Li Magazine 32nd edition

LANDLORD | PROPERTY | INVESTMENT

LANDLORD INVESTOR MAGAZINE 32ND EDITION | 2017

WILL YOU BE ALLOWED TO LET YOUR PROPERTY AFTER NEXT APRIL? / BEWARE POLITICIANS JUMPING ONTO THE INTERGENERATIONAL BANDWAGON / WHY PRA’S NEW BTL MORTGAGE RULES MIGHT BE A GOOD THING / LEASEHOLD SOLUTIONS CALLS FOR REFORM TO LEASEHOLD LAW / THE VALUE OF ADVICE WHEN IT COMES TO PROPERTY INVESTMENT / TAKING THE HASSLE OUT OF INSURING YOUR PROPERTY / WHY SHOULD LANDLORDS IMPROVE THE WATER EFFICIENCY OF THEIR STOCK? / NEW TAX FILING DEADLINE LOOMS FOR BUY-TO-LET LANDLORDS

BE WA RE POLITICIANS JUMPING ONTO THE I N T E R G E N E R AT I O N A L B A N D WA G O N

DAVID SMITH, ECONOMICS EDITOR OF THE SUNDAY TIMES DISCUSES THE CHALLENGE OF DELIVERING AN ACCEPTABLE BREXIT DEAL AND THE ISSUE OF INTERGENERATIONAL FAIRNESS.

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

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Welcome

With Autumn here and Winter just round the corner, landlords would hope that 2017 had already given all the surprises possible. But with the interest rates rising and the Budget planned for 22 November, more could be in store.

David Smith, Economics Editor of the Sunday Times, joins us for the second time as a columnist and this issue he talks about intergenerational fairness being high on the agenda and how that could affect the budget announcements. We will have to wait to see what additional measures Philip Hammond has planned to help the young and how it will affect BTL. At the National Landlord Investment Show at London Olympia on Tuesday 7th November, up to 4,000 landlords can expect recent developments, including the interest rate rise, to be discussed in depth. Those attending the Expert Property Panel – the UK’s largest landlord debate - will get the chance to pose direct questions to industry experts including Iain Duncan Smith MP on recent developments that affect them. Presented by Marie Parris, MD of George Ellis Property Services, the panel will debate and discuss topics of interest with 450 current landlords.

With 37 additional seminars and 100+ leading suppliers of BTL services covering tax, finances, legislation, mortgages and more, make sure you register free today. For those wanting to attend the panel, admission is on a first come, first served basis.

In this issue, we cover other changes that those renting out properties need to be aware of, including the minimum EPC ratings required from April 2018 – turn to page 14 to get advice from Peter Littlewood at the Southern Landlords Association.

In what can be said to be a confusing environment, where else do landlords go for advice and help? Paul Mahoney talks about the routes available, and the pitfalls you should avoid – see page 38 for his take on it. Finance-wise, get a take on the new tax filings requirements coming into place from 2018 on page 50.

Having seen 10,000 landlords and investors come through the doors of the National Landlord Investment Show so far this year for advice, networking and meeting suppliers, register for your complimentary ticket to our flagship show at London Olympia, 7th November at landlordinvestmentshow.co.uk.

LANDLORD INVESTOR MAGAZINE Editor Tracey Hanbury editor@landlordinvestmentshow.co.uk Editorial Contributors Tom Entwistle Peter Littlewood David Smith Tony Gimple Emma Cox Kevin Wright Mike Morgan Marie Parris Louie Burns

Paul Mahoney Mark Bowers Andrew Turner Design Marc Riley Advertising Beverley Meliniotis Marketing Anna Jackson

Follow us @LandlordInShow @LandlordInvestmentShow Contact Telephone: 020 8656 5075 landlordinvestmentshow.co.uk 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 upto-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

5 10 14 16 20 24 28 32 36 38 40 46 48 50

Show Update Landlord Investment Show returns to Olympia

Industry Update Population trends bode well for landlords…

Industry Update Will you be allowed to let your property after next April?

