Landlord Investor SEPT 2015

BY

INDUSTRY

EXPERTS

COVERING

ALL

ASPECTS

OF

BUY-TO-LET

SEPTEMBER 2015

WRITTEN

LANDLORD | PROPERTY | INVESTMENT

swoT: how Do wE DEAl wITh busInEss ChAngE?

- Tom Entwistle

whERE now foR buy To lET InVEsToRs?

- Kate Faulkner

bEIng A sTuDEnT lAnDloRD: IT DoEsn'T hAVE To bE DIffICulT

- Nick Gill

IDENTIFYING YOUR WEAKNESSES

In ThE PRoPERTy PuZZlE

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wElComE To ThE sEPTEmbER IssuE of lAnDloRD InVEsToR! Editorial Editor

Tracey Hanbury editor@landlordinvestmentshow.co.uk

It has been a very busy summer for us here at Landlord Investor and I am very pleased to say that after weeks of keeping our two boys busy in the summer holidays and juggling work we have all settled back into some sort of normal routine!

Sending a huge thank you to our great team for all their help and hard work!

Time to celebrate!

Editorial Contributors

David Humphreys easyProperty Kate Faulkner Nick Gill Paul Shamplina Peter Littlewood Simon Thompson Spicerhaart Steve Cox Susannah Cole Tom Entwistle

Art Dept.

Design Craig Edmonds Advertising Beverley Meliniotis

Contact 0208 656 5075 landlordinvestmentshow.co.uk /LandlordInvestmentShow @LandlordInShow

Tenants History LTD 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 and our contributors 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.

I am delighted to announce that next month we will be celebrating the magazines 1st birthday, look out for our birthday issue which will be available on the 1st October.

More good news!

Audit Bureau of Circulation – Application Approved.

We are really proud to announce that we have had our membership accepted by ABC and are now being regulated by the audit bureau of circulation.

ConTEnTs Expert Advice Industry Update Tax Advice Lettings & Management L.I.S Update Great Property Tips Buy-to-Let Analysis Industry Spotlight Investment Landlord Insurance Student Accommodation

06 10 14 20 22 24 28 32 34 36 38

In this month’s issue, our monthly columnist Tom Entwistle explains how using SWOT analysis (strengths, weakness, opportunity and threats) in property investment can help you plan for the future.

Kate Faulkner, looks at where we should be investing our money next and Nick Gill explains why being a student landlord doesn't have to be difficult.

It is going to be a manic few months with fi ve Landlord Investment Shows and three issues of Landlord Investor. We really hope to see you at some of our events so please go to page 4 for a full listing of upcoming shows with links on how to book your tickets.

Happy Reading!

Tracey Hanbury | Editor Landlord Investor

Tracey Hanbury

lAnDloRD InVEsToR September 2015

4

mEET ThE TEAm

show loCATIons

TRACEy hAnbuRy EDIToR & sAlEs DIRECToR

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lAnDloRD InVEsToR

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6

EXPERT ADVICE

How do we deal with business change?

Tom Entwistle - LandlordZONE

If you went to business school, or you attended any sort of business course, it's more than likely you will remember the acronym, SWOT. It stands for: Strengths, Weaknesses, Opportunities and Threats, a useful business “tool” which assists anyone involved in running a business, or any sort of organisation for that matter. It will help you focus on what really matters, using a brainstorming approach.

September 2015

LANDLORD INVESTOR

I would encourage anyone involved in any sort of business, and investing in and renting out property is certainly a business, to sit down with your employees, your business partner or marriage partner once a year to brainstorm a SWOT analysis on your business.

It really is a useful little device to focus attention on what’s important, and to get everyone involved seeing the same bigger picture, singing off the same hymn sheet, in the jargon. Business consultants Peters and Waterman in their classic business book, In Search of Excellence, came up with the phrase, “stick to the knitting”. In other words, do what you do best, play to your strengths and identify your weaknesses, but above all stick to what you are best at doing.

Successful businesses develop operating models, ways of working which they have perfected and have proved successful, and can be replicated. You might look at Domino's Pizza or Greggs for example, highly successful operations which have developed a successful formula, simple systems to be repeated over and over again.

7

Pretty much the same idea can be applied to a rentals operation: develop systems and methods of working, documentary processes which can be followed by virtually anyone, and which can be replicated. As your portfolio grows, or even if you want to remain small, you are then in a position to be organised with minimum time input, an efficient operation growing an income and capital value which really benefits from economics of scale; make it once and use it many times. What the Americans term a “cookie cutter” operation.

Change is inevitable in any business, but it’s how you adapt and embrace change that matters, or as this aphorism - purported but not proven to come from Charles Darwin - puts it: It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.

A case in point is Greggs recent change in strategy, a shops revamp programme that has targeted a “Food on the Go” market, a change which is proving highly successful; witness the tripling of Gregg’s share price over the last 18 months or so.

Change too is a feature of the residential rental market; right now more change than we’ve seen in 20 years. In 2015 the signs are that the pendulum is beginning to swing back a little in favour of tenants, a situation we last saw before the 1988 Housing Act came into force, and this is particularly so in the Scotland and Wales where new tenant friendly laws are currently being introduced.

While the measure is well intended to act as protection for tenants, it does not take a genius to see that the system is open to abuse by those tenants with a mind to stymie any eviction attempt. A tenant with a history of rent arrears may well be minded to be “creative” about the need for repairs in the property, whilst at the same time being less than cooperative about allowing tradesmen access.

A new section 21 notice will be introduced from 1st October which thankfully will simplify the process of possession proceedings in England. Most of the problems encountered by landlords in the eviction process have been because of the complexity of the s21 notice, with its critical dates etc, but that’s where the simplification ends.

Landlords and agents will need to be really well organised to successfully execute an eviction using section 21.

These are the requirements: •

A written tenancy agreement

•

A correctly served prescribed section 21 notice with proof of service

•

The section 21 notice to be served within strict time limits

•

A deposit correctly protected within the 30 day time limit

•

A deposit notice (s213) correctly served with proof of service

•

A current Energy Performance Certificate (EPC) for the property

Section 21 of the 1988 Act embodied a principle which allowed landlords to reclaim possession of their property when 6 months and the tenancy term had ended, with no reason required, called a no-fault possession procedure.

•

A current gas safety certificate, served on your tenant

•

Where appropriate a licence for a HMO (subject to redefinition of what is an HMO)

This was the bedrock on which the rental market started its exponential growth after 1989, because landlords could at last let properties without the fear of being stuck with problem tenants on uneconomic rents.

•

No notices received from your tenants about repairs

Where a local authority issues a repair notice after a complaint, the landlord will be prevented from serving a valid s21 notice for 6 months.

LANDLORD INVESTOR September 2015

EXPERT ADVICE

Although the provision still applies, it is slowly being restricted by requiring more and more criteria to be met, including most worryingly, that a tenant who has complained about repairs can prevent eviction until it is dealt with by the landlord.

EXPERT ADVICE

8

Landlords will need to have installed smoke alarms and where appropriate, carbon monoxide alarms with arrangements made for testing. They will need to carry out risk assessments for legionella, electrical systems and appliance tests and general safety inspections including the grounds outside the property. It will also be a requirement to give tenants a copy of the Department for Communities and Local Government’s ‘How to Rent’ guide.

