Landlord Investor JUL/AUG 2016

JUL/AUG 2016

W R I T T E N B Y I N D U S T R Y E X P E R T S C O V E R I N G A L L A S P E C T S O F B U Y - T O - L E T

LANDLORD | PROPERTY | INVESTMENT

BREXIT IS BREXIT: THE FUTURE OF THE HOUSING MARKET

- Tom Entwistle

WHAT'S THE FUTURE FOR LANDLORDS AFTER THE REFERENDUM?

- Peter Littlewood

INVESTMENT OPPORTUNITIES IN AND AROUND BIRMINGHAM

- David Humphreys

HOUSING AFTER BREXIT:

WILL THE MARKET CONTINUE TO GROW?

REMAINING 2016 SHOW LOCATIONS SEPTEMBER 21ST WEST BROMWICH MIDLANDS SEPTEMBER 28TH NORWICH EAST ANGLIA OCTOBER 13TH OLD TRAFFORD MANCHESTER NOVEMBER 8TH LONDON OLYMPIA Thousands of Landlords & Investors Attending // Hundreds of Exhibitors Expert Local Property Analysis // All Apsects of the Property Sector Covered FOR MORE INFORMATION AND TO GET YOUR COMPLIMENTARY TICKETS VISIT:

LANDLORDINVESTMENTSHOW.CO.UK OR CALL 0208 656 5075

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WELCOME TO THE JULY & AUGUST ISSUE OF LANDLORD INVESTOR! Happy Holidays one and all!

Editorial Editor

Tracey Hanbury editor@landlordinvestmentshow.co.uk Editorial Contributors David Humphreys Kevin Wright Leaders National Landlords Association Peter Littlewood Simon Zutshi Southern Landlords Association Steve Cox The Personal Agent Tom Entwistle

Art Dept.

Design Craig Edmonds Advertising Beverley Meliniotis

Contact Telephone: 0208 656 5075 Website: landlordinvestmentshow.co.uk Facebook: /LandlordInvestmentShow Twitter: @LandlordINShow

Tenants History LTD 27 Stafford Road 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.

CONTENTS Industry Update

Summer is in full form here at LIS Towers and our shows for the first half of the year have all been successfully delivered. Our last show at London Olympia saw over two thousands attendees through the door as well as ninety companies showcasing their services on the door.

Landlord Associations

Though our show schedule has quietened down for the time being, the world of property has not slowed down in the slightest.

Investment

Last month’s Brexit announcement left landlords, investors and property professionals across the country scratching their heads at the uncertainty of the markets future.

Landlord Insurance Industry Spotlight L.I.S Updates Auctions New Investor

06 16 18 20 22 24 34 38

In this month’s issue of the magazine, Tom Entwistle from LandlordZONE explores the announcement and the new Prime Ministers stance to speculate the future and what it means for landlords everywhere.

Also analysing the recent election results is Peter Littlewood from the Southern Landlords Association who is outlining which legislations will need to be revised in the market in order to achieve a clean split.

Also in this feature, David Humphreys from Buying Auction Property continues his analysis of assessing auctioned properties within a five mile radius of our up and coming events, this time highlighting some of the fantastic opportunities the Midlands has to offer at auction.

That means our next show is of course, in the Midlands! We’re heading to the West Bromwich Albion Football Club for our first ever Midlands show on the 21st September, so be sure to visit the website for more information.

Happy reading!

Tracey Hanbury | Editor Landlord Investor

Tracey Hanbury

July / August 2016

LANDLORD INVESTOR

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MEET THE TEAM

SHOW LOCATIONS

TRACEY HANBURY EDITOR & SALES DIRECTOR T: 0208 656 5075 M: 07931 308 845

28TH JANUARY - GUILDFORD

24TH FEBRUARY - EAST LONDON

2ND MARCH - COLCHESTER

16TH MARCH - BRIGHTON

13TH APRIL - CROYDON

27TH APRIL - DARTFORD

18TH MAY - MAIDENHEAD

25TH MAY - STEVENAGE

21ST JUNE - LONDON OLYMPIA

7TH JULY - EPSOM DOWNS

21ST SEPTEMBER - MIDLANDS

28TH SEPTEMBER - NORWICH

13TH OCTOBER - MANCHESTER

8TH NOVEMBER - LONDON OLYMPIA

tracey@landlordinvestmentshow.co.uk

STEVE HANBURY DIRECTOR

T: 0208 656 5075 M: 07429 683 046

steve@landlordinvestmentshow.co.uk

LES HANBURY DIRECTOR

FRAN ROBINS

SALES & EVENTS MANAGER T: 0208 656 5075 M: 07950 284 615

fran@landlordinvestmentshow.co.uk

RYAN DENNINGTON SALES & EVENTS MANAGER T: 0208 656 5075 M: 07931 308 856

ryan@landlordinvestmentshow.co.uk

BEVERLEY MELINIOTIS ADVERTISING SALES MANAGER T: 0208 656 5075

beverley@landlordinvestmentshow.co.uk

CRAIG EDMONDS CREATIVE DESIGNER T: 0208 656 5075

craig@landlordinvestmentshow.co.uk

IF YOU WOULD LIKE ANY INFORMATION ABOUT 2015 SHOWS, PLEASE GET IN CONTACT WITH A MEMBER OF THE TEAM OR ALTERNATIVELY, VISIT OUR WEBSITE AT: WWW.LANDLORDINVESTMENTSHOW.CO.UK

July / August 2016

LANDLORD INVESTOR

AUCTION

Five Day Sale - 154 Lots

RAMSGATE Two Individual Vacant Flats

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UCT ION 29 g th J ew uly SE hole IN T E THE s ou H F

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IS W ther ULL n re E C EST EK’S E ATALO gion ATE DIT G ION UE SG AZE O TTE F THE

MAIDSTONE Land & Buildings with Potential GUIDE £60-65,000

GUIDES £54-56,000 & £64-66,000 EPC: F&G

GRAVESEND Terrace House for Investment GUIDE £190-200,000 EPC:E

MARGATE Freehold Ground Rents GUIDE £15-18,000

CHELMSFORD, ESSEX Village Cricket Ground GUIDE £30-40,000

DARTFORD Garage Block for Investment GUIDE £150-160,000

WISBECH, CAMBRIDGE Detached House in Rural Location GUIDE £250,000 Plus EPC: E

BRAINTREE, ESSEX Freehold Residential Investment GUIDE £275-280,000 EPC:D

LEIGH-ON-SEA, ESSEX Mixed Residential/Commercial Invest GUIDE £900-925,000 EPC:D&G

HORSHAM, WEST SUSSEX Detached House for Modernisation GUIDE £340-360,000 EPC:TBA

PEVENSEY BAY, EAST SUSSEX Public House in Prominent Position GUIDE £350,000 Plus EPC:TBA

NEWPORT, ISLE OF WIGHT Town Centre Commercial GUIDE £85,000 Plus EPC:D

VENTNOR, ISLE OF WIGHT Four Bedroom House GUIDE £65,000 Plus EPC:TBA

BRIDGWATER, SOMERSET Detached House for Refurbishment GUIDE £80-100,000 EPC:F

TORQUAY, DEVON Hotel with Potential GUIDE £450-500,000 EPC:E

REDRUTH, CORNWALL Bungalow for Improvement GUIDE £75-85,000 EPC:TBA

Guides are provided as an indication of each Seller’s minimum expectation.

They are not necessarily figures which a property will sell for and may change at any time prior to Auction. Unless stated otherwise, each Lot will be offered subject to a reserve (a figure below which the Auctioneer cannot sell the Lot during the Auction). We expect the reserve will be set within the guide range or no more than 10% above a single figure guide. All lots are sold subject to legal documentation. Please check our website regularly at cliveemson.co.uk, or call 01622 608400, in order to stay fully informed.

auctions@cliveemson.co.uk follow us on

cliveemson.co.uk Tel. 0345 8500333

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INDUSTRY UPDATE

BREXIT IS BREXIT Tom Entwistle - LandlordZONE There is no turning back, even after an extended two-year withdrawal period; Britain will live with the consequences, certainly the economic uncertainty in the short-term, the constitutional change it could bring, and years of re-adjustments in trade and regulations with the EU and the rest of the world.

