BY
INDUSTRY
EXPERTS
COVERING
ALL
ASPECTS
OF
BUY-TO-LET
NOVEMBER 2014
WRITTEN
LANDLORD | PROPERTY | INVESTMENT
WHY COMMERCIAL-TO-RESIDENTIAL IS NO WALK IN THE PARK
- Caridon
THE UPS AND DOWNS OF THE LONDON MARKET
- Kate Faulkner
FIVE BUY-TO-LET HOT SPOTS UNVEILED INSIDE
IS COMMERCIAL THE
NEW RESIDENTIAL?
LANDLORD & PROPERTY INVESTMENT EXHIBITION
Thursday 13th November 10am-5:15pm Olympia Conference Centre, Hammersmith Road, Kensington, London W14 8UX This exhibition / seminars will provide you with all the information to help grow and retain your investment, receive FREE EXPERT ADVICE from industry experts and meet over 40 professional property services that are exhibiting on the day.
Exhibitors include: • Legal Services • Landlord Insurance
• Letting Agents • Property Management
• Tenancy Deposit Scheme • Buy-to-let Mortgages
Over 20 seminars delivered by Industry Experts with more to be announced: Kate Faulkner Property Checklists
Clive Emson Clive Emson Land & Property Auctioneers
Richard Bowser Property Investor News
Robin Pilley Northern Investment
David Humphreys Property Investor Online
David Sandeman Essential Information Group Ben Beadle Tenancy Deposit Scheme
Nicholas Cliff Northern Capital Group
Susannah Cole The Good Property Company
Nick Carlilse Platinum Portfolio Builder
Logan Hall Move Bubble
Marie Parris George Ellis Property Services
SPEED NETWORKING Due to the massive success of our Speed Networking sessions at our last London Landlord Investment Show (8th May 2014 - London Olympia) we are giving you another opportunity to meet with other like minded industry professionals, make new contacts and widen your own network of customers and suppliers.
Book your FREE show tickets to fast-track your entry by visiting:
www.landlordinvestmentshow.co.uk/London Or come along and register on the day!
Or if you would like any further information regarding the event, please contact the team on: 0208 656 5075 Main sponsors
Media partners:
Show sponsored by
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WELCOME TO THE NOVEMBER ISSUE OF LANDLORD INVESTOR! Editorial Editor Tracey Hanbury editor@landlordinvestmentshow.co.uk Editorial Contributors Caridon David Humphreys Envirovent Karen Bennett Kate Faulkner Kevin Gilbert Kevin Wright Matt Hutchinson Marie Parris Mike Morgan Neil Carpenter Paul Walshe Peter Davis Peter Littlewood RITA4RENT Robin Pilley Steve Cox Susannah Cole Tom Entwistle
Art Dept. Design Craig Edmonds
Contact 0208 656 5075 landlordinvestmentshow.co.uk /LandlordInvestmentShow @LandlordInShow
Last month we launched Landlord Investor magazine to our members on a digital platform. Our November issue brings with it the announcement that from our second issue onwards, the magazine will also be available in print as well as being digital. The response has been phenomenal, both from readers and businesses wishing to contribute. Landlord Investor magazine has already become a welcome addition to our Landlord Investment Shows which goes to buy-to-let hotspot areas throughout the UK. Our shows and this magazine will keep Landlords and Investors completely up to date with legislation, give advice on everyday problems that Landlords/ Investors face and in addition will provide a great source of information on the best areas to invest for those wishing to widen or even start a property portfolio.
CONTENTS Buy-to-Let Analysis Commercial (cover story) Landlord Insurance L.I.S Updates Great Property Tips Tenancy Deposits Landlord Associations Financial Your Property Partner Tax Advice Legal Refurbs Investment Industry Spotlight Industry Update Auctions
06 12 18 22 26 28 32 40 44 48 52 54 58 66 68 70
Steve and I would like to thank our team for all their hard work and dedication and a special thanks to Craig Edmonds our designer for putting all of this into reality! Tracey Hanbury | Editor Landlord Investor
Tracey Hanbury Tenants History Southbridge House Southbridge Place Croydon CR0 4HA Statements and opinions expressed in articles, reviews and other materials herein are those of the authors; the editors and publishers. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. Tenants History Limited will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through the promoted links.
LANDLORD INVESTOR
November 2014
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MEET THE TEAM TRACEY HANBURY EDITOR & SALES DIRECTOR T: 0208 656 5075 M: 07931 308 875 tracey@landlordinvestmentshow.co.uk
STEVE HANBURY DIRECTOR T: 0208 656 5075 M: 07429 683 046 steve@landlordinvestmentshow.co.uk
LES HANBURY DIRECTOR
CARL MARTIN SALES & EVENTS MANAGER T: 0208 656 5075 M: 07949 533 355 carl@landlordinvestmentshow.co.uk
FRAN ROBINS SALES & EVENTS MANAGER T: 0208 656 5075 M: 07950 284 615 fran@landlordinvestmentshow.co.uk
HOLLY O' BRIEN SALES & EVENTS MANAGER T: 0208 656 5075 M: 07931 308 856 holly@landlordinvestmentshow.co.uk
CRAIG EDMONDS CREATIVE DESIGNER T: 0208 656 5075 craig@landlordinvestmentshow.co.uk
November 2014
LANDLORD INVESTOR
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WHAT A 2014 WE HAVE HAD! 2014 has been a huge year for the Landlord Investment Show. It has seen the addition of four team members, one office move, a magazine launch and by the end of the year, twelve shows over ten counties. 2015 will see over fourteen shows all across the U.K. The show has grown leaps and bounds since it started and in only two years, the team have met some amazing people in the property industry and have made many friends as a result.
JANUARY SURREY
MARCH KENT
MAY LONDON
JUNE CROYDON
JUNE BRIGHTON
JULY DORSET
NOVEMBER BUCKS
NOVEMBER LONDON
OCTOBER EAST ANGLIA
OCTOBER HAMPSHIRE
SEPTEMBER MANCHESTER
JULY ESSEX
WITH A MASSIVE 2015 AHEAD!
MAY LONDON
APRIL BERKSHIRE
MARCH SUFFOLK
MARCH ESSEX
MAY SUSSEX
JUNE CROYDON
JUNE KENT
SEPTEMBER NORTH LONDON
IF YOU WOULD LIKE ANY INFORMATION ABOUT OUR 2015 SHOWS, PLEASE GET IN CONTACT WITH A MEMBER OF THE TEAM ON THE OPPOSITE PAGE OR ALTERNATIVELY, VISIT OUR WEBSITE AT: WWW.LANDLORDINVESTMENTSHOW.CO.UK
NOVEMBER BUCKS
FEBUARY KENT
JANUARY SURREY
OCTOBER MANCHESTER
NOVEMBER LONDON
OCTOBER KENT
LANDLORD INVESTOR
November 2014
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BUY TO LET ANALYSIS
THE UPS AND DOWNS OF BUY TO LET IN LONDON Kate Faulkner - Propertychecklists.co.uk I’ve been running property clinics for investors in London now for over five years. At every event I give free one to one help primarily to buy to let investors. The most popular question I get asked is “where is the best place to invest in London?” I’m afraid the answer isn’t quite what people want to hear.
HERE'S WHAT I EXPLAIN TO PEOPLE: “There are 32 Boroughs in London with average prices varying from £250,000 to over £1.3 million. Each Borough would take me two weeks to research and by the time I’d finished – my advice would be inaccurate as price movements will have changed” One of the ‘ups’ about London, as most Londoners know, is if you have the capital available to invest, there is a way to make money in pretty much every Borough in London. The ‘down’ though is it is very tough in today’s market for buy to let to be cash flow positive for newbie investors. The ones making the real money, invested many years ago, or during the lows of 2009.
THE 'UPS' OF THE LONDON MARKET FOR LANDLORDS The key benefit of investing in London is capital growth potential. However, don’t be fooled by what you read in the media, not every property in every Borough is booming.
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LANDLORD INVESTOR
SERIOUS STATS ON LONDON BOROUGHS The following Boroughs have outperformed London’s ‘average’ 7% annual growth since 2000: • Hackney and Kensington and Chelsea grew by 10% per year • City of Westminster and Southwark grew by 9% per year • Islington, Camden, Hammersmith and Fulham, Lambeth, Waltham Forest, Haringey, Lewisham and Wandsworth grew by 8% per year The “worst” performing Boroughs though still grew more than the national England and Wales average, by 6% per year. Kingston upon Thames, Greenwich, Bromley, Havering, Bexley, Enfield, Hounslow, Hillingdon, Harrow, Croydon, Sutton
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BUY TO LET ANALYSIS
So, over the last 15 years, substantial price growth has been gained across London, albeit not equally by Borough. And for those that spotted the lows of the London market back in 2009 and 2010, they will have seen substantial growth in the likes of Hackney, Kensington and Chelsea, City of Westminster, Southwark, Islington, Camden and Hammersmith and Fulham where prices just in the last few years have risen, on average, by 50%. What’s more interesting though is when you dig down into the performance of individual property types, for example flats versus houses. In Hackney, although flats have increased in value well, they haven’t done anywhere near as well as houses which are in serious short supply and many are now selling for in excess of £1 million.
THE 'DOWN'S OF THE LONDON MARKET FOR LANDLORDS TO BE AWARE OF So some areas have performed phenomenally and houses have typically been a better investment than flats in London to date. And that’s where the ‘down’ sides start to creep in. Take areas like Hounslow, Hillingdon, Harrow, Croydon and Sutton. Unlike successful areas in London, they haven’t done too well - yet. Since the heights of 2007, although some of these areas are up by 1520% year on year, versus prices six years ago, these areas have underperformed so far and are only 3% to 10% higher during this time, so way behind other areas which have increased by five times that much. And taking flats over houses, it’s not just capital growth but income that can be affected. The problem with flats is they attract service charges, ground rents and major works costs, the latter sometimes out of the blue. A well run block of flats can be very cost effective versus maintaining a house in its entirety – you share the cost of repairs for example. However, leasehold law doesn’t favour flat owners, so above average increases in service charges and high maintenance and repair costs can severely damage your income returns. In addition, when you buy a flat, you buy it for a period in time, not ‘for life’, so a 99 year lease may well after a 20 year hold by an investor need renewing to maintain its value and that can require investing tens of thousands more before benefiting from earnings.
In addition to struggling income returns, London is now the focus of building affordable homes. Schemes such as shared ownership, build to rent, rent to buy and affordable rent, where tenants are charged 80% of average market rental values are all on the way. If these kind of initiatives are near your investments, or areas where you are looking to buy, they could impact on your capital growth and rental income, so important to know what’s happening around your property.
LANDLORD INVESTOR
November 2014
BUY TO LET ANALYSIS
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IS IT POSSIBLE TO MAKE MONEY FROM BUY TO LET IN LONDON ANYMORE? The answer to this is a definite ‘yes’. But, you have to be prepared to be patient to find a property which stacks up and have substantial sums of cash behind you. When investing tens if not hundreds of thousands of pounds in property with a loan to value of around 50% versus the property’s price, it’s wise to check what other financial investments can deliver versus buy to let - before taking the plunge. And in London, in the main, you will need to invest at a 50:50 loan to value ratio to enable you to secure enough extra income to fund buy to let maintenance and refurbishment costs during ownership. The reason you typically need a higher loan to value ratio is that yields ie your rental income versus the price you pay for a property is pretty low versus other parts of the country. The average for the UK is around 5 to 5.5%. Greater London yields though are often quoted at 3-4%. Your Move and Reeds Rains see yields from their Buy to Let Index of around 4.2%, HSBC’s buy to let hot spot report suggests Hammersmith and Fulham deliver around 3.5% although it is possible to secure returns up to 6% on some properties in areas such as Newham and Hackney – but they are hard to find. While interest rates are as low as they are, at current mortgage rates, even with higher loans to value than 50% you may be able to afford to run your buy to let without putting money in every month. But, buy to let works over a long period of time: 15-20 years and during that time, mortgage rates are likely to rise higher than they are now, meaning when investing, you need to check you can still afford your investment if mortgage rates reach pre-credit crunch levels of 5-6%.
