Li Magazine 27th Edition by Landlord Investor Magazine

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LANDLORD INVESTOR MAGAZINE 27TH EDITION | 2017

IN THIS ISSUE GOVERNMENT’S VISION FOR THE PRIVATE RENTED SECTOR / THE BTL OPPORTUNITY / 2017, THE YEAR OF NO EXCUSES! / WHAT DOES BUY TO LET PROPERTY INVESTMENT AND A BIG JUICY ORANGE HAVE IN COMMON? / HARD WATER PROBLEMS? / DEPOSIT PROTECTION WHAT IS IT GOOD FOR? / LETTING SERVICES AND INITIATIVES FOR PRIVATE LANDLORDS AND AGENTS / LANDLORDS INCREASINGLY VULNERABLE TO FRAUDSTERS WITH FAKE ID’S / A DISASTER FOR TENANTS; OR AN OPPORTUNITY FOR LANDLORDS?

WRITTEN BY INDUSTRY EXPERTS COVERING ALL ASPECTS OF BUY-TO-LET

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Welcome

Welcome to the 27th edition of Landlord Investor Magazine!

This month’s issue covers many aspects of buy-to-let including: – How are the government planning to tackle the housing problem, and how will it effect small scale private landlords?

LANDLORD INVESTOR MAGAZINE

– 2017, the year of no excuses. Why we should be investing in bricks & mortar?

27th Edition 2017

– Recent landlord survey. Could it reveal disaster for tenants or an opportunity for Landlords?

Editor Tracey Hanbury editor@landlordinvestmentshow.co.uk

– Fraud! Landlords are increasingly vulnerable to fraudsters with fake IDS.

Editorial Contributors Tom Entwistle - LandlordZone Emma Cox – Shawbrook Simon Zutshi – PIN Paul Mahoney – Nova Financial Thames Water Ben Beadle - Tenancy Deposit Scheme Croydon Council David Pope - HooYu Peter Littlewood - Southern Landlord Association

– Expert Property Panel just announced for the Olympia Show on 15 June.

Design Marc Riley

Come and join thousands of Landlords & Investors and meet over 100 suppliers from all areas of buy-to-let. Attend over 37 seminars on the day.

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Not long now to our London Olympia Show which will be taking place on Wednesday 15 June at Olympia.

New expert panel announced!

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The show will now offer an Expert Property Panel to discuss current issues that landlords face, including Brexit, licensing, tax, finance and immigration. Find out more and register for your complimentary tickets at landlordinvestmentshow.co.uk/olympia If you would like any further information regarding Landlord Investor Magazine or our National Landlord Investment Shows please call our office on 020 8656 5075

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Contents

4 13 17 21 23 26 29 36 39 Expert Advice Government’s Vision for Private Rented Sector

Finance

The BTL Opportunity

2017 The year of NO Excuses!

What does Buy to let property Investment & a big juicy orange have in common?

Thames Water Hard Water Problems?

Tenancy Deposit Scheme Deposit Protection, What is it good For?

Council Schemes

Company Spotlight

Industry Update

Croydon Council are looking for Private landlords & agents

Landlords are increasingly Vulnerable to fraudsters with fake ID’S

A disaster for tenants, or an opportunity for Landlords?

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.

LANDLORD INVESTOR 27 TH EDITION

Meet the team TRACEY HANBURY

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Subscribe to LI Magazine Landlord Investor Magazine gives property professionals, landlords and investors monthly advice and information on the topics, news and legislation that matter to the industry. Your subscription gives you the latest industry information in 11 issues per year. Subscribe today for just £65.00 per year to get news, advice and comment on all areas of buy-to-let: • legal services & tax • insurance • investments • deposit schemes & landlord associations • property hotspots Call the subscription hotline on 020 8656 5075 today or visit landlordinvestormagazine/subscribe Published by LI Media, organisers of National Landlord Investment Show

27TH EDITION LANDLORD INVESTOR

EXPERT ADVICE

TOM ENTWISTLE LANDLORDZONE

Government’s Vision for the Private Rented Sector “The housing crisis isn’t about houses – it’s about people. It’s the family struggling to meet next month’s mortgage payment. The young family renting a rundown flat, wondering if they’ll ever be able to afford a home of their own. The children living in temporary accommodation, forced to change schools every time they move.” This paints a grim picture, and for many this is true, but the UK’s housing market is vast and shelter is dealing with just one sector – chiefly those in the low income category. For whatever reasons, when demand increases and supply does not, the price goes up, whether that’s for land to build on, property prices to buy, or rents to pay for accommodation – that’s just basic economics and a reality in today’s housing market. Jeremy Corbyn’s solution of bringing back rent controls may seem like a no brainer to the economically illiterate, but to anyone with any experience with this it’s a disastrous policy which only makes things worse – wherever it’s been tried in the world, it just does not work.

The demand – supply imbalance means that house prices and rents don’t just affect the poor - home ownership is slipping out of reach for many, especially the traditional young would– be first-time buyers, and especially those without any access to the ‘bank of mum and dad’. On average, throughout the country, house prices are now almost eight times people’s earnings, and considerably more in the capital, making it almost impossible for many young people to save enough for a deposit, especially when paying today’s high rents. ‘Generation Rent’, as the demographic has been dubbed, will remain in rented accommodation, in many cases, for life. What’s more, a recent study (Understanding the Next Housing Crisis) carried out by researchers at the University of Reading and presented as

Dwelling stock by tenure type, England, 1981 - 2015 Owner Occupied Rented Privately Rented Socially

a paper at the Royal Economic Society’s annual conference (April 2017) concludes that Britain will never build enough houses to make property affordable for young people: “The increases in housing supply required to improve affordability have to be very large and long-lasting: the step change would need to be much larger than has ever been experienced before on a permanent basis,” the authors concluded. Recent estimates say there are around nine million people in private rented accommodation, including almost 1.3 million families with children. A good proportion of these families are on low incomes, receiving Housing Benefit and would, in times past, perhaps have occupied social housing provided by the local council. As council provided housing has declined, private landlords have taken up the slack.

80% 60% 40% 20% 0% 1981

1987

1993

1999

2005

2011

2014

27TH EDITION LANDLORD INVESTOR

Source: DCLG – Trends in Housing Tenure

Successive governments have had a problem with housing supply. If you listen to some sections of the media it’s not just a problem, it’s a crisis… For example, Shelter says:

This article is about how government plans to tackle the housing problem and its likely impact on small-scale private landlords and is based on a paper produced by the House of Commons Library: Building the new private rented sector: issues and prospects (England).

Recent estimates say there are around nine million people in private rented accommodation.

27TH EDITION LANDLORD INVESTOR

EXPERT ADVICE

• Longer term tenancies to give greater stability to tenants and particularly renting families. The Government’s vision in 2012 of a private rented sector characterised by a growing number of large-scale, institutionally backed developments was to some extent modelled on property markets in other countries. The graph below shows that over 47% of the Netherlands’ institutional real estate investment in 2011 was held in the residential market which compares to less than 1% in the UK.

PERCENTAGE OF INSTITUTIONAL REAL ESTATE INVESTMENT ALLOCATED TO RESIDENTIAL PROPERTY, 2011 50% 45% 40% 35% 30% 25% 20% 15% 10%

27TH EDITION LANDLORD INVESTOR

Source: IPD/KTI

5% 0% SP AI N

“The sector… remains a cottage industry. The combination of aging stock and the cottage nature of the private rented sector have prompted criticisms of

• Large building projects using private finance (pension funds and insurance companies) would quickly provide large

• These blocks would be provided with professional management, in theory and in the government’s view, management to a standard that would be far less troublesome to government than many of the private landlords can offer today.

