OCT 2016
WRITTEN BY INDUSTRY EXPERTS COVERING ALL ASPECTS OF BUY-TO-LET
LANDLORD | PROPERTY | INVESTMENT
BUY TO LET ANALYSIS OF MANCHESTER: WHERE DEMAND NEVER SLEEPS
- Ascend Property
ESSENTIAL ADVICE FOR LANDLORDS: HEALTH AND SAFETY
- Peter Littlewood
FACING NEW CHALLENGES: CHANGES IN THE LAW
- Tom Entwistle
MANCHESTER: WHERE RENTAL DEMAND NEVER SLEEPS
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WELCOME TO THE OCTOBER ISSUE OF LANDLORD INVESTOR! It’s our second birthday!
Editorial Editor
Tracey Hanbury editor@landlordinvestmentshow.co.uk Editorial Contributors Ascend Properties Ged McPartlin Gerry Fitzjohn Kevin Wright LandlordZONE National Landlords Association Peter Licourinos Peter Littlewood Simon Zutshi Steve Cox Tom Entwistle Towergate Insurance
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 Expert Advice
Here at Landlord Investor, we have been celebrating the incredibly successful year that the magazine and show has had.
Buy to Let Analysis
The magazine is now celebrating its 22nd issue and continues to reach over 40,000 landlords, investors and property professionals up and down the U.K.
Landlord Insurance
This month we take the show to the bustling City of Manchester and to coincide with our journey to the North, Ascend Properties have been assessing the rental demand in and around the city to explain why Manchester is perfect for landlords and investors.
L.I.S Update Investment New Investor Landlord Associations
06 10 16 20 24 28 36 40
Continuing his series for new investors is Peter Littlewood from the Southern Landlords Association. This month Peter delves in to the health and safety regulations that every landlord should be aware of, and gives his insight as to how to pass any home risk assessment. Covering changes in the law this month is Tom Entwistle from LandlordZONE. Tom’s expert advice analyses the past year of new rules and regulations for landlords and property owners, and how to ensure that you avoid the pitfalls they entail. We have two must attend property shows to go until the end of 2016 which include Manchester on the 13th October, and if you are farther South, our London show on the 8th November. We hope to see you at the shows and we hope you enjoy the fountain of knowledge in this issue. Happy reading!
Tracey Hanbury | Editor Landlord Investor
Tracey Hanbury
October 2016
LANDLORD INVESTOR
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T: 0208 656 5075 beverley@landlordinvestmentshow.co.uk
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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
October 2016
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INDUSTRY UPDATE
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BREAKING: HMRC TO REVIEW SMALL LTD CO BUSINESS TAXATION LandlordZONE Taxation has become a topic of concern for landlords recently and has prompted many to consider the idea of incorporation - forming a limited company for their property business. Since Mr Osborne introduced his new tax regime for landlords, where landlords’ ability to claim 100% tax relief on mortgage interest as an expense, will be phased-out over a number of years. This will reduce the expense claim to a maximum of 20% (or the basic rate of income tax) of interest paid each year. The HMRC “sting in the tail” with this is that mortgage interest will no longer be treated as an expense; the 20% relief being merely a tax credit against total tax liability. This will have the undesirable effect for many of pushing up their total income, when rental income is added, which may result in a higher tax band rating. As incorporated businesses and commercial property landlords are exempt the new measures, an obvious solution might be to form a limited company, a tax shelter under which buy-to-let properties can be owned. However, this will not benefit many and could disadvantage some, and there are many issues involved. It is important to seek professional advice before making any changes. Another important consideration for those keen on incorporation is the risk that HMRC might again change the rules. Known in the trade as regulatory risk, HMRC has a habit of “closing loopholes” when it becomes obvious that a large number of people are taking advantage of tax avoidance measures. A clue to HMRC’s intentions comes from their exploration of what they term “look-through entity.” In the March Budget it was announced that the Government is considering the introduction of a
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LANDLORD INVESTOR
completely new system of small company taxation. They have asked the Office of Tax Simplification (OTS) to consider a possible completely new system of taxation for small businesses, including landlord businesses. It is proposed that the new system, if introduced, would apply to what HMRC term “micro-entities”, those businesses with 9 or fewer employees, and this would tax shareholders directly on their company profits in proportion to their shareholdings as if the company was a partnership or LLP. For example, if a couple each owned 50% of the share capital of New Landlord Trading Ltd, and the company made a profit of £100,000, there would be no corporation tax to pay but they would each be taxed on their £50,000 share whether or not that amount was distributed to them. HMRC says this could “level the playing field” between the taxation treatment of a small limited company and an unincorporated business. The Government and OTS are also considering the introduction of protected asset status for unincorporated businesses to align the owners’ liability with that of limited company shareholders. Both proposals may have significant tax implications for any landlord considering incorporation – speak to your accountant. ⌂
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INDUSTRY UPDATE
ADDRESSING 'PORTAL JUGGLING' Gerry Fitzjohn The Property Ombudsman On 1st October 2016, The Property Ombudsman (TPO) scheme will issue updated versions of all its Codes of Practice in order to address emerging industry issues; primarily the manipulation of internet portals, coined ‘portal juggling’.
THE PRACTICE KNOWN AS 'PORTAL JUGGLING' ACCUSES AGENTS OF MISLEADING CONSUMERS BY REMOVING AND RE-LISTING HOMES ON PROPERTY PORTALS This enables them to hide price cuts and give the impression a property is new to the market when it is not. Other revisions to the Codes include: •
Disclosure on pre-contract deposits – to clearly define the actions required to ensure all parties involved in a pre-contract deposit arrangement have agreed to the terms and conditions attached to the payment.
•
VAT on fees – to ensure all fees and charges are quoted inclusive of VAT.
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• Disclosure of referencing – adding the provision that landlords receive all relevant facts, regardless of whether the tenant has met or failed to meet the referencing criteria. Gerry Fitzjohn, Chairman of the TPO Board, comments: “The decision was taken to carry out a full review of the Codes to reflect market developments and provide clear definitions of unfair practices. Our Codes already state that all advertisements must be legal, decent, honest and truthful, but now go one step further to clarify that ‘portal juggling’, in its various forms, is misleading to consumers. Evidence of member agents found to be carrying out such poor practice could be reported to the Disciplinary and Standard’s Committee (DSC), NTSEAT and/or local Trading Standards.