Landlords and agents will not be able to serve a section 21 notice during the first four months of a tenancy and will not be able to issue proceedings based on a notice more than 6 months after it was served.

Although the new section 21 rules are due to come into force on 1 October 2015, the pre-conditions and time limits will only (until 2018) apply to new tenancies created after that date.

In addition, landlords throughout the country will soon be required to carry out right-to-rent or immigration checks, which could involve a rather complicated process of identification and verifying proof of residency status. The government has issued three guidance documents for landlords on right-to-rent totalling some 36 pages of text.

All of this is becoming quite onerous and time consuming for landlords and/or agents when managing their tenancies, hence the need for robust systems, administration procedures and action points which produce good documentary evidence to prove that all the requirements have been met, should the need arise for a court process.

September 2015

LANDLORD INVESTOR

Returning to SWOT then; an analysis of your strengths and weaknesses comes down to looking at yourself and your own business model and deciding how you can improve it. Just what do you need to do to address any weaknesses you may have in the way you manage your rentals business vis-a-vis the above?

How can I capitalise on my strengths as a person, and as a business to get the most out of it?

Opportunities are many in terms of property investment in the UK, but we are still faced with many threats, not least of which are increasing bureaucracy through more and more regulations; landlord licensing; tighter controls on mortgage applications; a less generous taxation regime for property landlords; and campaigning pressure for more and more tenant friendly measures such as rent control, longterm tenancies, and eviction restrictions, from people that do not understand the motivations and issues that private landlords face.

Given all of that, buy-to-let is still likely to give a higher rate of return that most other alternatives for the average small-scale individual investor: with a growing population, inward migration, an increasingly mobile workforce in a growing economy, a growing student population and a severe housing shortage in many parts of the country, all these factors bode well for the rental market for the foreseeable future. ⌂ Tom Entwistle is an experienced landlord and founder of the website portal, LandlordZONE®

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10

INDUSTRY UPDATE

Should I be worried about Immigrants?

Peter Littlewood Southern Landlords Association It seems that immigration has been more present in recent media than ever before, and it's starting to worry landlords...

A recent report by the Office of National Statistics shows net migration rising.

in part as a result of immigration of citizens from the countries that joined the EU in 2004.

During the 1960s and 1970s, there were more people emigrating from the UK than arriving to live here, and during the 1980s and early 1990s, net migration was typically above zero.

Before the current peak, annual net migration has mostly fluctuated between around 150,000 and 250,000

Since 1994 however, it has been positive every year and net migration peaked between 2004 and 2007,

Interestingly enough the same report shows that the trend is for EU citizens, rather than non-EU to come to this country.

Long-Term International Migration for the UK, 1970 to 2014 (annual totals) Source: Office of National Statistics

September 2015

LANDLORD INVESTOR

11

The Government has issued this guide to checking: Landlords must obtain original acceptable documents.

How: Landlords must ask for and be given original documents from either List A or List B of acceptable documents.

Check

So how does this affect landlords?

Simple, no matter where they have come from, you will have to check the right for a prospective tenant to live in this country.

This is part of the Governments clamp down on illegal immigrants, in that in future no-one will be able to register with a doctor; open a bank account; get a job, as well as rent a home unless they prove they are allowed to be in this country.

The scheme to check prospective tenants is being trialled in the Midlands and is due to be rolled out across the whole country soon – but no date has been announced as yet. However it is a good idea for landlords to start checking now. This is both good practice, and will ensure you don’t offer to someone you shouldn’t - because, although the legislation is not retrospective it will apply if a landlord renews an existing contract.

A recent map published by the Guardian newspaper shows that the majority of immigrants are living in the South, especially London, and the Canterbury area. So landlords in that area have to be especially wary of who they offer to.

And it doesn’t stop there. Landlords have to be sure that their tenants retain their right to remain in this country, so unless you know that they have some form of permanent right to remain you will need to check on an annual basis. You will need to see appropriate original documents and keep copies of them for at least 1 year after the tenancy ends. The list of valid documents is too long to re-produce here, but in essence are appropriate passports, with visas where required.

Landlords must check in the presence of the holder (in person or via live video link) that documents appear genuine, that the person presenting them is the prospective occupier, the rightful holder and allowed to occupy the property.

How: Landlords must check: 1) Photographs and dates of birth are consistent across documents and with the person's appearance in order to detect impersonation; 2) Expiry dates for leave have not passed; 3) The documents appear genuine, show no signs of being tampered with and belong to the holder; 4) The reasons for any different names across documents (e.g. marriage certificate, divorce decree, deed poll). Supporting documents should also be photocopied and the copy retained.

Copy Landlords must make a clear copy of each document in a format which cannot later be altered, and retain the copy securely: electronically or in hardcopy. Landlord must retain a record of the date on which the check was made, and retain the copies securely for at least one year after the tenancy agreement comes to an end.

How: Landlords must copy and retain: 1) Passports: any page with the document expiry date, nationality, date of birth, signature, leave expiry date, biometric details and photograph, and any page containing information indicating the holder has an entitlement to enter or remain in the UK. 2) All other documents: the document in full, including both sides of a Biometric Residence Permit.

LANDLORD INVESTOR September 2015

INDUSTRY UPDATE

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www.bishopandsewell.co.uk September 2015

lAnDloRD InVEsToR

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13

Also, don’t forget that all tenants have to be checked, even those holding a British passport. If in doubt contact the Landlords Helpline on 0300 069 979.

Please don’t ignore this – it is not going to go away.

Government Consultations Mr Osborne appears to have the Private Rented Sector firmly in his sights.

Firstly the allowance for landlords to improve the insurance in their properties – LESA (Landlords Energy Savings Allowance) – finished last April. So if you are yet to do last year’s tax and have spent money on insulation improvements make sure you claim your allowance.

This is the last time you can claim - it’s next to the 10% wear and tear allowance.

And talking of the 10% Wear and Tear allowance, this is also under threat as the Government is proposing to remove this and replace it with a scheme whereby you can only claim for actual expenditure.

It is true that the 10% carte-blanche allowance has been very generous, but the proposed scheme will have a lot of administration for landlords and HMRC alike.

It is also (likely) to be complicated in that if, for instance, you replace a washing machine with a washer drier, then only that part of the expenditure deemed to be applicable to the cost of the washing machine only can be claimed. The extra is considered an improvement and can only be classed as capital expenditure, only claimable when you sell the property.

There is a consultation on this to be found at https://www.gov.uk/government/uploads/system/ uploads/attachment_data/file/447461/150715_ Wear_and_tear_condoc.pdf (sorry, rather a long one). I urge you to participate in this.

And finally, the big one. Mr Osborne is proposing to reduce the substantial allowance on interest payment to 20% only from April 2020. For anyone on the top rate of 45%, or even those on 40% this will result in much larger tax bills.

There is no consultation on this, but there is a petition to be found at https://petition.parliament.uk/ petitions/104880 The main message is to start long term planning on your budgets and finances. DON’T turn a blind eye. There may also be an interest rate rise next year – can you afford that? ⌂

LANDLORD INVESTOR September 2015

INDUSTRY UPDATE

Additionally, it is strongly recommended that all prospective tenants are checked, even if they are not named on the agreement, but currently does not apply to children under the age of 18.