ITA LY PO RT UG AL

However, this is the way central government sees the PRS today:

On the face of it this would solve several problems for the government at once:

numbers of modern accommodation of a good standard, far better standards that much of the housing stock currently held by small-scale landlords.

UK NO RW AY BE LG IU M IR EL AN D

A Private Landlords’ Survey (2010) showed that around 89% of landlords in England are private individuals rather than companies or organisations, 92% of landlords are part-time, and just 2% of landlords have a portfolio of more than 10 properties – there’s no reason to suspect that these proportions have changed dramatically since.

Through various government reviews of housing and the PRS in the UK over the last 10 years or so, and in particular the Montague Review in 2012, it has become increasingly evident that recent governments have been pinning their housing strategy on encouraging more house building for rent though more institutional investment as opposed to more small-scale buy-to-let investment.

FR AN CE DE NM AR K GE RM AN Y SW ED EN

Since the introduction of the Assured Shorthold Tenancy in the 1988 Housing Act, renting legislation has created a good amount of stability for the rental market, so much so, and in conjunction with the buy-to-let mortgage introduced in 1966, the private rented sector (PRS) has grown to the point where it houses more people than does the social housing sector (council and housing associations combined) – the PRS has doubled in size in the last ten years and now houses around 20% of the population.

parts of the sector. A 2013 Communities and Local Government (CLG) Select Committee report highlighted particular concerns about security of tenure, property standards and regulation of letting agencies. The nature of the industry can therefore make it difficult to regulate and to disseminate information such as legal duties around property maintenance.”

NE TH ER LA SW ND S IT ZE RL AN D AU ST RI A FI NL AN D

The growth in private landlords housing low-income tenants has itself has created another housing problem for government: the rise of the rogue landlord. Not all landlords housing low-income tenants are rogues, by any means, but there is a hard core of them who house tenants in unsafe accommodation using unprofessional management methods. They not only get the vast majority of responsible landlords tarred with the same brush, creating an anti-landlord media firestorm over the last few years, they present a formidable problem for local authorities and central government.

EXPERT ADVICE

Initial hopes were high as a £1bn government fund, intended to build 10,000 new homes for rent. The Baker review in 2004 highlighted the comparative lack of institutional investment in the UK and at the time proposed the introduction of US-style Real Estate Investment Trusts (REITs). These were subsequently introduced in 2007, but by April 2011 only one of 23 listed REITs was investing in residential property. Later, the 2010 Coalition government put a major focus on securing institutional investment to increase the quantity and quality of PRS housing stock and commissioned a review of barriers to institutional investment in private rented homes (the Montague Review mentioned above). Initial hopes were high as a £1bn government fund, intended to build 10,000 new homes for rent, was initially successful when bidding for the money was oversubscribed. However, it soon emerged that a large number of developers had withdrawn from the bidding process and a final allocation resulted in just £123million worth of contracts awarded in 2013. Why is it then that even though the government offers loan guarantees and tax incentives for large scale development for rent, there is still a lack of enthusiasm? Well, it would seem there are a number of reasons for this lack of support for largescale institutionally backed developments in the UK. One significant factor is undoubtedly the historic importance in the UK of owner-occupation over PRS homes. In addition, the investment model for the PRS is one of long-term financial gain (capital appreciations and well as rental income) rather than the shortterm capital value creation from the sale of owner-occupier properties. The PRS

LANDLORD INVESTOR 27 TH EDITION

model creates greater risk for institutional investors who want certainty. Mark Hafner of American PRS investor Greystar, explaining this question of institutional investor caution argues: “The answer is very simple and very obvious; the reason PRS hasn’t flourished in the UK to date is because the for-sale market is so robust. “For virtually any piece of land you are going to achieve a higher return faster from a for-sale strategy than you are with rental.” This issue of returns then is very important to institution investors in terms of risk: changes in market rent rates are significant for them, particularly with newbuild PRS developments, which require a significant investment of capital up front. The Montague Review identified this as a concern for potential investors, stating: “…there seemed to be a reasonable consensus that the base historic net yield of 3.5% p.a. would be too low to prompt much investor appetite, without the boost to total returns from capital appreciation (which implies sale to owner occupation within a reasonable period after acquisition)” The Montague Review noted that in any large-scale PRS market, yields would have to be particularly high to tempt investors into the sector: any major change of paradigm to a long-term residential rental investment market in the UK, dependent only on income returns, is therefore likely to require higher rents, or lower land, construction and management costs, or some combination of all of these. Others factors include the higher costs involved with professional management

vis-à-vis the typical vanilla buy-to-let management by a conscientious parttime landlord, who in truth probably offers a better service. And the fact that large scale investments target the high end of the letting market, one which is not suited to many tenants and locations. There has been considerable interest in the Build-to-Rent fund from institutional investors, with several large-scale schemes under way, but only in those locations where they are more likely to be successful and aimed at a higher end of the tenant market. But the improving owner-occupier market since the last recession (and in part as a result of Help-to-Buy) has steered some potential institutional investors and developers away from the PRS. Montague argued that one of the major attractions for institutional investors of the UK PRS market is the “stability of the regulatory framework” for the sector over the past 20 years (since the introduction of the Assured Shorthold Tendency), which would give large investors confidence in stable returns. But to counter this, investors have warned about the dangers to the attractiveness of the sector were that stability to be undermined by a change of government. The introduction in the 1970s, under the then Labour government, of rent controls and restrictions on regaining vacant possession caused both institutional and private interest in the sector to evaporate. The Labour Party announced a manifesto commitment in 2014 to legislate to make three year tenancies the standard for the PRS and introduce a form of rent control. Jeremy Corbyn has since reiterated this intent.

EXPERT ADVICE One plank in the present government’s argument for more large-scale development of the PRS would be tenant stability and the desirability of longer-term tenancies, but by encouraging familyfriendly tenancies rather than legislating for them. However, as Andrew Cunningham of large scale landlords Grainger PLC argued, in practice there seems little demand from tenants for this: “Government intervention in tenancy structures is not required. Longer tenancies are often not offered because of a lack of demand among tenants or because of the negative impact that a longer tenancy would likely have on an asset which is valued based on its vacant possession value. As PRS expands, and assets begin to be valued on their net operating income rather than vacancy, longer term tenancies will naturally be made more available by landlords. Legislation is not required.”

While the 2010 Government implemented a number of policy initiatives to increase institutional investment in the PRS, in the 2015 budget the then Chancellor George Osborne hinted that the emphasis on institutional investment may be changing. In his 2015 Autumn Statement he announced a 3% Stamp Duty Land Tax (SDLT) surcharge on additional residential properties over £40,000, including buyto-let properties, commencing from April 2016. At the time it was suggested that government would consult on whether to introduce an exemption for corporates and funds owning more than 15 residential properties, but following this consultation it was decided not to apply an exemption. Despite more recent efforts to increase institutional investment and large-scale PRS developments, the uptake has been slow and the sector is still dominated by small-scale landlords. A Communities and Local Government (CLG) Select Committee 2013 report questioned whether the Build-to-Rent fund was focused on the development of “new housing for the middle classes” as the Build-to-Rent model, at market rents, would not be considered suitable for a large proportion of the PRS market. Shelter’s response to the Montague Review criticised it for focusing solely on institutional investment at the expense of the rest of the PRS as a whole: “It (the Review) misses a trick in offering nothing for the millions of people already in the sector, paying sky-high rents and