THE MOMENTOUS REFERENDUM VOTE HARBINGERS THE BIGGEST TURNING POINT IN BRITAIN'S HISTORY SINCE WORLD WAR TWO It brings the beginning of the end of our contentious 43-year relationship with what is now the EU – merely a common market, not a federation of states, when we joined.

The stock market bounced back pretty quickly, despite the S&P credit rating downgrade, and in many respects after one month it seems pretty much business as usual. Tory MPs elected a new prime minister in double quick time, removing much of the uncertainly following Cameron’s surprise resignation, but there’s turmoil within the main opposition party.

July / August 2016

LANDLORD INVESTOR

Until we see the new leader’s agenda there’s still a lot of uncertainty as to the way things will go. One view is that although Europe is being dogmatic in its demands, particularly on the immigration stance, these demands may soften over time, leaving Britain with some sort of sensible access to the EU market on terms which are acceptable to the electorate and hopefully all the UK nations, including Scotland.

Even if we don’t get totally free access, the tariffs are relatively small, and in effect neutralised by the devaluation of the pound. This could also ultimately be more than offset by our increasing trade with the rest of the world.

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Triggering article 50 of the Lisbon Treaty is a decision for the Prime Minister alone, as it is constitutionally a royal prerogative, however, parliament could instruct her to do it. But whatever happens the withdrawal process could go on for years. EU ministers want to accelerate it, but this may not be in Britain’s interests, and so far we probably hold most of the cards.

The referendum result is disappointing for those in the UK large-scale property sector; it has led to uncertainty in the commercial and residential property markets, particularly in London where deals have fallen through, and where agents want to encourage European investment in the UK. It has also led to some panic selling of investments in commercial property funds, where in some cases withdrawals have had to be restricted.

As Britain is one of the three major players in the EU, the consequences of this vote to leave will be felt far beyond our own shores; adapting to the change will inevitably bring opportunities for some in property, as well as dangers, but those in property will have to make the most of the situation, good or bad.

INDUSTRY UPDATE

The vote has shown that a majority of people, particularly in England, are out-of-step with the politicians in Westminster and businesses in general, most of who are pro-Europe – the Remainers. It also to some extent underlines the north-south divide – between the prosperous pro-Europe south-east and the north. This leaves the direction of political authority in Britain in disarray, and with constitutional uncertainty in relation to the UK Union – Scotland and Northern Ireland in particular.

Everyone will be hoping for a timely and smooth period of transition; consumers, employees, retailers and investors. We all know that much foreign investment has flowed into the UK as a result of our membership of the EU, so we shall now see how much of an effect the change will have on that – is the ARM deal announced this week a portent of what’s to come? As with the constitutional issues, managing this transition successfully will be crucial to Britain’s future prosperity. Mrs May has stated that holding the UK Union together is her main priority.

The fact is we are in uncharted territory and no one really knows what is going to happen over the next couple of years. What we can expect as a result of the uncertainty is quite a lot of volatility in the property and stock markets, which will inevitably have an impact on the economy as a whole and our continuing recovery from the 2008 recession, which will be slower than it would have been paying down national debt.

According to the latest UK Economic Outlook from PcW, UK economic growth had already slowed from around 3% in 2014 to nearer 2% before the EU referendum, due to slower global growth. However, according to PcW’s latest projections, Brexit could now see UK growth slow to around 1.6% in 2016 and 0.6% in 2017. Despite this, Britain’s growth is expected to outstrip that of Germany and France by a small margin next year.

If this transpires the UK will just avoid a recession (technically two quarters of negative growth), though PcW admit there are particularly large uncertainties around any such projections after the this momentous and unprecedented vote.

July / August 2016

LANDLORD INVESTOR

INDUSTRY UPDATE

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The main reason for a slowdown will be a decline in business investment and particularly inward investment from overseas in areas like commercial property, plus a construction slowdown. Consumer spending growth in PcW’s analysis will hold up better, but will still slow from previous strong rates, dropping to around 1.3% in 2017 in their main scenario.

This reflects the weaker pound, pushing up import prices and squeezing the real spending power of households, as well as lower consumer confidence levels and slower jobs growth.

As for the housing market, the vote is likely to lead to a significant dip in UK house price growth over the next few years, with London likely to be hard hit in the short term due to the negative impact on international buyer sentiment. Despite this, the existing supply-demand imbalances that have pushed house prices up by more than earnings for the past three decades or so will remain. Brexit will certainly not solve the problems of “generation rent”.

PcW estimate the time taken for the average “generation rent” household to save for a first home in 2016, without the help of the “bank of mum and dad”, to be around 19 years, a slight improvement on the 21 years pre-Brexit estimate. This is little comfort to those without family support, and the fact that there is a possible increased risk of unemployment due to the economic shock associated with the vote.

The huge decline in the number of 20-39 year olds buying homes over recent years, and the huge rise in the demand for renting, is a situation that’s unlikely to change in the foreseeable future, and one which should provide a crumb of comfort to anyone who has invested their savings into rental property.

There is only one viable longer-term solution and that is certainly not the rent controls muted by the new Mayor of London, and any more swinging regulation and taxation of landlords – encouraging the building of more houses must now be a priority of any UK government. This is a decade-long, not a years’ long project, which if implemented and sustained could eventually lead to a situation where earnings growth once again outstrips house price growth, sustainably bringing house owning affordability for those young renters.

In the meantime, landlords should be given all the incentives they need to invest in rental property, bringing back into use thousands of underused properties, to a standard that meets modern living needs, without the imposition of excessive regulation or taxation.

If property prices are adversely affected in the shortterm, and with a weak pound, value opportunities will inevitably be created in our property markets for foreign investors. Any dramatic drop in the value of the pound will alert shrewd international property investors, cash rich buyers from Asia, as well as from the US, who will be looking to take advantage of cheap UK property in a relatively stable and safe country. Likewise, cash rich domestic landlords may see attractive buying opportunities emerge.

July / August 2016

LANDLORD INVESTOR

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For the small scale landlord there will inevitably be plusses and minuses. The hit to the economy of uncertainty could lead to a slow down if not a minirecession, rising unemployment and the cost of living would affect tenants’ ability to pay rent. The drag on economic recovery will almost lead to the need for even further interest rate cuts, and yet more financial support from the Bank of England, in the form of quantitative easing.

A reduction in interest rates would lead to cheaper borrowing, but the recent greater restrictions on borrowing and mortgage application criteria are likely to remain. As was said above, house prices are likely to fall or at least stall across many parts of the country in the short-term, but given that new-build could now be put on hold, a continuing shortage of homes will mean that prices should still continue to rise once things settle down.

House buyers and sellers will now go through an uncertain and anxious time with house sales put on a wait-and-see slow-down. On the other hand rental demand will almost certainly continue to rise across the UK as demand from tenants remains strong, and can only be more so as new housing supply stalls. The effect is likely to be a continuing upward pressure on rent levels, particularly in London.

Buy-to-let landlords’ profitability may see a knock from the recent stamp duty and tax allowance changes, but as noted by a recent LSL survey, landlords’ financial health is robust across the piece and should be in a position to withstand economic shocks, as is also the case with the lending banks.

A bonus would be some form of compromise with the coming tax measures when Mr Hammond, the new Chancellor, takes the Treasury reins and the legislation is finalised.

Tom Entwistle, Editor LandlordZONE® – is an experienced landlord of residential and commercial property. July 2016 ⌂

July / August 2016

LANDLORD INVESTOR

INDUSTRY UPDATE

So, not everyone in property is pessimistic about the future; gradually investors are likely to see strong fundamental factors in a UK economy, which is the 5th largest in the world. The UK should eventually be free of some of the worst excesses of the EU: its profligacy, its red-tape bureaucracy, and the undemocratic technocracy it has created with its seeming inability to deal with major economic, migratory and security issues effectively.

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INDUSTRY UPDATE

WHAT'S THE FUTURE FOR LANDLORDS AFTER THE REFERENDUM? Peter Littlewood Southern Landlords Association

I DON'T THINK THE EDITOR LIKES ME! IN THE WEEK BEFORE THE REFERENDUM I GOT THE REQUEST 'CAN YOU DO A PIECE ON THE OUTCOME OF THE REFERENDUM'!!

Talk about a poison chalice! But let’s have a go.

I must start my saying that this has to be a pure guestimate, as any look into the future is always wrong, and with our current situation only a Time Traveller would be able to stand a chance.