Insight Beware politicians jumping onto the intergenerational bandwagon

Taxation Why PRA’s new BTL mortgage rules might be a good thing

Finance Rolling with the punches

TDS I'll pay if you pay?

My honest viewpoint The survival of the buy-to-let landlord

Legal Leasehold Solutions calls for reform to leasehold law

Investment The value of advice when it comes to property investment

Industry Spotlight Total Landlord Insurance wins “Best Landlord Insurance Provider”

Insurance Taking the hassle out of insuring your property

Landlord Services Why should landlords improve the water efficiency of their stock?

Buy-to-let update New tax filing deadline looms for buy-to-let landlords

Meet the team TRACEY HANBURY

RYAN DENNINGTON

T: 0208 656 5075 M: 07931 308 875 tracey@landlordinvestmentshow.co.uk

T: 0208 656 5075 M: 07931 308 856 ryan@landlordinvestmentshow.co.uk

STEVE HANBURY

BEVERLEY MELINIOTIS

T: 0208 656 5075 M: 07429 683 046 steve@landlordinvestmentshow.co.uk

T: 0208 656 5075 beverley@landlordinvestmentshow.co.uk

EDITOR & SALES DIRECTOR

SALES & EVENTS MANAGER

DIRECTOR

ADVERTISING SALES MANAGER

ANNA JACKSON

MARKETING MANAGER

LES HANBURY DIRECTOR

T: 0208 656 5075 anna@landlordinvestmentshow.co.uk

FRAN ROBINS

MARC RILEY

SALES & EVENTS MANAGER

DESIGN MANAGER

T: 0208 656 5075 M: 07950 284 615 fran@landlordinvestmentshow.co.uk

T: 0208 656 5075 marc@landlordinvestmentshow.co.uk

ALICIA CELA

CHARLOTTE DYE

ACCOUNTS

SALES SUPPORT

T: 0208 656 5075 accounts@landlordinvestmentshow.co.uk

T: 0208 656 5075 info@landlordinvestmentshow.co.uk

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Awards

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Published by LI Media, organisers of National Landlord Investment Show

32ND EDITION LANDLORD INVESTOR

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SHOW UPDATE

LONDON OLYMPIA 7 NOVEMBER 2017

Landlord Investment Show returns to Olympia Registrations are rising at an unprecedented rate as the National Landlord Show gets ready for its largest show to date at Olympia, 7 November.

Up to 4,000 landlords and investors will be arriving at Olympia on Tuesday 7 November for what’s shaping up to be its largest show in its history. With 100 suppliers – more than ever before, the show will host 35 new exhibitors and 25% more exhibitors than its flagship show in June. Exhibitors at the event for the first time include Qubic Tax, Black Tie, HomeRenter, Kwik Sweep, ODN Realty, WinwInnKeeper, Lease Extend, Unbeatable Invest and Ringley Limited.

Suppliers at the show cover property investment, tax, legal, insurance, mortgage services and more. It’s a perfect opportunity for those thinking of entering the market to get expert advice on opportunities, as well as for seasoned investors to stay up to date. Exhibitors include Royal Bank of Scotland, Valuation Office Agency, Ikea

LANDLORD INVESTOR 32ND EDITION

Business, Nova Financial, Mortgages for Business, Total Landlord Insurance, LOFT Interiors and Together Money, many of whom have exhibited for more than 10 shows in its history.

This year the event is sponsored by renowned names in buy-to-let - Less Tax for Landlords, Shawbrook Bank, Fast Property Finance, Clive Emson, Tenancy Deposit Scheme and Philip James Partnership. Having already hosted over 10,000 landlords and investors this year, the Olympia show is its final in 2017 and is set to being in up to 4,000 landlords and investors from around the UK. Expert Property Panel returns with Iain Duncan Smith MP Another key feature to look out for is the Expert Property Panel, returning

for the second time and featuring Rt Hon Iain Duncan Smith MP, as well as a host of renowned property and buy-to-let experts. These include Marie Parris, MD of George Ellis Property Services, Fionnuala Earley, Chief Economist at Countrywide, Vanessa Warwick from Property Tribes and Simon Zutshi, experienced investor & successful entrepreneur.