living under constant threat of eviction or further rent rises. No solutions for our rental market could be complete without measures to address this lack of stability.” Given that the vast majority of the existing PRS housing is owned by individual investors, developing a completely new PRS, as the government appears to favour, will involve changes to individual landlord’s practices and improving the standards in existing housing stock, as well as the promotion of large-scale, professionally managed build-to-rent developments. Critics of buy-to-let and its rapid growth over the last 20 to 30 years argue that the growth has been at the expense of homes for owner-occupation. And it seems the government in 2015 took some of this criticism on board when in the 2015 Budget George Osborne announced that he would “level the playing field” and take away some

of these advantages that buy-to-let investors had enjoyed. The result was a restriction on relief for mortgage interest for individual landlords, down to the basic rate of income tax on gross income, phased in over 4 years, limiting the “advantage” that those individuals currently enjoyed over those purchasing their own home. This coupled with the three percentage point Stamp Duty Land Tax (SDLT) surcharge for additional properties, and later, no reduction for buy-to-let landlords on capital gains tax (CGT), when everyone else saw a 10% reduction, raised concerns that all of this could mean the “final nail in the coffin” for buy-to-let. The Institute for Fiscal Studies concluded that the government’s policy of removing the tax relief available to landlords’ on mortgage interest, to be phased in over four years from this April 2017, “will significantly reduce the attractiveness of buy-to-let housing as an investment among higher-rate taxpayers who require mortgage finance.” For a ten-year buy-to-let investment 50% financed by a mortgage, the effective tax rate for a higher rate taxpayer will increase from 47% to 76%. What does all this mean for the small-scale buy-to-let investor? Whilst ideally it would seem the government would like to see a boom in institutional investment into the sector, to balance out that of the small-scale investor,

and it has actively tried to encourage this, the types of accommodation the institutions provide is not for everyone or every location, and so far, due to the characteristics and economics of the UK PRS market, take up has been slow. The government has taken big steps to “cool down” what was becoming a boom in buy-to-let lending, and is increasing significantly management regulations for landlords and letting agents in an attempt to “clean-up” the sector, and address the problem of rogue landlords and agents, but thankfully, unlike plans in Scotland and wales, there are no plans to change basic tenancy laws in England: “The Government does not support a wide-ranging review to consolidate legislation covering the private rented sector at this time. We are firmly of the view that a wide ranging review would introduce uncertainty into the sector

and would slow down investment at a time when it is most needed. It would also provide significant and unwarranted upheaval for tenants and landlords,” the government has said. Although some recent policy changes, such as the changes to SDLT, and the decision to incorporate the Build-toRent fund into the Home Building Fund does not suggest any prioritisation of increased supply in the PRS and may suggest a change in emphasis away from an institutionally backed PRS, it is still a big part of government strategy. It is too early to say what long-term impact the strategy will have, particularly in the light of the uncertainly provided by Brexit, as we enter the 2-year negotiation period, but without doubt the sheet size of the small-scale landlord investment in the sector means it will dominate sector for years to come, if not permanently. It will be interesting to see how things pan out long-term, but it is not beyond the realms of possibility that government will need to change tack and rely more on the small-scale landlord if its hoped for institutionalisation drive or “Tescoisation” of the sector does not materialise. In the meantime it is likely to be tough going for individual small-scale investor landlords, but for those who can see it though and adapt, in the long term they will thrive. Tom Entwistle is editor of LandlordZONE® and an experienced landlord himself. 27TH EDITION LANDLORD INVESTOR

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The BTL opportunity I N T E R N AT I O N A L ( J E R S E Y S U B S I D I A RY ) S H AW B R O O K I N T E R N AT I O N A L L I M I T E D

With the private rented sector (PRS) remaining a market powerhouse, rising house process, the reduction in social hosing and a turbulent regulatory and political landscape, the broader Buy-to-let (BTL) space offers much for the savvy investor.

BTL property offers an opportunity to capitalise on demand from private renters and take on projects that boost the UK’s stuttering housing supply, and is a hugely diverse market spanning single houses rented out by families, Houses of Multiple Occupancy (HMOs), semi-commercial properties, and commercial space available to rent. While some BTLs are straight forward with a clear case for lending and are catered for by mainstream BTL products, for other more complex applications a more specialised loan is required from a lender that recognises the value in a personal, good sense approach to every transaction.

What is a specialist buy-to-let lender? Regardless of the decision – a health problem, a work choice, a financial opportunity, seeking the advice and support of a specialist will help facilitate a direct route to the best possible solutions. This is no different for BTL finance and a specialist BTL lender, such as Shawbrook, will consider a customer’s application in detail to arrive at a tailored solution that suits each client.

Shawbrook provides what we term a ‘specialist BTL’ alongside our mainstream BTL products. Although “tick box” or rulebased BTL decisions suit some customers, in many cases these customers have personal circumstances that require a more personal underwrite. Due to the fact that our underwriting decisions are made by real people at our Brentwood HQ, (not computers), complex case aren’t filtered out but given the airtime necessary to progress where appropriate. Even if a specialist buy-to-let is not required in the first instance, as customers grow their businesses and diversify their portfolios, having a lender with specialist options is invaluable and leads to a long term relationship where each party has a good understanding of how the other works. It can give borrowers confidence that they are working with a financier who understands the developments of a BTL business and can make accommodations that a computer wouldn’t recognise. With the BTL market constantly evolving, it pays to home in on the best loan for investors with the help of expert advice, and a lender that can meet a property investor’s requirements; however they may evolve in the future. For the experienced property investor a flexible ‘specialist buy to let’ lender offers investors an opportunity to stay ahead of an increasingly competitive market.

For more complex applications a more specialised loan is required from a lender that recognises the value in a personal, good sense approach to every transaction.

LANDLORD INVESTOR 27 TH EDITION

FINANCE

Making the most of HMOs and refurbs

HMOs are a particularly popular form of specialist buy-to-let from the tenant’s perspective.

There has been a surge of the more niche type of property of late with HMOs being near the top of the list. HMOs are a particularly popular form of specialist buy-to-let from the tenant’s perspective. At Shawbrook we see three main tenant categories creating demand: students, key workers and professionals. The consistently strong higher education student numbers are a prime group in university towns as they provide a constant stream of renters looking for accommodation close to their area of study. The newer, and perhaps more rapidly growing group are the key workers such as those involved in the health industry, the police or the education sectors, and who are often unable to afford to buy in a convenient location, particularly given rising house prices. Key workers will often stay in rental accommodation during the working week, maintaining another

residence in a surrounding area. We also see professional workers adopting the same approach across commuter belt areas, around key transport links and on the outskirts of major cities. Due to the density of housing in commuter hubs like London, many of these new private renters, including the most affluent professionals, are now considering HMOs for residence. There continues to be significant evidence for the HMO market as an area where investors have an increasing desire to expand or enhance their portfolios. On our own books we’ve seen a significant boost in total number of loans of this type and this is largely due to the attraction of the significantly higher yields available within this asset class. If a property is subdivided and converted to an HMO rental with 4, 5 or 6 bedrooms, investors can benefit from many times the income of a single dwelling, sparking real interest amongst the property investment community.

27TH EDITION LANDLORD INVESTOR

FINANCE

Switched-on property professionals will be aware not only of refurbishment for initial conversion of a single property into an HMO, but also refurbishment to add to the property’s attributes and appearance. The current HMO market now includes properties that are refurbished to a higher standard with modern facilities and luxuries. Loan products for refurbishment are therefore an increasingly popular option for investor clients, providing the means to a higher yield addition to a portfolio. Indeed, in an increasingly competitive market the higher quality of HMOs we are seeing indicates an almost forced evolution if investors are to attract the desired client profile.