November 2014
LANDLORD INVESTOR
SO THE IDEAL FIVE RULES TO STICK WITH IF YOU ARE LOOKING AT INVESTING IN LONDON ARE: 1. Ideally find a property which you can buy at a discount, for example for cash, then refurb or add value, and re-mortgage
2. Make sure you can afford a 50/50 loan to value investment
3. Check you are able to fund 3% stamp duty charged on properties over £250,000
4. See how the property will cash flow if mortgage rates increase to 5-6%
5. Know the rules about renting in London, for ex-
ample understand the requirements from initiatives such as the London Rental Standard (http://www.london.gov.uk/priorities/housing-land/renting-home/ london-rental-standard) And if you are looking at using a lettings agent, London has so many people, so many agents and so few properties, do make sure you pick one you and your tenant can trust. To spot a good agent who lets property legally, make sure they are a member of the Associations of Residential Letting Agents (ARLA); National Approved Lettings Scheme (NALS) or Royal Institute of Chartered Surveyors (RICs). Keen to know what to do with your existing London property investment, how to make more money or get started in investing in our Capital? Then do come to my seminar and book an appointment for a free one to one clinic. Source of property price information: Land Registry For more information on each individual London Borough’s property price performance, visit my latest report www.propertychecklists.co.uk/articles/ London-property-price-update-November-2014 ⌂
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Buy to let is a receiving a huge amount of attention at the moment. The idea of people cashing in their pensions under the new rules to invest their money in property or giving up on financial investment altogether to purchase property in the hope of better income returns...
... AND LOOKING BACK AT THE STATS FOR PROPERTY IN THE BUCKINGHAMSHIRE AREA, THIS WOULD LOOK LIKE A GREAT PLACE TO INVEST. For those that invested in the area in 2000, average house prices were around £134,000 (source Land Registry). They have grown every year since then by approximately 5.6%, meaning, today, 15 years later, the average price is £291,000. And that’s just the increase in capital growth, on top of this a landlord would have profited from excess net income too.
The reason for buy to let delivering a good return is down to two things. Firstly you can “gear” the investment ie invest say a 25% deposit, which would have been £33,500 on a property costing £134,000. If the property was now worth the average £291,000, the returns, even after tens of thousands of pounds of costs for buying and selling, would probably look pretty good versus other financial investments which don’t allow you to borrow to buy a higher priced asset. Secondly you have the ability to rent the property out, which if you can do at a profit, excess income post taxes can help a geared investment deliver returns in excess of 20% versus just under 10% (source: ARLA) for those who invest with cash alone. So, capital growth returns for buy to let overtime have looked pretty good in Buckinghamshire, but what has been happening to rental returns? According to Your Move and Reeds Rains, rental returns, on average are around 4.6%, just under the national average of 5%. And taking a look at the Belvoir Lettings Index which has been running since March 2008, rents are on average round £900 a month in the area, up 4% year on year. This is good news as many areas don’t see rents rise more than inflation (which averages around 3% a year), so as a landlord you should be seeing some positive growth in rents in the last year, albeit that rents have been tough to increase during the recession because of a lack of wage growth.
LANDLORD INVESTOR
November 2014
BUY TO LET ANALYSIS
THE BEST AND WORST OF BUY TO LET IN BUCKINGHAMSHIRE
BUY TO LET ANALYSIS
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IS NOW THE TIME TO BUY IN BUCKS - OR HAVE YOU MISSED THE BOAT? Areas like London have in most places ‘already gone’ and some have seen 50% increases in property prices since the market lows of 2009. In Buckinghamshire, prices peaked at £276,500 on average in April 2008. They then fell to an average low of £228,500, a fall of 17.5%. Smart buyers (or lucky ones!) will have seen prices rise just a little bit since this time – around 5% over five years. This is a lot less than the normal 5.6% growth property prices have seen in the past – each year. So what’s the prognosis? Well currently we are seeing prices rise around 10% year on year and in the past we’ve seen prices increase year on year to levels of 22%. So it looks like property, versus price heights of 2008 seen in Buckinghamshire, is still reasonable value for money and if you get on the ladder now, then prices should continue to rise for another year or so. However, the downside to look out for, is that the government and Bank of England have made it pretty clear they want to see property price growth held back – especially to avoid people over borrowing via mortgages. As such we are entering a new era of uncertainty. In the past, we have seen prices rise pretty well because of expanding mortgage debt, whereas now we are looking at it potentially being held back. This, together with the current ‘talk’ of property price rises slowing in London, Buckinghamshire in contrast does still appear to be seeing good growth in prices, according to the Land Registry data, however, the next few months will tell us if prices will continue to gain momentum or fall back as mortgage lending is tightened.
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Keen to know what to do with your existing property investment, how to make more money or get started in investing in Buckinghamshire? Then do come to my seminar and book an appointment for a free one to one clinic. In the meantime, to find out more about what’s happening to property prices and rents in your area, visit PropertyChecklists.co.uk and if your area isn’t covered in the reports, let me know before your local landlord show and I’ll make sure I have the figures for your area with me. ⌂
Kate has also kindly written up on the pros and cons of buy to let in Hampshire as well as the good, the bad and the ugly of investing in Buy to Let in Norwich. For both of these visit: PropertyChecklists.co.uk
Download all the FREE checklists a Buy to Let Investor will need Independent expert advice on: • Property prices, rents, returns and forecasts • Analysing your buy to let • How to buy property below market value • How to choose the right buy to-let services
SEE OUR CHECKLISTS FOR ALL THE BUY TO LET HELP YOU WILL NEED www.propertychecklists.co.uk
T: 01652 641 722
COMMERCIAL
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SAFE AS HOUSES? Experienced property developers benefit from planning law.
by Nick Harding
THE COALITION GOVERNMENT HAS DONE MUCH TO KICK START THE ECONOMY... While the 2008 recession had a devastating effect for the construction industry as a whole, subsequent policy has gone some way to reverse the damage and encourage growth. Proposals to streamline the planning process for home improvements and to relax certain areas of planning law have been broadly welcomed across the building and property sector. In May last year the government introduced new changes to planning regulations which made it easier for commercial buildings to be turned into residential units. The move was ostensibly aimed at easing the housing shortage which is particularly acute in London and the South East. It left many with an interest in residential development rubbing their hands in anticipation and eager to jump on the bandwagon. However, the expected change-of-use gold-rush has not fully materialised and it has not been an easy ride for the inexperienced developers who entered the sector. While ‘commercial-to-resi’ can be rewarding, the sector has proved challenging and only those developers with knowledge, understanding and expertise have been able to negotiate it successfully.
Wrencote House, Caridon 2014 Property Head Office. November LANDLORD INVESTOR Photo credit: Azam Abedi
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COMMERCIAL
Abbas Alidina – Chief Operating Officer at Caridon Property
Caridon Property Services is one such business. Between them, its executive board has over 35 years of experience in property development, letting and management; enough to ensure success in the choppy commercial-to-residential waters. In the last year alone Caridon has developed over 250 units and 70,000 sq ft of space for both private and social housing across London and has completed and maintained several large change-of-use developments. And they are not in the fast-buck, cut-and-run business. Caridon’s sustainable business model is about retention and adding value to the communities it operates in. It manages the units it develops and helps its tenants. The company has won plaudits across the industry for this benevolent approach. With a mixed range of tenants, Caridon was developing commercial sites for residential use in areas of need long before the planning rules were relaxed. Its beautifully-appointed properties span the entire housing market and it works with local authorities and stakeholders to service tenant housing needs. Unlike many players, Caridon is in it for the long haul. It currently manages and owns over 1000 units and has built up an enviable reputation for providing lucrative returns for investors as well as helping the people it houses. This year, in the face of competition from large housing associations, Caridon won the award for Best Service Provider in the Private Rented Housing Sector at the annual UKLAP conference.
Mario Carrozzo – Founder and CEO of Caridon Property
LANDLORD INVESTOR
November 2014
COMMERCIAL
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CHIEF OPERATIONS OFFICER ABBAS ALIDINA EXPLAINS THE ETHOS BEHIND THE SUCCESS. “We are creative and dynamic in our approach to business, this differentiates us from our competitors. Our ethos is to always keep pushing the boundaries and look for new opportunities,” he says. “Our wealth of experience enables us to adapt to any situation and think outside the box, ultimately allowing us to explore opportunities where others see none. We believe our success is down to hard work, focus and our ambition to achieve greatness in whatever it is we choose to pursue. “We have created a strong and robust business through diversification within all segments of the property market; we are tenants, agents, landlords, developers and investors. We therefore view any transaction from numerous perspectives and understand the needs of each of our client groups.”
CARIDON WAS FOUNDED BY CROYDON-BASED ENTREPRENEUR MARIO CARROZZO. Since the age of 18 when he acquired his first property Mario built up a huge property portfolio. In 2009, frustrated with the inefficiencies of dealing with management agencies, he spotted a gap in the market and set up Caridon Property Services; a new type of agency run by landlords for landlords. It offered a unique arrangement; guaranteed rent. It was a huge success and today Caridon guarantees rent on all its properties which are spread across all 32 London Boroughs. Abbas partnered Mario and has over 15 years experience in property management. A formidable force, they grew the business, invested and diversified. In addition to its property management function Caridon now also develops sites and has an inhouse team of architects, builders, property managers and financial experts. This extensive talent pool allows it control over every aspect of operations, from sourcing building materials and project managing developments to collecting rents and maintaining the properties it owns.
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LANDLORD INVESTOR
Caridon has completed several commercial to residential developments in previous years. It is currently in the process of completing others and is looking for more opportunities. However, commercial-to-resi is no walk in the park and while the opportunities provide a good return for investors, Caridon is quick to point out that it is a challenging arena in which to operate. Mario Carrozzo explains: "There can be a perception that the commercial to residential sector is a way to make a quick, easy profit. Nothing could be further from the truth. We’ve taken over from half built properties where developers couldn’t complete the projects. It is challenging and it takes know-how and expertise to create developments that work. “We have years of experience and a range of specialisms which allow us to succeed and provide real value-added in communities. We aren't newbies exploiting a relaxation in the planning process. The relationships we have with our partners and stakeholders have been built up over years and are invaluable. We can only do what we do because we have a 75-strong management team in the back office to manage our properties.” Caridon continues to expand and has ambitious plans to develop another 5000 properties in the next five years. The percentage of this growth attributable to commercial to residential developments will depend largely on the results of next year’s general election and the legislation introduced by the successful administration. However, whatever party or coalition forms the next government will still face the prospect of an urgent need to provide good quality housing for both private homeowners and social tenants. And Caridon aims to be at the forefront of the solution to this problem, working closely with local authorities, the Mayor of London’s Office and stakeholders across the UK to identify opportunities and to continue providing stand-out service to its tenants, investors and business partners. ⌂
We have over 20 years experience in the property market. We design, build and manage properties across London.
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LANDLORD INVESTOR
November 2014
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COMMERCIAL
THE FUTURE FOR COMMERCIAL PROPERTY INVESTMENT Tom Entwistle - LandlordZONE In this article I discuss the prospects for the private investor in smaller commercial properties and the options available to investors for converting commercial properties for residential use.
The traditional secondary and tertiary shops, offices, storage units, workshops and industrial premises, which have been the stock in trade for many private investors like me for many years, have been badly affected by the recession, and some will become unviable as commercial lets in the future. The recession has had a really big impact on commercial investments and their landlords in some areas where high streets are literally dying. Residential investments on the other hand have had, on the whole, sustained demand throughout the recession from residential tenants, many of whom cannot afford to buy. A recession is usually an ideal time for increasing your exposure, selectively picking up commercial property investments at fire sale prices, refurbishing, then simply waiting for the up-turn and healthy tenant demand. Is now the time to start to invest? Well, it could be for some who, with laser-like focus, are able to pick up some bargains in locations where tenant demand is virtually guaranteed. But, there are changes afoot in the economy which says to me it’s a time for caution and that things might be a little different this time.
November 2014
LANDLORD INVESTOR
Look down many high streets, especially in areas of high unemployment, and you can guarantee your vista is peppered with to-let or for-sale signs on the shops and offices in view. If you are lucky enough to be standing in a good, well managed town you will probably see just one or two, if not you could be looking at dozens of them. A sign of the longest and deepest recession in living memory? Most definitely. In that respect it’s all been seen before in the 1970s and early 1990s. But dig a little deeper, look a little harder, think a little smarter and you will begin to appreciate that this time there’s more to it than that: structural change, the long-term trends that are taking place in our economy are playing a part as well. The recession has certainly had its effect, but it has also been a catalyst to greatly accelerate other important changes; changes which are easily identified and not really all that new - they have been evident for years. It’s now, after this long downturn, that the major effects of out of town retail (supermarkets and shopping centres) and the Internet are really beginning to tell on the way we live and work in the 21st Century. Not since the industrial revolution and
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the coming of railways has our society been faced with such a shift. These two trends are changing the very nature of many historic high streets, the way we spend our work and leisure time and the way we spend our money.