FACTORS AFFECTING PROPERTY PRICES Property is bought for two main reasons, to earn money from; or to live in as an owner occupier.

July / August 2016

LANDLORD INVESTOR

Owner occupiers aren’t affected by property prices, unless they move, or re-mortgage. Then they are only of interest because:

1.

of the stamp duty liability;

2.

the potential to make a ‘profit’ if they trade down;

3.

or the increased amount required if the trade up.

If they buy to the same value it won’t matter if the property is worth £10M or £1, apart from the stamp duty liability, or potential negative equity with a mortgage. But it does matter if the property is intended to be sold for purely to make a profit – capital gain.

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RENTS

So the immediate question is arising from the Brexit vote is how will it affect property prices?

According to the Office for National Statistics (ONS) rents have gone up evenly since the start of 2011: and on the basis that people are still going to need somewhere to live, and is fed by supply and demand.

It is unlikely that the supply will alter much over the foreseeable future, in spite of the provision in the 2016 Housing Act to provide more affordable housing. The question is what will happen to demand?

Personally I think it will remain good for a while.

This graph shows property prices since 1952 (courtesy of Nationwide Property Index). The black line is the overall trend since 1952, which I have extended to 2021. This shows that the average price across the whole of the UK now stands at £198,564, up from £1,891 in 1952! and could be circa £245,000 in 2021.

The point it shows that although prices fluctuate they have always risen over a long period of time – i.e. whilst someone might make a profit quickly, to be certain property has to be held for a long time to ensure selling an increased time.

I’ve also extrapolated the graph to show what might happen if there were a 10% crash this year. Based on previous criteria it might not regain the current average value until the 2020/21 (4 to 5 years) – but who knows?

It is anticipated that the higher end properties are likely to suffer from the Brexit vote, as the high-earning bankers are unsure if they will still have a job in the UK. There is a lot of talk of jobs going to Frankfurt. The effect on the lower end is unknown.

A lot of demand is due to the number of immigrants, who will tend to rent rather than buy. Whilst no-one knows what will happen to immigration in the long term, especially after we leave the EU, in the short term we are likely to see an increase in EU migrants taking advantage of current rules, along with the prospects of an amnesty on anyone legally living here.

Index of average UK rents: Jan 2011 = 100

RIGHT TO RENT - I.E. IMMIGRATION CHECKS If there proves to be a substantial reduction in immigration (which personally I doubt) there might eventually be a relaxation the need to do Right to Rent checks.

Given the public concern about Immigration I think this unlikely, and certainly not in the next 5 years.

It is a funny time anyway. The market was slewed prior to March with many investors trying to beat the April deadline, and now it is depressed by the traditional summer interregnum, interestingly enough, anecdotal evidence seems to indicate that prices are generally holding.

July / August 2016

LANDLORD INVESTOR

INDUSTRY UPDATE

CAPITAL GAIN

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INDUSTRY UPDATE

EU LEGISLATION At some stage the Government will have to look at legislation brought about because of the EU. Some might be retained, some might go. That ones most likely that affects the PRS to be looked at are: • MEES – The Minimum Energy Efficiency Standard. This is the mechanism by which

any residential property with an F or G rating

will not be able to be re-let after April 2018;

and will not be able to be let at all after April

2020.

This has caused problems in Government; on one hand The Department of Energy & Climate Change ((DECC) now defunct) is tasked to reduce energy wastage, and this is one way of helping achieve this; on the other the Government are desperate for more residential property and don’t want to lose too many – so they are in a quandary, solved by the EU pushing for energy reduction, and Shelter pushing for substantially improved housing. Hence MEES. Will MEES be amended/removed – we wait to see.

•

EPC’s - also brought in by the EU after they signed the Kyoto Treaty in 1997 which bound all member states of the EU to reduce greenhouse gases. A main way of achieving this was the introduction of EPC’s.

In theory the UK could decide they are no longer bound by the Kyoto Treaty, and thus get rid of EPC’s, etc. However this is unlikely.

•

District heating - Heat network metering and billing regulations - requiring some HMO type accommodation, sheltered housing (and commercial premises) to have individual metering - quite easy to abandon or adapt as not yet fully enacted.

It is also not known how this review of EU legislation will be tackled. We could either repeal all EU led laws, and re-instate those we want, or could just adopt the ones we want to keep.

July / August 2016

LANDLORD INVESTOR

Whatever happens it is clear the Parliament is going to be very busy on Brexit for a long time, and one wonders what will happen to other matters. For instance, a lot of the recent 2016 Housing and Planning Act requires Parliamentary intervention to fully enact. Will this happen, or will it be a secondary victim to Brexit by running out of time?

Additionally last year the Government consulted on two matters, extension of Mandatory Licensing; and the potential to stipulate minimum room sizes. Will this see the light of day?

THE LARGER HOUSE BUILDERS The two sectors to be hit immediately after the referendum were banks, and large house builders. Uncertainty hitting both. Banks seem to have recovered fairly well, due to the Bank of England making soothing noises; house builders have now been hit by a fall in sterling, because so much is imported in house buying.

CONCLUSION I attended a talk by a large firm of Chartered Accountants on the effect of Brexit, and one of the presenters jokingly said that if he had prepared his slides to take full account of Brexit alone they would have been blank! I.e., no-one knows.

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It is very important that you have an exit strategy.

If you have bought to rent, can you sell? If you have bought to sell, can you rent? Have you got your tax structure sorted out, to minimise tax problems if you do decide to sell. Have you got funds to buy if prices do drop?

Don’t put your head in the sand.

⌂

So we all have to wait to see; fortune favours the brave, and that will continue.

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July / August 2016

LANDLORD INVESTOR

INDUSTRY UPDATE

But it is clear that the PRS is already undergoing radical changes due to the recent anti PRS legislation brought in by the Government. This appears to have had more of an effect than the Referendum. We will have a new Government by the time you read this.

Will they be so anti PRS, indeed will they have time to be?

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LANDLORD ASSOCIATIONS

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WHO YA GONNA CALL? National Landlords Association

THERE'S AN INCREASINGLY COMPLEX REGULATORY ENVIRONMENT WHEN IT COMES TO LETTING OUT PROPERTY...

So it’s no wonder that half of landlords admit that they find it difficult to keep up with changes in landlord law*.

In the last year alone we’ve seen the roll out of right to rent checks, changes to taxation, stamp duty, wear and tear allowances, and the introduction of retaliatory eviction and smoke and carbon monoxide regulations (to name but a few).

MORE CHANGE ON THE WAY? With a new prime minister in office, it’s anyone’s guess what could be further down the line, so it’s vital that you are just a phone call away from sound advice and a sympathetic ear should you need it.

One of the many services provided by the National Landlords Association (NLA) is our Advice Line which is manned by a host of trained advisers able to offer practical and pragmatic advice on any and all issues to do with running your lettings business. It is one of the leading benefits of membership.

July / August 2016

LANDLORD INVESTOR

We receive over 38,000 calls a year from landlords who have come unstuck and need our help, covering a wide variety of problems, including: •

Regaining possession of a property

•

Dealing with rent arrears

•

Understanding housing benefit payments and regulations

•

Contract law matters

•

Council Tax liabilities

•

Protecting tenants’ deposits

If you’ve got a problem listed above, or you’re experiencing an issue you need help with, then your first point of call should be the NLA’s Advice Line.

Of course, you could turn to the internet for the answers you seek, but you might not be guaranteed to find the right information. You could always call a solicitor, but that might prove more expensive in the long run.

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DON'T TAKE A GAMBLE, GET THE RIGHT ADVICE

NLA Full Members have free access to the Advice Line as part of their membership and we also offer a more flexible solution in Call Credits, which means you can sample the Advice Line without committing to NLA membership. They also benefit from free access to our 24x7 Online Library, broken down into six core categories: Starting up; Regulatory Regime; Property; Tenancy; Safety and Finance.

Join the NLA and find out exactly how we can help support you to make a profitable success of your letting business.

NLA Full members can access the Advice Line on 020 7840 8939 *NLA landlord Panel (Q4 2015 – 1364 respondents)

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July / August 2016

LANDLORD INVESTOR

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LANDLORD INSURANCE

RENT GUARANTEE IS A MUST WHEN ECONOMIC UNCERTAINTY ARISES Steve Cox - Alan Boswell Group Property is likely to be your most valuable asset, but what do you do when your tenants fail to pay the rent? Steve Cox at Alan Boswell Group takes a look at the benefits of rent guarantee insurance.