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INDUSTRY UPDATE
As the industry changes, it’s necessary to release new versions of our Codes to ensure agents fully understand their responsibilities and adhere to best practice.” The Ombudsman, Katrine Sporle, will apply the new Codes of Practice when reviewing consumer complaints about events that have occurred after 1st October 2016 to determine whether or not a TPO registered member has breached the high level of standards required. Issues detailed in the new Codes will be covered in greater depth at TPO’s annual Conference ‘Raising Standards’ on 12th October at the National Conference Centre, Solihull.
d
g di
Residential Estate Agents (Scotland), Residential Letting Agents (Scotland), Buying Agents, Property Buying Companies, Commercial and Membership Obligations. Please visit www.tpos.co.uk/members/codes-guidance for all updated TPO Codes of Practice. ⌂
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The working group for the revised Codes involved trade associations, representatives from large and smaller agents in both sales and lettings and a representative from TPO’s independent Council. All TPO Codes of Practice have been revised including: Residential Estate Agents, Residential Letting Agents,
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advertising • branding • brochures • design for print flyers • leaflets • pop-up stands • roller banners stationery • web design for all enquiries about design work, print or digital email craig@landlordinvestmentshow.co.uk
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EXPERT ADVICE
CHANGES IN THE LAW PRESENT NEW CHALLENGES
Tom Entwistle - LandlordZONE
WE'VE JUST PASSED THE 1ST ANNIVERSARY (1ST OCTOBER 2015) OF THE INTRODUCTION OF A SLEW OF NEW RULES AND REGULATIONS... ...which have turned the business of letting residential rental property into a paper critical exercise – an evidence-based process. As a landlord, or agent, if you fail to collect the correct evidence when handling a new letting, meaning documents to prove that you followed the rules, then you will be kinking yourself for two clear reasons: (1) you could be liable to a substantial fine, and (2) you could be barred from using the Section 21 no-fault, no blame possession process. If you are one of those unfortunate landlords needing to seek possession under the new rules which apply to all Assured Shorthold residential tenancies (ASTs) commencing on or after 1st of October 2015, then woe betide you if you didn’t know about these rules. The government’s strategy is a rather clever one; in its attempt to improve letting standards it uses the threat of withdrawing the real benefit of the no-fault
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eviction process by imposing some specific prior-toletting criteria upon the landlord or agent: serving three correct documents at the start of every tenancy; protecting the deposit, serving correct deposit notices; and responding adequately to requests for repairs. In addition, since last February, strict Rightto-Rent regulations must be complied with. These demands are not all that difficult to achieve for the diligent landlord or agents who have the correct administrative systems in place. The problem is many landlords have become accustomed to taking a casual approach when putting a tenant in their property. The new landlord, the so called “accidental landlord”, those who just don’t keep themselves up-to-date with the legal requirements, and finally the rogues who rarely follow the rules; all are vulnerable if their tenants want to enforce their rights, or if they house the small minority of tenants who quite simply use their knowledge of the law to abuse those rights.
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Yes, some landlords have abused this privilege, but given it takes months of notice and legal process to actually achieve possession, it’s pretty rare if not impossible for a tenant to be evicted “at the drop of a hat” as many of the homelessness charities have claimed. Most landlords are at their wits end before they invoke this process. The overwhelming majority of landlords want to follow the rules, provide good quality accommodation at a competitive price, and do all they can to keep their tenants as long as possible – changeovers cost money. And by far the majority of tenants are satisfied with their rental accommodation and their private landlord’s service. But one aspect of the new legislation introduced through the Deregulation Act 2015 is a potential problem for landlords. It’s the so called “retaliatory” or “revenge” eviction regulations. These prevent landlords seeking possession when a tenant has filed a complaint, the landlord has not responded adequately, and subsequently the local authority issued a relevant notice, such as an Improvement Notice.
CONDENSATION AND MOULD With winter coming, inevitably the problem of dampness and condensation raise their ugly heads in rental accommodation. If you have a property which is susceptible to condensation – we’ve all seen those ugly pictures in the media of black mouldy walls – then it’s easily interpreted as dampness by the authorities – the environmental health officer with little experience of this may condemn the landlord, when in fact it’s the tenant’s doing. Drying clothes on radiators, failing to heat the place properly and not opening windows or using extractors to vent steam, they create category 1 or 2 hazards out of nowhere. Most worrying for landlords is the fact the assumption is always: condensation is the landlord’s fault and it’s down to disrepair of some sort. Advice agencies will invariably assume as such and advise tenants to seek help from their local authority environmental health officer first, as a matter of course, and regardless of the degree or the cause. Of course, landlords should be providing good habitable accommodation, especially as condensation is recognised as being prejudicial to health, and a “hazard” for the purposes of the Housing Act 2004. But condensation claims are contentious and expensive if the courts get involved. Preventing condensation in a tenanted home is a priority and a matter of striking the right balance of heat input; moisture content (steam production); ventilation and insulation. These repair situations are extremely difficult to deal with at the best of times. But when faced with an obstructive tenant – any tenant refusing entry for repairs creates a nightmare situation when it can hold up an eviction. Tenants in financial difficulties will often throw up a “smoke screen” for landlords by requesting repairs, just to delay payments. With the new rules on “repairs reporting” it rather plays into these tenants’ hands. I’m afraid age and experience makes me cynical in these matters, but I’m already seeing evidence of tenants presenting landlords with a list of repairs when they have been sent a demand for overdue rent.
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EXPERT ADVICE
Many landlords feel the tenancy laws are stacked against them. Well generally that’s not the case in my view; the Assured Shorthold Tenancy (AST) in England has stood the test of time, it protects the tenant as well as the landlord, but ultimately it gives the landlord the no argument, no legal challenge right to possession if things go wrong.
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EXPERT ADVICE
There are ways and means of dealing with all these situations effectively, but it requires knowledge and good preparation, all of which is covered in a series of articles on the LandlordZONE® website. Do yourself a favour, do some useful reading and bring yourself up-to-date with the latest changes in the lettings rules and how to deal with them. As the 12 months’ anniversary of many of these new laws passes, be prepared and you won’t fall foul.
REPORTED REPAIR ISSUES The idea behind the new legislation (Deregulation Act 2015) on “retaliatory eviction” is that where a tenant reports (in writing) a repair issue, the landlord must respond – provide an “adequate response”within 14 days. The repair request triggers a series of actions: An adequate response and repair has no impact on the ability to serve a valid s21 notice. An adequate response but no repair resolution may result in the tenant reporting the matter to the local authority environmental health department. No adequate response could also result in the tenant reporting the matter to the local authority environmental health department. The local authority can either:
A.
B.
C.
October 2016
Inspect and find the issue does not constitute a Category 1 or 2 repair issue – no impact on s21. The local authority has not yet decided on what to do. The local authority issues a “relevant notice”, usually an improvement notice or enforcement order.
LANDLORD INVESTOR
In the case of b or c the landlord or agent will be prevented from issuing a valid section 21 notice for 6 months. An adequate response would be one where the landlord or agent states (ideally in writing) the remedial action that will be taken and sets out a reasonable time scale. This should then be followed quickly by arrangements with tradesmen and the tenant giving reasonable notice periods for means of access. This repairs process under the Deregulation Act includes common parts in HMOs where the landlord or agent under an AST controls the common parts in the building. This puts pressure on landlords and agents to have proper repair procedures in place. Apart from the fact that repairing of defective items quickly often saves money in the long run, it prevents the situation were you are prevented from re-letting for 6 months. This is a particularly onerous issue for agents given the liability and reputational consequences not responding to tenants’ repair requests.
CONTENTIOUS ISSUES WITH THIS LEGISLATION The landlord / agent is totally in the hands of the local authority, both as to the time they take to make a decision, or issue a relevant notice, or decide on the degree of disrepair, category 1 and 2 issues. As stated above, some repair issue are contentious, particularly in the case of condensation and mould, and unless the housing officers are experienced in these matters, a situation caused by the tenants’ lifestyles can be blamed on the landlord.
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There are a few things you can do to avoid the problems associated with condensation, which invariably gets blamed on you, the landlord.