With an oversupply of older, out-dated secondary and tertiary commercial property, shops and offices in the main, and with all those vacancies around, there is always going to be pressure on rents and therefore capital values in the near future. However, not all locations are so badly affected; there are many parts of the country where tenant demand for commercial remains healthy. Some niche locations such as small shopping parades on urban estates, with mixed use flats above, will always find occupants at healthy rents. In other locations there could be real opportunities to convert from commercial to residential use. It is possible given the current state of some town centres that more incentives will be available in the future to encourage conversions. In a recent budget George Osborne looked at making it easier for property owners to convert commercial properties to residential use, and one was the relaxation of planning restrictions on conversations as a way of easing the UK’s housing shortage. There already exist various HMRC schemes giving tax incentives for such conversations. These schemes are often feasible but can be expensive, and they sometimes require some creative thinking and skilled labour to convert in a way that works occupationally, and fully complies with current building regulations, in particular Part L regulations that ensure compliance to conservation of fuel and power.
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The impact of these changes has the potential to devastate trade in some towns and communities, with its consequent effect on the value of commercial property – since 2000 around 25,000 retailers have closed their doors in Britain’s high streets. The retail domino effect - more voids - diminished foot fall - profit decline - rent arrears - more vacancies - no new openings - rental value drop - capital value drop - town centre in terminal decline - is a scenario that’s played out in many centres.
Other factors which can militate against such schemes in town centres are: parking restrictions, shared access to additional space upstairs, planning restrictions, for example, to shop fronts, conservation area restrictions and the possibility of noisy neighbours such as pubs and clubs. Local authorities usually adopt a blanket policy when considering change of use planning applications - the property must have been on the market for a minimum period, anywhere between six and 18 months. Basically, the onus is on the owner to prove there is no market for the building commercially, before it can be considered for a change of use. As with any property development or refurbishment scheme, much research, care and thought needs to be taken before jumping in with both feet. But the continuing decline of some town centres means that this is one opportunity that has almost guaranteed growth. My feeling is there will always be good opportunities investing in commercial property if the two crucial factors for success are adhered to:
1. Doing endless research in any location to ensure there is healthy tenant demand, and...
2. Buying at the right price – buying value. For
those willing to think creatively and “outside the box” it may not be as easy as it’s been in the past, but there will always be opportunities to make money in small commercial property investments. Tom Entwistle is editor of the property website LandlordZONE.co.uk. He is a long-term landlord and investor in commercial and residential property. ⌂
LANDLORD INVESTOR
November 2014
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LANDLORD INSURANCE
INSURERS NOT OBLIGED TO PAY FOR POORLY MAINTAINED PROPERTIES Steve Cox - Alan Boswell Group
To ensure a full settlement in the event of a claim, Steve Cox, Property Insurance Specialist from Alan Boswell Group, explains why you should keep your property well maintained and secure from weather damage.
The UK was caught out by a series of severe storms last year, which left behind devastating effects for many properties. Steve Cox, Property Insurance Specialist from Alan Boswell Insurance Brokers, part of Alan Boswell Group, recommends that landlords should learn a lesson from these storms and ensure that they – and their tenants – are not faced with unnecessary costs as a result of weather damage this winter. "It’s essential that all property owners take steps to ensure that their premises are well maintained and secure from weather damage. Failure to do so can not only result in inconvenience to landlords and tenants while the mess is cleared up and damage made good, but more importantly insurance companies may decide that if the property is not adequately
November 2014
LANDLORD INVESTOR
maintained they may not pay for the damage; or if they do, they may seek a contribution from the property owner for what they call “betterment". Heading up the specialist landlords’ team at Alan Boswell Group, Steve has witnessed landlords being caught in this situation. Steve comments: "In essence, insurance is intended to put you in the same position after a loss that you were in before it. Landlords’ insurers would be well within their rights to say that if they repair a poorly maintained property to make it weatherproof, then the insured is actually better off after the loss. This is clearly not what insurance is about and so they could pay only part of the loss, or ask for some money towards the repairs."
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WATER DAMAGE LANDLORD INSURANCE
A frequent peril in winter is damage to buildings and contents caused either by flooding or burst pipes. If you live in a flood prone area, taking precautions can protect the property against disruption. Considering first line defence such as sand bags, moving all electrical points above the likely flood level and installing metal kitchen units can all help to defend against flood damage. Protection against burst pipes can be enforced by checking that all exposed water pipes (including those in lofts) are properly lagged and keeping the heating on low during freezing conditions.
CHIMNEY FIRES ARE ALSO A THREAT IN THE WINTER A less obvious consideration applies to landlords who have a property with chimneys. If temperatures suddenly plummet, higher fuel prices may encourage tenants to light open fires without first checking if the chimney has been cleaned. Landlords whose properties have chimneys (even if they think these are boarded up) should check to ensure that naked fires are not being lit – or if they are, that the chimney is professionally cleaned and safe to use.
GETTING THE RIGHT ADVICE To avoid non-payment or a betterment request from insurers, it is important to keep your property in a well maintained condition. Steve can recommend precautionary steps to take and provide advice on any element of your landlord insurance, so get in touch!
For further advice contact Steve on: T: 01603 216399 M: 07766 715654 W: alanboswell.com/landlords E: scox@alanboswell.com Alan Boswell Group offers a range of other services including business, home, travel, car insurance and financial planning.
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L.I.S UPDATES
LANDLORD INVESTMENT SHOW GEARS UP FOR 2015 THE LANDLORD INVESTMENT SHOW HAS HAD AN INCREDIBLY SUCCESSFUL 2014 SO FAR. The team have been preparing for our London show for the past month as Olympia is set to be our biggest show since they began in 2013. There are merely two shows left until Christmas, both of which the team are massively excited for. This time last year, L.I.S had covered only three local shows over their own counties, with two more ahead in London and Buckinghamshire. Not only were these shows a great experience for the team to enable property professionals and industry experts to connect, they were also an insight for L.I.S to realise the demand for local-based property shows. After assessing their achievements and receiving an enormous amount of positive feedback from
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L.I.S UPDATES
exhibitors, it was decided by the team to travel farther, market larger and pull out all the stops. 2014 so far has brought ten shows to the U.K, with two more still to go including London and Buckinghamshire. We here at L.I.S have been overwhelmed this year by the upward direction the shows have taken since our very first in Croydon last year. Since then, and by the end of the year, we would have successfully planned and executed seventeen shows over ten counties in the U.K. We have expanded the team with the addition of new sales members and our in-house creative designer, who have moved
2015 is going to be a big year, not only for the Landlord Investment Show, but for landlords, investors and property professionals as well.
the whole operation forward in anticipation for next year’s road show. As it was this time last year that L.I.S were planning our 2014 dates, we have decided to plan ahead for next year over many a lunch-time pub meeting.
ENTER 2015! The entire team are looking forward to the new year and the busy schedule they have ahead of them. With over fourteen shows planned for 2015, L.I.S have grown leaps and bounds since it started. Over only two years, the team have met some amazing people in the property industry and have made many friends as a result.
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EVERYONE HERE AT L.I.S TOWERS WOULD LIKE TO THANK EACH AND EVERY PERSON WHO HAS ATTENDED, EXHIBITED AND PROMOTED THE SHOWS IN ONE FORM OR ANOTHER TO DATE. WE LOOK FORWARD TO THE FUTURE OF THE LANDLORD INVESTMENT SHOW AND TO MEETING NEW FACES AT THE SHOWS ALL ACROSS THE U.K.
FOR MORE INFORMATION ON ANY OF OUR SHOWS, IN 2014/15, VISI November 2014
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2015 SHOW DATES SO FAR (Surrey)
JANUARY 29TH
ASHFORD (Kent)
FEBRUARY 5TH
COLCHESTER
(Essex)
MARCH 5TH
IPSWICH
(Suffolk)
MARCH 19TH
READING (Berkshire)
APRIL 23RD
LONDON OLYMPIA
(London) MAY 7TH
SUSSEX HOT SPOT
(Sussex)
MAY 15TH
CROYDON
(Surrey)
JUNE 4TH
MAIDSTONE (Kent)
JUNE 18TH
NORTH LONDON
(London)
SEPTEMBER 24TH
MANCHESTER (Lancashire)
OCTOBER 1ST
KENT HOT SPOT
(Kent)
OCTOBER 15TH
LONDON OLYMPIA
(London)
NOVEMBER 9TH
BUCKS HOT SPOT
(Bucks)
NOVEMBER 18TH
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IT WWW.LANDLORDINVESTMENTSHOW.CO.UK
WOKING
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GREAT PROPERTY TIPS
INTERESTED IN MAKING SERIOUS CASH IN PROPERTY? Susannah Cole The Good Property Company
WITH HOUSE PRICES BOOMING HERE IN BRISTOL, AND A NUMBER OF BUY TO SELL PROJECTS AT ALL STAGES OF THE PROCESS SOLD, UNDER OFFER, AND BEING RENOVATED, I WANT TO SHARE WITH YOU HOW WE ACHIEVE HIGH PRICES AND FAST SALES. Simple - we are buying wholesale and selling retail. And to sell retail, you actually need to retail it - think Selfridge's shop windows - turn your own sale property into a beautiful piece of retailing. So learn from the best home retailers – visit Ikea, the Conran Shop, John Lewis and others, online or in person, to see how they present homes to the general public. Then do the same yourself – buy their kit, and pose up your Buy to Sell property, with a professional photographer – the kit goes back into the box until the next property and the couple of hundred quid you spend should increase your sale price by thousands. Retailing works: Sell the sizzle and dress the property beautifully.
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We use one theme colour and a second base one, and look at how Habitat (R.I.P), Ikea and Living Etc style up rooms and essentially do it exactly as they do. So, at the moment, purple is our theme colour and lime green or teal blue the second colour. Then everything else is beige (sorry, mocha!). Candles, pots (expensive, from habitat, which still have their labels on them), towels (strong aubergine colours), mugs (cream and aubergine), table settings, and then bedroom settings.
I THOUGHT I WAS SELLING 'COFFEE AND CROISSANTS IN BED', BUT MY ESTATE AGENT SAID 'SUSANNAH, YOU ARE SELLING SEX IN BED', AND HAVING RE-LOOKED AT HOW WE STYLE UP THE BEDROOMS, I THINK SHE WAS POSSIBLY RIGHT! WHAT DO YOU THINK?
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Every time I sell a property I am asked if I can sell the furniture too (nope). That means I have sold the lifestyle well, and very likely gotten a much higher price and a faster sale. Remember, that you actually have to sell your Buy to Sell Project twice – once to your chosen Estate Agent, and the second time to your eager and high paying buyer.
WHY SELL TO YOUR ESTATE AGENT, SURELY THIS IS THEIR JOB? Well, yes, but you know yourself, if you are enthusiastic about something, it will be easier and more fun to sell. Estate Agents who survived the recession have property ‘in their blood’, so they will enjoy selling a beautifully presented property – it puts a shine on their day. It is fun for them. They will naturally have your property as ‘front of mind’ and be more enthused to call it out. That energy and enthusiasm will transmit to their prospective buyers. So concentrate on describing the lifestyle through presentation to your two customers. Take a look at this kitchen photo – it says ‘honey I’m home’ with the table set, wine in the background, pots on the cooker all warm and welcoming…
WHY DO ALL MAJOR HOUSE BUILDERS HAVE A SHOW HOUSE? IT IS TO BUILD DREAMS OF WHAT THE LIFESTYLE COULD BE. DOING THIS WILL MAKE YOU THOUSANDS EXTRA. Once you have renovated and ‘posed’ the property, don’t forget your job is not yet over. Engage a cleaning service to clean once a fortnight, as the ‘dead fly on the window sill’ look is not good for sales! Pick up mail regularly, ensure lights and heating are on a timer in the darker months to keep the property feeling warm and welcoming (your equivalent of freshly brewed coffee and baked bread).
And when you buy a house, you imagine yourself living in it. What could be nicer than a warm, welcoming feeling? One test of whether you have dressed it well - If your buyer has not asked you to buy your furniture at each and every transaction, you need to improve your skills in presenting the property to the market.