RECENT ECONOMIC DATA AND POLITICAL EVENTS HAVE LEFT THE UK ECONOMY IN AN UNCERTAIN POSITION. With manufacturing output declining, a crisis in the steel industry and poor import and export figures, the prognosis is gloomy. Add to this the uncertainty caused by the recent Brexit vote and it looks like many sectors, including the rental market, could be heading towards choppier waters. Businesses across the board will undoubtedly be looking at their expenses and may curb spending and hiring plans – putting jobs at risk as companies adapt to uncertain times.

Although this situation is worrying for everyone, landlords are especially vulnerable to economic downturns. Even if they are careful to weather financial turbulence, invest wisely and always keep something

July / August 2016

LANDLORD INVESTOR

to fall back on, their tenants may not be as sensible or as lucky. If someone loses their job, they may end up in arrears and – despite their best intentions to pay – may end up owing several months' back payment. This is why it’s vital that all landlords have rent guarantee insurance.

COVERING YOUR BACK If you have a rent guarantee insurance policy in place from Alan Boswell Group, we will actually cover the rent money you are due while your solicitor pursues the tenants for the money they owe. It can be purchased as an extension to our legal expenses cover and will pay out up to a maximum of £25,000 or 12 months' rent, whichever is reached soonest.

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LANDLORD INSURANCE

Our legal expenses cover will also help you with the costs of pursuing a tenant who is in breach of the tenancy agreement. For both of these policies, we offer great value for money, and they really are invaluable should you find yourself suddenly without your main source of income in terms of rent paid.

MAKING ENDS MEET If a tenant defaults, you will have no money going in while you still having money going out. You’ll need to find the money to pay the mortgage on the property, pay for maintenance and upkeep, and cover all of the other regular costs of running a house.

You may also find that the tenant has gone into arrears with utility bills or council tax, which is yet another headache for you to deal with. Then there's the cost and trouble of finding a new tenant, including agency fees and reference checks.

Like all forms of insurance, rent guarantee insurance also gives you peace of mind even if you never have to claim on it. Don't be a hostage to fortune – make sure you protect your income.

Want to learn more about the benefits of rent guarantee insurance? Call Alan Boswell Group today on 01603 216399 to make sure you're fully covered. ⌂

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July / August 2016

LANDLORD INVESTOR

INDUSTRY SPOTLIGHT

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INDUSTRY SPOTLIGHT WHO ARE WE? The Personal Agent is a five-branch independent estate agency dedicated to local homeowners and investors, offering sales, lettings and property management services across the south-west London and north-east Surrey region. For more than 10 years our highly trained, tenacious and friendly team have built us a reputation for quality of service and delivering on our promises, and we’d love the opportunity to prove this to you.

WHAT DO WE DO? Aside from providing all the standard property sales, lettings and management services, we also offer exceptional local knowledge, exceptionally accurate valuations, passion for all things property, and a very different approach to estate agency than you may be used to. To start off with all of our photographs are professionally taken (not dark, blurry, poor representations for your property), and every vendor has the option of a free video walk-through (to enhance saleability). Then there are our dedicated sales progression staff to ensure that offers follow through to completions, and the support we give all parties throughout the time you are with us.

WHEN CAN WE HELP? Anytime you need us. If you want to buy or sell, let or rent your property. If you wish to unburden yourself from your duties as a landlord by passing them to our management team.

July / August 2016

LANDLORD INVESTOR

If you want to know what your home is worth to see if you can afford to move. If you wish to tap our local knowledge to discover whether Ewell, Epsom, Stoneleigh or Banstead are the towns, villages or areas you’d love to call home. If you’re looking for an investment with the very best returns, a new property off-plan or a home with character, a mortgage or just a chat about moving. We are here to help whatever your property needs.

WHERE DO WE COVER? Our five branches are located in Epsom, Ewell, Stoneleigh and Banstead, and our traditional ‘region’ stretches out a few miles in all directions from them.

As our staff all come from or live in the region, as we’ve been helping vendors to sell, landlords to let, tenants and buyers to find their new homes, developers to showcase their workmanship, and investors to seal deal after deal for over a decade, we know these areas well. And that always works in your favour.

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WHY DO WE DO WHAT WE DO?

I appreciate this may be a little direct for some and we should probably be looking to woo you with fancy words about our talented team of property management and letting consultants, each with years of dedicated experience in the local market.

We should probably mention that our marketing – both digital on portals such as Rightmove and Zoopla, and in the press within local newspapers and magazines, on boards and via our window displays – draw the eyes of millions of potential tenants each month.

And, we may even be advised to mention that though properties rarely stay on our books for long enough to take advantage of this, our property details are the best in the business, consisting not only of impactful wording designed to convince tenants that your property should be their home, but also professional photography and video walk-throughs can be included at absolutely no additional cost to you.

Yes, we should be saying all of that, because quite frankly it’s all true, but it’s a bit wordy, and we’d rather just get to the point… we need your property because we have more lovely, qualified, referenced and reliable individual and corporate tenants than we have properties to match them to.

And, as this has been a constant issue over the last 10 years that we have been one of Epsom, Ewell and Stoneleigh’s leading estate agents, we can say with confidence that no matter whether you have a flat or a house, a maisonette or a bungalow, a Victorian, Edwardian, pre- or post-war, modern or character property, we would love to hear from you.

INDUSTRY SPOTLIGHT

In a word, passion. We launched The Personal Agent in 2004 to be a different kind of estate agency. We strove to care about our clients, to know our stock inside and out, and to understand the needs of our region, and we do. We were driven to offer the highest quality service as standard, and this has been an unwavering commitment from day one. And we took personal responsibility for servicing our client’s property needs, so we treat every home, investment and search with the individuality it deserves, the personal touch.

Our company name encompasses the ethos we were launched to uphold – we make buying and selling, renting and letting our personal responsibility, not a job, not a career step, or an inconvenience, but the personal responsibility of our company, of the branch closest to you, the team within, and the consultant we choose as best suited to work directly with you.

Cross-branch cooperation means that everyone in all five of our branches will be pulling together to sell or let your property, or to help you to find your perfect home, the weight of over a decade of experience marketing both online and off will support our efforts, and our long opening hours mean that we can dedicate more time to the task. But, with all that going on in the background we want things to be clear and simple for you.

As proud members of the Property Ombudsman and the Deposit Protection Service (DPS) you can have confidence that we strive every day to uphold the very best customer care and standards of service, and our TSI Approval Code validates this. Also, with a thriving property management team, a dedicated removals and storage service, and mortgage advisors in-house for you to chat with, you can literally get all the expertise and assistance you need under one roof.

If you’re considering renting your property out or if you would like a free valuation and expert advice from our team then please contact Cheryl on 01737 333699 or Ria on 01372 726666. ⌂

July / August 2016

LANDLORD INVESTOR

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L.I.S UPDATES

ANOTHER GLOWING SUCCESS AT OUR EVENING RACES

ON 7TH JULY 2016, AFTER THE SUCCESS OF LAST YEARS EVENT, THE LANDLORD INVESTMENT SHOW RETURNED TO EPSOM DOWNS RACE COURSE TO HOST THEIR SECOND LANDLORD INVESTOR RACE EVENING. The evening was a glowing success attracting five thousand attendees through the gates on the day!

The races were proudly sponsored by Leaders, a South-East based letting & estate agents, Towergate Insurance, an award winning and leading insurance intermediary, and The Personal Agent, an Epsom and Banstead based estate agent specialising in residential and property management.

July / August 2016

LANDLORD INVESTOR

dlord The full Lan Show team Investment

Our Landlord Investor Race Days have proven to be succesful events that bring together our clients, landlords and property investors to enjoy a fun-filled and informative day out of the office.

These events are another great opportunity to network with fellow industry experts and help promote your brand and services to a large audience.