1.
2.
3. The worst case scenario is where all this becomes a legal dispute in court, where expert reports are required, all of which becomes very expensive. It is therefore important to stay on top of repairs, and inspect regularly so that tenants know that they are being attended to, and if the repairs situation arises, deal with it effectively.
DEALING WITH CONDENSATION Condensation is caused when water vapour comes into contact with cold surfaces and condenses to form dampness or water droplets; when a property is inadequately heated there are lots of cold surfaces, including walls, wallpaper, clothes in wardrobes and bedding etc.
Educate your tenants – we have produced a condensation letter* for this purpose. Make sure your heating system is adequate and not too expensive to run. Make sure your property is adequately insulated – in any case you will need to meet a minimum energy efficiency standard (MEES) by April 2018 – see below.
4.
If necessary, provide good extractors in kitchens and bathrooms – these can be automatic, acting above a certain humidity level.
5.
If all else fails consider a full forced ventilation system supplied by a company such as Enviro-Vent.
Condensation in the home isn’t normally a building fault. It can occur in a new home as much as an old one, though older properties with poor insulation are perhaps more susceptible. Modern homes are built so that they don’t waste energy, with better insulation, draught-proofing on doors and sealed window units. This minimises draughts and stops heat escaping from the home but it also reduces water vapour escaping, which increases the risk of condensation.
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EXPERT ADVICE
Normal daily activities (such as taking showers and baths, washing and drying clothes, cooking and boiling kettles) produce warm air containing a large amount of water vapour. If the warm air can’t escape through an open window or air vent, and if the property is inadequately heated, it will find lots of cold surfaces to form condensation. Homes that are heated intermittently are more likely to suffer with condensation, which is typical of a tenanted property.
EXPERT ADVICE
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MINIMUM ENERGY EFFICIENCY STANDARDS (MEES) FOR UK RENTED PROPERTIES The 2011 Energy Act required the government (Under an EU Directive) to set minimum energy performance standards for both domestic and nondomestic privately rented property. UK regulations have been passed making it unlawful to grant new leases of energy inefficient commercial or domestic buildings in England and Wales after 1 April 2018, though the regulations don’t apply to sales. Scotland has plans for its own legislation likely to restrict both the sale and letting of energy inefficient commercial properties.
REGULATION IN ENGLAND AND WALES The 2015 Energy Efficiency Regulations, passed in March 2015, set out minimum energy efficiency standards (MEES) for England and Wales. These regulations make it unlawful for landlords to grant a new rental agreement or lease a building with has an energy performance certificate (EPC) rating below E, from 1 April 2018. The regulations apply to both commercial and domestic rented properties, with some exceptions. It is thought unlikely that the Brexit vote will affect the implementation of this.
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The requirements of these regulations are compounded by changes to the Building Regulations that came into force on 6 April 2014. It means that properties already assessed for an EPC may be given a lower energy rating if a new EPC is required and the property is reassessed. This could in theory result in a property that currently has a rating of E being downgraded to an F. From April 2023 for commercial property and from April 2020 for domestic properties event stricter requirements will apply to landlords. They will not be permitted to continue to let a property with an EPC asset rating of below E unless some specific energy efficiency measures have been carried out. Other regions across the UK; Scotland and Northern Ireland have their own legislative measures in train, so landlords should bring themselves up-to-date on these if they own properties that are likely to be affected. ⌂ *Documents mentions in this article can be downloaded here: www.landlordzone.co.uk/documents Tom Entwistle is editor of LandlordZONE® and an experienced landlord.
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BUY TO LET ANALYSIS
MANCHESTER: WHERE RENTAL DEMAND NEVER SLEEPS Ged McPartlin - Ascend Properties
MANCHESTER HAS IT ALL. Aside from the shopping, restaurants and vibrant nightlife, it’s home to art, culture, history and 80 of the FTSE 100 companies. Not to mention the 50 international banking institutions that have a key presence in Manchester. The city is an ever-growing force to be reckoned with. With house prices set to rise over 24% over the next 5 years, there’s little wonder why investors are scrambling to secure property here. Recent plans have been unveiled for a phase II, £1 billion expansion of MediaCityUK; the first phase generated around £760 million of investment and injected over £1 billion into the economy over the last five years, just imagine what the next phase will deliver. There’s also the £800 million Airport City Enterprise Zone and the £60 million Citylabs expansion - the list simply goes on. Manchester is at the forefront of the Northern Powerhouse and with the amount of investment being ploughed into the city, creating new employment opportunities and bolstering the local economy, it’s clear to see why this city is high on the agenda of many.
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With a population of over 520,000 and a workforce of 1.7 million, Manchester has the largest economy outside of London and is the third largest city in the country. The population growth is three times the national average too, so the rental demand is ever increasing. This is due in part to the huge transformation Manchester has undergone over the past few years, not to mention the large student presence in the city (over 78,000). With further significant investment planned, this monumental growth in rental demand is only set to continue. Manchester is undeniably one of the most popular cities to live. Home to two world-class football clubs, a thriving cultural hub and a never-ending supply of attractions and entertainment, tourism has contributed greatly to the economy with over 1.15
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BUY TO LET ANALYSIS
million international visitors entering the city every year. With world-class attractions at the Manchester Arena (the third largest indoor venue with a multitude of music and sporting events), the ever popular Football museum, the renowned Old Trafford cricket ground and a plethora of art galleries and museums, there’s no end of things to do and see. It’s safe to say that our city is one of the most visited in the UK, with world-class architecture, heritage and a cultural edge which draws people from around the globe, Manchester is now firmly on the map for visitors. With a vast range of bars and restaurants, a multitude of shopping and leisure centres, and plenty of parks, museums and galleries on offer, Manchester has an abundance of places to visit. There’s little wonder why Manchester was voted ‘best city to live’ two years in a row.
WHY IS MANCHESTER PERFECT FOR LANDLORDS AND INVESTORS? There are plenty of reasons to invest in Manchester – high yields and capital growth being just two of them. However, one of the main driving forces has to be its role in the government’s Northern Powerhouse vision. There are plans in place which are already helping to shape the future of the north; this includes government approved plans for the HS2 and £202 million improvements to the smart motorway which will improve the city’s transport and infrastructure. The Northern Rail hub has already seen £1 billion of investment, while a further £3 billion will go towards improving Manchester’s roads and creating smart motorways which will drastically reduce journey times. This boost will serve as additional ‘icing on the cake’ to the wide range of transport facilities
already on offer in the city, including extensive Metrolink, bus and rail routes. This bolsters the city’s appeal to commuters, students and young working professionals, a key attribute when looking for a perfect location to invest. It’s not just the Northern Powerhouse vision which makes Manchester an ideal location for landlords and investors. There’s a tonne of investment on the way from both government and private funded sources, and the rise in population and the creation of thousands of jobs all increase demand which contributes to high yields and significant capital growth. The demand for city centre property simply outweighs supply. Just recently it was unveiled that there are around 15 tenants chasing every property on the market and some of these are snapped up within the hour. Our team at Ascend certainly echo these comments and there are simply not enough properties on the rental market to satisfy this appetite. We’ve already predicted that rental costs will increase by 6% over the next 12 months, and with many of the city’s graduates choosing to stay in the city after graduation, the rental demand from students will remain incredibly high. There’s also a substantial proportion of the city’s younger generation shunning home ownership to reap the benefits of flexible city centre living. In the first half of this year, Ascend saw a 21% increase in the number of enquiries from existing tenants aspiring to climb up the rental ladder, as opposed to saving for a deposit to purchase their first property.