Marie Parris explains, ‘The interactive debate will give landlords the opportunity to ask questions to the panel on tax, Brexit, rent arrears, Universal Credit, immigration plus lots more within the private rented sector.

Attendance at the Expert Property Panel is complimentary and on a first-come, first served basis for all registered visitors.’

Continued on page 8.

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Suppliers at the show cover property investment, tax, legal, insurance, mortgage services and more.

37 complimentary seminars In addition to the property panel, there are 37 additional complimentary seminar sessions, covering the entire spectrum of buy- to-let and presented

by UK buy-to-let specialists including Paul Shamplina, Founder of Landlord Action, speakers from Clive Emson Land & Property Auctioneers, Nova Financial, Shawbrook Bank, Southern Landlords Association, Together and Main Sponsor, Less Tax for Landlords.

There is also a complimentary networking event in the morning of the show for visitors to meet new contacts and discuss local issues. Tenancy Deposit Scheme, having exhibited at

all 53 shows, attests to the popularity of the show, ‘National Landlord Investment Show is a really well run event and has gained the popularity it deserves within the industry.’

The event takes place from 09.00am and the Expert Property Panel runs from 10.00am – 11.30am.

Landlords and investors can register for complimentary tickets at landlordinvestmentshow.co.uk Iain Duncan Smith MP is a regular columnist for Landlord investor Magazine. To see his introduction on what he will be covering at the show, read the latest issue

About Landlord Investment Show National Landlord Investment Show is the UK’s leading property investment exhibition, providing solutions, networking and advice for new seasoned and investors in the buy-to-let market. Established in 2013 and operating in property hotspots throughout the country, it has now run 53 shows successfully, and has provided property investment solutions for over 25,000 landlords in the last 12 months alone, a growth of 31% since 2015. www. landlordinvestmentshow.co.uk

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32ND EDITION LANDLORD INVESTOR

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.

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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

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LANDLORD INVESTOR 32ND EDITION

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INDUSTRY UPDATE

TOM ENTWISTLE LANDLORDZONE

Population trends bode well for landlords If you are looking to benefit from investments in the future, one well known strategy is to look at the big picture, look to the macro trends in the economy for a window on future demand.

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32ND EDITION LANDLORD INVESTOR

INDUSTRY UPDATE

Investing in residential property as a landlord is no exception to the concept: and population forecasts are obviously a good indication of the future demand for property, and especially rental property.

So, landlords should be very interested in the latest ONS report which predicts 11.1pc growth in residents over the next 25 years, albeit they say, with no account taken of Brexit.

As well as an aging population and more people living longer, migration will account for three quarters of population growth over the next 25 years, and the number of people living in the UK is forecast to rise to 73 million.

That’s an increase of 7.3 million people between 2016 and 2041, equivalent to an 11.1 per cent increase, perhaps reaching 70 million by 2030, driven by migration, including growing numbers of babies born to foreign born parents.

Although the figures don’t take into account the UK’s exit from the EU, it is thought they will still be largely in-line with trends as Andrew Nash, of the ONS Population Projections Unit, says: “Because migrants are concentrated at young adult ages, the impact of migration on the projected number of women of

childbearing age is especially important over this period.”

Also, the number of over-85s is expected to double over the next 25 years to more than three million, and there are expected to be 16.3m pensioners, with obvious implications for future demand for older end rentals, sheltered accommodation, and NHS and nursing care.

The ONS said: “The largest difference is that in mid-2041 there are projected to be many more people at older ages. This partly reflects the 1960s baby boomers now being in their 70s, but also the continued increase in life expectancy.”

Migration Watch UK figures show that net migration has averaged 250,000 a year for the past decade, whereas the ONS has projected net migration at 165,000.