We will endevour to continue working closely with The Jockey Club, so be sure to keep and eye out for future events at the Epsom Downs Race Course. ⌂

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L.I.S UPDATES

w

ho tment S s e v n I d Landlor e big screen on th

Towergate Insurance with the winnin g jockey and horse owner

The w

inning jo at the ckey arrives podium

The Personal Agent presen t the winning horse owner with h is award

finish on A race to the nge the final furlo

the rs presenting e d a Le r so n o Race sp award owner with his

July / August 2016

LANDLORD INVESTOR

INVESTMENT

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THE CATCH 22 OF SERVICED APARTMENTS Kevin Wright - Ninja Investor Programme Services apartments provide short term lets for people who are travelling either for pleasure or for business. Sites like airbnb and Booking.com demonstrate how popular this form of accommodation is.

In fact, I use them myself sometimes – when I’m visiting London to deliver the Ninja Investor Programme I’m usually ‘in town’ for at least three nights and it’s nice to have the privacy and independence a one-bedroom apartment gives me.

As there is now a significant demand for this type of property, savvy investors are looking at the opportunity with interest. They may have a successful track record with HMOs and this is a logical next step.

Then they hit the barrier when they apply for a mortgage. As far as a lender is concerned it’s not the same; with an HMO you can show the AST agreements proving the rental income you get from the property and this is very important to commercial lenders. They need to get comfortable that you will be able to maintain your mortgage payments before they will agree to lend to you. Easy with a tenanted HMO but not so easy with a serviced apartment as it’s a much chancier investment; you don’t have that security of income – you could be fully booked one week and empty for the rest of month.

It’s not that mortgages are not available; commercial lenders have been lending on short term lets for decades in the form of hotels, guest houses, B&Bs, holiday lets, even kennels and catteries (they may have different clientele, but the principle is the same!) The problem is that if there’s no track record – either of the apartment(s) you’re planning to purchase or of your experience as a serviced apartments landlord how can the lender be confident that you’ll be able to pay your mortgage every month, without running into difficulties?

July / August 2016

LANDLORD INVESTOR

Commercial lenders need reassurance. Your ability to provide that reassurance depends on a number of factors.

•

If you currently own and rent out other short-term lets successfully you could offer the historical occupancy rates of your existing properties as evidence of your competency as a landlord using this model.

•

If, for example, you’re buying a going concern that has achieved 86% occupancy in previous 12 months a lender would be inclined to expect a similar result in coming period.

The problem appears to be insurmountable if you want a mortgage on a newly acquired property you intend to let as serviced apartments – and you have no experience as a landlord of this kind of short-term let. Your lack of historical occupancy and/or experience will result in a ‘vote of no confidence’!

However, there are ways around the problem

•

You could joint venture with someone who does have the experience and will satisfy the lender that there’s someone in the equation who knows what they’re doing.

•

You could use cash (yours, if you have it, or someone else’s) and dispense with the need for a mortgage, until you build that track record, then apply for a mortgage.

•

You could get bridging finance, run the project short term to build a track record over 12 months, then apply for commercial mortgage.

There is, as they say, more than one way to skin a cat! ⌂

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INVESTMENT

HOW TO GET YOUR NEXT DEAL, NEXT MONTH! Simon Zutshi property investors network For many Landlord Investor readers, the three months over the summer can be very slow in the property world as people generally take their foot off the accelerator to enjoy a few months during the summer. However, this can be one of the best times for you to get your next deal as Simon Zutshi explains and gives some practice tips in his article this month.

DOESN'T EVERYONE GO ON HOLIDAY OVER THE SUMMER? When I first started the property investors network back in 2003, we used to run a network meeting once a month, for 12 months a year. After a few years we decided to reduce this down to 10 meetings per year as we noticed that the attendance was much lower in August and December, as most people had other things on their mind during those particular months.

Whilst there are still some people around during the summer who would come to network meetings, we felt it was not really worth holding the meetings at those times.

I have also noticed, over the 14 years that I have been teaching other people to became successful investors, that many investors stop advertising for motivated sellers particularly during August often because they believe less people are around to see their marketing, and also they may not be around themselves to take the calls from anyone who may happen to respond to their marketing.

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LANDLORD INVESTOR

This is not a good idea. Whilst many people do indeed go away at some point during July, August or September, the property world does not suddenly grind to a halt. Estate Agents are still open and are targeted to sell a certain number of properties, and more importantly motivated sellers still need to sell their homes. It seems that there are less people around to buy, which is good because it means there is less competition. So in fact, you should step up your marketing activity in the summer because it is easer to stand out from the competition because most other investors do not put in as much effort at this time.

If you are away on holiday yourself, and not physically able to take calls from motivated sellers, then make sure you have a good system in place to capture all the enquires.

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All too often, I see people who do nothing towards their property investing in August and then find it very difficult to get the momentum going again in September, with the result that they don’t actually get going again until October.

BE PROACTIVE As I have mentioned earlier, Estate Agents are still tasked to sell a certain number of properties during the summer, but the reality is they are probably not as busy as normal. They will have more time to spend with you and so this can be a great opportunity to build your relationship with them and get into their little black book so that they call you whenever they get a great deal. They need to know that you are a serious investor and that you will move quickly when they give you a good deal. Just like motivated sellers, they too want speed and certainty. If you plan to visit the Estate Agent once a week, each week over the summer, you will be amazed at how much you can develop your relationship with them

Over the past two years we have introduced something called the 21-day challenge, which we used to run exclusively for people on my 12-month Property Mastermind Programme, but now we have made available to everyone who is a member of pin academy (www.pinacademy.co.uk). In August, when there are no pin meetings, we have a 21 day period when hundreds of investors go through this online challenge at the same time providing each other with support and encouragement.

The results are incredible with most people reporting more progress on their property investing journey than normal and some people even doing a property deal thanks to the increased focus over the three-week period. The interesting thing is that none of these tasks are particularly difficult in themselves but when you take action each day, and every day, it is amazing how much you can move forward. If you are a member of pin Academy make sure you look out for this and take advantage of the opportunity.

KEEP THE MOMENTUM GOING The other problem I have seen with many investors is that they not only slow down their investing activity but completely stop during the summer to take some time off. Now I am all for taking time off, it is very important and after all that is one of the reasons we should be investing in the first place, to give us the time and freedom to do what we want with our time, but that should be once we have the portfolio we want, generating the passive income we need to make those kind of decisions.

July / August 2016

LANDLORD INVESTOR

INVESTMENT

Maybe work with another local investor who you trust to deal with the enquires whilst you are away.

You could maybe joint venture on these deals and even come back from holiday to find that they have negotiated a great deal for you whilst you were away enjoying yourself. Working with other people can be a really smart thing to do, rather than trying to do everything on your own. Please make sure you take time to get to know potential joint venture partners, build the relationship to ensure you really want to work with them and that your values are aligned to ensure a successful partnership.

Whilst you might slow down in the summer, especially as the kids are off school, I would suggest that you aim to do something each day to move you forward, even if it is a small task, to just keep the momentum going. This is a principle from one of my favourite books called “The Slight Edge” by Jeff Olson. If you have not read it already, I highly recommend you do.

The idea is that it is the small things that you do on a consistent basis that will give you the results you desire.

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INVESTMENT

KEEP LEARNING Although there are less physical property networking meetings over the summer, use the time you would have normally spent going to these events, to increase your investing knowledge. Read property books, listen to webinars, take part in online training, and make sure you keep up to date with the latest investing strategies. Robert Kiyosaki Author of Rich Dad, Poor Dad has a great saying “What you know will make you money. What you Don’t know will cost you money”

SPEND QUALITY TIME WITH YOUR FAMILY AND FRIENDS Having said all of the above, I think it is important to remember why you are investing in the first place.

For most people it is to give themselves more choice and freedom by creating a passive income. You do need to take some action to set up the passive income streams as it won’t happen on its own, but there is also a balance between short term sacrifice of putting in the necessary time and effort to get the results you want without ignoring your family and friends completely I sometimes meet people who tell me they have not been on a proper holiday for a number of years. That can’t be good. We all need some time away, some rest to recover and recharge your batteries. It does not have to be an expensive holiday. It could just be a week away camping if that is all you can afford. But you must take some time out for you and your family.

MAKING THE MOST OF THE SUMMER MONTHS In summary, here are a few tips on how to make the most of the summer whilst still moving your property investing forward:

1.

Make a commitment to keep momentum going during the summer

the

2.

Do at least one thing each day to move you forward

3.

4.

5.

6.

7.

8.