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BUY TO LET ANALYSIS
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THE MOTIVES FOR MOVING INCLUDE: •
26% want to move closer to the inner city centre (average age 23)
•
51% desire a larger living space (average age 26)
•
16% requested a higher floor apartment with improved amenities (average age 29)
•
3% want to upgrade to a penthouse apartment with outside space (average age 32)
Moving up the rental ladder has become the norm for many of today’s younger generation and whilst rising house prices and large deposits act as the two main barriers towards home ownership, even those who are in a position to buy are choosing to sit tight in their rental property as a result of the flexible lifestyle being a tenant allows them to have. The rental market is here… and it’s here to stay.
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CAN INVESTORS STILL GET A GREAT DEAL IN MANCHESTER? Believe it or not, there are still some cracking deals to be had in Manchester. We very rarely see properties being marketed at below market value on the open market, however, there are still discounted, pre-tenanted deals available if you know where to look. Obtaining the right property at the right price will ensure you hit that magic yield number which matches your investment goals/needs. Many of the new rental hotspots in Manchester are only just emerging, so property prices are still relatively low, and it’s trends like this which some investors don’t spot until prices go through the roof. A reputable agency who knows the city like the back of their hands will always be able to make recommendations. Author: Ged McPartlin, sales director at awardwinning, Manchester based estate and letting agency, Ascend Properties. ⌂ www.ascendproperties.com
0161 637 8336
LANDLORD INVESTOR CELEBRATES IT'S 2ND BIRTHDAY! Dear Readers, I am absolutely delighted that this month Landlord Investor celebrates its 2nd Birthday. Since our launch in October 2014 we have produced 22 editions of the title and the magazine has gone from strength to strength. WRITTEN
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LANDLORD | PROPERTY | INVESTMENT
I would like to thank our, readers, guest writers, subscribers, advertisers and everyone who has supported us to date! We welcome any feedback and suggestions that you have. In addition, if you have any stories as a Landlord that you would like to share or you would like to contribute to editorial content, then please email me: Tracey@landlordinvestorshow.co.uk or call the office on 0208 656 5075 We hope you continue to enjoy reading Landlord Investor! Yours sincerely,
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BUY-TO-LET
LANDLORD | PROPERTY | INVESTMENT
TAxINg TImE foR lANDloRDS: wIll IT gET ToUghER?
TRENDS IN THE PROPERTY MARKET: WHAT IS THE FUTURE OF BUY TO LET?
gETTINg STARTED AS A lANDloRD: fRom AN INSURANcE ANglE
WIGGLE AS MUCH AS YOU LIKE: STAMP DUTY
how To fIND ThE bEST STRATEgY foR YoU IN 2016
WHY LANDLORDS SHOULD BUY IN EAST LONDON
- Tom Entwistle
- Steve Cox
- Tom Entwistle
- Peter Littlewood
- Simon Zutshi
Landlord Investor is written by Industry Experts and covers all aspects of buy-to-let.
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FEBRUARY 2016
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JANUARY 2016
L.I.S UPDATE
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UPCOMING TAX CHANGES:
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WHAT IS THE FUTURE OF
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Getting the right product isn’t nearly enough. Taking care of delivery, assembly, installation, tenant liaison, key collection and product disposal is just a selection of the services LOFT Interiors provide to make the managing of residential properties as hassle free as possible. Find Out More: www.loft-interiors.co.uk/our-service Benjamin Hall Director LOFT Interiors
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LANDLORD INSURANCE
IS LANDLORD INSURANCE REALLY WORTH IT? Towergate Insurance Most Landlords are aware they need a specialist policy when renting out their property, although its not always clear what the difference is between a standard home insurance policy and a specialist landlords policy. A typical Home Insurance is intended to cover the householder as an owner occupier or simply occupier, this is a different interest from that of a Landlord owning the property and earning a letting income from tenants. Home insurance won’t cover you for the liability, legal and loss of rent options that are available on a landlord’s policy. Although you may not consider yourself as running a business, you actually are, in view of you, earning an income by receiving money for rent. Further, also you will have other legal obligations to meet. Landlord Insurance Policy Coverage Explained Property Owners Liability (POL) - This is often the most misunderstood or overlooked cover by new landlords. It’s a type of public liability insurance that compensates for injury to a third party or damage to their property. A landlord may ultimately be liable through ownership and the need to ensure the property is maintained and safe. A typical liability claim could arise should a trip on a loose slab in your drive way. You could be held liable for the consequences of the accident and be required to pay compensation. If you don’t consider yourself at fault, then you’ll be seeking legal defence assistance. Buildings insurance – Getting the rebuild cost right is vital when arranging property insurance. This figure should to be adequate to cover the costs of damage, right through to full reinstatement of the property after a severe fire. Your building sum insured should represent the full re-build costs of your property at current prices taking into account any improvements.
October 2016
LANDLORD INVESTOR
Being underinsured occurs when you state the cost to rebuild your house at a lesser amount than it actually is. You should never choose a lesser rebuild value to save a few pounds on your insurance premium, as this will have significant financial implications in the event of a claim making you vulnerable. Insurer payments will be proportionately reduced and you’ll end up with insufficient funds to rebuild. Loss of Rent – Your policy will contain an ‘Indemnity Period’ limitation, being the maximum length of time ‘loss of rent’ can be claimed after an insured event. When arranging your cover its important to accurately assess the length of time it will take for a full rebuild in the most severe loss circumstances. Landlord’s contents - A great way to understand the difference between your ‘contents’ and your ‘building’ would be to (hypothetically) tip your house the wrong way up. Anything that falls is considered contents i.e. furniture. The walls, ceilings, bathroom and kitchen cabinets will be under buildings. When renting a furnished property, replacement contents values are important as many policies offer standard amounts. For more information on what type of Landlord Insurance you need call Towergate Insurance on 0330 123 5976. You can also take advantage of our limited offer when calling and get a £50 high street voucher* when you take out a new policy. ⌂
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.
LANDLORD INSURANCE
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10 THINGS TO CHECK WHEN BUYING LANDLORD INSURANCE Steve Cox - Alan Boswell Group Alan Boswell Group’s Steve Cox explains the key points you should focus on when searching for landlord insurance.
COMPARING LANDLORD INSURANCE PRODUCTS CAN BE HARD WORK. While it’s easy to get quotes from multiple insurers, you may find there’s lots to read through and that you struggle to spot the differences. So how do you know which policy is right for you? Here are my top ten things to look out for when comparing insurance products, to help you get on the right track.
1. ADDITIONAL FEES Many insurance companies hook you with a cheap premium, but will charge hefty admin fees for making changes or cancelling your policy. While checking for these fees, it’s worth looking at the payment options to see whether there are any charges for paying monthly. These fees can quickly put the price up.