However, Migration Watch has said: “The immigration assumption of 165,000 underlying the principal projection is extraordinarily low. This is serious because it will lead to inadequate planning for housing, schools, hospitals and infrastructure - as, indeed, we have seen in recent years."

A next decade population growth projection of 3.6million will hit England the most at almost 6 per cent, with around 3 per cent growth in Scotland and Wales and 4 per cent in Northern Ireland. Cities like London, Manchester, Birmingham, Liverpool and Leeds will see continuing high demand for rental accommodation as migrants’ families start to expand at a faster pace than the indigenous population.

Jonathan Portes, a professor of economics at King’s College London, told the Daily Telegraph: “There will be an increasing proportion of migrants of child-bearing years, and babies born to migrants will account for an increase in the overall numbers of children… We have seen an increase in the number of children with one or two parents born abroad for a long time.”

According to a recently published Civitas report the population figures could be even higher*. In the year ending 30 June 2016 the estimated population of the United Kingdom increased by an average of 1,475 per day increased by an average of 1,475 per day – a total increase in the year of 538,500. This equates to a small town of 10,355 people being added to the country every single week.

Migration will account for three quarters of population growth over the next 25 years.

LANDLORD INVESTOR 32ND EDITION

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INDUSTRY UPDATE

If the UK average of 2.3 people per dwelling is maintained into the future, though we know some immigrants are living in conditions much more densely packed than that, 641 new dwellings per day would be needed to house 1,475 people, says the report.

So, if the population really did continue to grow at the rate of over 500,000 a year, as the Civitas report forecasts, by 2039 there will be just under 10 million (9.7m) more people living in the UK – that’s enough, says the report, “to populate Greater Manchester three times over”.

For the small-scale private landlords letting one or two or even a small portfolio of rental units the figures bode well, though this could be impacted in some locations by Build-to-Rent, the government’s initiative to get institutions and developers investing in large-scale rental projects.

Build to Rent refers to the emerging sub-market in private rented residential housing stock in the United Kingdom, tax incentivised by government and designed specifically for renting rather than for sale; it is typically owned by institutional investors and managed with a high service-led culture by specialist operators similar to those already well established in the United States and in continental Europe.

One such operator Quintain, which was acquired by US private equity firm Lone Star in 2015, has said the company decided to move from building for sale to building homes for rent because it provided a reliable long-term income

LANDLORD INVESTOR 32ND EDITION

stream, unlike the ups and downs of the traditional housebuilding cycle. Angus Dodd, the chief executive has said that government support for and investor interest in build-to-rent had increased: “It’s a solution to the housing crisis; it could be a big solution… it sits alongside housing in all its various forms modular housing, micro living.”

The latest published research by the British Property Federation (BPF) suggests that Build to Rent (BTR) is (Autumn 2017) approaching the 100,000 unit milestone at 95,918 homes now completed, under construction or at the planning stage. Thanks to recent Government efforts to tackle the housing shortage in this regard, BTR starts have seen around a 40 per cent increase compared the first quarter of 2017.

Many housing industry professionals now see BTR as a big part of the solution to the UK’s housing crisis and a move towards the type of property market which is popular in parts of Europe and the United States.

Student accommodation has been one housing category - in addition to this BTR premium renting sector - that BTR is concentrating on. Brexit fears appear to have had little impact on investment going into student accommodation in the UK, with levels increasing by 17pc in 2017, that’s according to Savills research.

This year applications for student places have fallen by 5pc from students in Britain and by 7pc from those in the European

Union. However, investment in the student blocks is continuing apace, with £5.3bn expected to be sunk into purposebuilt student accommodation in 2017, compared to £4.5bn in 2016 and a record £6bn in 2015.

The student sector was boosted by international investors, favoured by investors from the Far East. This jump in international investment was due partly to the an influx of money from a Singapore sovereign wealth fund GIC and the real estate developer Mapletree, spenting almost £1.2bn on UK student housing between them last year.