If you would like to make sure you know all you need to know in running a professional and highly profitable Buy to Sell Strategy, you might consider joining us on our One Day Workshop ‘Make Serious Cash Flipping Property’. Set yourself up for a fantastic 2015, and book our one day workshop on 15th November event. Call us on 0117 942 8914 or email Jess on: education@thegoodpropertycompany.co.uk ⌂
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TENANCY DEPOSITS
COUGHS AND SNEEZES: OVER HALF OF TENANCY DEPOSIT DISPUTES ARE OVER CLEANING. Michael Morgan - Director of Dispute Resolution Tenancy Deposit Scheme Every month the Tenancy Deposit Scheme publishes a case study of a genuine deposit dispute in its Adjudication Digest, to give users of the scheme an idea of how adjudicators make their decisions. In this issue of Landlord Investor we are sharing one of our more unusual cleaning cases, where the tenant left after contracting an infectious disease. The tenant had paid a deposit of £500 at the start of the tenancy, and unfortunately shortly after moving in they contracted tuberculosis. At the end of the tenancy the letting agent wanted to claim back the cost of a specialist clean from the deposit. In the case presented to TDS, the agent states that they contacted the local authority who recommended that the house was given a specialist deep clean. The agent’s evidence included a ‘Sales Order Form’ referring to such a clean at a cost of £895.00 plus VAT (£1,074.00). The evidence from the tenants included a letter confirming that although one of them did indeed have tuberculosis when living at the property, they thought the cost of cleaning was excessive. They also argued that it was not their fault that they became ill. The issue that the adjudicator had to consider was whether the tenant had breached the terms of their tenancy. There was no dispute that the tenant had tuberculosis and, as the tenant had stated it was not their fault that they became ill. However the key issue for an adjudicator in all cases is whether or not
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the tenant had met their obligations in the tenancy agreement. In this case the tenancy agreement required the tenant to return the property in the same cleanliness as at the start of the tenancy. The local authority had recommended that a specialist deep clean was required as a result of the tenant’s illness and because of the serious nature of what is acknowledged to be a communicable disease the adjudicator decided that an award in the landlord’s favour for specialist cleaning was justified. In this particular case the dispute also included claims for damage which the adjudicator awarded to the landlord.
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PAYING TOP DOLLAR TENANCY DEPOSITS
The next issue was how much the landlord should be awarded. Adjudicators can only award up to the value of the original deposit and when deciding how it is to be used, must follow the terms of the tenancy agreement. In this case the agreement stated the deposit was to be used for any damage first of all. Thus, the adjudicator made an award of the full £380.00 for the damage caused to the property. This left a balance of £120.00 available for the cleaning claim. The adjudicator noted the tenants’ concerns about the high cost of cleaning, but was satisfied that the cost of cleaning the property was at least equal to the remaining balance of the deposit (£120.00). The adjudicator therefore awarded this to the landlord, meaning that in total the landlord received the deposit in full.
WHAT ARE THE KEY POINTS HERE? 1.
Adjudicators are only able to make decisions about claims against the deposit. In this case, because the landlord was at least entitled to the deposit in full, it was not necessary in this case for the adjudicator to decide whether the amount of the cleaning claim was justified in full. If the landlord wanted any further sums from the tenant over and above the value of the deposit, they would need to pursue this through the Court.
2.
Had the adjudicator not made awards (or not awarded as much) for the damage claims, the landlord may still have received the deposit in full as it is likely that the adjudicator would have considered the specialist cleaning of a complete property to at least equal £500.00.
3.
The agents had understood that TDS could only award up to the deposit, but had been careful to spell out that the total claim exceeded this. This was important because had they limited the cleaning claim to, say, £120.00 (so that the total claim exceeded the deposit) and the adjudicator awarded less for the damage claim than £380.00, the adjudicator could only award up to £120.00. ⌂
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LANDLORD ASSOCIATIONS
RACHMAN, THATCHER AND BEYOND
Peter Davis - Eastern Landlords Association So often the word landlord is preceded in the media by the word 'rogue'. It makes good copy, and is somewhat over-used to gain attention. These landlords are criminals. To many, the original 'rogue' landlord, was Rachman, a name still used over 50 years after his death. There is no doubt that the alleged dealings of this character would be highly illegal with today's legislation. He certainly would never have joined the Eastern Landlords Association, where landlords can obtain full support and advice, and ensure that the law is followed. Three years after his death, and partly due to his notorious exploitation and intimidation of his tenants, the 1965 Rent Act, introduced by Harold Wilson's Government, gave security to tenants that had
er's radar was the rented sector. At the time of her election in 1979, the private rented sector was about 10% of dwellings, and the social sector three times as large. Today the law that governs most tenancies within the private sector, and drastically altered the balance of landlord/tenancy rights, the Housing Act 1988, is a legacy of the Thatcher years. The act gave council tenants the 'right to buy' and also strengthened the rights of the landlord, and no doubt was a major factor that lead to the buoyant private sector we now have. This is a sector that now provides more properties than the social sector. It is not just a coincidence that the Eastern Landlords Association was founded a year later in 1989, and has been advising and supporting landlords on all residential letting matters ever since. It is the 1988 Housing Act that forms the backbone of the legislation used by landlords today, and in the 25 years that it has been in force has been little altered. To increase a rent with an existing tenant, Section 13 of this act that is used. Also for the landlord to gain their property back if rent arrears of more than two months, Section 8 is used, and to end a tenancy for other reasons, Section 21 is the legal instrument.
been much weakened by the earlier 1957 legislation, and reintroduced rent controls. However whilst this rightly effectively ended the previous practices, it had the unintended consequence that private rented housing became scarce. The situation remained much the same until the 1980's. One of the many sights on Margaret Thatch-
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DISCRETIONARY
LICENSING AND LOCAL AUTHORITIES
Is it really the answer to anti-social behaviour? Peter Littlewood - Southern Landlords Association The latest trend among Local Authorities is to introduce discretionary licensing; this is in the form of additional or selective licensing. In the view of many councillors this is a panacea that will solve their problems of low demand, and/or anti-social behaviour.
SO HOW HAVE WE GOT TO THIS SITUATION? First some background of Houses in Multiple Occupation. Licensing was introduced by the 2004 Housing Act (HA04). Unfortunately HA04 was badly written, and has proved a ripe source of income for the lawyers in ascertaining what it was meant to say. But the act did give a definition of an HMO as: • The rental agreement must meet the conditions for an AST (Assured Shorthold Tenancy); • There must be 3 or more sharers – sharing essential facilities – e.g. toilets/kitchens/bathrooms, etc.; • They must form more than 1 household – i.e. must not be in any type of relationship. This is a summary of the wording.
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So what was the reasoning behind Licensing? There are three types of licenses for rental property; Mandatory; Additional and Selective – the last two collectively being called Discretionary Licensing – i.e. it is at the discretion of the local authority whether to introduce it. Mandatory applies to large HMO’s – those of 5, or more, unrelated sharers, AND 3, or more, storeys in the property. A landlord/manager has to apply for a license, ensure that the property meets certain property conditions – particularly relating to safety, especially fire safety; and that the manager is able to manage the property appropriately. The reasoning behind this was exaggerated claims about the risk of fire in larger HMOs, making accidents more likely. Therefore Mandatory Licensing and the application of all it brings, reduces this risk.
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Discretionary Licensing should only be introduced as part of a package to deal with problems, as part of poor management of ASB, or low demand or because of problems affecting HMOs not subject to mandatory licensing (resulting from ineffective management by private landlords). It is important to note three things about Discretionary Licensing: • The license can only last for a maximum of 5 years; • The fees collected can only be used to cover the cost to the local authority for processing and administration of the scheme (backed up by a recent court case (Hemming vs Westminster City Council));
Discretionary Licensing was meant to be an additional tool in the Local Authorities arsenal to allow them to control ‘rogue landlords’. If the local authority found non-mandatory HMO(‘s) being poorly managed, causing “problems” then those landlords operating HMO’s could be required to apply for either an Additional License which would necessitate them to: • Manage the property correctly; • Impose conditions on the property; particularly ensuring the property has a current electrical certificate. Thus the Council officers now had extra legislation to ensure the badly run HMO’s would have an opportunity to come up to the required standard. If the HMO continued to be run badly, then the manager would have their license removed, and if the owner wanted to continue trading, would have to find an acceptable new manager, or have the property taken over by the local authority.
The only extra mandatory conditions introduced by licensing are: • The need to have a current Electrical Safety Certificate; • The tenant must receive a written agreement; • The managers name, and contact details must be on view in the property. However, the local authority can introduce other conditions, but these can always be challenged. All HMO’s have to adhere to management regulations, whether licensed or not. Also that the physical condition of all residential property (both rental and owner-occupier) is covered by the Housing Health and Safety Rating System (HHSRS), also introduced in the Housing Act 2004 (HA04), and that inspecting residential properties under HHSRS has to be paid for out of local finances.
Selective Licensing is pretty much the same thing. Whereas Additional was intended for a very small number of HMO’s within an area of more successful HMO’s, Selective applies to a whole ‘Selected’ area, and applies to all rental property – not just HMO’s. It can be imposed where there is low demand and/or anti social behaviour caused by ineffective management by landlords within the ‘selected area’. The reasoning behind this is that the poor management of a few rental properties is starting to drag down the area – the ‘rotten apple’ effect. Thus licensing of all the properties in the ‘rotten’ area would force up the standard.
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Actually the statistics don’t bear out that licensing has reduced fire deaths:
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And it is that last comment that contains the problem – cash strapped local authorities are struggling to fund inspections of property, and the idea that extra revenue can be raised through licensing fees is attractive indeed. The law states that the fees raised can only be used in the processing, and administration of licensing – i.e. the extra cost to the council of introducing licensing. Some councils claim that they can charge for inspections, as they are ‘necessary’ administration part of licensing. No one asks the question “why have things been allowed to get to this point when the local authorities already have sufficient powers to ‘stop the rot’”? The answer is that local authorities lack the will to take the necessary steps and fail to devote enough resources. Imposing licensing should, therefore, be seen as a badge of failure on the part of local authorities. The reality is, however, that the Chartered Institute of Environmental Health Officers estimate that it needs three times as many environmental health officers to effectively impose housing regulations under the current system. If used correctly Discretionary Licensed can have a role to play in tackling poor management. But unfortunately Councillors see Licensing as the panacea to improve an area, effectively putting the blame and the cost solely on landlords. Thus it is used as a blunt tool to control a perceived problem - real or not. This is the general reason that landlords object to this blanket use of licensing: • The presumption the problems in Anti Social Behaviour is due solely to landlords failing to control this behaviour; • Treating of good, bad and indifferent landlords alike; • Good landlords have to pay high fees for enforcement against criminal landlords and poor quality landlords What we now have is a situation where local authorities are exercising more powers because they fail to use their existing powers adequately. This is futile. If they cannot use their wide powers what is to say they can do any better relying on licensing. When Discretionary Licensing was initially introduced, any Local Authority wishing to bring it in had to apply to the Dept of Communities and Local Government (DCLG) for permission to proceed. To get that permission they had to prove that they (the Lo-
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cal authority) had followed all the ‘checks and balances’ required – i.e. to comply with the guidelines. Many applied, but not all were given permission. In 2010 DCLG changed the parameters by allowing Local authorities to self regulate – i.e. they had to satisfy themselves they had followed all the requirements. Members of the public could challenge this decision, but only by a cumbersome Judicial Review (JR) process – i.e., an application to the High Court to overturn a local (or central) Government decision. A JR can only challenge the lawfulness of a scheme, and/or that the appropriate ‘checks and balances’ had been applied. It is not possible to bring a JR challenging if it is an inappropriate scheme; it is deemed that decision is up to the local Councillors. A JR is by necessity a difficult; complex; and expensive matter – designed to stop frivolous and vexatious cases. In general it is only Landlord Associations who have the organisation and income required to bring JR’s. Like the Local Authorities, Landlord Associations have no time for landlords who are not interested in the law; applaud landlords who try their best to provide appropriate accommodation; and want to work with those landlords who are not as fully versed in ‘landlording’ as they should be. It is where a Local Authority brings in Discretionary Licensing as a blunt tool to control all the perceived problems in an area that Landlord Associations become involved. It was for this reason that some while ago the Southern Landlords Association (SLA) brought a Judicial Review against Thanet District Council (TDC) for introducing Selective Licensing.
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The SLA argued that the Selective Licensing scheme was unlawful, because of the definition of Low Demand; and ASB used. Outside the court, they argued that it stigmatized landlords; with no differentiation between good and bad landlords alike. Indeed in an open letter to the local press, a local Councillor suggested all landlords were bad - not the kind expression expected for elected representatives. Whilst the High Court ruled that TDC had brought in the scheme correctly, the SLA still argues it is inappropriate. What we see time and time again are schemes put forward without adequate justification but the time trouble and expense involved with the judicial review challenge means that local authorities are getting away with posing these schemes. Instead we need new procedures allowing the Residential Property Tribunal to review the way in which these schemes are implemented. So back to the original question, does Discretionary Licensing work? One of the early schemes was Salford. First started in 2007, they are now attempting to get the 5 years extended. This would suggest it has not worked. Additionally, it is reported to have caused a shortfall of ÂŁ700k in their finances.