2. A UK-BASED CLAIMS SERVICE Insurance is a funny purchase: it’s one of those things you buy but never want to use. However, if you do make a claim, you’ll quickly discover that you get what you paid for. Ensuring you deal with a UKbased company with its own claims team should ensure you get a swift and satisfactory resolution.
October 2016
LANDLORD INVESTOR
3. THE RIGHT POLICY It may seem obvious, but many people don’t realise you need landlord insurance for a buy-to-let property. That’s because home insurance is designed for owner-occupier properties. While some home insurance products stretch to renting out the property, they are not designed specifically for it and in some cases you could invalidate your policy.
4. LOSS OF RENT COVER If your property suffers a claim, most landlord insurance should include cover to provide an income while the property is uninhabitable. Not having this cover could leave you out of pocket should a claim occur.
5. MALICIOUS DAMAGE COVER Malicious damage by a tenant is a surprisingly common claim. When comparing the details of any policy, make sure it’s included or can be added on.
6. EXCESS VALUE Some claims occur more often than others and may have higher excesses applied. Escape of water is the most common property claim and will often have a higher excess than others. There is generally a
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7. TERMS AND CONDITIONS All insurance products have conditions that must be adhered to, for example, making sure there’s a tenancy agreement in place. While this may seem obvious, if you’re renting to friends or family you may not have a formal agreement, which could cause problems if you make a claim.
8. COVER FOR MANUFACTURE OF DRUGS This cover comes into action if a tenant damages your property through production of drugs. Cannabis farms, for example, can lead to the destruction of properties and failure to have this cover could ruin your investment.
9. UNOCCUPANCY RULES We would all love our tenants to stay forever, but when the average length of a tenancy is under a year, it’s likely you’ll have a period where the property is unoccupied. Insurers vary on how long they will cover unoccupied properties – some will give cover for up to 90 days, while others will restrict cover immediately.
10. INDEPENDENT REVIEWS Whether you look at product comparisons, service reviews or company awards, the internet is invaluable. Check out whether the company you’re about to place your trust in has the trust of its customers. If you’d like to know more about Alan Boswell Group Landlord Insurance, simply give us a call on 01603 216399 and we’d be happy to help you find the right cover. ⌂
Landlord insurance you can trust, at a price you can’t beat. Five-star rated products Award-winning service Dedicated claims support
01603 216399 www.alanboswell.com
October 2016
LANDLORD INVESTOR
LANDLORD INSURANCE
standard policy excess, with specific excesses (for instance, for escape of water) highlighted in your quotation documentation. Make sure you read them and are happy with what you’re signing.
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COULD YOU BE A 'CASH BUYER'?
INVESTMENT
Kevin Wright - Ninja Investor Programme
BEFORE YOU TURN THE PAGE BECAUSE YOU DON'T THINK YOUR BANK BALANCE IS BIG ENOUGH TO BUY PROPERTY FOR CASH - STOP!
Bridging finance coupled with smart negotiation can result in much bigger profits than the traditional BTL mortgage route. With the right lenders you can:
Have you noticed that cash buyers always get the best deals? It’s those magic words “What discount will I get for cash?” Whether that’s buying a car, a new washing machine or a suit, cash buyers often pay less. Unfortunately, property is such a big ticket item that cash buyers are few and far between. The perception is that you need at least a six figure bank account to even consider becoming a cash buyer. This belief leads many property investors to ignore or miss out on the best deals. They think they simply don’t have enough in the bank. A cash buyer can buy unmortgageable properties – and some should be avoided – but there are more that are really good opportunities to build your property investment, but they’re only available to cash buyers.
SO HOW CAN YOU BECOME A CASH BUYER WITHOUT A BIG BANK BALANCE? That’s simple – bridging finance. Before you start into the ‘it’s expensive’ argument, let me ask you a question: if you had the choice between no deal at all or a deal where you make 40% profit – why wouldn’t you want to do the deal?
1.
Borrow against the VALUE of the property, not the purchase price.
2.
Buy unmortgageable properties substantial profit locked into them.
3.
Make outrageously low offers to vendors – because they know that they will have to give a discount for cash, and cash buyers are rare creatures.
with
Yes, the interest rates on bridging finance are higher than traditional mortgages – but the opportunities it opens up to you mean you can buy properties like a cash buyer, quickly, cheaper and make much more profit. So few people ‘get’ bridging finance and cash buyers are a rare species – so the field is open to people who can see the opportunities and use bridging finance intelligently.
WHAT DO YOU NEED YOUR OWN CASH FOR? If you’re borrowing against the value of a property and you negotiate the price down (sometimes as low as 50% BMV) you can buy higher value properties with as little as 10% of the property value as deposit. If you learn how to buy fast, you can start putting your exit strategy in place (and getting your money out) even before completion. If you’re really smart you can get 100% of the purchase price – leaving your own cash for the refurb. Isn’t it a no-brainer? Bridging should be the first choice of a savvy investor, not the last resort of the desperate investor. ⌂
October 2016
LANDLORD INVESTOR
Property Mastery : Recycle Your Cash
Is your property investment giving you the results you want? If you’re finding: • The best deals slip through your fingers to cash buyers • You want to recycle your cash but your portfolio is growing too slowly because all your cash is tied up • Financial freedom is still not within your reach
Your Ninja Trainer Kevin Wright
The Ninja Investor Programme Programme will will reveal: howhow to buy like a cash The Fast Fast Funding Funding Formula Formula™™Discover Discover toproperty buy property buyer without a 6 figure bank account a 6 figure bank account like a–cash buyer – without not what you say, it’s the way that The Negotiation NegotiationTransformer Transformer™™It’sFind out how to make you say it! Get smart, get respect and get ’yes’ to even outrageously ridiculously low offers – and get accepted low offers
The JV Profit Retainer™ Make sure you don’t give away any ™ The JV Profit Why give away of your profitsRetainer that you don’t need to 50% of your profit, learn that you don’t need to?
The Rapid Cash Recycler™ Learn how to predict post-refurb ™ The Rapid Cash Recycler Learn the 6 vital steps to ensure you don’t value accurately, before purchase trap your cash in a deal unnecessarily
And Ninja Investor Strategies™ Transform your mind-set to ™ And Ninja Strategies Transforminvestment. your mind-set to transform enable youInvestor to transform your property
your property investment and shrink deposits to way below 25%
DOUBLE GUARANTEE • If you’re not happy with the course and tell us by lunchtime on day 1 - you’ll get a FULL REFUND; no quibbles. • When you bring your first deal to our bridging brokerage; - you’ll get the FULL COST OF YOUR COURSE REFUNDED at completion.
NEW for 2016 - 2 day format with even more hot tips and smart strategies. Join a Ninja Investor Programme in: London 16/17 January Bristol 14/15 6/7 February 20162016 London 16/17 April 2016 London 16/17 April 2016 Bristol May 2016 Leeds 27/28 February 2016 Birmingham 19/20 March London 5/6 November 2016 Birmingham 26/27 November 2016 Leeds (new) 27/28 February 2016 Birmingham 19/20 March 18/19 Leeds 2/3 July 2016for 2016 London 16/17 April 20162016 Bristol 14/15 May 2016 2017 datesBirmingham will be released inJune December, check the website details. Find out more – and book your place
07889 526979 • www.ninjainvestorprogramme.co.uk
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INVESTMENT
THE KEY TO SUCCESSFUL PROPERTY INVESTING: A STRONG SUPPORT NETWORK Peter Licourinos Propect Investors Club / Reading pin
PROPERTY INVESTING HAS BEEN A HIGHLY PROFITABLE AVENUE FOR PEOPLE TO ACHIEVE WEALTH FOR A LONG, LONG TIME. As the UK population continues to grow, the demand for living accommodation grows with it. This fundamental rule makes property extremely attractive to investors! So why don’t more people invest in property or why do so many people give up too early?