14

TAX ADVICE

Tax Free Rent & No money left in: The five Year Strategy 2015-20 David Humphreys Property Investor Online

The Conservatives are in power and should remain the Government until 2020.

In the post-election budget, they showed their hand regarding the Private Rented Sector, reducing the mortgage interest relief tax rate, which a substantial number of landlords are making a fuss about, and also abolished the 10% Furniture Depreciation Allowance, which was a very useful tax benefit because you could qualify for the 10% FDA by spending as little as ÂŁ200 on a 2 bed property and deduct 10% of the gross rent before calculating your tax liability. Anyway that allowance has gone and if the Internet Forums are to be believed, nobody seems particularly bothered.

Thankfully, though, Mr Osborne did not reduce/ limit a landlord's ability to set-off/deduct from their rental income the cost of repairing & maintaining their properties before calculating their income tax liability.

September 2015

LANDLORD INVESTOR

The result is that all property investors, from existing to thinking about it, can buy rundown housing, fix it up and set-off a high percentage of the fixup costs against their rental income, both current & new.

The result is that no tax is payable on any positive cash flow until all the "fixup" costs have been recovered and outstanding year-end losses can be carried forward year-on-year.

I must stress that I am not an accountant, and this article does not constitute, and is not intended to be either tax and or investment advice. This is a strategy I operate for myself and clients, and have done so for many years. If this strategy interests you then you should consider taking qualified professional advice before making any commitment.

15

TAX ADVICE

And you may say, and some do, you may not have a tax liability with this strategy, but surely you will lose your positive cash flow because you will have to use it to pay for the fixup, and it will take years before you get your positive cash flow/income back. Thankfully that is not the case as I will show you.

In some locations there are literally streets and streets of distressed rundown property and, offtopic, I am sure that the well-publicised housing crisis in the UK could be substantially reduced if these properties were renovated and once again became sought after homes.

It is accepted that if you buy rundown property, it is possible to fix it up so that the value of the property is greater than the initial cost of the property plus cost of fixup. The fixed up value can even be substantially greater than the two costs combined.

Unfortunately, street and streets of empty distressed housing generally do not make good investments, principally because few people like living next to an empty boarded up house as they are a magnet for anti-social behaviour, vermin, the four-legged variety, and can detrimentally affect the fabric of adjoining properties. So my advice for the single property buyer is to find a location/neighbourhood where people already want to live, also few investors can raise the capital needed to buy the entire neighbourhood.

If the fixed up property is let, it is possible to remortgage the property, repaying the investor the cost of fixup leaving their positive cash flow unaffected and pay the interest on the re-mortgage with the new rental income from the fixed up property, possibly even generating a surplus.

Depending on the final fixed up value, it is also possible to borrow, via a re-mortgage, the whole cost of buying and fixing up the property resulting in a property investment that does not include any of the investor’s cash, a NMLI deal (No Money Left In) allowing the investor to reinvest/recycle their initial capital in a similar deal, possibly increasing the tax free years.

There is virtually an inexhaustible supply of distressed rundown property as is evidenced by the Empty Homes Agency Statistics which lists the total number (600,000+), with a County, City or Town breakdown so it is relatively easy to shortlist a number of potential investment locations based on the number of "empty" homes in the city/towns in your list.

As a property ages, it can quickly become distressed and rundown unless it is continually maintained on almost a monthly basis dependent on the season and any break in occupation, such as repossession, divorce, relocation, death, etc. can accelerate the deterioration.

Off-topic again, I once looked at a street of 27 terraced houses in Stockton on Tees. Bar a couple of the houses, all were boarded and in various states of distress. The surrounding neighbourhood was reasonable with the majority of the properties occupied. Our idea, client investors and I, was to buy all the properties, fix them up to a high standard either for letting or sale, removing a blight to the neighbourhood.

We worked out the mechanics of how we would do it so as to avoid the possibility of vandalism in the fixed up houses during works and before occupation, because once a vandalism has happened the property remains at risk till occupied, talked to a few local residents who said they would help us and then approached the property owners, a local Housing Association and the Local Authority who between them owned all the boarded houses. Whilst the Housing Association liked our plans, the Local Authority didn't and wouldn't play ball and so the project had to be abandoned.

LANDLORD INVESTOR September 2015

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TAX ADVICE

But there are many ways of finding single distressed rundown properties that are located in good neighbourhoods to buy that do make good investments because they need renovating, modernising, improving, updating, all terms used in estate agents particulars and auction catalogues.

They also come in a variety of degrees of distress so virtually every budget and investor level of experience can be satisfied. Some need little more than what is termed a "makeover", probably a new bathroom and/or kitchen, certainly redecorated, probably some repairs and generally tidied up, two, maybe three weeks work. These properties are generally sold by both estate agents and auctioneers.

Others haven't been touched for decades, even though they may have been lived in until quite recently. These properties are mostly sold through the auction rooms rather than estate agents and are the ones I want to buy because they are ideal for my strategy.

The reason I like seriously rundown distressed property is that it means that I can fix up the property to virtually as new condition. I am buying little more than the shell, floors, walls and roof, all of which may need a little TLC. But what many investors don't realise is that provided the distressed property was "capable of being lived in" when bought, and "capable of being lived in" is very much a grey concept, the cost of fixup, the renovation, can be split between Revenue and Capital with the Revenue element being set off against the rental income of the entire portfolio before tax is assessed.

This means that normally taxable rental income can become Tax Free Positive Cash Flow until such time as the renovation costs have been completely set-off against the rents collected.

Obviously, the higher the cost of renovation the longer the period of Tax Free Positive Cash Flow.

Whilst the same Revenue/Capital split applies to makeovers, because there is less cost involved in carrying out a makeover, it may only have the effect of reducing the tax payable in the year of renovation rather than eliminating it for some years.

So where do you start? Your first decision is where are you going to invest and your cash pot will probably be the principal driver. You can borrow up to 70% of the cost of buying "distressed" property, particularly at auction, from specialist lenders offering "Bridging Finance" which you will generally arrange through a Bridging Finance Broker, such as Kevin Wright whose Recycle Your Cash Workshop is reviewed on the Property Investor Online website, but the property costs of the strategy are not just the cost of the property, you will have legal fees to pay, plus auctioneers premium if you're buying at auction, and of course the cost of fixup, though you may be able

LANDLORD INVESTOR September 2015

18

TAX ADVICE

to delay some or most of these costs until you remortgage on completion of works. But, at the very least you will need cash to cover 30% of the cost of the property, plus legals, including auctioneers premium.

Now it can be difficult to find out what you can buy, or rather where you can buy, with a fixed amount of cash and this becomes even more difficult when you are looking at distressed property but there is a little-known source of this information which is in the public domain.

The source is the Essential Information Group, or more commonly called the EIGroup, which is the leading database for auction statistics in the UK. EIG is a membership site, but each month, and this aspect is little-known, they publish a newsletter which is available to the general public, you don't even have to register to view.

The newsletter is a "Regional Auction Analysis" consolidating & breaking down the results of all UK property auctions into each of 13 UK Regions, then splitting between "Residential" & "Commercial".