Short Term speed As property investors look to purchase properties at speed, they are turning more and more to short term finance options that are becoming ever more affordable across the market. Shawbrook has a variety of products including refurbishment propositions that enable investors to bring new residential properties to market at speed. This includes a range of standard shortterm-loan (STL) products as well as STLs designed for light or heavy refurbishment. They enable financing within a matter of days and so are well suited to buying property at auction or to ensure a quick completion on a sought-after property. Clients can then switch to a term loan with us, or indeed with another lender. Alternatively, our longer term residential products can also be a real help in HMO conversion cases. This option enables clients to undertake decorative or structural works in a similar way to a refurbishment STL, but then subsequently retain and rent out, acting like a standard buy-to-let loan. This hybrid product is a one-stop-shop for investors looking to buy, refurbish and let out. The deal can also be structured over a 3 or 5 year period which removes the need to remortgage after a short period of time. Also, crucial for landlord clients to grow their portfolios, is that the value of the loan is based on the after works value, enabling the investor to realise the full potential of a property and allowing them to draw out some of the equity in the property once the value has increased. This need for speed is something Shawbrook is fully aware of and our range of buy-to-let products is tailored directly for this sort of function. For experienced landlords then, HMOs are a highly attractive investment class particularly when looking to increase ready capital

LANDLORD INVESTOR 27 TH EDITION

and expand their portfolio. Experience is a must when evaluating these deals. At the same time, flexibility is something we pride ourselves on as a lender, and we will do our utmost to accommodate our brokers and their investor clients. Alongside this opportunity is a note of caution around margin compression where rents do not increase directly in line with interest rates. Most experienced property professionals are alive to this and are already one step ahead, keeping an eye to the future and building a sustainable investment model that can withstand these forces. Alongside regulatory bodies such as the Prudential Regulation Authority (PRA), savvy investors and responsible lenders are taking more stringent affordability criteria into account to ensure that the customer is protected as much as possible.

As property investors look to purchase properties at speed, they are turning more and more to short term finance options.

Market development, responsible lending, and the value of brokers The BTL market and refurbishment products that enable it appear to have opportunity for additional growth as such projects do not demand the same expertise and specialism as new builds. As a team, we will be watching keenly to see if the activity in the London property market will impact the refurbishment and BTL markets. It’s likely that investors will start to focus more attention on other areas across the UK such as the North East and Midlands that offer impressive rental yields. This activity will only serve to increase the strength of the market overall, although economic and political uncertainty will always have an impact and it is likely that we will continue to see the effect of this, and of the wellsignposted changes to the tax regime. As a lender committed to the investor, landlord and SME community via the broker channel, we would always advise that property professionals surround themselves with a good team. From a knowledgeable mortgage broker to a tax advisor and commercial conveyancer, seeking specialist advice to guide you through the various pitfalls of the specialist market is a solid foundation from which to build. No-one has access to a crystal ball but drawing upon this advice and “playing a long game” is perhaps the sensible strategy, as is partnering with a lender that shares these ideals and can help support you along the journey. Emma Cox Sales Director Shawbrook Commercial Mortgages

FINANCE

SIMON ZUTSHI

2017 The Year of

I have been writing articles for Landlord Investor magazine every month for two years and I can honestly say that I don’t think there has ever been a better opportunity to invest in property than right now, as you long as you know what you are doing.

LANDLORD INVESTOR 27 TH EDITION

Excuses!

You might think that is a crazy statement because there is massive uncertainty in the market due to, the Section 24 tax changes, increasing legislation and even the effect of BREXIT still hanging over us, but that is exactly what I am talking about. Right now many investors are paralysed with fear and don’t know what to do. That means there is an opportunity for all of us who are prepared to take action and make the most of this unique purchasing opportunity. However, at times like this, people often come up with all sorts of reasons why they can’t invest. In this month’s article, I want to clear the path for you and remove any barriers you may have to investing. I am going to do this by addressing head on five of the most common reasons (excuses people tell themselves) why they can’t invest right now. To demonstrate that these are not really valid reasons. I am also going to refer to some case studies of people just like you who could easily have used that particular excuse but have gone on to achieve massive success. The reality is if they can do it, so can you. Prepared to be inspired and motivated!

FINANCE

Excuse No 1

Excuse No 2

Excuse No 3

I don’t know what is happening in the property market. The market could be at its peak and so prices might fall in the next year or two, so I am going to wait until the property market hits the bottom and then buy.

I don’t have enough money to invest in property

I don’t have a good credit rating so I can’t get mortgages and no one would lend to me anyway!

No one really knows what is going to happen to the property market. We have had strong growth in some areas over the last few years and prices do feel high. There might well be a market correction, but who knows. The problem with waiting is that if prices do go up, then you could miss out on the continued price boom. In practice, it does not really matter what happens short term to property prices, if you believe that in the long term prices will go up, and during that time you can afford to hold the property. If you take this approach, then you should only ever buy properties which make a positive cash flow each month, as per Golden Rule No 3 in my book Property Magic. There are lots of investors who would love to buy now, but they have a whole load of other reasons (excuses) stopping them so let’s look at a few more of the common ones.

No matter how much money you have, or don’t have, at some point everyone runs out of their own money. All successful investors use other people’s money to invest. It’s just some people have to start using other people’s money sooner than others. If you don’t have money, then what do you have? The key is to get good at finding great deals. When you find good deals there will be other people who have money but don’t have the time, knowledge or inclination to find good deal themselves. Working with you could be a great solution for them. Curtis Jackson is a great example of this. Curtis who is a 26-year-old electrician from Nottingham, had no previous investing experience and no money, but wanted to replace his income, so that he could give up his job and start following his true passion. He joined our Property Mastermind Programme in April 2016 and started with Rent to Rent to gain some quick cash flow and to demonstrate to potential investors that he knew what he was doing. This is exactly what he did then went onto purchasing HMOs through Joint Ventures, where he did all the work and other people put the money in. The result was that in just 11 months, Curtis went for zero to £8k+ profit per month.

As far as convincing someone to invest with you, get good at finding great deals and forming relationships.

First of all, it does not matter if you can’t get mortgages as there are plenty of strategies where you can make money from property without having to have mortgages such as, deal sourcing, assisted sales, Rent to Rent and Purchase Lease Options. Of course, it is better if you can get mortgages as you will have more choices, but If you do actually want to buy the property, and use money from an investor, you could always put the property in their name, which they might be happier with anyway because they will have more security. You would then have a deed of trust to acknowledge your true interest in the property. As far as convincing someone to invest with you even if you have a poor credit rating you need to again get good at finding great deals and forming relationships with people. Property is a people business. A great example of this is Richard Morgan, who came on our Property Mastermind Programme 12 months ago with no money. Richard was really good at finding profitable development projects, but had no idea how to fund them especially as he had been bankrupt in the past. He did exactly what we showed him and eventually secured private funding of over £500k which allowed him to secure £3.3m of development projects, which will generate a personal monthly profit of £9k per month once they are all completed this year. No money, no problem.

Property is a people business.

27TH EDITION LANDLORD INVESTOR

FINANCE

Excuse No 4

Excuse No 5

I don’t have any experience so no one would want to lend to me

I don’t have any time to invest. I am just too busy.

If you don’t have any experience the best thing to do is to educate yourself so that you learn how to find great investment deals. The numbers speak for themselves on these projects,which makes it much easier to find joint venture partners and investors.

You might well be busy, most of us are, but we all have the same amount of time every day. It is up to you how you choose to spend or invest your time. It all comes down to what you decide to prioritise in your life. One of the many benefits of investing in property is that you can work once and get paid forever! The time and effort you put into finding each property is rewarded every month (for as long as you own it) by the rental profit that it makes each month, without you having to do any more work. You could work with other investors who do have time to find great deals for you.