BECAUSE IT'S A CHALLENGE! It’s true. Although anyone can successfully invest in property, it’s not ‘a walk in the park’. You need to execute vigorous research, carefully select your property investment strategy, which I’ll talk about another time and then there’s also financing your project. However, all of this becomes ten times easier if you build a solid support network! I’m extremely fortunate that I met my property mentor, James May, over 15 years ago and he shared his knowledge with me.
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LANDLORD INVESTOR
We now run Prospect Investors Club together and through it, I’ve met hundreds, if not thousands, of other investors and property professionals. Each of who have each helped me on my investment journey. However, it’s my Power Team that are the ones who; help me execute my investment projects, identify new investments, arrange funding for my next purchase and also to make the most out of my existing portfolio. Without them, sure I’d still be able to invest in property and I’d still make a profit, but it would be a lot more of a challenge for me and I wouldn’t be as successful as I am today.
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HOW CAN I BUILD MY POWER TEAM?
If an Estate Agent has five motivated property investors and a new BMV property or HMO comes to market, if you’ve built a good relationship with them, chances are you’re the first call he’ll make. If you want to enter into a JV on an investment that you don’t have the resources to attack yourself, you’ll know different investors who have the speciality in that local area, who have the finances necessary to fund the project and who have the knowledge and experience in that specific investment strategy. You have to work hard to find and build your Power Team but there are ways to make life easier!
THIS IS WHERE READING PIN IS VALUABLE! Over 100 like-minded investors and property professionals gather for this event every month, with two professional speakers. These speakers are some of the UK’s most successful and profitable investors, who talk in depth about their area of expertise, whether it’s funding, BTL investments, JVs, property sourcing strategies or even a case study of how they achieve massive returns in the current market. Reading pin also gives you ample opportunity to network not only with the speakers, but also with other investors. I meet dozens of new investors every month and am constantly astounded by some of the ideas and approaches other investors have towards property. I’ve been investing for over 10 years myself and I learn something new every month, and I don’t just mean from the expert speakers! There are also highly qualified property experts proving financial updates, market updates and an
insight into all the local goldmine areas. They provide a community to share their wisdom and expertise to make property investing easier and to make financial freedom a reality for serious investors.
I'M READY TO TAKE ACTION! If you’re ready to begin networking and building your own support network, I strongly advise you to attend Reading pin – the biggest and best pin event in the UK, which runs on the first Tuesday of every month! The value you’ll take away from just one evening will help you approach investing in a new and more efficient way. Plus, if it’s your first time at a pin event, you can attend free of charge as my guest. Use voucher code ‘PeterGuest’ and I’ll pick up the cost of your ticket so you don’t have to. Visit www.readingpin.co.uk to learn more about the next Reading pin, which expert speakers will be sharing their expertise and also to book your seat. Get yourself out there, learn all you can from the experts and most importantly, begin or continue networking and making connections. You can begin with me, as I’m always excited to meet new people who share my passion for property!
ABOUT PETER Peter Licourinos – Director of the Prospect Group & Joint Owner of Prospect Investors Club For over 15 years, Peter Licourinos has been involved in every aspect of buying, selling, renting, letting and investing in property, as well as being a successful mentor to dozens of property investors. Peter Licourinos is now sharing his expertise and knowledge of property with you! Learn more about investing in property at www.prospectinvestorsclub.co.uk ⌂
October 2016
LANDLORD INVESTOR
INVESTMENT
If you follow any property investor, you’ll notice that they attend a lot of property networking events. Why do you think that is? It’s not just to flaunt their success or push their products to you, it’s actually to meet like-minded people. People are the most valuable resource an investor, no a person, can have!
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INVESTMENT
TO FLIP, OR NOT TO FLIP? THAT IS THE QUESTION! Simon Zutshi property investors network
THERE ARE MANY DIFFERENT WAYS TO MAKE MONEY IN PROPERTY. Some people like to flip property for a quick profit and some people like to buy and hold for the long term. So which is the best strategy? Well it depends on what you are tying to achieve. In this month’s article, Landlord Investor have asked me to consider some of the pros and cons of each strategy, and give you some tips on how to maximise your profit and minimise the risks when flipping property. Let’s just make sure we are all clear on the terminology before we move on. Flipping property is where you buy a property, usually below the true market value, then add some value to it and sell it on for a higher price in a relatively short period of time. Buy and Hold, is where you purchase a property, preferably below the true market value, you may or may not need to add value through renovation, then instead of selling it, you rent the property out to cover all of the holding costs and make a profit each month and also benefit from long term capital appreciation.
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LANDLORD INVESTOR
BENEFITS OF FLIPPING PROPERTY There are two main benefits of flipping property which are: 1) You don’t have to deal with tenants, 2) You can make good chunks of cash in relatively short periods of time. These are two pretty good reasons to flip property. However, there are also some compelling reasons to follow a Buy and Hold strategy as well.
BENEFITS OF BUY AND HOLD There are two main benefits of buy and hold: 1) You make far more money over the long term thanks to capital appreciation, 2) You work once and get paid forever, because you make rental profit each month for as long as you own the property.
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However, I do prefer long term Buy and Hold because I have seen how much potential profit I have missed out on over the years, by flipping instead of holding. Back in the year 2000, when I was still working full time as a senior manager at Cadburys in Birmingham, I was doing property very much part time, including flipping properties. I remember buying a 3-bedroom terraced house, close to where I was living for just £42k. I had to spend £8k on the renovation putting in a new kitchen, bathroom, windows, carpets and decoration. So overall the property cost me £50k and it was then worth £60k. I had to make a decision. I could either hold the property and rent it out to make about £50 profit a month, or I could sell it to get all of my money back plus £10k of profit and using my personal Capital Gains Tax allowance, I would pay no tax on the profit. I decided to sell so that I could reinvest in another property. The property that was worth £60k then is now worth about £120k. With hindsight, I should have re-financed the property, to pull out all of my original investment, held the property and rented it out to benefit from the long term capital growth. If I had done that I would have approximately £70k of profit (£120k value less £50k mortgage) instead of £10k profit by selling it. I think the dilemma that many people face is: Do they get the cash profit now, or wait for a potentially much bigger return in the future?
WHY ARE YOU INVESTING IN PROPERTY? For me, one of the main reasons to invest in property is to provide a passive income to give time, freedom and choice to spend my time doing what I love to do. The biggest problem that I see with flipping property is that when you sell the property, you crystallise the amount of profit you can make for that particular property. You will never make any more income from it. Which means that if you want to make more money, you need to go and flip another property. So although flipping property can be well paid this is far from a passive income. You are selling your time for money. You need to keep doing it, to keep the money coming in. Some of the investors I know who flip properties, do it because they really don’t like the idea of having to deal with tenants. Whilst I completely understand that point of view, because tenants can be a pain at some times, I would suggest that you don’t need to be involved in the management of your properties, as long as you have some good letting agents, or someone in your team who can do it for you. I do not personally manage any of my properties. I have other people do it for me. It does cost me some of the revenue from my rental income, but it gives me the time to do what I want. Your time is your most valuable asset so why would you spend your precious time managing your tenants?