Listed are all the relevant data needed to work out the average hammer price and number of unsold lots, unsold lots are very useful because generally they are owned by very motivated vendors now disappointed by failure to sell at the auction.

We number-crunch and publish this information, courtesy of EIG, on our "Property Auction Expert" Facebook page, but, let me tell you, that having number-crunched the results we can show that it is possible to buy a property in any of the regions for as little as 50% of the average hammer price for that particular region.

For example the EIG August 2015 stats for the period May 2015-July 2015 lists the average hammer price for the North East Region at £73,000 across 526 lots sold out of 787 offered. There were also 261 lots unsold, either in the room or on the day of the auction. But but but, let's prove our 50% rule and see what we get for our money.

Auction House North East held an auction on the 21st July with 38 Lots, a relatively small auction, and you can see the results on their website because you have to be a member to see the results on the EIG website. Starting with Lot 5A, a 2 bed terraced house in Peterlee, County Durham, needing work, sold for 20k. Same auction, Lot 7, ground floor flat (3 rooms) in New Herrington, Tyne & Wear, went for 30k and finally, Lot 36, 2 bed semi in Hartlepool sold for 35k, still under 50% of the average hammer, so 3 Lots out of 38 sell for less than 50% of the average for the Region.

So take a look at the EIG Regional Analysis on Property Auction Expert FB page, because the average hammer is worked out for you. You will see that 6 Regions are less than 100k average, which means you can buy property for less than 50k, maybe as low as 30k. 3 Regions average less than 150k, so you can buy a property at auction, needing work and ideal for a Tax Free Rent & NMLI Strategy for less than 75k.

Add 25k for fixup, borrow 70% with Bridging Finance and you can get started with less than 50k cash.

Next month I will look at what makes an ideal property for both long-term Tax Free Rent and equally importantly NMLI, No Money Left In the Deal.

Finding “Ideal Properties” can be compared to “Panning For Gold” because the Nuggets are there, but often very difficult to find!

If you want to know more about my Tax Free Rent, NMLI & Panning For Gold Strategies, all through Auctions, come to the Landlord Investment Show at Elstree Holiday Inn in Borehamwood, Hertfordshire on Thursday, September 24. ⌂

September 2015

LANDLORD INVESTOR

19

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lAnDloRD InVEsToR September 2015

LETTINGS & MANAGEMENT

20

Landlords are saving thousands by doing it themselves

With high street estate agencies charging high rates of commission on letting services, it comes as no surprise that many of Britain's landlords choose to go it alone.

But in an effort to save hundreds - or even thousands - of pounds in fees, DIY landlords may struggle to find quality tenants.

Void periods and bad tenants both end up costing you money, but fear of the first can often lead to the second. The solution is to quickly generate a large number of good quality tenant enquiries, giving you the widest possible choice. Combined with proper referencing, this gives landlords the best chance of finding the right tenant.

September 2015

LANDLORD INVESTOR

GETTING ENQUIRIES THROUGH RIGHTMOVE AND ZOOPLA High street agents talk about having lots of quality tenants ‘on their books’ - but the truth is 90% of people looking for a property do so online, and nowhere more often than through the UK’s leading property portals, Rightmove & Zoopla. These sites drive the vast majority of quality enquiries nowadays.

However, only registered agents can directly upload properties to these sites, making it tough for DIY landlords to gain access to the best tenantfind tools. Until recently, they had to choose between expensive agent fees or making do with leafleting, local press advertising, or classified ad sites to find tenants themselves.

However, this has now changed in a big way with the rise of online agents.

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Let’s imagine you’re a landlord with a 3-bedroom house in Harrow. After some research, you decide to rent out the property for £1,500 a month. If you choose to find tenants through a high street estate agent, you would be facing around 10% commission (often more) month in, month out, for as long as those tenants stay.

Over the first year, this works out to £1,800 – not including additional charges for tenancy agreements, inventories and other such admin, and before VAT is added on at 20%, so you’d be looking at agency fees of at least £2160 all-in.

For an online agent’s take on the traditional high street service, just consider easyProperty’s Complete lettings pack.

For a simple one-off flat fee of £275 you’d receive: A professionally created advert (with photos, floor plan and descriptions) Listings on Rightmove, Zoopla, and PrimeLocation An eye-catching ‘To Let’ board erected for you Management of tenant enquiries

'PICK-AND-CHOOSE' LETTING AGENTS Landlords can now buy all of the services they would expect from the high street – for a fraction of the cost. Not having branches, it turns out, saves a lot on overheads, and those cost-savings are passed onto customers in the form of lower prices.

An open house (or group viewing) Tenant referencing at no cost to the landlord Arrangement of deposit protection An ARLA-accredited tenancy agreement

For example, the standard letting pack from easyProperty.com offers industry-leading tenant referencing, an eye-catching ‘To Let’ board and, most crucially, an advert on Rightmove, Zoopla, and PrimeLocation to get those viewing requests flowing in.

There is no commission to be paid, and no mandatory extra fees. What’s more, the price includes VAT, so no need to factor in an extra 20% on top. There’s also a special summer offer giving you 6 months free property management when you choose this pack.

Try it for the first week for free with no tie-ins, and then if you want to continue, pay just £9.99 a week.

A package like this represents a saving of hundreds of pounds when compared to high street agents – whose commissions commonly run to over 10% of your monthly rent for a ‘let only’ tenant find service, more if you’d like them to manage the property as well.

By going with easyProperty over a high street letting agent you will have saved at least £1,885 in the first year alone.

Once you do the sums, it’s easy to see why landlords are leaving the high street in droves. ⌂ To find out how you can profit from using an online estate agent, go to easyProperty.com

LANDLORD INVESTOR September 2015

LETTINGS & MANAGEMENT

DOING THE SUMS

l.I.s uPDATEs

22

AbC gIVEs lAnDloRD InVEsToR ThE gREEn lIghT Dear Reader, ABC (Audit Bureau of Circulations) is an independent industry body that audits the circulation figures for a range of media. Our primary function is to offer you, the advertiser peace of mind by providing independent verification of the circulation figures quoted to you by media owners.

I am writing to you with the news that Landlord Investor had its ABC application approved on 20th August 2015.

For publishers, an ABC Certificate gives credibility to what is often the most sensitive and vital aspect of a magazine’s competitiveness; the circulation.

Within the UK, most leading publications have their circulations authenticated by ABC – an independent, internationally recognised circulation audit bureau.

Truly independent circulation audits require publishers to verify their circulation claims with print and distribution evidence, full mailing lists, and, supporting source documentation where applicable, all to an agreed industry standard. Publications with uncertified circulations provide no independent guarantee that their circulation is accurate or indeed targeted to the buyers you need to reach.

If you would like to know more about ABC and its activities then have a look at our website at www.abc.org.uk or call our offices on 01442 870800 and ask for the Business Media Division.