Take Carly and Kirstin for example, Sisters living in Brighton who had no property investing experience, or money of their own. We taught them how to find high cash flow properties and also how to approach other people so that they want to lend you money. Their first deal was with their next door neighbour, who was already investing in single let properties and was interested to hear that Carly and Kirstin were also learning how to invest. When Carly sat down with her neighbour and showed her the first HMO deal they had found, the neighbour soon realised that she could lend the money to the Sisters, and her 50% share of the profits would be more than she would make if she just purchased another single let property on her own without her having to do any work. It was a no brainer deal for the neighbour. The numbers just worked. More money for less effort, a great Joint Venture.

of HMOs and development projects in just 12 months. Tim now has an annual profit, before tax of £174k from his property portfolio. Are there any more excuses left for not taking action? I do hope that I have been able to help you realise, that some of the reasons which may have prevented you from achieving all your desires, are not really valid reasons. If other people have been able to overcome them, you can too. To help you further build your belief of what is possible and what you could achieve, then you can watch the case studies here: http://bit.ly/MM21results

Some of our most successful students have been people who have very busy jobs or businesses, and yet they commit just 8 to 10 hours per week of focused time with life changing results. Take Tim Percival from Bristol for example. Tim was a very busy Doctor with two young children and his wife (also a Doctor) was pregnant with their third child when he started his Property Mastermind journey. Despite having very little time, Tim was able to partner with other more experienced Mastermind graduates, with the result of him being able to purchase £3.2m

If you don’t have any experience the best thing to do is to educate yourself so that you learn how to find great investment deals.

2017 – The Year of no excuses Are you ready to step up your investing success? The April Property Mastermind Programme (MM23) is now sold out and there is already a list of investors registered for the next one (MM24) which starts in October. However, you may not have to wait until then to start benefiting from being part of the Property Mastermind Community. The Property Mastermind is evolving and I am delighted to announce that last year we launched a new initiative called Mastermind Local (or MM Local for short). This is a new way of delivering all of the content, knowledge and strategies from the Property Mastermind, but in your local investing area, in smaller focused groups of between 8 to 11 delegates. You still benefit from Monthly Mastermind workshops, 1 to 1 private coaching, and access to 24/7 support of the Mastermind Forum over a 12-month period, but without the need to travel to Birmingham each month

LANDLORD INVESTOR 27 TH EDITION

and for a lower investment than joining the main Property Mastermind. We are running a number of these MM Local groups around the UK starting over the next few months, however the number of delegates are limited in each group, to maximise the learning experience and so it is a first come first served basis. If this sounds of interest to you, then I recommend you register now to join me this month on a live 90 minute, online training session on which I will explain exactly how this works and how this time next year you could be one of the inspirational case studies. Register for this live online training here now: www.pinWebinar.co.uk/MMLocal

FINANCE

PAUL MAHONEY NOVA FINANCIAL

What does Buy to Let Property Investment and A Big Juicy Orange have in common? At Nova Financial, as property advisors our core business is to assist clients with guidance on how best to go about investing in property and what they can hope to achieve from the right investments. Most of our clients are mum and dad investors wanting to provide for retirement. We find that most people tend to start with a default position of “cash is king”. By that I mean chasing cash flow from the outset tends to be their main focus. What we often must explain to our client is that until they have an asset base that will generate them an acceptable level of income, capital growth is often an important consideration. In the case of smaller proportion of our clients that have large sums of money to invest and the desire to retire as soon as possible, the focus would generally be on securing those funds and generating as much cash flow as possible and generally with little to no debt. So in this case “cash is king”. However, for most who are aiming to turn a smaller amount of capital (money) into a larger amount sufficient to allow them enough to retire at some point in the future, a slightly different approach must be taken. Let’s look at an example; John is 30 years of age, he earns £40,000 per annum and has managed to save £50,000 over the past 5 or so years that he now wants to invest. He would like to retire one day with £35,000 per annum of passive income. If John invests in a property that generates him

LANDLORD INVESTOR 27 TH EDITION

a 7% NET yield but very little growth in value, then John will have £3,500 per annum which perhaps may be pegged to inflation if he is lucky. So how does John get the rest of the £35,000 he requires, well he could keep saving 10 lots of £50,000 until each set of £3,500 adds up to £35,000 of income but that would probably take a very long time if achievable at all. An alternative to John eating baked beans and locking himself indoors for the next 60 years would be to invest his funds in a capital growth focused asset with 75% borrowings and a £200,000 price point and a property with the likelihood of doubling in value over the next 10 years. Then John has turned his £50,000 into £250,000 (£400,000 less £150,000 of debt) which is an incredible 500% return on his funds. Now the old cliche of property doubling every ten years isn’t always true these days so let’s say that he achieved a more conservative return of 5% per annum which means his property will be worth £325,779 and that is a profit of £175,779 or 350%. This would allow John to reach his goal a lot quicker even if the property isn’t providing him with a lot of income straight away. Most of the clients that we meet with that are similar to John don’t need income straight away but will do in 20 years when they want to retire.

So what does property investment have in common with a big juicy orange? Well when an orange is small and still green would it be a good idea to juice it? No, because you won’t get much juice and anything you do get probably won’t taste very nice. However, when that orange is large and juicy is it perfectly placed for juicing and will provide all the juice you need. The analogy compares an orange to an investors asset base and the juice to income. For many we find that in the wealth creation phase of their life they should focus on growth with the prudent use of investment debt to accelerate returns and then when they’ve grown their orange/asset base the focus shifts to high yielding income assets with little to no debt. No Advice Disclaimer: this article should not be perceived as personal advice and you should not take action based upon its contents. Prior to investing seek professional advice which Nova Financial can provide on a one-to-one basis. If you’re a property investor or considering investing please don’t hesitate to get in touch to determine if we can help. www.nova.financial

INDUSTRY SPOTLIGHT

THAMES WATER

Hard Water Problems? A Simple Solution That Saves Money and Energy Hard water affects around 60% of homes in the country. Treating hard water is not the responsibility of water companies, but Thames Water, the UKâ&#x20AC;&#x2122;s largest water and waste water provider, recognises the problems hard water causes, and the energy wasted by the effects of hard water and the increase in carbon emissions. It, therefore, researched solutions to offer to its customers who would not only solve their hard water scale problem, but save energy and money too. As well as a conventional salt-based softener, Thames Water tested and approved Scaleguard, an electronic water conditioner now offered at a special price for its customers. This is part of a scheme to offer selected water related products to customers at special prices â&#x20AC;&#x201C; a scheme which has proved popular and successful.

27TH EDITION LANDLORD INVESTOR

From a landlords point of view, there are huge benefits in extending boiler by a proven 45% and protecting the whole water system from hard scale build up and removing existing scale, As a bonus it also gives the tenant a substantial energy saving. Building regulations recommend a form of scale control in hard water areas, and Scaleguard will do just this.

INDUSTRY SPOTLIGHT

As well as protecting the hot water system and appliances there is a considerable improvement in water quality which is kinder to the skin and reduces the use of soap powder.

What Is Hard Water? As rain water passes through soil and rock it picks up traces of minerals such as calcium and magnesium. Hard water occurs when water includes a high content of these minerals. Around the home this can be seen as scale forming on basins, showers, taps and more importantly scale build up inside plumbing, particularly hot water systems, which can lead to severe problems with maintenance and increased energy costs. Hard water also affects everyday appliances including dishwashers, washing machines and kettles. Deposits increase when water is heated making appliances perform less efficiently and thereby reducing their life.