Southend-on-Sea considered introducing licensing, but after discussion with local landlords; tenants; and agents decided to set up a voluntary scheme South East Alliance of Agents and Landlords (SEAL). Members of SEAL are encouraged to inform the Local authority of any properties not attaining SEAL standards, and they are then able to concentrate on those persistently bad landlords using their existing powers. Bournemouth Council abandoned a plan to introduce Discretionary Licensing, on the basis that the alternative proposals include better use of existing powers, allocating funds and a member of council staff to deal specifically with the problems in the wards concerned, along with voluntary accreditation. Milton Keynes also abandoned plans for a scheme. Newham have famously brought in Licensing for every rented property in their borough. Following negotiations they are looking at a sliding scale of fees, favouring those that apply early. This scheme can only work if environmental health officers in large numbers are attracted to Newham away from other nearby authorities which, in turn, will simply worsen the position in these areas because they will have even less resources to police the private rented sector. It is not known how much they have raised, but is likely to be in excess of ÂŁ10M. Barking & Dagenham have just (Sept 1st) introduced the same scheme as Newham, as have Waltham Forest;
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Enfield proposes to follow suit, but have been delayed by a JR brought by a local private landlord. Brent have introduced a borough wide Additional License for all HMO’s, and a Selective License requirement for some boroughs. Hartlepool are proposing a scheme, even it is opposed by local tenants - on the grounds that a previous scheme was ineffective in dealing with nuisance and anti-social behaviour. But Wales are to introduce licensing across the whole country, Note that this is only a selection of the schemes around the country. So it would appear that local authorities are now favouring the ‘blunt tool’ approach, and are starting to use licensing as fine tuning along with other methods – the way it was intended all along. It is worth repeating that under Discretionary Licensing: • Fees collected can only be used for the extra administration brought about by the actual scheme; • Local authorities have many tools already available to them, the only extra Licensing brings are:• Mandatory Electrical Certificates (very sensible); • A register of landlords. This was recommended in the Rugg Review (published 2008), but not taken up by the Coalition Government; • Compelling all landlords to have written agreements (again, very sensible), and possibly to reference prospective tenants – sometimes helpful.
forcement in England. The current system is broken. Instead we need robust self regulation for the good compliant landlords outside the local authority control. This will free up resources allowing local authorities to deal with criminal and poor quality landlords. This needs statutory underpinning to be effective. We urge local authorities to continue working with landlords, including through Landlord Associations, and to consider accreditation as a method to assist those landlords who un-intentionally make mistakes through lack of knowledge. That would then allow local authorities to concentrate on the real ‘rogue landlords’ and to license only them. We urge landlords to maintain their standards; to use written agreements; to have Electrical Certificates; and to become accredited to prove they have the knowledge required. But above all to be prepared to report real ‘rogue landlords’ who are in a minority, but who can bring down the reputation of all landlords. The motto of Local Authorities; tenants; and reputable landlords should be ‘Let the Criminal Landlord beware’. Stop press - the Government have just (October 20th) introduced changes to the Section 8 Notice to Quit, allowing them to evict tenants guilty of Anti Social Behaviour. The fact remains the same, that landlords can only evict tenants, not prosecute them separately. More about this in the next issue. Peter Littlewood; Director the Southern Landlords Association. ⌂
Other matters to consider are: • If Anti Social Behaviour is indeed a problem a landlord is very limited in what they can do. They can, and should, manage their property to minimize problems; but if ASB persists they can only evict a problem tenant(s), thus merely moving the problem to another landlord. Naturally referencing might help. The only people allowed to tackle ASB are the Police and/or the local authority. Most good landlords are keen to work with local authorities to improve an area. The problem is finding the ‘rogue’ landlords, and dealing with them is exasperated by the lack of finances suffered by most local authorities. What we need is a complete rethink of housing en-
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COME AND SEE PETER AT THE LONDON L.I.S ON THE 13TH NOVEMBER, GIVING TRAINING OVERVIEWS. TO BOOK TICKETS, VISIT THE WEBSITE ON: LANDLORDINVESTMENTSHOW.CO.UK
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FINANCIAL
LEVERAGING IN PROPERTY INVESTMENT
Karen Bennett - Shawbrook Bank THE PROS OF LEVERAGING
LEVERAGING IS THE PRACTICE OF AN INVESTOR MAXIMISING THE IMPACT OF A CASH INPUT INTO PROPERTY BY USING BORROWED FUNDS.
With a more buoyant economy and greater confidence amongst investors, leveraging is a tool that is once again rising in popularity. Borrowers and lenders hold varied views on leveraging, and it is important to address both, analysing the pros and cons of this technique.
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Beginning with the advantages, leveraging improves the return on capital and makes your money work harder as the borrower earns more from the equity. It helps the investor grow a larger portfolio more quickly, resulting in greater cash flow. It is a simple principle that is used throughout all businesses, not just by property investors. A high-profile, classic example is that of Manchester United. The club’s owners, the Glazers, used heavy leverage to buy the football club and secured an excellent return for their equity. They used cash flow from the football club to service that debt, paying down what they owed to increase their equity value.
AND THE CONS... A crucial aspect for investors planning to leverage is being able to understand their ability to withstand shocks, such as an interest rate rise. Investors need to service their debt irrespective of whether property prices are going up or down. For example, if you are paying 7 percent debt on a portfolio while borrowing at 75 percent LTV, you would need an income of 6.6 percent gross yield from your property merely to pay the debt and break even. That is gross yield assuming 20 percent of running costs, such as insurance and wear and tear. All that remains after wear and tear and costs is going towards servicing debt, resulting in no free cash flow. Landlords tend to focus on the yield they can get from portfolios but should look at debt affordability in terms of yield needed to service the interest. It brings it home clearly!
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FINANCIAL
Property investors also need to be wary of shortterm house price fluctuations – house prices can go down as well as up, but the debt level won’t go down. Long-term trends are positive for property but the debt does have to be serviced. Higher leveraged landlords are therefore more at risk from having to sell in a falling market as they cannot maintain the debt. Another disadvantage is that higher leveraged landlords don’t have as much freedom as less leveraged landlords. The former have a stakeholder (the lender) so if, for example, they wish to carry out some development work on their property, they will have to gain the approval of the lender. This obviously limits the landlord’s independence and flexibility. Higher leveraged landlords will also be paying more for their money as leveraging means higher LTV which equals higher debt costs.
CONSIDERATIONS FOR LEVERAGING Most professional landlords would aim to keep their overall portfolio sensibly geared at 60 to 65 percent, although within the portfolio there will be certain properties where higher gearing is appropriate. The regulatory environment is fundamentally different post-credit crunch and few lenders allow constant re-mortgaging. A good level of leveraging will get borrowers the best returns: around 60-65 percent is a medium space in which to operate as there isn’t too high a level of risk. This provides the debt in order to grow the portfolio as well as the headroom to withstand shocks, striking a sensible balance. Shawbrook does not place a limit on the number of properties per client, whereas some lenders specify a maximum per individual. We therefore get brokers approaching us so their clients can leverage. Although we do not limit a client’s properties, we do strongly recommend taking a sensible, sustainable view of leveraging and work on a case by case basis.
FINAL NOTE To conclude, it is clear that deciding whether leveraging is the right strategy depends almost completely on the borrower. Investors need to understand and be clear about their appetite for risk before using leverage as a growth strategy. The overwhelming view appears to be that there is a place for leveraging but it is imperative that it suits the client and that they are suitably experienced to manage the risk. ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. EARLY REPAYMENT CHARGES APPLY. A BROKER FEE MAY APPLY. ⌂
LANDLORD INVESTOR
November 2014
42
FINANCIAL
HOW TO GROW A PROPERTY PORTFOLIO FASTER THAN YOU THOUGHT POSSIBLE Kevin Wright - Positive Property Finance
THE PROBLEM The problem with buying property as an investment is that you need capital to put down as a deposit – and then it’s locked into your property for six months or more, until you can re-mortgage. The days of ‘no money down’ mortgages are gone; you need a deposit to get any mortgage these days. At this rate you’ll be lucky to manage to add two properties a year to your portfolio, unless you have a big nest egg. The secret is not to lock your capital into a mortgage, but to use creative financial packages specially developed for property investors.
DO YOU FIT THE BUY-TOLET LENDER'S TYPICAL PROFILE? It’s easy to imagine that lenders love property investors, because they have plenty of assets so their mortgage is secure. Wrong! Buy-to-let lenders like their clients to have a nice secure full time job earning a minimum of £25,000 a year and have their own cash for deposits. They don’t like you to have too many properties as that may mean you will soon leave your nice secure job, which makes them nervous. They expect you to be able to put 25% down on each property and then to go away and just pay your mortgage each month until it’s paid up. They don’t like people who want to re-mortgage their property after six months when the property has been refurbished and is now worth a lot more. Serious property investors are going to find it tough. Since the flexible mortgage products were withdrawn from the market in 2008 when people talk about ‘no money down’ strategies what they are really describing is a method of concealing the true purchase procedure from the lender. This is fraud and any legitimate investor, bridging financier or credible
November 2014
LANDLORD INVESTOR
ADVERTORIAL FEATURE
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mortgage or finance broker will have nothing to do with it. However, there are creative means of putting togeth27744 Positive Propery Finance A4 ad.qxp 26/06/2014 12:14 Page 1 er finance packages that are entirely legal and don’t put the lender, the purchaser or the property at risk.
Akhtar Khan used bridging to buy a property that had fallen into disrepair, had a kitchen fire and was unmortgageable. The owners had two charges on the property of £50K and £55K, although the property was only worth about £75K.
The bridger released 65% of market value (£125K) on completion, releasing £81,250, which covered both the purchase price and most of the refurbishment costs. The finance structure that Kevin Wright put in place made this possible without Akhtar needing a substantial cash investment to purchase the property outright.
FINANCIAL
CASE STUDY
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To be successful in bridging finance you need an experienced bridging lender and a solicitor who understands bridging finance and can complete transactions in days, rather than months.
Positive Property Finance has a wide range of lendAkhtar negotiated the second charge on the proper27744 Positive Propery Finance A4 ad.qxp 26/06/2014 12:14 Page 1 27744 Positive Propery Finance A4 ad.qxp 26/06/2014 12:14 Page 1 ty down to £15K and ended up paying a total of £65K ers and will match you up with the right one for your property deal. They can also introduce you to solicfor the property. itors who understand bridging finance and will get things moving quickly. ⌂
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27744 Positive Propery Finance A4 ad.qxp 26/06/2014 12:14 Page 1
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Refurbishment costs: £15,000 Exchanged with key access and 4 weeks to carry out the refurbishment. On completion of the refurb the bridger valued at market price of £125,000.
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LANDLORD INVESTOR
November 2014
44
YOUR PROPERTY PARTNER
GEORGE ELLIS IN THE SPOTLIGHT Marie Parris George Ellis Property Services Landlord Investor caught up with Marie Parris, Founder & Director of George Ellis Property Services, to discuss why the company has recently undergone a re-branding as well as gaining her insight into the current property market.
HOW LONG HAVE YOU BEEN ESTABLISHED? Ten years.
TELL US BRIEFLY ABOUT GEORGE ELLIS We let and manage property across London. We offer a range of management and lettings services that offer solutions and not promises. We also do our own tenant referencing and inventories, not just for our letting clients but anyone who requires this service. In addition to this we provide educational training courses for landlords who prefer to selfmanage. We are a regulated agency with client money protection and all the other things you would expect from a professional established agency.
November 2014
LANDLORD INVESTOR
HOW ARE YOU ABLE TO PROVIDE A LETTING & MANAGEMENT SERVICE ACROSS LONDON? Most of our instructions are given to us on a sole exclusive basis. We work with personally selected viewing representatives – so when we have an instruction we get them to do the viewings and once a prospective tenant makes an offer, we will qualified them before notifying our landlord. If the landlord is okay in principle, we take over the entire process from there and liaise directly with the tenant. We do the referencing, contracts, check-in and management. We would not be able to facilitate the viewings otherwise. The benefits to the landlord is that your property is getting maximum exposure, with viewings being arranged quickly, but you work with us on our terms – which means no renewals fees. Tenants establish a relationship with us early in the process.
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I am not aware of any letting & management agents that will also support landlords by offering training courses. When we initially started this is what we did, it was our clients who wanted us to manage their properties.
WHY DID YOU DECIDE TO REBRAND? I grew very tired of our old logos and colours, we were also opening another branch in Beckenham, but more importantly when we would exhibit at events, landlords would refer to us as “the training company” – which is fine, but it is just one of our core six areas. We are different, and I am okay with that, but it has taken some time to filter this message through. We have a new website and a new domain name.
WHO DID YOUR BRANDING? I first used a branding company, but it really was not working for me. I spent two hours in a consultation with them and was disappointed with the results – they did not get us. I was having a conversation with Tracey Hanbury and she suggested that lismedia assist. I had meeting with Craig in our new office and this was one of the three options for our logo change and I really liked it. Craig worked with me getting it to how I wanted it and was very prompt and attentive and did not make me feel like the pain I was - I swapped and played around with colours. It is simple but effective and the colours are not widely used. A bit like us hassle free service, experienced and different.
WHY DID YOU OPEN A NEW BRANCH IN BECKENHAM? We had seen this unit late last year and our managed portfolio was growing in the areas of South London and East London. It is easier going through the Blackwall Tunnel when visiting East London instead of through town. A couple of staff members where happy and there are also some exciting things that will be happening in the town.