Yours sincerely,

September 2015

lAnDloRD InVEsToR

WRITTEN

BY

INDUSTRY

EXPERTS

COVERING

ALL

ASPECTS

OF

BUY-TO-LET

LANDLORD | PROPERTY | INVESTMENT

AUCTION | COMMERCIAL | COMPANY SPOTLIGHT | DEVELOPMENTS | EXPERT ADVICE | GREEN DEAL INVESTMENTS | NEW INVESTORS | LANDLORD ASSOCIATIONS | LANDLORD INSURANCE | LEGAL LOCAL PROPERTY MEETINGS | NEWS | TAX ADVICE

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24

GREAT PROPERTY TIPS

Buying from Auctions: ParT ONE Susannah Cole The Good Property Company Snap up a fantastic property deal at Auction – simple when you know how.

I LOVE buying property from Auctions. It is a fun, exciting, fast and certain way to be sure you have secured yourself a property.

It is absolutely one of my favourite ways to buy property deals.

Did you know you can buy property three ways from Auction; pre, during and post, thus increasing your chances in picking up a great deal? Here at The Good Property Company, we pretty much buy from auction every month, landing some fantastic property deals as a result.

September 2015

LANDLORD INVESTOR

Let's look at how to buy your property deal at auction.

These are the stages I go through when buying from auction:

1.

2.

Auctioneer publishes properties, on line and in their catalogue.

You do your desk and telephone research to evaluate the properties and identify a number you would be happy to buy – I never focus on buying only one, I always prefer to have a number of properties, usually 4 plus. This makes auction work more efficient as I increase the chances of buying, and reduces any emotional involvement with an individual property, which is bound to push up my top price.

25

GREAT PROPERTY TIPS

Here are a few of my Auction Viewing Tips 1.

Take a camera and photograph the site. This

is to help you remember the property – once

I have viewed more than 10 I tend to lose the detail.

2.

3.

3.

4.

5.

Identify which strategy for each property you are interested in – am I going to Buy and Sell the property, rent it out as a single let or move it to a Shared House, or HMO (House of Multiple Occupation). I also want a worked out Plan B for each property, in case Plan A does not quite come off – it has been known in property!

Identify a funder for each property, usually bridging company or cash purchase.

Attend Viewing slots – often once a week, for 30 minutes, first yourself and then a second visit with your builder

I do a very quick viewing, as most of the work in identifying a deal is desk research and administration – sorry to make it sound so glamorous, but knowing what it is worth and how you can fund it will get you closer to a deal than spending hours enjoying the view of something you may not buy!

4.

5.

Take a clipboard plus a prewritten form (I call mine the Property Viewings Recorder). Fill it out in advance with the address, so you can record aspects about the property to remind you about layout, property attributes, costs and work needed, as well as neighbourhood details that can only be picked up from being on site, that are easily forgotten or mixed up once you drive off.

Enter onto your Sourcing Offer System, which is a spreadsheet we use to track all our viewings, offers and properties bought.

That way we can track our efficiencies – how many we view, as a ratio of how many we buy is a great measurement to track. It also allows you to know how many you need to view in the future, to hit the number of properties you want to buy.

Look at buying one of at least four properties at each auction, and work on all four, knowing only one will be coming home with you that night!

Listen to the auctioneer, but don’t listen!

What I mean by that is that they are there to sell, not to neutrally inform you. I once was at a viewing of a house worth no more than £130k, done up, which had a guide price of £95k. It had serious subsidence, and required a large refurb to get it back to standard. The house next door had sold, in a bubble I think, for £178k.

LANDLORD INVESTOR September 2015

gREAT PRoPERTy TIPs

26

However, by doing wider research, it was clear that the general market value of these houses was £130k. The auctioneer took great delight in telling every person who entered the property (and there were hordes) that the neighbouring house fetched £178k, which to be fair was true, but a real fluke.

As a result, the property got an unrealistically high price at auction, tens of thousands more than it was worth. The buyer had not done their homework, and I always wondered if the buyer had managed to get funding on the property, due to paying so much over the odds, or if they got stung and lost their deposit.

So now we have looked at general tips on viewing and buying properties coming up for auction, let’s look at how to benefit from Buying from Auction...

ThE ThREE RouTEs To buyIng AuCTIon PRoPERTIEs: 1. Pre Auction Purchase 2, Auction Purchase 3. Post Auction Purchase The first, buying the property prior to auction is not a widely known strategy. We aim to buy at least one a month in this manner, as you get great property bargains, swiftly. I thought it would be useful to go through the stages of buying a property pre auction.

PRE AuCTIon PuRChAsE CAsE sTuDy Pembroke Road • Bought £175k • Refurb 20k • Sold £240k • Reason – owners in Dubai, tired flat • Location: best part of Bristol As you can see, buying pre auction can be highly profitable. Let’s cover the stages you need to follow.

8 buyIng fRom PRE AuCTIon sTAgEs 1.

Find out which properties are available for pre auction offers – some will and some won’t. Your auctioneer can guide you here.

2. Do your analysis on their end value, and also the cost to refurbish the property

3. Identify how you will fund the property, and start the funding application with a fast funder – likely a bridging company, so that you are ready to actually submit the second you buy it. So in practical terms, make sure you know what documentation the funder will need, and make sure you have it to hand. Also see if you can get a DIP (decision in principle) for your top price, so you go to auction fortified by this knowledge; fewer sleepless nights will follow!

4. Put in pre auction offer, with proof of funds (which may at this stage only be a deposit, with an application pending for bridging) and your solicitor’s details

5. Get your offer accepted – congratulations!

6. Conveyance on a daily basis, working with

your funder and your solicitor, to complete all paperwork needed to get the funding and exchange prior to the auction day. We have been known to exchange around 3.30 pm, when the auction starts at 6.30, a little hair raising, but at least we withdraw the property for sale at auction that way!

7. Exchange very fast, in advance of the auction date, (often only a few hours, but aim for earlier!) paying a 10% balance.

8. Complete within 28 Days, by paying the balance of the purchase price in time.

Pre Auction is probably my favourite way to buy – you know it will get bought in less than 3 weeks, all parties’ minds are focused and you can get onto the property development super fast with no time wasted, and no uncertainty about buying it once you have exchanged. ⌂

September 2015

lAnDloRD InVEsToR

The UK’s Leading Independent Regional Land & Property Auctioneers

The professional and effective land and property auctioneering service across southern England

BRIGHTON, E. SUSSEX

Freehold Ground Rents

12 Lock-up Garages

GOSPORT, HAMPSHIRE

SOLD: £312,000

Re-development Project

PENGE, LONDON

CHATHAM, KENT

SOLD: £340,000

Vacant Commercial

SOLD: £106,000

SOLD: £56,000

Suitable Auction Lots Include > Houses, flats, bungalows & cottages for improvement. > Tenanted properties (commercial & residential). > Vacant commercial premises, building plots, development sites & conversion projects. > Farms and smallholdings, woodland, grazing & leisure land. > Garages. > Freehold/Leasehold ground rents. > Unusual lots such as Martello towers; nuclear bunkers; churches; theatres and even sea forts! > Any property where there is potential to add value.

SOLD: £28,000

SOLD: £298,000

Ground Floor Flat for Investment

SOLD: £119,000

ST AUSTELL, CORNWALL

Residential Investment (3 Flats)

WESTCLIFF, ESSEX

High Street Investment

SIDCUP, KENT

GILLINGHAM, KENT

Recently Sold Lots from our July Auctions include ...