British Water calculated for every 1.6mm of scale build up on a hot water system there is a 12% loss on heating efficiency and the Carbon Trust found that 1mm of lime scale on a heat transfer surface causes a 7% increase in energy input to the boiler.

What Is Scaleguard and How Does It Work? An electronic water conditioner, it is usually fitted to the incoming main thus treating all the water in the property. There is no plumbing involved and the running cost is under £10 a year. It comes with a 10 year product guarantee and with a money back performance guarantee. The technology is proven and has been

used in industry and housing for over 20 years. The electronic force field created by Scaleguard changes the structure of the calcium temporarily so that, in simple terms, the calcium is in suspension and does not bond and form hard scale. As well as protecting the hot water system and appliances there is a considerable improvement in water quality which is kinder to the skin and reduces the use of soap powder. Scaleguard does not create ‘softer’ water, but it protect from hard scale build up. Scaleguard costs £98.33 plus VAT with a special discounted price for Thames Water customers of £80 plus VAT. For further information, visit us at the Landlord and Investment shows in Reading and London Olympia and at www.scaleguard.co.uk

27TH EDITION LANDLORD INVESTOR

TENANCY DEPOSIT SCHEME

BEN BEADLE TENANCY DEPOSIT SCHEME

Deposit protection, a term that everyone in the private rental sector knows – but what purpose does deposit protection serve? It may be surprising to some that deposit protection isn’t just about protecting tenants – it exists to protect landlords as well.

Deposit Protection What is it Good for? The common thought, back when the idea of deposit protection was first floated, was that the schemes offering this service would be flooded by disputes from tenants and landlords each claiming the right to the deposit. This has most definitely not been the case. In 2007-08 the number of deposits protected (by all three government approved schemes) was 924,181, in comparison the number of adjudications completed was only 458. Over the years, the number of deposits protected has risen, and though the disputes has risen too – the percentage of deposits protected needing to have disputes adjudicated remains low. In 2015-16 this figure was 0.82%. Since the inception of mandatory deposit protection we have also seen better practices become more common place throughout the industry with landlords and agents appreciating the importance of a thorough check in/out report and inventory.

How does the Tenancy Deposit Scheme help landlords? When a landlord fails to protect a deposit in a government authorised scheme such as TDS, they are leaving themselves open for fines of up to 3x the original deposit amount. Without a protected deposit, landlords will also be unable to reclaim possession of their property using section 21. Deposit protection gives tenants the confidence to pay a tenancy deposit, safe in the knowledge that their money will be returned to them unless they breach their contractual responsibilities. This means that tenants are more likely to rent – and keep the property in a good condition. Landlords, too, can rest easy knowing that there is a monetary buffer to prevent them from suffering loss due to a tenant’s breach of contract. TDS is committed to raising the standards of the private rental sector. We run regular workshops and have our own TDS Academy to give those

in the sector the opportunity for professional development. In addition we regularly write educational articles – both on our blog and through external partners, to try and answer the questions that landlords have. Recent popular articles include our best practice guides for Mould and Utility Bills, and our Tessa Shepperson series highlighting the landlord legislation that landlords need to be aware of.

Deposit protection gives tenants the confidence to pay a tenancy deposit, safe in the knowledge that their money will be returned.

27TH EDITION LANDLORD INVESTOR

TENANCY DEPOSIT SCHEME

TDS currently offer the cheapest insured deposit protection without scrimping on the quality of the service.

Which type of deposit protection is better for landlords? The type of deposit protection a landlord should use is completely dependent on what benefits the landlord wants to get out of the protection. For example, if the landlord would like the security and control of holding the deposit in their own account, they should use an insurance based scheme such as TDS Insured. TDS currently offer the cheapest insured deposit protection without scrimping on the quality of the service we provide. For further discounts, members of the Residential Landlord Association (RLA) are able to use our ‘DepositGuard’ offering which offers an unmatched discount. If the landlord wants the process to be as cheap and as simple as possible – then a free scheme like TDS Custodial would be the better match. With our new custodial scheme, we have listened to landlords and created functions that will make life easier such as: • Tenant changeover function: Is one tenant moving out during the tenancy? Amend the deposit easily online without repaying the entire deposit. Particularly useful for student accommodation. • Pre-populated version of the prescribed information: making complying with the law quicker and easier. • Communications log: see what we have sent, when we sent it, and where.

• Update tenant contact details directly: with their permission, we share the tenant’s new details with you too. • Change the lead tenant mid- tenancy: Lead tenant on holiday? Make the change at the click of a button • Split repayments between tenants: You engage with all tenants, not just the lead tenants – so do we. • Powerful online evidence portal: Dispute arisen over deposit repayment? Upload your evidence to our impartial adjudicators quickly and cheaply • Tenancy activity function: View a history of tenancy stages and how a dispute case is progressing. What are the legal requirements? There is a two part duty under the legislation: To protect the deposit in a government approved tenancy deposit scheme and to issue the tenant(s) and any relevant person(s) (anyone that has paid the deposit on the tenant’s behalf) with prescribed information. Both parts must be done within 30 calendar days of the landlord receiving the deposit. If the landlord does not do either part, the tenant can raise an action against the landlord in court and ask the court to award between 1 and 3 times the deposit. But don’t worry – while the sanctions can be high if the deposit is not protected, it is very easy to protect a deposit and can be done in just 5 minutes in either of our models, Insured or Custodial.

Custodial and Insured Deposit Protection Explained Insured deposit protection allows the landlord to hold the tenancy deposit in an account of their own choosing. On the other hand Custodial is a completely free deposit protection service that holds the money on your behalf. The Tenancy Deposit Scheme (TDS) is able to offer both of these services without a joining fee. Our customer service is award winning, and we have a dedicated team to helping you switch deposits from another deposit protection scheme to us, so the process is completely hassle free. Just email switch@ tenancydepositscheme.com for more information. Custodial Deposit Protection • Fast, free, secure • We hold the deposit • Quick repayment process at the end of the tenancy Insured Deposit Protection • Market leading rates and free to join • You hold the deposit • You repay directly at the end of the tenancy

Insured fee per tenancy

DepositGuard TDS for RLA members)

TDS

DPS

MY Deposits

Joining fee

No fee

£20.00

Deposits £13.20 up to £500

£14.70

£15.00

£20.00

Deposits £17.95 over £500

£21.95

£22.20 £26.00

Prices correct as of February 2017

LANDLORD INVESTOR 27 TH EDITION

Sales & Lettings

0.75%

If you instruct us to sell your property *

management fees for the first 6 months if you instruct us to let and manage your property *

Exclusive offer for the first five instructions Contact your local branch at leaders.co.uk to take advantage of this limited offer.

*Offer is available to the first five instructions received before 1st July 2017. Offer is open to attendees of the Surrey Landlord Show and at participating branches only. Leaders must be instructed on a sole agency basis with a To Let/For Sale board displayed at the property. Full terms & conditions apply – contact your local branch for details.

SPECIALIST LANDLORD INSURANCE YOU CAN TRUST As one of the UK’s leading specialist landlord insurance brokers, our wide range of solutions covers all types of residential property, commercial property and tenant status. Whether a single property or a portfolio, we’re sure to have it covered.

To find out more, call 01625 348116 or visit www.bollington.com/landlord-investor

Insurance Times

Awards

WINNER

BOLL255 01/17

LANDLORD INVESTOR 27TH EDITION

COUNCIL SCHEMES

CROYDON COUNCIL

Letting services and initiatives for private landlords and agents Croydon Council is always looking for landlords and agents within the M25 including Kent, Sussex and Surrey to work with us as part of our housing solutions strategy.