DO YOU THINK THAT ONLINE AGENCIES WILL TAKE OVER? No, but I do not think you need a shop front either to survive in this business. Our Dover Street office is not. The local planning department took a lot of time to agree change of use for the new shop and we are not on the high street (that was a strategic move). There are 18 agents – that is an overkill and no high street needs that. At our Beckenham shop we offer the residents in the community of BR3 something different that no agency has ever done before and if our next branch is shop front I will do so again.
WHAT DO YOU LIKE ABOUT THE INDUSTRY? It is a people business and I genuinely like people. I love the variety and diversity of our business. I do think it is an honour when a landlord entrusts us with their biggest asset to manage and that is why I inspire our team to always have three main objectives in mind. No rent arrears, no litigation and property returned to client in good condition. So far we have achieved that for all of our clients.
DO YOU THINK AGENCIES SHOULD BE REGULATED AND FEES CAPPED? It was good to see that all letting agencies now have to belong to a redress scheme. I do think there should be some compulsory minimum educational levels for all staff. It is a very complex area and agents must understand that their negligence can make a landlord suffer. Usually it is those small detailed points that catch other agents out. With regards to capped fees – I am strongly against this. Why any government would want to consider introducing this, is draconian. I have never favoured renewal fees, but companies must be free to assess their own charges. I wonder whether they would insist on making it law for all food in supermarkets to be the same price? Doubt it, but as an industry we have to be more professional and transparent in our dealings with landlords and tenants. I think if there were minimal educational standard it would raise the impression others have of us.
LANDLORD INVESTOR
November 2014
YOUR PROPERTY PARTNER
WHO ARE YOUR COMPETITORS?
YOUR PROPERTY PARTNER
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WHAT TIPS WOULD YOU GIVE TO A LANDLORD ON FINDING A NEW MANAGEMENT AGENCY? • Check they have client money protection
TELL US SOMETHING ABOUT YOURSELF WE DO NOT KNOW? I once auditioned for Homes by the Sea after a broadcaster friend recommended me. I also have 8 children – okay they are my god-children *laughs* ⌂
• Make sure their insurance policies are up to date • Make sure they are regulated – member of ARLA or similar. • Ascertain their arrears ratio • How promptly do they send you your rent. Do they also attached trade invoices with them? • Ask if they have lost managements in the last 12 months to any other agent and why • Ask what makes them different • Find out how they work, are staff on targets, visit their offices, are files well documented and in order, keys kept locked and coded, security for computers etc there is a whole lot of stuff to look out for. • Are they prepared to be flexible with their services to accommodate you? • Is the director of the firm visible, approachable? • Some people think it is expensive to hire a professional but wait until you hire an amateur!
DESCRIBE A TYPICAL DAY? No such thing. But I will give you an insight into my day yesterday. I get up most mornings by 6am. I like to run in the mornings if time and diary permits. I started off in Beckenham, catched up with team setting agenda for the day. I had a check out in Rotherhithe (yes I am very hands-on) and then had to drive to central London to meet an overseas business man who has just purchased an apartment in Marble Arch and is leaving me to deal with the entire remit – refurbishment, consents, letting and management. We had a meeting with the builder at the apartment I selected to do the refurb. I will be responsible for choosing the furniture and doing what we do best the letting and management of the property. I popped into Dover Street, answered some emails, had lunch in my car! Got back to Beckenham to interview a possible new staff member. A couple of clients popped in – which is always nice to see. Lots more work finally tiredness took over and I quit the office at 9pm.
November 2014
LANDLORD INVESTOR
George Ellis Property Services can be contacted on:
WEST END 26 Dover Street Mayfair London W1S 4LY Telephone: 0207 763 7200
SOUTH LONDON 261 Beckenham Road Beckenham Kent BR3 4RP Telephone: 0208 778 9686 Email: info@georgeellis.london Web: www.georgeellis.london
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advertising • branding • brochures • design for print flyers • leaflets • pop-up stands • roller banners stationery • web design
for all enquiries about design work, print or digital email craig@landlordinvestmentshow.co.uk
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TAX ADVICE
ZIP IT SHRIMPY... RITA4RENT And that is directed at Moira Stuart for saying “tax doesn’t have to be taxing.” With one of the most complex tax systems going, and reports last year of 1 in 3 landlords not declaring rental income, tax obviously is taxing to a huge number of individuals!
PICTURE THIS... You tried to sell your house, and no buyers were able to match your asking price, or there simply was no demand. You needed to move house, and decided instead to let the property to tenants.
OR PICTURE THIS... You inherited a property. The thought of selling the property was too much at this stage, and felt it best to let the property to tenants, whilst decisions were made as to the future of the property.
FINALLY PICTURE THIS... You moved in with your new partner, and rather than sell your old property, you felt it may be worthwhile letting the property to tenants before committing to selling the home.
November 2014
LANDLORD INVESTOR
These circumstances are all too common when dealing with Let Property Campaign cases where there has been undeclared rental income in the past. Of course, there will always be those who hope to not be found out, and those who deliberately evade their obligations. If you have taxable rental profits to declare, it is an offence not to declare this to HMRC… simple as that. However, the landlords we regularly encounter in the scenarios above have been subject to little education on the tax system.
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WE RECOMMEND THAT ALL NEW AND EXISTING LANDLORDS CARRY OUT THE FOLLOWING ACTIONS:
al income was first received. As a landlord, you may either register for self assessment online, or alternatively by filling out a form named SA1.
TAX ADVICE
• Understand their tax obligations and ensure they are compliant. • Join a landlord association to ensure you are compliant in all other areas. Here at RITA4Rent, we recommend the Residential Landlords Association.
THE BASICS: If you let a property to tenants, and you receive taxable profits of above £2,500, or receive rental income before expenses of above £10,000, most landlords will need to report this via a self assessment tax return each year, and you will need to fill in the property pages within. If the property is held jointly, your share of the rental income and expenditure would be reported on your tax return, with the joint owner reporting their share separately if required. In a nutshell, all taxable income, including rental and expenditure should be reported on your self assessment tax return. If a shortfall of tax arises, then payment needs to be made to HMRC. If you have paid too much tax, then a refund can be requested from HMRC. There is a common misconception that if you are employed, profits below £2,500 are not taxable. This is NOT the case. It still needs to be reported, but instead, under certain conditions, the profit may just be reported to HMRC, as opposed to filing a self assessment tax return. HMRC do not operate on a calendar year basis. They operate on what is referred to as a tax year. A tax year runs from 6th April one year, to the 5th April the following year. Once the tax year ends, there are two main deadlines to bear in mind, which follow the 5th April end date: • 31 October – Due date to file your self assessment tax return if filing on paper. • 31 January – Due date to file your self assessment tax return if filing online. Any tax liabilities arising must also be paid by 31st January. Registration should be carried out by 5th October following the first tax year end date where the rent-
EXAMPLE 1: Mrs Kane let a property to her tenants Mr and Mrs Vertonghen, with the tenancy beginning on 1st May 2013. She received rental income of £15,000 and incurred expenses of £3,000. Given the property letting began in May 2013, this falls under the 2013/14 tax year, which runs from 6th April 2013 to 5th April 2014. Mrs Kane prefers to file online, and therefore needs to prepare a self assessment tax return by 31st January 2015. The tax owed also needs to be paid on this same date. Please note, Mrs Kane needed to register for self assessment by 5th October 2014.
EXAMPLE 2: Mr Eriksen let a property to his tenants Mr and Mrs Lennon, with the tenancy beginning on 1st May 2014. He received rental income of £20,000 and incurred expenses of £8,000. Given the property letting began in May 2014, this falls under the 2014/15 tax year, which runs from 6th April 2014 to 5th April 2015. Therefore, as at the time of this publication, this tax year has not ended as yet. The tax return may be prepared after the tax year ends on 5th April 2015, up until the filing deadline. Mr Eriksen prefers to file online, and therefore needs to prepare a self assessment tax return by 31st January 2016. The tax owed also needs to be paid on this same date. Please note, Mr Eriksen needs to register for self assessment by 5th October 2015.
LANDLORD INVESTOR
November 2014
TAX ADVICE
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A FEW EXTRA POINTS WORTH BEARING IN MIND: • Any losses arising may be carried forward against future rental profits. • If you owe less than £3,000 on your self assessment tax return and you receive PAYE income (such as a salary or a pension), under certain conditions, you may be able to add the tax liability to a future PAYE coding notice. However, your tax return must be filed by the less publicised deadline of 30th December. Therefore, if you owed tax of £800 on your 2013/14 self assessment tax return, and you met the other conditions, you may be able to add this liability to your tax code which comes in to operation from 6th April 2015. The payment would be spread over the course of that next tax year, and therefore your net monthly pay each month would be reduced, as opposed to having to find a lump sum payment of £800 on 31st January 2015. • If you owe over £1,000 when preparing your self assessment tax return, you may need to make additional “payments on account.” These are payments in advance towards any potential tax owed in the following tax year. If when you prepare your 2013/14 tax return it is discovered that payments on account are due in addition to the standard tax owed under self assessment, these additional payments will be due on 31st January 2015 and 31st July 2015. • Should you sell the property, capital gains tax may arise, and it is recommended to seek professional advice here. • You should keep supporting documentation should HMRC enquire into your tax affairs, and we would recommend keeping a spreadsheet of income and expenditure. Of course, landlords with larger portfolios may wish to consider a more advanced software package.
November 2014
LANDLORD INVESTOR
WHAT INFORMATION IS REPORTED ON THE PROPERTY PAGES OF THE TAX RETURN? This is a detailed area, and for the purposes of this feature, we shall provide a very general overview. You must report on all the income and expenditure relating to the rented property in the relevant tax year. Tax is paid on rental profits, which is ascertained by subtracting all allowable rental expenditure from rental income. Tax is paid on your profits at a rate of 20%, 40% or 45% depending on your other taxable income. However the position may be different if all your taxable income is within your personal allowance limit. There are a vast array of expenses which may be reported on your tax return, such as mortgage interest, insurances, repair costs, letting agent fees, and wear and tear allowance on fully furnished properties. Of course, this is just a very brief list, and if you are in any doubt whether a cost is claimable, it would be advisable to seek professional assistance. Confusion often arises as to whether a cost is of a capital or a revenue nature. If it is the former, you may not claim this cost against rental income, but may instead claim the cost against a future potential capital gain. If it is the latter, then this is fine to claim against rental income. As a for instance, if revenue repairs are carried out in a bathroom, then this will be fine to claim against rental income. However, if an extension is built which houses a brand new bathroom, then this would be an improvement and treated as a capital cost, and therefore only claimable against a future capital gain on sale of the property. Other capital costs include purchase costs such as solicitor’s fees and stamp duty.
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A SELECTION OF DATES FOR YOUR DIARY IN THE NEXT 12 MONTHS:
TAX ADVICE
30 DECEMBER 2014 The due date to file your 2013/14 tax return online should you wish to add your self assessment tax liability to your 2015/16 tax code, assuming you meet the criteria.
31 JANUARY 2015 The online filing deadline for your 2013/14 self assessment tax return.
31 JANUARY 2015 Final Deadline for paying your 2013/14 self assessment tax liability.
31 JANUARY 2015 Due date for making your first “payment on account” as an advance payment towards the 2014/15 tax year if applicable.
28 FEBRUARY 2015 If you miss the 2013/14 payment deadline and do not pay your tax by 31st January 2015, this is the deadline to avoid paying a penalty of 5% of the tax owed.
30 APRIL 2015 If you miss the online filing deadline of 31 January 2015, this is the deadline for filing your 2013/14 self assessment tax return in order to avoid the £10 a day penalties.
31 JULY 2015 Second due date for those who are liable to “payments on account,” as this is when the second payment is due towards the 2014/15 tax year.
31 JULY 2015 The deadline to renew your tax credits should this be applicable to you.
5 OCTOBER 2015 Should the 2014/15 period be your first reporting year of rental income, this is the latest date you should register for self assessment if you need to prepare a tax return for the 2014/15 tax year.
31 OCTOBER 2015 The filing deadline to submit your 2014/15 tax return if you opt for paper filing.
SUMMARY: It is of utmost importance that landlords understand their tax obligations, so they are not penalised by HMRC, and to ensure they are paying the correct amount of tax. Landlords are firmly in the sights of HMRC, and with the information they hold, there is nowhere to hide. The Let Property Campaign serves the purpose of reporting past undeclared rental income. But if you are new to being a landlord, please ensure you understand your full tax obligations, and ensure there are no surprise letters waiting for you at the front door in the future! This feature is courtesy of RITA4RENT, on behalf of the RLA. RITA (Rental Income Tax Advisors) specialise in property taxation and is a partner of the Residential Landlords Association, the national voice for landlords. RITA is regulated by the Association of Chartered Certified Accountants. Contact RITA at www.rla.org.uk/tax
LANDLORD INVESTOR
⌂
November 2014
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LEGAL
SKIP OR STORE? What to do about goods left behind after a tenancy. Paul Walshe, Partner - Moore Blatch Personal possessions left behind at the end of a tenancy is an infuriatingly common headache for landlords. This article looks at the legal and practical options available.