Fire Damage/Re-development

SOLD: £70,000

September Catalogue Now Available E-catalogue, download or post

Entries invited for the following Sales

2-6 November Closing date: 5 October 14-18 December Closing date: 16 November

For advice regarding all aspects of the auction process call

0345 8500333 or email auctions@cliveemson.co.uk

28

BUY TO LET ANALYSIS

Where now for buy to let investors?

Kate Faulkner Property Checklists

The last 12 months have been a bit of a roller coaster ride for property investors.

On the one hand there has been good news with the cost of mortgage finance dropping for many, but on the other, my constant warnings at the landlord investment shows over the last 12 months of the likelihood of taxes being increased for landlords has come true (for some) with the changes to mortgage tax relief and wear and tear allowance. And, based on feedback I’ve received it’s rightly frightened many an investor.

Review your finances

So what are the real implications for property investors of the changes to mortgage tax relief? Well in reality it’s not going to start to bite until 2017, then it’s introduced in stages, so the full effect won’t be felt until 2020.

For those already owning property, what you really need to do is double check you are paying the lowest fees for the biggest cost you incur: which is likely to be your mortgage. The majority of landlords I have asked over the last 12 months have told me they haven’t reviewed their mortgage finance at all. This is despite the opportunity of saving thousands a year if you have multiple properties or saving this level of money over several years if you have just the one.

This means there is no need to panic, but it does mean you can’t stick your head in the sand and ‘hope’ for example that you can just increase rents each year to compensate for the lost relief as the market may not allow for this.

And don’t forget to go to an experienced buy to let broker such as Mortgage Advice Bureau. Many mortgage lenders don’t deal directly with landlords, so not going to see one and trying to do it on your own isn’t necessarily going to get you the best result.

September 2015

LANDLORD INVESTOR

29

Avoid voids

Check your rent I review all the rental indices I can every quarter and talk to agents on a regular basis. One of the most interesting learnings is how little individual landlords increase rents annually – especially to existing tenants. It’s ironic that there are those looking at rent controls when the Office of National Statistics has shown that on average, rents increase at a lower rate than inflation, just 2% annually over the last 10 years.

And according to Countrywide, rents to existing tenants hardly increase at all over the time the tenant lives there, so effectively there is a ‘natural cap’.

Up until last year it was pretty difficult to increase rents to tenants as they can only afford typically to pay more rent if their earnings are rising at a faster rate than inflation. This didn’t happen for some years since the recession until October 2014 and low and behold, rents started to rise when wages started to increase beyond the rate of inflation.

What’s even more fascinating is that social rents and rents from large landlords tend to increase by inflation or inflation plus a higher amount, say 0.5% or 1%. And to verify this, the English Housing Survey 2014 measure social rents increasing at twice the amount of private rents since 2008.

Get independent financial advice Many landlords or would be investors I speak to are investing in property because they don’t trust financial advisors. But just because you’ve been let down in the past doesn’t mean you will be in the future.

The reality is not getting independent financial advice can cost you – and anyone inheriting from you – a fortune if your affairs are not properly in order from a trust or tax perspective.

But there is also another reason now why you need to see an independent financial advisor. What is not been talked about much by property investors is the changes to tax for other types of investment, some of which may end up being potentially good news.

Now to me, you need a regulated, independent financial advisor, such as Chase de Vere who I work with. They can advise you on what to do with your money to reach your goals such as financial freedom, retiring early etc. But if one asset is being taxed more and other assets are attracting a better taxation regime, then this is something that just like checking on the pros/cons of mortgage re-financing, you need to keep up to date with so you know the best way to invest for the future. Remember, just because property has delivered well for you in the past, it doesn’t mean it is necessarily the best moving forward.

So if you haven’t increased your rents to your existing tenants, then double check if local rents have increased and aim to negotiate an increase with your tenants which is deemed fair for both sides. This means you can still keep them in the property, but start to help reduce the effect of the further loss of tax relief.

LANDLORD INVESTOR September 2015

BUY TO LET ANALYSIS

It’s worth making sure too that your property is in a decent condition. Spending money on a property at a time when you are going to earn less income might seem hard to do, but a property in good condition will rent well and quickly. And it is essential to make sure that you keep your property in a good state of repair so if you need refinance or sell, you can maximise the value.

buy To lET AnAlysIs

30

look foR CAPITAl gRowTh oR go foR PuRE InComE gEnERATIon Both now and in the future, you really have to crunch the numbers on property investment. Just relying on rent being 25-30% more than the mortgage doesn’t always mean the property will be cash flow positive.

Buy to let for capital growth overtime is still achievable, but if it’s income you want, then you may have to look at other ways of generating it, unless you go down the Houses in Multiple Occupation route.

Remember, you invest your hard earned cash in property to get the best return you can, if the rules and returns change, especially from a tax perspective, you need to make sure that it’s still the best place for you to invest in the future.

Then do contact me via: www.propertychecklists. co.uk and I’ll do my best to get you the independent, professional help you need. ⌂

FOR MORE ABOUT HOW TO MAKE MONEY FROM PROPERTY IN YOUR LOCAL BUY TO LET "HOT SPOT", COME TO MY PROPERTY SEMINARS AT THE LANDLORD INVESTMENT SHOWS ACROSS THE COUNTRY:

MANCHESTER OCTOBER 1ST

MAIDSTONE OCTOBER 22ND

SOUTH COAST NOVEMBER 4TH

LONDON OLYMPIA NOVEMBER 19TH

www.landlordinvestmentshow.co.uk September 2015

lAnDloRD InVEsToR

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

32

INDUSTRY SPOTLIGHT

It's All Action in September Paul Shamplina - Landlord Action

There's a theory that September is a quiet month of the year, particularly in the property world.

With kids back to school and people coming back from summer holidays, things slow down in many offices, but not here at Landlord Action! We’ve had an extremely busy summer, not only doing our every day job of helping landlords regain possession of their properties, but filming, advising on industry issues and trying to effect change that will help landlords now and in the future. Here’s a flavour of what’s been going on.

Section 21 Notices

Notice of Abandonment form

We attended another Government Think Tank meeting, along with other industry figures, to hear about and assist with the new proposed Section 21 which is believed to be going live from October 2015. The revisions will make it easier for landlords to serve Section 21 notices on tenants, the end date of expiry after 2 months will be much simpler and will include fixed term and periodic provisions combined in one form.

The DCLG (Department for Communities and Local Government) attended our offices last month because we have been consulting on new procedures and the new proposed notice of abandonment form – typically used when a tenant absconds from a property mid-tenancy. We are pleased they have asked for our input on this because we feel it is something that has needed to be addressed for some time.

September 2015

LANDLORD INVESTOR

33

Client Money Protection

For me, when the Government makes it mandatory for all letting agents to have Client Money Protection Insurance in place, then we will know our industry really has made great strides in thoroughly protecting our landlords and tenants

Filming This month I have also started filming the next series of ‘Nightmare Tenants, Slum Landlords’, with Channel 5 has just confirmed will be 10 episodes long and due to air in March 2016. It doesn’t seem two minutes since the last series finished.

We’re very grateful to our clients for agreeing to participate on this Channel 5 program as their stories could just help to save hundreds of others.

I’m planning to expose more professional bad tenants, subletting scammers and rogue letting agents.