This level of investment in high end student accommodation is bound to have an impact on the traditional small-scale landlord’s business in some, particularly city, locations, though with such strong demand there are still opportunities to be had from niche markets for multioccupation units.

So despite the business threats to smallscale landlords from these big investors, the increased regulation of the sector, and in particular the increased supply in the student accommodation sector, there are still some major opportunities for the savvy investor, given the projected overall growth in demand.

Tom Entwistle is Editor of LandlordZONE® and an experienced property investor and landlord himself. *Britain’s Demographic Challenge: The implications of the UK’s rapidly increasing population - https://goo.gl/MoX3hc

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INDUSTRY UPDATE

PETER LITTLEWOOD SOUTHERN LANDLORDS ASSOCIATION

Will you be allowed to let your property after next April?

We have been saying for some time that there will be regulations coming out about minimum EPC ratings for letting your property, and on October 9th the Government finally published its guide for this.

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32ND EDITION LANDLORD INVESTOR

INDUSTRY UPDATE

The report states that for any property with an EPC rating of less than E (i.e. F or G) it will not be legal to start a new tenancy after April 1st 2018 (next April), and additionally it will not be possible to continue with any existing tenancies after April 1st 2020.

That’s the bad news. For some slightly better news, there are exemptions.

See the guide for the actual wording, along with your EPC, but in summary you can get exemptions if one of these apply: 1) all possible improvements have been made, and it is still has an EPC rating of <E. i.e. if the current and potential EPC rating are both F or G, and there are no Recommended Measures at the bottom of the EPC; 2) where the recommended improvement cannot be financed at no cost to the landlord. i.e. none of the tick at the bottom are green – green ticks show that the work could be done under the Green Deal (see below); 3) if the recommendation is for wall insulation, and it proves inappropriate/ inadvisable for that building. An expert report would have to be sought from one of the bodies in the guide; 4) it is not possible to get third party consent, e.g. the tenant/mortgage company/freeholder, etc won’t give

LANDLORD INVESTOR 32ND EDITION

consent to do the work. Therefore it is not possible for the work to be done legally.

5) If the work were to be carried out it would actually devalue the property.

Again an expert report would be needed.

6) an owner became a landlord of the property unexpectedly. The exact wording needs to be checked in the guide.

7) finally – an EPC is not required.

Some buildings do not need one, or the property has been continually let since before EPCs became a legal requirement (Oct 1st 2008).

So in a nutshell this is what you do: • if you have an EPC read it; • if the rating is E, or greater, don’t do anything; • if it is F or G start a mild panic; •

if it is F or G, and there are green ticks in the Recommended Measures at the bottom – have a big panic! And then ensure you carry out the recommendations and get a new EPC, without any green ticks.

If you fall into a category that allows an exemption make sure you apply, and then re-apply every 5 years.

Green Ticks = the Green Deal A recommendation with a green tick means that the work is not too costly, and therefore could be financed through the Green Deal.

The Green Deal is a mechanism by which the recommended work is paid for by a Green Deal loan, at no cost to the landlord. The repayments are then made by extra charges on the electric meter; i.e. the user of electricity (the tenant) repays the loan. See www.gdfc. co.uk for more details.

Like everything that seems too good to be true, it is the case here. Any Green Deal work has to be declared to an existing and potential tenant, and also a potential purchaser when selling. If two identical properties came on the market, both with a rating of D (say) but the first had its improvements paid for by the Green Deal, and the second was paid directly by the landlord, the second’s overall electricity bills will be lower. Which one do you think the tenant is going to choose? The nonGreen Deal one.

So think carefully how you do the works –but most of all do them before next April.

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INSIGHT

DAVID SMITH ECONOMICS EDITOR OF THE SUNDAY TIMES

Beware politicians jumping onto the intergenerational bandwagon Sometimes politicians get the bit between their teeth on a particular issue. For this government, alongside the considerable challenge of delivering an acceptable Brexit deal, the big issue of the moment is intergenerational fairness.