THE PROBLEM Even if the tenant leaves possessions behind, he is still the legal owner. If a landlord sells or disposes of them the tenant can potentially sue them for conversion or trespass to goods. Legally, the landlord becomes what’s known as an “involuntary bailee”. A bailee owes certain duties in respect of the bailor’s goods. Think of the situation where you take your suit to be dry cleaned. You are the bailor and you leave your suit with the dry cleaning company (the bailee) and expect them to look after it and clean it. They have a legal duty to take reasonable care with your suit, not to sell it etc. Whilst a landlord hasn’t invited the tenant to leave items at the property the law still requires that he does not recklessly damage or destroy the goods.
THE SOLUTIONS ABANDONMENT If goods are abandoned, the person left with them can sell or dispose of them. On the face of it, that’s useful for landlords. Unfortunately, two elements must be established; first, that the goods are physically abandoned (fairly obvious in most cases) but, second, an intention by the owner to abandon them. Usually the landlord won’t know whether the tenant intends to abandon them or return and collect them so it’s difficult in practice to rely on abandonment.
TENANCY AGREEMENT The best solution is to have a clause in your tenancy agreement setting out exactly what will happen if goods are left behind. Therefore, many landlords specify that all goods left at the property are deemed abandoned and can be disposed of immediately. However, tenancy agreements are subject to the Unfair Terms in Consumer Contract Regulations 1999 which means each clause must be fair. Such clauses are likely to be struck out if challenged at court. Therefore, it’s safer to have a more balanced clause, for example that the landlord will store items for a month and may then dispose of them (the tenant paying the costs incurred).
November 2014
LANDLORD INVESTOR
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WARRANT OF EXECUTION
TORTS (INTERFERENCE WITH GOODS) ACT 1977 The law does not expect a bailee (landlord) to hold onto someone else’s goods indefinitely. A procedure is provided under the Torts Act allowing notice to be served requiring collection of goods and that they will be sold if not collected. The notice must be in writing and served by post – recorded or special delivery not ordinary first class. It should list the goods and state that they are ready for delivery, give the landlord’s name and address and where they are held. It should also give a date after which the landlord intends to sell them and state that any costs will be retained from the sale proceeds. The notice period is not specified but should be ‘reasonable’, e.g. 28 days. The Act allows the landlord to sell goods if he has failed to trace the tenant after taking ‘reasonable steps’ such as writing to any addresses given in the referencing process (employer or guarantor), contacting them by mobile phone or email or instructing a tracing agent - many offer low cost no trace no fee services.
THE PRACTICAL APPROACH
Also, the landlord can counterclaim against the tenant for any breaches of the agreement – like leaving goods there which the landlord has to dispose of - and any rent arrears.
LEGAL
If you apply for a possession order to end the tenancy and there are rent arrears you should obtain a money judgment at the same time. You can then ask the bailiff sell any goods in the property at the time of the eviction to satisfy the judgment. In practice, the bailiff will only take items that have a resale value so is unlikely to clear the property of all items left behind. Also, you won’t know in advance whether anything will be left at the time of eviction.
new ones. So, in most cases it’s not worth the cost, time and effort of bringing a small claim.
EVIDENCE It’s vital for landlords to take photographs of everything left at the property. One of the biggest problems in dealing with these claims is lack of evidence. Photos are invaluable evidence in court cases so landlords should take as many photos as necessary to show every item left behind, exactly as the landlord finds them.
JUDGE THE RISK When deciding whether to store or dispose of items consider the likelihood of the tenant wanting them back. The higher the value the more likely they will sue if they are disposed of. Also be mindful of irreplaceable items like photograph albums, data storage devices, personal papers, handwritten letters and children’s artwork. Tenants can get very angry if they are thrown away and they are usually easy to store.
CONCLUSION Items left behind is a very common problem. The safest course of action is to follow the process set out in the tenancy agreement. The Torts Act provides a legal route to sell items of value but, in practice, many landlords simply dispose of them. Take lots of photos and an inventory if using this option and weigh up the risk factors. Landlords can waste a huge amount of time and money dealing with unnecessary litigation if they get it wrong and the tenant sues. ⌂
Often, items left behind are “junk” like old clothes, crockery, food, magazines etc with no resale value. Legally disposing of goods takes time and may cost more than they are worth. Landlords therefore often decide simply to dispose of them. But if they do, they risk the tenant later claiming damages for conversion or trespass to goods. In practice, it is often no more than a threat because the tenant is only entitled to sue for the actual value of the items, not the amount it would cost to buy
LANDLORD INVESTOR
November 2014
54
REFURB
TAX-FREE RENT FOR LIFE? David Humphreys - Property Auction Expert
YES, YOU REALLY CAN LEGALLY ENJOY TAX FREE RENT FOR LIFE FROM YOUR BUY TO LET PROPERTIES, STARTING THIS YEAR. November 2014
LANDLORD INVESTOR
This is not a get-rich-quick scheme but brings together a number of tried and tested strategies, resulting in either a reduction in your rental tax liability or a position where no tax at all is payable. The second benefit is that you are also able to generate tax free capital gains by selling a property each year to release your CGT exception, currently ÂŁ10,900 per person. The third benefit is that following re-mortgaging the property you are generally able to release most if not all of the money you initially invested, in fact it is possible to generate a "cashback" where the re-mortgage monies exceed all what you have invested.
55
REFURB
HOW IS THIS POSSIBLE?
CREATE A NEW MODERN DES RES. If you buy a property, which is distressed or rundown but "capable of being let" when bought, and then renovate or fix it up to a high standard, the value after fixup should be greater than the combined cost of buying, including legals, and building works. When re-mortgaging, your mortgage will be based on the fixed up value. A mortgage of 75-80% of the fixed up value can be equal or even greater than all the cash invested resulting in "no money left in" the deal, NMLI. Because you have increased the value by more than the cost of fixup, you will make a capital gain if you sold the property. By careful choice of property and extent of fixup that capital gain can equal all your family/partners CGT exemptions.
STARTING WITH A 'NICE DES RES'! Quite simply by buying and fixing up distressed property of which there are thousands, and often tens of thousands in every major town & city in the UK, altogether nearly 1 million throughout the UK. Even more rewarding is the fact that the braver you are in your buying decision, buying properties which need very extensive fixup's rather than a quick makeover, the easier it is to achieve the three objectives whilst at the same time, fixing up a property that is blighting the neighbourhood.
Because the property was "capable of being let" when bought the fixup costs can be split between Revenue and Capital for tax purposes reducing your rental tax liability. Revenue costs are deducted from the rent before income tax is payable, capital costs are deducted from any capital gain made on the sale of property before capital gains tax is assessed.
LANDLORD INVESTOR
November 2014
56
REFURB
The Revenue cost is set against the rental income that would be taxable under normal circumstances. By normal circumstances, I mean after deducting all other allowable costs such as mortgage interest, maintenance & repair, letting & management fees, insurance & statutory checks etc. The Revenue element can include "the repair and renovation of any subsidiary part of the whole" that would be allowed as a Revenue cost after the property was let, even if the repair is carried out following purchase and before the first let by you, the new owner. These repair/revenue costs do not apply to any repairs you carry out on your principal private residence, your home, prior to the first letting.
We specialise in buying at auction, repairing and renovating distressed terraced houses and budget on spending £25-30 K outside London and, as with many tax efficient schemes, the devil is in the detail. By breaking down the overall work into literally dozens of small jobs, following completion, we are able to split the cost roughly 70/30 in favour of Revenue. As a result, if the cost was 30K, the Revenue element would be around 21K. The investor can then collect 21K in rent from their entire portfolio before actually needing to pay any tax on the rental income.
For example, replacing a bathroom suite with one of equivalent standard would be a Revenue cost, whilst the installation of an extractor fan in the same bathroom would be a Capital cost, because the bathroom suite existed, but the extractor fan is new work and an improvement. Fitting a Jacuzzi bath though would make the work a Capital cost because a Jacuzzi would be considered an improvement. Broadly speaking, this is the rule behind the Revenue/Capital split with the exception of replacing timber or metal framed single glazed windows and doors with UPVC. The entire cost of installing UPVC double glazed windows and doors can be treated as a Revenue expense, even though it could logically be regarded as an improvement. HMRC, in their wisdom, have deemed replacing with UPVC to be a repair, as you are using "modern technology"! You may be able to apply this logic to the replacement of coal burning fires which were de rigueur 100 years ago with a gas fired central heating system which is today's "modern technology". I hasten to add that I have not tried to categorise a new central heating system where one did not exist before as a repair! If you own a number of properties, this Revenue cost can be set off against your entire rent roll before any tax is calculated. In the event that you sell one of your renovated properties, you keep any tax losses that are technically outstanding. It is of course necessary to keep detailed records of what you are doing, including before and after photographs and receipts for all the work & materials. The costs also need to be broken down between each individual job. Please remember I am not a qualified Financial Advisor and therefore this article does not constitute financial or tax advice. However, I have operated this Strategy on my and my Client Investor’s properties with a Chartered Accountant acting for us. HMRC has challenged individual Tax Returns and, at worst, we have simply re-allocated the cost to “Capital” and recovered on sale by setting the cost against the Capital Gain reducing that tax liability. The concept is simple; the execution needs specialist knowledge & experience. If this strategy interests you, first action, call/email me for more help & information on “How To”, or come to my Free Seminar at the next Landlord Investment Show. ⌂
November 2014
LANDLORD INVESTOR
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INVESTMENT
IS SOUTHAMPTON SET TO BE THE MOST LUCRATIVE BUY-TO-LET LOCATION? Neil Carpenter - Leaders
BUY-TO-LET INVESTORS MIGHT FIND THEY ENJOY THE GREATEST RETURNS OF ALL IF THEY PURCHASE PROPERTIES IN SOUTHAMPTON OVER THE COMING MONTHS AND YEARS.
The south coast cities are some way ahead of London, which is widely regarded as one of the most booming property markets not only in the UK, but in Europe. The capital is set to enjoy a 33 per cent rise in house prices in the same period.
New research by Rightmove has found average house prices in England and Wales are set to increase by 30 per cent over the next five years, with Southampton among the locations where the greatest expansion is expected.
In comparison with the current low interest rates on offer from banks and building societies, the chance to secure an investment that returns in excess of 30 per cent inside five years is one that should be grasped.
Indeed, the Hampshire city is predicted to witness a 42.9 per cent hike in house prices by 2019, making it the most lucrative market in the country.
If you wish to receive free, impartial advice from experienced and knowledgeable buy-to-let experts, please visit your nearest Leaders branch today. ⌂
November 2014
LANDLORD INVESTOR
On a regional basis, the south-east was identified as the top place to buy a property with a view to making a profit on it in the next five years. Overall, prices are predicted to rise by 37.3 per cent by 2019, compared with a national average of 30.2 per cent. The research highlighted areas that are within commuting distance of London are likely to witness the sharpest spikes in property values in the near future. People who are thinking of making a buy-to-let investment should bear this in mind. While rental income and yield is clearly of substantial importance, nobody should overlook or underestimate capital appreciation, as this can deliver a huge return in a relatively short period of time.
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INVESTMENT
IS THE HOUSE PRICE BOOM SPREADING FROM THE CAPITAL? Robin Pilley - CXG
THERE HAS BEEN A LOT OF PRESS HEADLINES RECENTLY ABOUT THE LONDON BUBBLE AND PROPERTY PRICES FLATTENING OUT IN LONDON AND THE SOUTH EAST. It has made investors very jittery about continuing to buy investment properties in this region. Matthew Pointon, property economist at the consultancy Capital Economics said “London is looking far more like a bubble.� He pointed out prices are already very high in relation to earnings and as a consequence banks are taking a relatively cautious approach about who they will lend to. Yet, in the North of England the picture is very different. House prices are still 40% below the housing peak of 2008. Whereas in London they are still 40% above the housing boom of 2008. In truth, there are property hotspots popping up all over the UK as the so called property boom started to spread beyond London from the beginning of last year. In the first half of this year the
November 2014
LANDLORD INVESTOR
average value of a home in Britain increased by 6.5%. However, there were regions, for example Salford in Greater Manchester where house prices increased by 12%. Manchester outperformed London last year with a capital growth rate of 18%. This trend looks set to continue as many regions in the north of England still offering very attractive returns for the prudent investor of between 6 and 10%. Whereas in London yields have reduced in some cases to as low as 2 or 3%.The lessons of 2007 do not appear to have been learnt as there still seems to be a number of investors who are continuing to purchase at these minimal returns and should there be a correction in the market they will have trouble servicing their mortgages as rents are beginning to flat line in the south east and interest rates are predicted to increase early next year and a number of them could turn into motivated sellers which may continue to depress house prices in this region.