Black Listing In another meeting this month, we learned of Government proposals to bring out a ‘black list’ of rogue letting agents and landlords. We gave our full support to the idea that any letting agent found to be stealing rent (I.e. not passing it on to the landlord) should be placed on a list, jointly supported by all property redress schemes and letting agent associations, and which should then be for consumer use, namely landlords and tenants. It’s very important also that Rogue Landlords are named and shamed. This is the link to the DCLG’s consultation on the subject. https:// www.gov.uk/government/consultations/tacklingrogue-landlords-and-improving-the-privaterental-sector

So, there are lots of very early mornings and late nights at Landlord Action at the moment, as we keep numerous plates spinning in our efforts to raise standards and protect the good guys of the industry. ⌂

Obviously, sitting on the advisory council for the Property Redress Scheme, my aim is to ensure the standards of letting agents are improving and that the few rogue operators don’t tarnish the reputations of those good agents who offer a great property management service to landlords.

LANDLORD INVESTOR September 2015

INDUSTRY SPOTLIGHT

There is a tendency to always think a problem tenancy is the result of a bad tenant, but our debt recovery department is regularly involved with acting on behalf of landlords who are trying to recover rent from rogue agents who have not passed on rent to landlords.

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investment

Let us hold your hand: Invest In New, a unique & free to use buy-to-let property sourcing service that helps buyers and developers.

Property investment used to be only for a specialist cash-rich minority, but today anyone can become a property investor with a relatively small amount of cash and not a great deal prior knowledge.

invest in new is a specialist free to use new service for buyers and developers.

It’s exploded in popularity since launching in January and its website has been created to ‘join hands’ between developers and keen new investors. Invest in new discretely accelerates the sale of developments, (or even parts of developments not yet released to the market) and cleverly offers newbuild property to pre-qualified private and corporate buyers. Many of its purchasers are in a position to buy immediately and a number of unique discounts and incentives are available. invest in new clients can purchase discounted property in a few simple steps at rates otherwise only available to investment funds. Many of the developers using it also offer the convenience of paying across stages with a variety of payment plans that better suit the buyer.

September 2015

LANDLORD INVESTOR

Need more?

What about 10 year lasting rental assurances? More still? What about upfront rental from even before completion? What better comfort than to know that your initial outlay is safely tied into an immediate income producing asset, of which you have full control?

What’s more, as a complete hands-off investment finder we are geared up to manage the whole process from start to finish; from the initial reservation, right through to the sale & build completion.

35

“I have been working with invest in new for around 4 months now and have invested and explored numerous investment opportunities with them. In a short space of time they have proven to be a reliable source to gather information on potential investments, in order to make an informed decision.

I trust their judgement and on numerous occasions they have gone out of their way to ensure I have the best deal available.

It is a pleasure working with invest in new as they always go above and beyond to deliver the best service to their investors. I look forward to working with them and investing in other investments in years to come.” ⌂ Buyers can register online for free by visiting: www.investinnew.co.uk or call us to discuss your desires on 01206 812 222 or (0114) 2452471.

Developers please email: mandi.doyle@spicerhaart.co.uk for full details.

With pension pots looking a little lacklustre & unsteady at the moment many investors are looking to grow an investment portfolio to top up their pension provision. With a team of dedicated account managers on hand to simply your next investment or to hold your hand and talk you through the whole process invest in new are here to help.

On invest in new many of the developments offer a 10 year rental assurance scheme which takes away the stress and worry of rental voids - it really does become a lower risk purchase. Coupled with payment plans to suit each individual investor deposits can be paid across the build period eliminating lump sum requirements. We work closely with new homes mortgage professionals and protection specialists to ensure that if you do need a mortgage then we can assist in finding the right mortgage for you and your budget.

So whether you have limited knowledge of the property industry, very little time to spare, have no access to large cash deposits, or are purely buying a property to sell on… invest in new can offer a solution.

LANDLORD INVESTOR September 2015

INVESTMENT

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LANDLORD INSURANCE

Obstacles to landlord insurance and how they can affect your premium Steve Cox - Alan Boswell Group Steve Cox, Property Insurance expert from Alan Boswell Group, discusses some of the common reasons why your buy-to-let insurance can be expensive or even why it can be refused or revoked.

Landlords' insurance can be a minefield of Unoccupied or under repair risks. Each of them carry 'weighting' which can impact the cost of the insurance and in some cases can actually lead to your insurance being refused. However the vast majority of them can be overcome.

Many policies include a clause stating that if the property is unoccupied for a certain period typically 45 days or more - then your cover is invalid. Lack of occupancy for more than six weeks isn't something any landlord would want, but it can happen - for example while repairs or renovations are taking place.

The amount of renovation work being undertaken can itself often prove to be something of a sticking point, with many policies insisting on a fixed limit to the value of work being done. The nature of work, value and time scale may affect the premium. In this situation I’d talk to the client to look at the work they’re having done so I can put together a package, tailored specifically to their requirements.

September 2015

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Background checks

Some policies also require your house to be 'of standard construction' i.e. with brick or stone walls and a conventional pantile or slate roof. A flat roof can also be an obstacle, with many insurers querying what percentage of your roof is flat, and penalising you to that degree. Because a flat roof can increase the risk of flooding and a thatched or timber property can be an increased fire hazard, those features can lead to a higher premium being demanded. However, none of these unconventional features should mean that you’re unable to get quality comprehensive landlord insurance.

You can also be refused insurance for reasons that are nothing to do with your property at all.

This could be because you've previously been declared bankrupt, or been subject to a county court judgement, or even just because you've been refused insurance in the past. Your choice in tenants may be a problem for some insurers or if the property is let to the local authority, housing association or a charity. Again, these are not impossible hurdles to overcome and can be helped by an insurance broker shopping around on your behalf to get you the best deals.

Not considered secure Security issues can also jeopardise your chances of obtaining landlord insurance. While I would always advise you to make your property as secure as possible, if there are good structural reasons why all of your windows can't be fitted with modern key locks, this should be able to be taken into consideration.

Using a broker If you are getting a quote for your buy-to-let insurance yourself, it can sometimes be difficult to understand why it comes out so expensive or even why you have been refused a quote. Using an insurance broker can help you understand what factors cause an inflation in premium and will help you find suitable cover.

For further advice or a quote on your insurance, contact Steve Cox on: T: 01603 218031 M: 07766 715654 W: alanboswell.com/landlords E: scox@alanboswell.com Alan Boswell Insurance Brokers Ltd offers a range of other services including business, home, travel and car insurance.

LANDLORD INVESTOR September 2015

LANDLORD INSURANCE

Unconventional properties

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STUDENT ACCOMMODATION

Being a student landlord: IT doesn't have to be difficult Nick Gill - Intus Lettings

"Students Make the Best Tenants" has been the title of many landlord reports over the past 2-3 years.

Surveys consistently find that students pay rent promptly, have parents or guardians guaranteeing payment and provide a year-on-year demand for properties. Whilst the focus of each report may differ slightly, what is abundantly clear is that student landlords receive some of the highest yields in the UK property market.

Unlike other rented properties there is always a constant demand for student accommodation. In recent years UCAS has reported on rising student figures as more people make the choice to go to university.