At that time, I did not know what I was doing. I was just using common sense. I had no property education because there was no education available in the UK. I was doing well and making money but I did not know what I did not know. However, you can learn from my mistakes which is one of the many benefits of educating yourself. The reality is that we live on an island with a limited amount of accommodation and an increasing population, which means over the long term, rentals and property prices will continue to rise. This is worth remembering when deciding to flip or to hold.
October 2016
LANDLORD INVESTOR
INVESTMENT
Personally, I use both strategies. I think it is wise to use a combination of these two strategies, such that over time you increase the size of your property portfolio to increase your monthly passive income, but also you can flip a few properties along the way, the profits of which can be used to fund the deposits for the properties which you want to keep long term.
INVESTMENT
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I have also seen investors get caught by changes in the property market. Flipping property works well when the property prices are moving up. But it can be a dangerous strategy if the market is stagnant or could go down as it does do occasionally. You don’t want to get caught with a property that you can’t sell and is empty with no income coming in. Holding costs can eat into your profits. That’s why my advice is, that if you are flipping property, make sure that it would stack up as a rental property in case you need to rent it out if you can’t sell it for any reason. I am doing this on a property that I have in Bromley. It was a house converted into three apartments. The project took longer than expected, cost more than expected and we have just had a sale fall through, so I have decided to use it for short term lets whilst we find another buyer.
3)
TIPS ON FLIPPING PROPERTY
I do hope you have found this article thought provoking in helping you work out if you should be flipping properties, or not, as part of your investment strategy.
If you do decide to flip property as part of your strategy, then here are some top tips for you:
1)
2)
October 2016
Get your numbers right. The cost drivers in flipping are: How much you buy the property for; How much you spend on it; and How much you can sell it for. Make sure you know your numbers. Make sure there is sufficient profit in the property. Projects often take longer than expected and cost more than expected so there needs to be plenty of profit to make sure that you still make money, even if you have to sell for less than you estimated. I like to have 25% profit on top of the costs when doing a project. So if the cost were £200k I would want to be able to sell for at least £250k just to give enough head room.
LANDLORD INVESTOR
4)
5)
Watch the market. If the local market looks like it is slowing and it could take time to sell your property, then it might not be the right time to use flipping as a strategy. Does it stack up? Only flip properties that stack up, so that if you can’t sell, you could rent it out instead and at least cover the holding costs. Could you use an option? Instead of buying a property, why not control it on a Purchase Option and then sell it on. You put far less money into each deal which means you get a far greater return on investment. I am going to give some examples of this in next month’s article.
RECOMMENDED BY LANDLORD INVESTOR MAGAZINE Whatever strategy you decide to use in your investing, one of the best things you can do is talk to and learn from other investors who are doing that strategy in your area. This can save you a huge amount of time, money and stress, by trying to work it all out yourself. As recommended by Landlord Investor Magazine as the best way to meet other investors is at your local property investors network meeting. There are 50+ meetings all over the UK every month (apart for August and December) so there is bound to be a meeting close to where you live, work or invest. Why not attend your local meeting this month and make it a regular commitment as part of your property journey. You can find your closest meeting here. www.pinmeeting.co.uk ⌂
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5) Two months to re-let the property £1,500 in lost rent
2) Four months lost rent would equal £3,000
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NEW INVESTOR
ESSENTIAL ADVICE FOR NEW LANDLORDS Peter Littlewood Southern Landlords Association
SO FAR WE HAVE LOOKED AT WHAT YOU NEED TO DO TO GET THE PROPERTY READY TO LET.
Two key tests are applied:
We will continue this by looking at the Housing Health and Safety Rating System.
•
HOUSING HEALTH AND SAFETY RATING SYSTEM (HHSRS)
• The likely outcomes in terms of injury or ill health (physical and mental) arising from the deficiency.
HHSRS looks at the effect that a deficiencies in the home can have on the health and safety of occupants and visitors by using a risk assessment approach. The aim of individual risk assessment is to reduce or eliminate hazards to health and safety in domestic accommodation. Potentially there are 29 hazards and each hazard is assessed separately and rated according to how serious the likelihood of harm.
The two key tests are multiplied together to get an overall score. If this final score is high it will result in a Category 1 hazard; if low will be a Category 2 hazard. Local Authorities have to respond to a Category 1 Hazard, and might to a Category 2. Their response can go from merely drawing your attention to a problem to an immediate prohibition order.
The assessment process is not just a question of examining defects to a property, but it comprises risk assessment, probable outcomes and the resulting effects on the occupier’s health, safety and welfare.
October 2016
LANDLORD INVESTOR
The likelihood of an occurrence (such as an accident or ill health) as a direct result of this deficiency in the house;
An example of how the same defect could lead to a totally different score is a loose tread on the stairs. If that tread is at the bottom it might lead to bad bruising, or even a broken arm. But if at the top could easily cause death.
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Same problem, totally different score and requirement to fix. The actual hazards.
It also important to note that it covers all part of the property that you have control over, so not just the actual house, but also any outbuildings; garden; fences, etc. So, for example if you are aware of a loose tile and it comes off and hits someone walking by in the street clearly you are responsible. The hazards break down into 4 categories:
1. PHYSIOLOGICAL REQUIREMENTS 1) Damp and mould growth
2: Excess cold
3: Excess Heat
4: Asbestos (and Man Made Fibres)
5: Biocides
6: Carbon Monoxide and fuel combustion products
7: Lead
8: Radiation
9: Un-combusted fuel gas
10: Volatile organic compounds
Asbestos (hazard 4) would need specialist advice, if present. That advice might be to leave it alone just paint it. Never attempt to deal with asbestos yourself, its dangerous stuff – it’s not called the Hidden Killer for nothing. Biocides and Volatile Organic Compounds (5 & 10) are down to the cleaning material; timber treatment, etc. you might have used. You have a duty of care to point out to tenants (both current and potential) of anything you might have used in your property. Carbon Monoxide and fuel combustion products & Un-combusted fuel gas (6 & 9) are down to ensuring any heating involving a flame is controlled properly. It is now a legal requirement to have a working Carbon Monoxide (CO) alarm in any room having solid fuel heating. It is also strongly recommended to fit one with gas heating (England only). Hazard 7 (Lead) is a problem with old fashioned lead pipes. Ensure any lead pipes within the property are removed. If possible change old lead supply from the mains.
The number 1 item, damp and mould growth is probably the number 1 matter Environmental Health Officers (EHO) are called out for. An experience EHO will not automatically assume the property is to blame, but will try to establish if it is the tenants lifestyle that has caused this problem – note however even if it lifestyle it might still be caused by the landlord. For instance, if they are drying wet clothes on the radiator is it because the landlord has not supplied appropriate facilities?