Be proactive and visit Estate Agents regularly to build the relationships Keep advertising for motivated sellers Put systems in place to take enquires When away, joint venture with a local investor to handle these enquires Keep educating yourself Do spend quality time with your family

HOW CAN WE HELP YOU? Over the summer we are going to be running a number of no cost webinars on various property investing subjects so look out for emails from me about these.

Also for the first time ever, we are going to run one of my advanced 3-day Mastermind Accelerator Workshops in August on Thursday 4th, Friday 5th and Saturday 6th. We don’t normally run any pin meetings or physical training courses in August for the reason mentioned above, but we have decided to run this advanced 3-day workshop in the school holidays so that teachers and people who cannot normally attend these events in term time can participate and benefit.

This is unlike any other three-day property event you may have previously attended. We teach you all of the strategies from my 12-month Property Mastermind Programme in three days of property immersion. It is a residential course with a full 100% money back guarantee so there is no risk in attending our training. Full details can be found here: www.MastermindAccelerator.co.uk ⌂

July / August 2016

LANDLORD INVESTOR

52/re you coocerned about

THE REFERENDUM DECISION HAS THE POTENTIAL TO AFFECT PROPERTY AND FINANCE IN MANY WAYS BOTH POTENTIALLY GOOD AND BAD

Property Supply & Demand

Mortgage availability

IFVOU HAVE QUESTIONS REGARDING HOW IT WILL IMPACT AREAS SUCH AS

Interest rates

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Property Prices

Rents

INVESTMENT

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LANDLORDS URGED TO MINIMISE VOIDS TO MAXIMISE RENTAL RETURNS LANDLORDS MUST TAKE STEPS TO MINIMISE VOID PERIODS IN ORDER TO ACHIEVE THE BEST POSSIBLE RETURN ON THEIR PROPERTY. Property specialist Leaders has warned of the importance of eliminating spells without tenants wherever possible and, when the time comes for a tenant to move on, ensuring they are replaced quickly with a quality applicant.

New research shows the average tenancy in the UK runs for 18 months before tenants move out.

In Birmingham this figure rises to 28 months, but in Leeds it is just 12 months. Leaders’ landlords, however, enjoy significantly longer tenancies with tenants currently staying almost three years (35.3 months) on average.

Jane Wilkinson, lettings director at Leaders, says: “By only allowing a quality applicant to rent our landlords’ properties and working closely with them to ensure their time in their rented home is as enjoyable as possible, we are able to increase the likelihood of tenants remaining in place for a significant period of time which gives landlords stability and peace of mind. It also ensures that the landlord’s investment is more profitable, which is a huge focus for us.

“However, it is inevitable tenants will move on at some point, so acting quickly and efficiently to remarket the property, setting the rent to the right level for the current market and preparing for any decorative work to attract the best tenants is the best way to ensure the property continues to generate rental income.

July / August 2016

LANDLORD INVESTOR

“It is also incredibly important that landlords allow for void periods in their calculations regarding the affordability of owning a rental property.”

The study, conducted last month by Direct Line for Business, found it takes an average of 22 days to find a new tenant for a vacant property, with some regional variations. Leaders’ landlords, however, experience significantly shorter voids between tenancies, on average less than 10 days.

Jane explains: “The key is to be prepared for all scenarios and to have a plan in place to replace current tenants. We keep our landlords’ void periods to a minimum by acting quickly to market their property before a tenancy comes to an end. In most cases we have found and fully vetted a new tenant before the previous tenant has moved out.

“However, in some cases, a short void period can actually have a positive impact. It provides an ideal opportunity to carry out repairs and maintenance work to ensure the property is able to achieve its full rental potential and attract quality tenants who will want to make it their long-term home.”

For more information on letting a property or for advice on the local market, please contact your nearest Leaders branch or visit leaders.co.uk ⌂

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AUCTIONS

INVESTMENT OPPORTUNITIES IN AND AROUND BIRMINGHAM David Humphreys Buying Auction Property

WELL, OVER 300 PUNTERS HAD EITHER NOT READ OR WERE NOT TAKING ANY NOTICE OF THE BREXIT WARNINGS ABOUT THE IMPENDING CRASH IN PROPERTY PRICES And as a result, they spent over £15 million on 106 lots out of the 129 lots offered at SDL Bigwood’s July 7 auction, the 2nd most successful auction in their history.

And, as hot as the room was, there were still bargains to be had such as 10 lots from the end, a 4.5K pa AST let studio flat, Lot 125, 16a Leys Rd, sold for 22K, a gross yield of 20.45%! It is always worth staying the distance at auctions because often the best deals, dare I say the bargains, are often in the last quarter of the catalogue.

July / August 2016

LANDLORD INVESTOR

All this bodes well for my Auction Masterclass which is being relaunched on August 15 to get to grips with Bigwood’s September 8 auction. 2 places are still available out of the maximum of 12 on this unique “live” auction training. For details go to www.PropertyAuctionExpert.com.

Last month, to coincide with the Olympia Landlord Investment Show my article was about auction opportunities within 5 miles of Olympia. September 21 finds the Landlord Investment Show at West Bromwich Albion FC with the National Midlands Show so this & next month I am going to look at the investment opportunities in and around Birmingham based on Bigwood’s 2016 auction results.

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WHAT TO ATTEND For those unfamiliar with Birmingham residential property auctions, there are 4 principal auctioneers in Birmingham.

AUCTIONS

No 1 and the largest is SDLBigwood with 6+ auctions a year at the Aston Villa FC offering a 130-150 lot catalogue mostly located to the West of Birmingham, (Bromsgrove, Brierley Hill, Dudley, Walsall, Willenhall, Wolverhampton, , Smethwick, ). Their catalogue almost always includes a number of properties & land being sold on behalf of both the Wolverhampton & Birmingham Local Authorities.

2nd is Cottons, also with 6+ auctions a year and again held at Aston Villa FC and offering a 40-60+ lot catalogue.

3rd is the Auction House Group with 6+ auctions offering 15-30 lot catalogues.

Last but not least and 4th is the West Midlands Property Auction – iam-sold, a non-conventional auctioneer selling both Conditional & Unconditional Lots, upwards of 60-80 on offer per auction, where a non-refundable deposit is paid on Conditional Lots with exchange of contracts to take place within 28 days, not on the fall of the hammer as is normal at auctions.

Finally, regularly, West Midlands properties are listed in auctions outside Birmingham. They often feature quite strongly in the London auctions as well as other strong auction centres such as Manchester and the North.

The overall total is well in excess of 300 properties per round of auctions, probably over 2,000 a year, with hammer prices ranging from a few thousand to a few hundred thousand.

Lot 63

Lot 60

In the July 7 auction £7,400 would have bought you Lot 2, 294 m² of Freehold Land with Street Frontage & Development Potential in Winson Green, B18, Vendor Birmingham City Council.

Those with deeper pockets might have been interested in Lot 63, 2-3 Church St, a Freehold Grade 2 Listed Hotel Investment in Wolverhampton (WV2) converted to provide 9 self-contained letting units with Planning Permission to build a further 10 units which sold at 700K off a guide of 675K. Ignoring the value uplift from the Planning Permission, the 9 units, a mix of studios & 1-bed flats, sold at less than 80K a pop and are currently generating an income in the region of £9,800 PCM (117K PA) on outgoings of 15K PA, a net pre-tax before development of 100K+.

If, £700K is a bit rich, £315K would have bought you Lot 60, The Vine, a Freehold Residential Investment Property of 6 Apartments, again in Wolverhampton (WV1), generating a gross income of £29,100 PA, GY 9% +. The 6 units comprise 5 2-bed let @ 395 PCM & 1 3-bed @ 450 PCM. Note the current LHA 2-bed rate is 454 PCM, a possible 300k pcm uplift! £315K still too rich? As I mentioned earlier, your credit card could possibly have bought the Studio Flat in Brierley Hill for £22K, AST let @ £4,500 pa, GY 20%. Alternatively/as well, £27K would have bought you Lot 119, another Studio but this time in Tipton DY4, AST let @ £4,628, GY 17%.

July / August 2016

LANDLORD INVESTOR

AUCTIONS

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Moving on to buy fix & flip/let, £48K (guide 35K) buys Lot 24, 30 Crescent Rd, a 3-bed mid-terraced house in Dudley DY2, needing work with a fixed up value of £100k+. Also £51.5K (guide 50K) would have bought Lot 100, 2 Payne St, a tidy looking 2-bed mid-terrace needing modernisation in Rowley Regis B65 with a fixed up value of £ 105k.