Such an influx has even prompted the relaxation of caps on the amount of students universities are allowed to admit. In 2014, there were an extra 30,000 places, in September 2015, the caps will be completely abandoned. This is just as well, as student figures are only forecasted to keep rising.

September 2015

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The other notable growth in the student market is the increase in international students coming to the UK for their education. Since 2002/03 the amount of foreign students in the UK has risen by a massive 54.5% and this doesn’t look set to stop. The government document International Education: Global Growth and Prosperity estimates a further 15-20% increase in the next five years. This is good news for landlords, as over 52% of international students choose to live in Purpose Built Student Accommodation (PBSA).

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STUDENT ACCOMMODATION

so what do students want?

With the increase in size of the student population, so comes an increase in expectations. Over the past decade there has been a definite shift in terms of what students want from their accommodation.

Whilst there will always be a market for the traditional house share; students have been reported to pay up to 70% extra for luxury PBSA.

Location is essential A short walk to university means students don’t have to pay extra for travel passes and can have longer lie-ins. Other musts include high quality furnishings, as well as fast and reliable internet. The 2013 Student Accommodation Tracker found that only 28% of accommodation currently meets students’ expectations, so landlords with properties that tick all the ‘must-have’ boxes are seeing increased demand.

property management Managing a student property can also put more pressure on landlords, particularly due to the perceived nature of this particular market segment as being dirty, untidy and generally having a lack of respect for the property they reside in. If you invest in PBSA, then the management of the entire building will generally be the responsibility of an appointed lettings and management agency.

However, managing your own property can be a tiresome process that leaves you feeling frustrated and annoyed at the very tenants who are paying you rent.

Broken furniture, noise complaints and issues with payments all culminate into a headache you could do without.

TAKE THE HEADACHE AWAY So why not allow a specialist company to take that headache away? Intus Lettings is an independent lettings and management company that offers a comprehensive service either on a let-only or fully-managed basis. Specialising in both student and residential lettings, Intus Lettings is a nationwide agency with a portfolio of properties that spans the UK. Geared for both single property and portfolio landlords, Intus Lettings offers a straightforward process to help you let and manage your properties.

Each property has a presence on Zoopla, Rightmove and Gumtree until a suitable tenant is found, and the aim is to find quality tenants in the lowest possible time frame, ensuring the minimum of void periods.

Let-only service: Intus Lettings will be happy to find, source and reference tenants on your behalf.

Fully-managed service: Intus Lettings will manage the day-to-day running of the property and deal with any maintenance issues that may arise on your behalf.

Looking for a new letting agent? Speak to the Intus Lettings team and discover how you can save up to £700 on your lettings fees, including 6 months’ free management and your first month’s let free. ⌂

LANDLORD INVESTOR September 2015

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STUDENT ACCOMMODATION

Students pay a higher price to attend top universities Simon Thompson

Director of Accommodationforstudents.com

Latest research from Accommodationforstudents.com reveals average weekly student rent for 2015 is £82.09, up just £1.43 from 2014. Rents have risen consistently by an average of £1.67 each year since 2010.

Six of the UKs top universities (according to The Complete University Guide for 2016) are in the top ten most expensive cities for student accommodation.

Students in the London area (including periphery locations) pay almost twice as much (£122.01 per week) as students in Wales (£69.70 per week) and more than £30 per week more on average than students in any other region.

Students in the South pay on average 18% higher rent than those in the remainder of the country (£90.96 versus between £76.23 and £77.32)

For the first time (since rental data became available in 2005) more than half of properties available to students offer at least some bills included with the rent.

Accommodation for Students (accommodationforstudents.com), the UKs number one student accommodation website, today released its annual report on the cost of student accommodation. Student accommodation markets have generally remained stable, with a modest average rent increase of £1.43 from 2014 to £82.09. However, according to the average rents table, students attending six of the UK’s leading universities (Cambridge, Oxford, Imperial College London, London School of Economics, Exeter and University of Surrey) are likely to pay on average between £20 and £58 more per week than the national average.

The top three most expensive student locations are London, Cambridge and Kingston, the three cheapest are Wolverhampton, Stockton and Walsall.

Lancaster University was the only top ten ranked university (The Complete University Guide for 2016) where average rental value for student accommodation fell below the national average at £78 per week.

September 2015

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We provide a full range of services to help private landlords file their tax returns efficiently and help property developers unlock their business potential by offering a one-stop-shop for all your accountancy and taxation needs.

Contact Nick ChrisForsyth Harmantotoarrange arrangea a complimentary introduction meeting meeting to to discuss your property portfolio. portfolio

Making life simpler for you Nick 326266 ChrisForsyth: Harman:01376 020 7148 0872 nick@lambert-chapman.co.uk chris@lambert-chapman.co.uk www.lambert-chapman.co.uk Offices in Braintree, London London and and Maldon Maldon

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Regional disparities in rent values remain in place, as students in the North of England continue to pay much less (£14.73 less per week) than students in the South, whilst students in and around London pay considerably more on average (£122.01 per week) than the rest of the UK. Students in Wales pay the least, with an average weekly rent value of £69.09, followed by students in Scotland who pay an average of £72.81 per week.

London (£140), Cambridge (£124), Kingston (£115), Aberdeen (£109) and Guildford (£104) are the cities with the most expensive average rental values. Interestingly, despite being some of the most expensive places to live, London and Kingston do have some of the greatest average differences in rent between lowest and highest, ranging from £80 to £195 and £19 to £139 respectively. Guildford and Aberdeen have some of the least variation with an average difference of £39. Despite seeing its average rental value fall by £9 per week, Uxbridge is still in the top six most expensive locations, down from second place last year, and Oxford has climbed two places to seventh in 2015.

Plymouth, Exeter, Nottingham and Liverpool were recorded as having the greatest range in weekly rents, a difference of between £138 and £146 between the lowest and highest rents recorded in these cities. For example, the lowest recorded rent in Plymouth was £39 but the highest was £185.

Bolton (£62), Middlesbrough (£62), Wolverhampton (£62), Stockton (£49) and Walsall (£48) offer accommodation with the lowest average rent per week, none of which are home to universities in the top thirty of the 2016 league table.

Luton, Bangor and Derby have seen this year’s greatest increases, up on average 20% on 2014, all moving from offering accommodation at a renal cost below the national average to being on or above this year’s average.

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30/04/2015 09:21

The number of student properties offering a bills inclusive option was greater than the non-bills inclusive property sample for the first time recorded in 2015, continuing the upward trend in the availability of bills inclusive accommodation. The average additional cost in bills inclusive properties is £9-£13 per week.

Simon Thompson, Director of Accommodation for Students comments “It’s great to see that the overall market has remained stable over the last year, this is positive for both investor landlords and students.

Unsurprisingly, the north/south divide in rent values remains apparent, just as in the private rented sector. Naturally rental increases in some areas will be governed by student demand, often determined by what courses are available, but it is interesting to see that there appears to be some correlation between the highest ranked universities and cost of student accommodation.

Bills inclusive rental options are increasingly prevalent which shows landlords are reacting to student needs. Anything which helps students to manage their finances is appealing and I think this trend will continue to grow over the next few years as the cost of attending university creeps up” ⌂

September 2015

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