LANDLORD INVESTOR 27 TH EDITION

COUNCIL SCHEMES

You will need to get in touch with a representative of our preferred providers who will speak to you about your property.

We can provide a seamless lettings service to accommodate landlords’ and agents’ needs free of charge, offer a range of generous monetary incentives, deposit bonds and all legal documentation such as tenancy agreements.

Croybond The Croybond scheme offers landlords:

Private sector leasing scheme (PSL)

• free letting service - you choose your tenant

Croydon Council works in partnership with private sector agents.

• up-front incentive payments • free ongoing support and advice, including housing benefit and Universal Credit • fast, free tenant-finder service • free, independent professional inventory • a bond agreement that covers the same risks as a cash deposit • free property check • free advice on any improvements required in order that the property meets the housing standards to let • access to grants and loans.

Our guarantees:

Guaranteed rent scheme

• Free letting service

This scheme is offered to landlords and agents who wish to manage shorter and medium-term lets (minimum 12 months):

• No fees • No voids • Trustworthy and reliable

• free tenancy and landlord support

• Full/part management

• rent guaranteed for the period of occupation paid directly to your bank account

• Guaranteed rent.

• no legal fees to regain possession

• Free information and advice

How do I apply? Contact the Housing Initiatives Service via email at Landlords@croydon.gov. uk or phone 020 8726 6789 for further information.

• you undertake day-to-day management • free inventory service • free bond, equivalent to six weeks’ rent, against damage

The scheme is designed for landlords who are unable to manage the property themselves but do not want to be tied into a long lease. The PSL scheme offers landlords: • flexible, hassle-free leases (one year- plus) renewable, free of charge • guaranteed rent • free management and maintenance service • lease renewed free of charge.

Private sector leasing scheme (PSL) We works in partnership with private sector agents. The scheme is designed for landlords who are unable to manage the property themselves but do not want to be tied into a long lease. The PSL scheme offers landlords: • flexible, hassle-free leases (one year- plus) renewable, free of charge • guaranteed rent • free management and maintenance service • lease renewed free of charge.

• free sign-up service • low turnover rates (maximum of one per annum).

27TH EDITION LANDLORD INVESTOR

COUNCIL SCHEMES

The scheme is designed for landlords who are unable to manage the property themselves but do not want to be tied into a long lease.

What happens next?

Croylease scheme

You will need to get in touch with a representative of our preferred providers who will speak to you about your property. Our preferred providers are listed below.

Croylease is an in-house, risk-free leasing scheme:

DaBora Conway Ltd 020 8989 5678

• free full property-condition survey

Theori Investments Ltd 020 8988 3492

• guaranteed rents, paid directly

Atlantic Housing Ltd 020 8501 8900

• free management and maintenance service

Omega Lettings Ltd 020 8988 2838

• access to council grants and loans

Cromwood Ltd 020 8806 0274

• property handed back to owner in good condition

Finefair Ltd 020 8554 0500 (option 1)

• long leases (five years renewable to ten) • full repairs and insurance lease • risk-free

• no void risks

• exempt from the Croydon Private Rented Property Licence (CPRPL).

• free management and maintenance service • lease renewed free of charge • exempt from the Croydon Private Rented Property Licence (CPRPL).

What happens next? We will ask for details of the property including address, property type and number of bedrooms. We will then put you in touch with a representative of a local housing association. Alternatively, you may contact the housing association directly: Oak Housing Association 0208 357 4840 Oak Housing

Smartspace Property Solutions Ltd 020 8686 3388

How do I apply?

020 8988 4781

Orchard & Shipman Group 01895 208869

A representative will arrange to visit your property. During the visit, the rent level will be assessed and you may be asked to make certain minor modifications to the property.

Housing association leasing scheme (HALS) We work in partnership with two housing associations.

The HALS scheme offers landlords: • three-year hassle-free leases • guaranteed rents

LANDLORD INVESTOR 27 TH EDITION

UK’s leading property investment event Our next National show is

WEDNESDAY 24 MAY – BERKSHIRE Reading Crowne Plaza Hotel THURSDAY 15 JUNE

WEDNESDAY 6 SEPTEMBER

WEDNESDAY 13 SEPTEMBER

TUESDAY 26 SEPTEMBER

LO N D O N

EAST LONDON

SUSSEX

KENT

London Olympia

Crowne Plaza Hotel Docklands

Brighton Racecourse

Kent Showground

THURSDAY 12 OCTOBER

WEDNESDAY 25 OCTOBER

TUESDAY 7 NOVEMBER

MANCHESTER

CARDIFF

LO N D O N

Old Trafford - Manchester United Football Club

Cardiff City Stadium

Olympia Conference Centre

For further information regarding our 2017 shows please call 020 8656 5075 or visit our website: www.landlordinvestmentshow.co.uk

@LandlordInShow

@LandlordInvestmentShow

ADVERTORIAL FEATURE

KEVIN WRIGHT NINJA INVESTOR PROGRAMME

Negotiating great deals Good negotiators get better Step three Use the right language prices for their property purchases – so how are You want to influence the vendor – or estate agent – positively so it’s your negotiation skills? important to say the words that will You don’t have to have read Negotiation 101 to understand that human beings make judgments – really quickly. If you’re a bit nervous the person you’re negotiating with will pick it up quickly – subconsciously – and will drive a harder bargain. You need to generate confidence, authority and conviction. Easier said than done – but if you know your stuff you’ll find that it gets easier.

Step one Know who you’re negotiating with Is it the vendor directly or the estate agent? What’s important to them? Why is the property being sold?

Step two Generate positivity Stand up straight, smile, use open gestures and you’ll look confident. You’ll also find you feel more confident if you act it – maybe a bit of fake it until you make it – but it works!

get the response you want. If you’re using bridging or you’re a cash buyer you have a big advantage – there’ll be no delays with chains and no mortgage issues to manage. It’s important that you let them know that – especially if the vendor wants a quick sale. If you’re dealing with an estate agent you need to know what’s important to them – is it cash flow, monthly targets or keeping a good client. The right language can win you the deal. If you’re dealing with the vendor and you know why they are selling you can reassure them that they can achieve their objective when you explain how easy it will be for them to complete the sale if they accept your offer.

Step four Do your homework In other words, know what the property is worth, know what you are prepared to pay and don’t be tempted to offer a penny more. Do your sums to work this out – and don’t forget to include your profit margin.

In negotiations each party has their minimum and maximum goals. The vendor has a least amount they’re prepared to accept and an ideal price they’d like to get. You’ll have the most you’re willing to offer and the ideal minimum you think you could get it for. Where the two parties areas overlap is your negotiation field of play. Remember: If they won’t sell at your price; you CAN’T buy at theirs. Also – don’t give up if they don’t agree to your offer and claim they can’t afford to accept it. Follow up until the property is actually sold. It’s often the case that your offer is the best the vendor can get, even if they don’t think so in the first instance. ‘Sold subject to contract’ doesn’t mean the property is sold – don’t give up until the vendor has a completed purchase. There are many ways to get closer to your ideal purchase price – but you might have to come on one of my courses or watch the Recycle Your Cash DVDs to find out the details – there isn’t room to explain all the strategies here! Find out more about Kevin Wright on his website www.recycleyourcash.co.uk.

27TH EDITION LANDLORD INVESTOR

Leeds 14/15 May Bristol 3/4 June Birmingham 24/25 June London 15/16 July

TENANCY COMPANYDEPOSIT SPOTLIGHT SCHEME

DAVID POPE HOOYU

Landlords are increasingly vulnerable to fraudsters with fake ID’s Landlords tasked by regulation to check tenant’s ID documents but over two thirds fail to identify if a passport is fake. First ID checking service that gives Landlords the ability to check the validity of an ID document.