One of the reasons why my Auction Masterclass is based on Bigwood’s is the wide variety of properties offered and the sometimes unusual conditions applying, which helps increase the confidence of novice auction buyers as they start to bid & buy for real having completed the vital Due Diligence.

Lot 100

To start with Bigwood’s auction is held in a large room, initially crammed full of people which can be quite intimidating, where, if you are serious about bidding, there is no point in being a shrinking violet and standing at the back hoping to be spotted as you gently wave your bidding paddle. If you are going to bid, be seen and be aggressive, and if you are going to continue bidding on a lot my advice is to leave your paddle up rather than taking it down/hiding it between bids. That way you have a chance of making every other bid rather than every third or fourth depending on the competition. Learning these tips & tricks and practising winning bids is covered in the Masterclass.

The first 7 lots, bar one, of the July 7 auction were land being sold on behalf of Birmingham City Council who insist on an unusual condition. The 10% deposit, due on the fall of the hammer, has to be paid with a Bankers Draft and only a Bankers Draft, no cash, credit/debit cards, gold or any other method of payment.

Now, whilst it was made very clear at the start of the auction that this condition applies and was repeated at each of the first 7 lots, applying this condition really slowed down the pace of the auction. Every time a new bidder entered the fray, auctioneer Rory Daly asked “have you got a Bankers Draft?” Answer, yes, bid accepted, answer no, bid not accepted, and then on the final bid, the potential winning bid, the Bankers Draft has to be physically checked/inspected by one of Bigwood’s staff before Rory finally drops the hammer to confirm the winner with suitable congrats!

Unfortunately in one case the bidder had left the Draft in his car after all these pre-auction exhortations and procedure explanations, and only had a picture of it on his mobile, quite why I have no idea, but proceedings were inevitably delayed while the Draft was retrieved.

So the effect of these Drafts was, and always is, that the auction stuttered on to lot 8, the end of the Birmingham City Council stock and then moved on to Wolverhampton City Council stock with no Bankers Drafts but 2 unusual conditions.

1.

2.

Lot 24

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LANDLORD INVESTOR

No offers will be accepted prior to or post-auction, the lot has to sell under the hammer or go on to the next auction.

Subject to condition, the property must be refurbished to a good lettable standard and completion is delayed for the fix-up period (3-6+ months). The purchaser also has to pay £1,000 Council legal fees, which is becoming increasingly common.

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Lot 4, 374 m² was not quite so hot guiding at 30K hammering at 73K, but the heat came back on with lot 5, a nice rectangular 502 m² plot guiding at 60K swept pretty quickly up to 200K. Interestingly lot 6, 1163 m² located behind 6 semis with narrow access, almost land-locked, guided at 15K hammered at 45K, and finally 228 m² of land with street frontage in B1 guided and sold at 125K. Now I have not done any due diligence work on land in and around Birmingham as I am only really interested in development land if attached to a residential property, a building plot within the curtilage, because, what I am looking for is 2-3 bed heavily distressed but not derelict, ideally terraced properties that can be refurbished to a high standard for either a Flip Profit or No Money Left In, NMLI following re-mortgage, Strategies with Tax-Free Rent resulting from the refurb/fixup cost split between Revenue & Capital.

But, given the difference between auctioneer/vendor expectation as indicated by the guide, and the subsequent hammer, at the very least investors need to understand the land market and it’s potential.

They say that there is no such thing as a Free Lunch, well that’s not the case with Bigwood’s provided you know where to stand. Around midday, or maybe slightly later, plates of tasty sandwiches on white & brown appear on the bar which runs down most of the length of the auction room. There are always punters standing with their backs to this bar so most of the seated punters in the centre of the room would not be aware of the arrival of this sustenance that helps maintain your blood sugar levels to keep you calm in the heat of battle!

Well short of the halfway point, around lot 50, in the proceedings you will probably notice that a substantial number of punters have left leaving the dealers clearly visible along with the solicitors and their legal packs at the back of the room. It’s a little bit like the tide going out exposing the rocky out-crops.

Also with the room half-empty you can watch the auctioneers struggling to ramp up interest in particular lots and starting to work the bids-off-the-wall routines trying to extract a genuine starter bid at or below the reserve. Bids-off-the-wall musn’t equal or exceed the reserve.

Outside in the foyer, where you registered on arrival and were given your bidding paddle, you will find the trade stands of Bridgers, Insurers and maybe Solicitors and now is the time to go talk to them if you need any of their services as the rush is over but they still have some hours to go before they reach the end of their day so will welcome your interest. Don’t expect any special deals but do expect plenty of time to discuss your particular requirements and foibles.

Next month I will take a closer look at the properties and you will find in Bigwood’s catchment area and particularly an area between Bilston (north) through Tipton & Dudley down to Brierley Hill (south) which is the main location of the properties we work with in the Auction Masterclass.

If you are interested in Auctions, my Live Auction Masterclass will help you with all aspects of Buying Auction Property. For details of the 44-hour programme go to www.PropertyAuctionExpert.com where you will also find a Google map with placeholders for all the sub £100K lots sold by Bigwood’s through 2016.

⌂

July / August 2016

LANDLORD INVESTOR

AUCTIONS

One surprise that came out of the Birmingham land sales was the considerable difference between the Guide and Hammer. The first lot, No 2, 294 m² of land guided at £1,500 hammered at £7,400, okay relatively small sums of money can vary wildly but lot 3, 420 m² of land guided at £20,000 hammered at £187,000 and this is without any planning consents in place.

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NEW INVESTOR

ESSENTIAL ADVICE FOR NEW LANDLORDS Southern Landlords Association In the last magazine Peter Littlewood from the SLA wrote on some dos and don’ts of letting. In it he outlined some of the potential models to be followed; and summarised that whatever rental model used the landlord has to be comfortable with what they are doing.

This article will continue the essential advice, this time concentrating on the requirements of the actual property. Next time we will look at how to set up and run a let.

The main difference with the underlying advice from now on is that comfort doesn’t come into the equation; everything that needs to be done is a matter of law and/or correct practice.

PERMISSION TO LET You may well require consent to let your property: •

if there is a lease it is vital you check that the leaseholder will allow you to let the property – technically this is sub-letting, as you are leasing from the freeholder.

For example, some old leases might state that you cannot hang washing out on a Sunday; so if you don’t tell your tenant and they do hang washing out on a Sunday it will be you in trouble, not the tenant; • you need to also check the deeds of the

property – for the same matters as outlined above.

If you don’t have this permission you will need to try to get the lease amended to allow for this. At the same time you might want to get other parts of the lease amended, especially the duration.

•

If the property has a mortgage it is vital that you obtain their permission to let. Whilst it is not clear if this is a criminal offence or not, it almost certainly will be in a contradiction to any mortgage clause, and you could be accused of mortgage fraud, -which is a criminal offence.

Note also that any peculiar requirements of the lease have to be reflected in the tenancy agreement, else the landlord might be in trouble with their freeholder but they can’t insist on their tenant fulfilling the term if they have not been told.

•

If the property is jointly owned, you will need permission of all the owners. Be careful about equity release schemes, or the property has been bought where the builder retains part ownership.

July / August 2016

LANDLORD INVESTOR

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TAX

INSURANCE Someone else you will need to tell is the insurance company. Whilst not technically requiring permission, if they are not aware you have tenants they almost certainly fail to entertain any claim – i.e. the money you have been paying will have been wasted.

Additionally it is strongly advisable to get specific landlords insurance. This will cover not only the bricks and mortar of the building, but any landlord’s contents – for example curtains; carpets; white goods; etc. And it should cover landlord’s liability, e.g. public and employer liability, etc.

Remember, the cheapest is not always the best. The critical time is when you come to make a claim. Will they pay out; pay out quickly?

It is also important to point out to tenants that they will need to arrange their own contents insurance.

Personally I think it a bad idea to offer to extend the landlord insurance to cover the tenant’s contents.

Whilst it might be a cheap option, if the tenant makes large claims it will almost certainly cause you problems when you come to renew.

REQUIRED DOCUMENTS Before you can offer the property to let you must have the following valid documents (required by law): •

Energy Performance Certificate – if you have one from the sale this can be used;

•

Gas inspection report (CP12)

depending on the circumstances you might also need an electrical safety report. Note that it is proposed that all properties will require one on these, but we await the Government to decide on this.