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There are 29 hazards in HHSRS, but before we go through them it is important to note that HHSRS evaluates the potential for risk, it does not intend to remove risks entirely. For instance, stairs are a risk and will get a score, even if there is nothing wrong with them – they are inherently dangerous, but necessary. No property can be entirely hazard free.
Hazards 2 and 3 are principally about supplying controllable space heating. Consequently if you have old fashioned electric night storage heaters, i.e. the ones that can’t be adjusted for that day, but only for the following day – then these would be deemed to be un-acceptable and would constitute a Cat 1 hazard. If you have an HMO with a standard gas boiler, you will probably want to lock away the central controls (a sensible option as constant turning on and off leads to fights, and a broken heating system), you would need to ensure each room has a thermostatic radiator valve (TRV) to allow each room to regulate the temperature.
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38 Radiation (8). The only thing that is under the control of the landlord is to ensure any micro-wave ovens are not leaking. Check the seal inside the door. If it is damaged get it fixed. Note that Radon is naturally in the ground and air, and might also be in the drinking water.
You need to ensure all tenants are aware of local facilities. For example, no-one living in the centre of Brighton has dustbins, all occupiers are responsible to put their rubbish in council supplied bins placed in each street – if you don’t tell your tenants that they won’t know.
2. PSYCHOLOGICAL REQUIREMENTS 4. PROTECTION AGAINST ACCIDENTS 11. Crowding and space
13. Lighting
12. Entry by intruders
14. Noise
I’ve been lucky enough never to have suffered a break-in, but those who have are paranoid about it thereafter – with good cause. So ensure you take all necessary precautions to avoid a break-in, consider window restrictors to allow the windows to be cracked open (to avoid damp and mould growth) but to stop anyone entering. I can best demonstrate the rest (11; 13 & 14) with reference to student tenants. They are in your property to work (well they are supposed to be). The individual students will require a working area with enough space to work; minimal noise so they can concentrate; and lighting to be able to see their work. On the other hand, you may well make available a communal area where they want the opposite, lots of noise; minimal lighting; plenty of noise. There is no universal test for these; it all depends on the individual circumstances.
3. PROTECTION AGAINST INFECTION 15: Domestic hygiene, pests and refuse
16: Food safety
17: Personal hygiene, sanitation and drainage
18: Water supply for domestic purposes
You need to ensure that your tenants can store food, cooked and uncooked; prepare it; dispose correctly. Additionally they need to be able to keep themselves and their property clean.
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19: Falls associated with baths, etc
21: Falls associated with stairs and steps
20: Falls on the level
22: Falls between levels
24: Fire 23: Electrical hazards 26: Collision and entrapment 25: Hot surface and materials
27: Explosions
28: Ergonomics
29: Structural collapse and falling elements
And you thought there was only one way of falling! This is the first area where we have to be aware of our tenant. Falls associated with baths (19) tend to be more prevalent with older or disabled tenants, so greater care must be taken.
39 Falls on the level (20) tend to be exasperated by loose rugs; trailing gang sockets, etc. Even if it is the tenant causing the problem, for example with trailing gang sockets, just ask the question if you the landlord are causing it, by having insufficient fixed sockets.
Falls between levels (22) tend to be worse in gardens with terraces where it is not obvious there is a step. Ensure any steps are obvious. Note that the EHO can take responsibility for checking electrical and fire safety (23 & 24). The only time this is not the case is for communal areas for HMO’s let on individual lets. Perversely the communal areas come under the Fire Brigade. Quite frequently the Fire Officer will be happy for the EHO to take any decisions necessary. New legislation means that all rental property requires a working fire alarm on each residential floor (England only).
Ergonomics (28) can affect Hot surface and materials (25) and Collision and entrapment (26). It is very important that you take care to ensure that you have not planned the kitchen in such a way that it is easy to touch the hot hob, or anything on it. Additionally, corridors are not so crowded as to cause collisions? Finally, Structural collapse and falling elements (29) takes us back to the start of this piece. Ensure nothing can fall off to cause damage, especially the roof; especially the chimney stack. If necessary get a pair of binoculars to take a good look at the roof/chimney stack.
NEXT TIME Next time in this series we will take you through your responsibilities and liabilities as a landlord. ⌂
LandLords IncentIve scheme West London Boroughs require good quality properties in the South East and the West Midlands. A range of generous incentives are available dependent on the type and size of the property.
FreeLance agents We are also looking for freelance Letting Agents working on commission. For more details, email: zaheer.iqbal@rbkc.gov.uk
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As already mentioned, stairs (21) are a source of accidents. Just ensure problems are kept to a minimum – check handrails for security; consider two hand rails, if there is room.
LANDLORD ASSOCIATIONS
40
CRIMINAL LANDLORDS AND ABUSIVE TENANTS National Landlords Association According to recent research from Shelter, a million private renters across England have suffered at the hands of law-breaking landlords over the last year, experiencing problems ranging from (allegedly) their utilities being cut off, to abuse, harassment and discrimination. The housing charity did stress that the problems were being caused by a minority of rogue landlords and said that the problem was partly down to renters not understanding their rights. To emphasise the point, Shelter pointed to more than 220,000 unique visits to its website’s advice pages last year, from people facing problems with a private landlord. As the largest representative organisation for landlords in the UK, the NLA responded to the story, conducting a number of media briefings and appearing on, among others, ITV, Sky News and BBC News. The NLA believes that no one should have to put up with a criminal as a landlord and we voiced our concern that a lack of enforcement and prosecution from councils was sending the message that it’s way too easy for the unscrupulous to get away with criminal or borderline criminal behaviour. However, while Shelter’s figures highlight serious issues that are unacceptable in this day and age, NLA research with tenants* shows that 82 per cent say they are happy with their current landlord, and Shelter’s own figures show that the vast majority of landlords are law abiding – something we were keen to stress to the media.
IT'S NOT JUST A ONE WAY STREET Worryingly, further research from the NLA shows that it’s not just a one way street when it comes to abuse and harassment: with three in 10 landlords in the UK** - approximately 600,000 – who say they have been either verbally or physically abused by a tenant before.
We think it’s important that anyone who is harassed, abused or subject to what they believe to be illegal behaviour seeks immediate advice and reports the matter to the police and relevant authorities.
HOW TO FIX THE PROBLEM? The fines currently in place tend to be treated as more of an occupational hazard by some so the question is whether or not the punishment is sufficient enough to deter the crime. There is also the question of whether the appetite from local councils is there to carry out the necessary enforcement to bring the worst offenders to the fore. Hopefully the Housing and Planning Act will deliver on its promise to impose stiffer penalties for landlords, while incentivising local authorities to carry out more enforcement by allowing them to hold on to the money they make from prosecutions. If that happens then we may just start seeing improvements and the reputation of the vast majority of good landlords will not suffer at the hands of the criminal few.
HELP THE NLA REPRESENT LANDLORDS IN THE MEDIA If we are to represent the interest of the landlord community effectively in the media, then we need real life experiences from landlords to help bring issues to life. If you have suffered verbal or physical abuse from your tenants and would be willing to share your experience with the NLA and serve as a media case study, then you can do so by contacting press@landlords.org.uk. ⌂ *NLA Quarterly Tenant Panel – Q2 2016 (946 respondents) **NLA Quarterly Landlord Panel – Q2 2016 (777 respondents)
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