London, UK – Leading identity confirmation service, HooYu, today released the results of new research, which reveals that landlords are at risk from fraudsters using fake ID’s. The survey discovered that despite being mandated by government to obtain and verify tenant ID documents for right-to-rent purposes, the vast majority of landlords are unable to identify a fake passport when presented with one. In a new study conducted by Atomik Research, 1,013 people were asked to identify if a passport was a real document or a fake. The results showed that 68% of the time people are unable to correctly identify a fake passport. The latest statistics reveal that fraud is at an all-time high. The National Fraud Intelligence Bureau revealed that in the UK last year 3 million victims handed over a record £5.4 billion to fraudsters assuming fake identities. This should be a warning for people not to take identity documents at face value. Businesses have always had the tools to protect themselves from being a victim of identity crimes. Until now, landlords dealing with tenants have to trust their judgement when checking ID documents and with the quality of

fake passports improving that is no longer a viable option. Landlords can now be safe in the knowledge that identity documents have been properly verified allowing them to protect themselves when they are taking on new tenants. By visiting www.hooyu.com landlords can get a comprehensive analysis report which identifies if the document is legitimate or has been forged, tampered with, or is a fake. HooYu does this without the need to share sensitive personal information or have the landlord worry about securing photocopies of ID’s and passports. David Pope HooYu Marketing Director, commented; “HooYu is successfully protecting individuals and businesses from financial loss by providing assurance that you know who you’re dealing with. Our research shows that criminals are using fakes that are impossible to identify with the naked eye. We are proud that now everyone can now use HooYu to check ID documents are real. Since launching, we’ve helped individuals and businesses carry out ID checks to protect them from being hit by property rental, recruitment,, investment, and romance scams.”

27TH EDITION LANDLORD INVESTOR

COMPANY SPOTLIGHT

FAKE

The results showed that 68% of the time people are unable to correctly identify a fake passport.

About HooYu

HooYu is a global identity confirmation service which launched in 2016 and is used not only by businesses that need to check their customers are who they say they are, but also by consumers who want to check another person’s identity before they proceed with an important or sensitive transaction. HooYu’s approach is to use universal tokens of identity including social media, digital footprints, identity documents and facial biometrics to confirm identity. HooYu cross-references and analyses data from a person’s digital footprint to confirm their real-world identity. HooYu also extracts and verifies data from ID documents at the same time as authenticating the ID document and conducting a biometric facial check comparing a selfie of the customer with the facial image on their ID document. For more information please contact Simon Kelman via Simon. Kelman@hooyu.com, 07584 435116 or 0207 9092151

LANDLORD INVESTOR 27 TH EDITION

27TH EDITION LANDLORD INVESTOR

INDUSTRY UPDATE

PETER LITTLEWOOD SOUTHERN LANDLORDS ASSOCIATION

A disaster for tenants; or an opportunity for landlords? In brief A recent survey by the Southern Landlords Association (SLA) has established that, because of The survey:the Government changes, many landlords are going • 3,236 landlords were surveyed; to reduce their portfolios resulting in many tenants • 61 opted out, leaving a total of losing their homes; an average of 6.4 tenants per • 3,175 landlords, of whom landlord in the survey. This was countered by 6% of • 318 responded = 10% • number of tenants already lost their the landlords proposing to increase their portfolio, home = 684 giving homes to an extra 104 tenantsi. The survey • number anticipated to lose their was sent to over 3,000 landlords, and 10% responded. home = 1,449 • number gaining a new home because of expansion = 104 • net = 2,029 less tenants.

10 MILLION HOUSEHOLDS

What does this mean?

8 7

No-one knows the exact number of landlords or tenants, but we can get some ideas:-

6 5

• HMRC stated that there were 1.75 million landlords in 2013/14ii;

4 3

• the 2011 census states that there were 8.3 million rented propertiesiii;

2 1 0 1980

1984

1988

Own outright

1992

1996 2000 2004

Buying with mortgage

Source: English Housing Survey 2013/14

27TH EDITION LANDLORD INVESTOR

2008

Private renters

2012

2014

Social renters

•

the 2013/14 English Housing survey produced the graph (alongside) showing 4 million rented householders, and growingiv:-

• and finally, the 2015/16 English Housing Survey estimated there was a total of 4.5 million tenanciesv.

INDUSTRY UPDATE

THE DETAILS The Private Rented Sector (PRS) is absolutely vital for the country, both in terms of the number of people it houses, which central and local government have been unwilling to for some years. This is done mostly at the landlords’ risk, with all the inherent problems; but fortune favours the brave. Now is the time to be brave and pick up the slack. As is often the case with surveys the interesting part of the SLA was some of the comments. Landlords work for a variety of reasons, but the underlying message was that they are there as a business and if Government keeps adding to their costs it is the tenant who ultimately suffers.

As is often the case with surveys the interesting part of the SLA was some of the comments

The answers Question

Number answered

% reducing

1. have you reduced your portfolio in the past year

318

30.8% 69.2%

2. If Yes - how many tenants were affected by this:-

684

3. do you propose to reduce your portfolio within the next 3 years

226 58.9% 41.1%

4. If Yes - how many tenants would be affected by this:-

1,449

because of the changes been/being made by Government

134

95.5% 4.5% 43.4%

always planned to

19.75%

80.25%

24.6%

14.5%

85.5%

24.6%

5 If reducing your portfolio can you indicate the reason why:-

unable to manage due to age or health

Other

23 TOTAL

6. Have you, or do you intend to increase your portfolio 7. If Yes - how many tenants will be affected by this:-

7.4%

309 224 8.5% 91.5%

104

Some of the comments received 1. I would like to sell one house and buy somewhere smaller else but capital gains at the moment makes this impossible. 2. The risk to me personally and my family is too much. I won’t suffer as I will move into something more profitable, but I do think my tenants will suffer a reduced supply of property available to let. 3. Good landlords are very important to modern high tech society. We provide economically efficient homes for modern flexible lifestyles and allow our workforce much more choice in job prospects through easy paths to job relocation.

Forcing a valuable facility like rental housing to become unprofitable will be a disaster. Many people don’t want the responsibility of a mortgage hanging over their heads because they want a more flexible lifestyle, especially young people just starting out in life. I think the government’s punitive measures against the rental market will eventually cause a housing crisis.

significantly lower unless I have vacant possession. The government changes were not in the manifesto - they were carried out in haste and they have badly damages the welfare of tenants who will lose homes and investors trying to be prudent for the future. This is not about big landlords but the small investor trying to create a basic pension.

4. The Government changes have forced me to sell and I am dreading having to tell the next family why they are having to go. They have been wonderful tenants and have brought up their children in this house. I wish I could keep them but the price will be

5. I have still to see the impact on my portfolio of 3 houses but feel that the government should allow the sale of houses and purchases of another within a given period to allow you to improve your portfolio for geographical or house type reasons.

i The Southern Landlords Survey on tax changes © ii Figures from estate agent ludlowthompson based on data from HM Revenue & Customs iii http://webarchive.nationalarchives. gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/census/2011-census/detailed-characteristics-on-housing-for-local-authorities-in-england-and-wales/short-story-on-detailedcharacteristics.html iv https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/469213/English_Housing_Survey_Headline_Report_2013-14.pdf figure 1.1 v https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/595785/2015-16_EHS_Headline_Report.pdf page 2

27TH EDITION LANDLORD INVESTOR