Another thing to point to sort out early is Council Tax. Under the 2011 Localism Act all Local Authorities are able to decide on the rules for their own Council Tax; and most have.

Consequently the rules vary considerably. It is important that you establish the rules on: • vacant properties, especially long term empty; • student lets (if that is the model you are to employ); •

discounts for single people.

RESPONSIBILITIES AND LIABILITIES Currently the landlord has to supply accommodation ‘fit for habitation’; and the tenant has the right to ‘quiet enjoyment of the accommodation’. In their own turn tenants have act in a ‘tenant like manner’.

Under Section 11 of the of the Landlords and tenants act 1985 the landlord is responsible for keeping good repair of the structure and exterior of the property such as walls; roof; windows and external woodwork this also include supply of fresh drinking water; gas; electricity; WC’s; space heating; hot water; food preparation areas and ventilation.

Your tenants are responsible for changing bulbs, unblocking sinks and other minor maintenance.

The problem with terms like ‘fit for habitation’ is that it is too vague, and the only people who like vague terms are lawyers! In an attempt to make this more definitive a new regime was introduced in the 2004 HA the Housing Health and Safety Rating System.

July / August 2016

LANDLORD INVESTOR

NEW INVESTOR

Also before you start the let it is vital that you sort out how you are going to trade. Sole Trader; Partnership; or Company. Essential you get appropriate tax advice before getting too far, as it might take some sorting out afterwards.

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2) PSYCHOLOGICAL REQUIREMENTS Space, Security, Light and Noise

NEW INVESTOR

11. Crowding and space 12. Entry by intruders 13. Lighting 14. Noise

3) PROTECTION AGAINST INFECTION Hygiene, Sanitation and Water Supply

HOUSING HEALTH AND SAFETY RATING SYSTEM (HHSRS) HHSRS was introduced as a replacement for the Housing Fitness Standard, initially introduced in the 1985 HA (amended in the 1989 HA).

The underlying principle of the HHSRS is that – Any residential premises should provide a safe and healthy environment for any potential occupier or visitor. It recognises that a property cannot be completely hazard free, but looks at 29 different (potential) hazards split into 4 main sections:

1) PHYSIOLOGICAL REQUIREMENTS Hygrothermal Conditions

1.

2.

3.

Damp and mould growth Excess cold Excess heat

LANDLORD INVESTOR

Falls

19.

20.

21.

22.

Falls associated with baths etc Falling on level surfaces etc Falling on stairs etc Falling between levels

Electric Shocks, Fires, Burns and Scalds

23. Electrical hazards 24. Fire 25. Flames, hot surfaces etc

26. Collision and entrapment 27. Explosions 28. Position and operability of amenities etc 29. Structural collapse and falling elements fuel combustion

products 7. Lead 8.

Radiation 9.

Uncombusted fuel gas 10. Volatile Organic Compounds

July / August 2016

4) PROTECTION AGAINST ACCIDENTS

Collisions, Cuts and Strains

Pollutants (non-microbial)

4.

Asbestos (and MMF) 5. Biocides 6. Carbon Monoxide and

15 Domestic hygiene, Pests and Refuse 16 Food safety 17 Personal hygiene, Sanitation and Drainage 18 Water supply

The policing of HHSRS is the responsibility of the Local Authority, specifically the Environmental Health Officer (EHO).

This represents a very brief summary of HHSRS, it is strongly recommended that you investigate this more - see a guidance from the Government on www.gov.uk, type in HHSRS in the search line.

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The actions are:

Same hazard, totally different outcomes, and therefore HHSRS score.

Local authorities are under a duty to take action in the case of category 1 hazards (high risk), They also have powers to take action in the case of all category 2 hazards (lower risk).

• Verbal warning; • Letter; • Hazard awareness notices (s28), • Improvement notice (s11), • Prohibition orders (s20), • Emergency Remedial notice (s40), • Emergency Prohibition order (s43), * • Demolition order (s265 – as amended), * • Clearance areas (s289 – as amended). * * Not available for Category 2 hazards Note that most Local Authorities will charge for notices. Unfair or unreasonable requests can be challenged via the First Tier Tribunal.

In the next part of this series of articles we will look at what needs to be done immediately before the let. ⌂

July / August 2016

LANDLORD INVESTOR

NEW INVESTOR

If an EHO comes into a property for a problem they have to inspect all the above 29 hazards. They will be looking at the possibility of a hazard causing injury, and the likely level of that injury. They will multiply one by the other to get a score – a high score will result in something known as a Category 1 hazard, a lower score a Category 2 hazard. So for example a loose tread on stairs might cause a broken arm if it were the bottom tread; however, could conceivably cause death if the top tread.

Property Portfolio’s How Broad is your Mix? Some of us are fortunate enough to have invested in a straight forward property in low crime areas, free of subsidence and flood risks.

Even luckier are the Landlords who not only have that hassle free property but also a “straight forward” tenancy. I.e. the type that doesn’t throw huge parties, live abroad 4 months of the year or are in full time education. However anyone who has been a Landlord for a period of time, owning single or multiple properties realises that life isn’t that easy. Properties and tenants come in all shapes and sizes, and so does insurance.

So how can different Insurance types suit your property portfolio?

As we said, Insurance can come in all different shapes and sizes. What’s important you have the right type of cover depending on the type and location of your property, the type of tenant, or your situation at any given time, particularly if you are purchasing as a short term investment or in it for the long haul.

Towergate Insurance can offer 3, 6, 9 and 12 month policies: Unoccupied Property Insurance: This could work if you’re renovating or selling your property or in-between tenancies. Look for a policy with flexible policy terms to suit you –Holiday Let / Home Insurance: if you are investing in a Property for Holiday Let, this cover can be applied to your apartment, cottage, villa, static caravan or chalet.

•Different Types of Tenants: Students, DSS or HMO’s (homes of multiple occupation): you may have invested near a University and your market is students – in which case, you may need a differently tailored product for your market.

Cover for “Non-Standard” Properties: A great investment doesn’t always come in the form of a red bricked, semi-detached with a pitched tiled roof. Examples of properties of non-standard construction are: l Listed Properties having architectural or of a historic interest nature as recorded on the National Heritage List for England and similar in Scotland. l Properties with flat or thatched roofs. l Timber or prefabricated construction. l Converted from a previous use i.e. barn, stable or Victorian property.

Commercial Property Insurance: Where properties are let for business use or a range of commercial activities these present different risks and considerations to that of a residential tenancy. We frequently insure properties occupied as Shops, Offices, Pubs or Restaurants. It’s not unusual to have a need for a mix in Commercial and Residential letting, such as a Flats above shops.

Finding the right solution for you.

Whilst there are many insurance packages out there sold on the internet or available from direct insurers, for independent advice taking into account your circumstances, we recommend that you contact a specialist insurance broker that has the expertise and knowledge to explain and cut through the insurance jargon, giving you the security that you are correctly insured and fully understand the terms of the cover. With their experience they will have specialist knowledge on the market and products that suit your portfolio. They will also explain about other covers that are available to protect you for loss of rent, legal assistance with tenancy disputes and professional help in the event of claims.

Traditionally Landlords have set up individual policies for each individual property, not realising the benefits of setting up a single portfolio policy covering all your properties under one policy and renewal date. Such policies enable additions and deletions throughout the year. Saving you time and paperwork when running your portfolio.

Towergate Insurance has a proven track record of covering properties, tenancies and landlords of all shapes and sizes. To find out how we can help you Call us on 0330 123 5976

LANDLORD INSURANCE

ÂŁ50

High Street voucher when taking out a Landlord policy*

0330 123 5976 towergateinsurance.co.uk *This offer is available to NEW customers over the phone only. One voucher per policy holder. Love2Shop vouchers will be issued. Not to be used in conjunction with any other offer. Vouchers will be issued once on cover, 30 - 60 days after we have received payment. We will not award if you cancel your policy within the first month. This offer expires 31st December 2016.

Towergate Insurance is a trading name of Towergate Underwriting Group Limited. Registered in England with company number 4043759. VAT Registration Number: 447284724. Registered Address: Towergate House, Eclipse Park, Sittingbourne Rd, Maidstone, Kent ME14 3EN. Authorised and regulated by the Financial Conduct Authority.

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