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The talk of rent controls also seems to be advocated in the London area as well as the new LHA (Local Housing Allowance) restrictions will also have a detrimental effect on rents.
Nationwide, Britain’s biggest building society said “property values have been rising for the longest period since the financial crisis in 2007.” They pointed out that there is huge demand for housing all over the UK and this has spread out from London which the already believe to be in ‘bubble’ territory. They also stated that the gap between the capital and the rest of the UK is at its widest in decades and logic would lead you to believe that it will narrow over the next ten years.
INVESTMENT
It therefore appears to me that investors should be looking further north as, the returns are so much more attractive. Property purchase prices in the North offer much lower entry points and the market still seems to have legs for another 3-5 years of double digit growth, which will bring a much needed balance to the property market in the UK. The Chinese are already starting to invest heavily in the North West as major regeneration programs are being put in place including the BBC’s move to media city yet, homes around this area still cost around ¼ of those in London. With the recent Scottish referendum resulting in political debate about how other UK regions should be given more devolved power and more autonomy to make decisions it seems very likely that the big Cities such as Manchester, Liverpool, Leeds and Birmingham will all have a greater say in how local funds will be spent and it could well lead to more regeneration opportunities in these areas. Experts believe that a boom in the North West will last beyond 2016. They predicted that double digit growth will continue over the next few years.
I have written this article to not only remind investors of the pit falls of investing in properties to create a high cash flowing portfolio but also to hopefully draw their attention to opportunities in areas that they may not have considered, yet the fundamentals are in place i.e. genuine discount a good return which equates to good cash flow good capital growth potential. And your investment is well managed by a letting agent with good accreditation and who understand the properties they manage. ⌂
DON'T MISS ROBIN'S SEMINAR AT THE LONDON LANDLORD INVESTMENT SHOW LANDLORD INVESTOR
November 2014
Why Choose
CXG have been sourcing investment properties since 2006 and have gone on to win 10 prestigious industry awards in the last 5 years including the Sunday Times award for Regional Letting Agent and Property Management. As a result of this, Robin was invited to No: 10 Downing Street to meet the Prime Minister, David Cameron to celebrate small business achievements. CXG source investment properties all round the UK and work very closely with major investor developers and look to achieve genuine market discounts of up to 25% together with attractive NET yields of between 7 - 12% in areas with excellent capital appreciation potential. We offer our customers the service they deserve based on our company ethos; ethics and integrity. We moved into our new premises on the local High Street at the beginning of the year, a former derelict public house, now a stylish new office suite welcoming clients for their individual appointments. CXG are members of the property ombudsman, NALS and safe agent and offer money protection to all our clients.
Business of the Year as voted by The Chamber of Commerce (presented by TV celebrity Penny Smith)
Robin discussing the property market with Prime Minister David Cameron during his visit to 10 Downing Street Robin picking up one of 10 industry awards in the last Þve years presented by Katie Piper
Ayres Road, Manchester Purchase Price £160,000 4 Bedroom Town Houses
7.5% NET Return for 1 year Income of up to £1000 NET
PCM
For more information or to see other developments we have to offer go to
invest@cxggroup.co.uk 01440 784159
www.cxginvest.co.uk
INDUSTRY SPOTLIGHT
66
INDUSTRY SPOTLIGHT Envirovent
CONDENSATION, DAMP AND MOULD ISSUES CAN CAUSE LANDLORDS NUMEROUS PROBLEMS OVER THE WINTER MONTHS, AND IF LEFT UNRESOLVED, THEY CAN REALLY BURN A HOLE IN YOUR POCKET. Aside from all the hassle, possible redecorating and initial costs spent on trying to find a solution - not to mention the time it can take - condensation could lead to insurance claims, a visit from environmental health and, potentially, the loss of tenants. The first signs of condensation are usually streaming windows, walls and even doors. Over time this will affect the decor of the property, wallpaper may start to peel, mould (usually black) will appear on window frames, walls and ceilings, which can migrate to soft furnishings, bedding and clothes hung up in wardrobes. The main source for excess condensation in a property is simple – poor or inadequate ventilation.
November 2014
LANDLORD INVESTOR
Today, modern homes have been subject to various energy saving measures with improvements such as double glazing and loft and cavity wall insulation. Whilst helping to prohibit heat loss these improvements effectively ‘seal up’ the home, preventing the natural flow of air within the property. High occupancy levels along with the daily routine of cooking, bathing, washing etc, also add to the problem. With soaring fuel costs and ever prevalent security risks – opening a window is not a practical long term solution. The only real way to banish condensation and protect the fabric of your investment, as well as the health of the occupants, is to improve the indoor air quality with good ventilation.
TOP TIPS TO HELP MINIMISE CONDENSATION Try to keep the inside temperature reasonably constant for as much of the time as possible. The following tips should also help to reduce condensation: • Clothes should not be dried over the radiator, where possible avoid drying clothes indoors. However, for a lot of people there is no alternative to this, especially in winter. • Place clothes on a drying airer or rack in a well-ventilated room with the door shut. • Tumble dryers should be properly vented - the con-
67
INDUSTRY SPOTLIGHT
densate reservoir should be emptied on a regular basis (if the machine has one). • Check the existing extractor fans in the property, do they work? If an extractor fan cannot hold a postcard then they are not providing sufficient ventilation and should be replaced. • Its common sense but extract fans or cooker hoods should be used when cooking or bathing/showering, and keeping the pan lids on whilst cooking will also help to avoid excess steam.
ENVIROVENT TO THE RESCUE EnviroVent has a wide range of eco-friendly ventilation systems including the Mr Venty® Range of condensation control systems which work by delivering
fresh, filtered and clean air into a property at a continuous rate. The units are quick and easy to install, no redecorating should be necessary. In addition, designed to deliver high performance in controlling humidity levels in kitchens, bathrooms and utility rooms, EnviroVent’s Cyclone 7 Fan uses the lowest energy consumption and operates without the need for any user intervention. EnviroVent offers a no obligation home survey to determine and recommend the correct type of ventilation suitable for the dwelling. To find out more about how EnviroVent can help you banish condensation call 0845 2727 807 or visit www.homeventilation.co.uk
LANDLORD INVESTOR
November 2014
INDUSTRY UPDATE
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RENTERS RESIGN THEMSELVES TO A LIFETIME OF RENTING Matt Hutchinson - SpareRoom Matt Hutchinson, director of house and flatshare site SpareRoom.co.uk, shares the results of the 2014 Flatshare Census, a survey of over 10,000 people living in shared accommodation.
BRITISH ASPIRATIONS OF HOME OWNERSHIP ARE SLIPPING FURTHER OUT OF REACH ACCORDING TO THE RESULTS OF THIS YEAR'S FLATSHARE CENSUS, IN WHICH ALMOST A FIFTH OF RENTERS SAID THEY DON'T EVER EXPECT TO OWN THEIR HOMES, UP FROM JUST 12% IN THE 2011 CENSUS. November 2014
LANDLORD INVESTOR
However, the reality may be even more bleak, as this figure rises significantly among those still renting in their 40s. Almost half of this age group never expect to make it onto the property ladder because they’ve been priced out of the market altogether, even though their annual income is 17% higher than the UK average. This group is arguably a more accurate gauge of future home ownership levels because they’re at, or near, their maximum earning potential. Across all age groups, half of renters say they won’t be able to buy for five to 10 years, while a quarter say it will be at least a decade before they can get on the ladder. Renters in London and the East Midlands are the most optimistic age groups. In both regions just 17% believe home ownership is so out of reach that they’ll never be able to buy property. However, Londoners are also most likely to believe it will be at least 10 years before they can buy - no doubt due to soaring house prices and high rents eroding deposits.
69
INDUSTRY UPDATE
It’s not just house prices that are rising. With one in five renters spending over 50% of their salary on rent, it’s no surprise that rents are considered unaffordable. Londoners are most likely to spend more than 50% of their take home pay on rent - and are most likely to consider their rent unaffordable while those in Yorkshire and the Humber (15%) are least likely to. In London, average room rents have now hit £691 per month, 39% of the average London flatsharer’s monthly take-home pay.
Price rises seem to be unstoppable, with a typical London home now clearing the £500,000 mark, and prices for first-time buyers rising faster than prices for owner-occupiers. Coupled with rising rents eroding savings, it’s hardly surprising that such a significant proportion of renters have resigned themselves to never owning their homes. The reality is that many young professionals will never own their homes. Attitudes to renting for life will have to change as, like it or not, we are heading towards a European approach towards property, where so called ‘lifestyle tenants’ are the norm. Given the British love-affair with property ownership, this is going to be a major cultural change.
The table below shows a regional breakdown of attitudes to renting and home ownership: % who spend more % who think it will % who think they % who consider their than half their take be at least 10 years will never be able to rent ‘unaffordable’ home pay on rent before they can buy buy property
Scotland
23%
24%
20%
16%
Wales
19%
16%
15%
19%
Yorkshire and The Humber
18%
15%
24%
22%
East of England
21%
26%
20%
24%
East Midlands North East
14% 19%
17% 17%
22% 10%
17% 19%
North West
19%
19%
19%
18%
South East
19%
22%
21%
25%
South West
20%
21%
23%
23%
West Midlands
20%
25%
21%
19%
London
25%
37%
25%
17%
UK
23%
29%
23%
18%
LANDLORD INVESTOR
November 2014
70
AUCTIONS
BUYING AT AUCTION
Kevin Gilbert - Clive Emson
The popular TV series of Homes Under the Hammer has created a huge interest in property auctions, fuelling millions of viewers to become interested in buying, improving, selling and renting property, after all we all need a roof over our heads! But there are some that continue to shy away from the auction room, and we constantly hear those words “I’ve never bought from an auction”. You could be missing out
ANYONE CAN ATTEND OUR AUCTIONS AS THEY ARE OPEN TO BOTH THE PUBLIC AND PROFESSIONAL, BUT IF YOU INTEND TO BUY AT AUCTION, FOLLOW THE FIVE GOLDEN RULES.
1 You need to obtain a catalogue to see all the
opportunities on offer. Be proactive, register to receive our emails advising when the details go live. The lots being offered for sale are available from our website, cliveemson.co.uk, about four weeks before the auction and it’s also available as an e-book too. You can also obtain a hard copy of the catalogues which will follow a few days later.
2 Inspect those lots you are interested in, we provide a schedule of block viewings, so book in, (online or over the ‘phone) and we will see you there.
3 Once you have viewed, and you are still interest-
ed, obtain a copy of the legal paperwork. You can view the information we hold at any of our offices or if you prefer to view on-line in the comfort of your favourite armchair, you can download it from our website. We always advise you take independent legal advice about the legal pack as you will be deemed to have read and understood the contents before you bid.
November 2014
LANDLORD INVESTOR
4 You should ensure that funds are in place.
Remember, at the fall of the Auctioneers Gavel, the contract is exchanged, you are legally committed to buy and the seller is legally committed to sell. No gazumping here! If you require a mortgage it’s advisable to have this in place before bidding – take advice from your mortgage advisor/broker and make sure they know you will be bidding at auction so they know the time scales they have to work to. Survey and re-inspect if necessary. If you do need too have the lot surveyed it is advisable to do so before the auction, just ask the surveyor to call us.
5 Arrive at the auction room in plenty of time.
You will need to register to bid, confirm how you intend to pay your deposit to the Auctioneers, 10% or £3000, whichever is the greater plus an auction administration fee of £750 and you will need your ID with you. The addendum (which is available to download the evening before the auction) will also be available in the room and lists the alterations to the catalogue and last minute amendments. And that’s all there is to buying from our auction, happy hunting and we wish you good bidding on the day. If you would like more helpful advice on Buying (or Selling) at auction then we will be on hand at the Show. ⌂
Residential investments
The UK’s leading regional land & property auctioneers with regular auctions throughout the year
Entries are now invited for suitable Lots Vacant residential
Next four day auction covering Kent to Cornwall, Isle of Wight to M4, London & Essex 15th December - Kent, London & Essex 16th December - Sussex & Surrey 17th December - Hampshire & Isle of Wight 18th December - West Country
Land with planning
Commercial Investments
Entries close: 17th November
Vacant commercial
Tel: 01622 608400 Email: auctions@ cliveemson.co.uk
Garages & Unique Lots
If you require professional friendly advice regarding any aspect of the auction process please contact us
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