It is a mouthful but, put into simple language, it means that ministers have woken up to the fact that the baby boomers and pensioners (some are members of both groups) have eaten all the pies, and that they had better do something about it.

Older people have fared better in the labour market since the financial crisis, with the young experiencing a bigger fall in real wages. Pensioners have seen their incomes better protected, though may would say that have been punished by ultra low interest rates on their savings.

The young, meanwhile, have also missed out on home ownership compared with

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their parents. Millennials are only half as likely to be on the housing ladder by the age of 30 compared with baby boomers. They spend, on average, a quarter of their income on housing, higher than previous generations.

The politics of this, for the Tories, is that they fear they have lost the young vote and will struggle ever to get it back. Famously, Theresa May’s summer election gamble failed spectacularly with the young, and in this case youth extends well into middle age. Labour enjoyed net support among voters up to the age of 47. There were many things wrapped up in this, including attitudes

to Brexit, but it was a sobering outcome for the Conservatives.

So there has already been a response.

At the Tory conference in early October, Theresa May announced that university tuition fees would be frozen at £9,250, rather than rising to £9,500 in 2018-19, and that the salary threshold for paying off student loans would be lifted from £21,000 to £25,000, which could turn out to be an expensive gesture. The government also rolled forward Help to Buy until 2021, promising a further £10 billion for the scheme, while also committing £2 billion for the building of council houses.

32ND EDITION LANDLORD INVESTOR

INSIGHT

LANDLORD INVESTOR 32ND EDITION

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INSIGHT

The question is whether the government has anything else up its sleeve, with Philip Hammond said to have the intergenerational issue high on his agenda for his November 22 Budget. Nobody needs reminding of George Osborne’s actions two years ago in his Autumn Statement, or his words.

As he put it then: “Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy. So I am introducing new rates of Stamp Duty that will be 3% higher on the purchase of additional properties like buy-tolets and second homes.” Nobody reading this needs reminding that a bigger issue than the stamp duty

premium were the changes in the tax deductibility of interest payments.

That was two years ago and it marked a very significant change. Until then the return of the private rented sector had been seen by Conservatives as something to celebrate. The long 20th century decline in the private rented sector came to an end in the mid-1990s. The revival since then has been impressive but has come to be regarded by some politicians as a curse rather than a blessing. It is all very strange.

Is there more to come? Sajid Javid, the communities secretary, told the Tory conference that the government’s housing failures had been a “national

outrage” for young people. He elaborated on plans to regulate letting agents and suggested a specialist housing court so tenants have “somewhere to go”. The growth in the private rented sector meant the government needed to go “further and faster” in controlling it. “We will take steps to protect renters against poor practice,” he said.

So some nervousness ahead of the November 22 Budget may be justified.

What more does a government keen to show it is helping young people have in mind? Hammond is a level-headed sort of chap. I think he probably recognises when enough is enough. But keep a close eye on the Budget just in case.

The question is whether the government has anything else up its sleeve.

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32ND EDITION LANDLORD INVESTOR

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TAXATION

TONY GIMPLE LESS TAX 4 LANDLORDS

Why the PRA’s new BTL mortgage rules might be a good thing What with S24 reducing your profits and now the PRA seemingly restricting how much you can borrow, landlords could easily be forgiven for thinking that there’s a big ‘kick me’ sticker on their backs. And to a degree they would be right; especially those landlords making tax payments on account who are now seeing the effect on their cash flow and ability to reinvest. No wonder all really does seem doom and gloom.

Now the good news – this is your chance to make highly sustainable profits by running a professional property business, which is exactly what the government wants you to do!

property businesses borrow money; large or small, the same principles apply - size doesn’t matter here, the business case trumps all. And that’s exactly what BTL lenders will be looking at.

But why is that? Governments of all hues are businesses just like yours, they all depend on tax to pay their way, and successful businesses and the individuals within them make that possible. And S24 aside, the more you earn the more tax you pay.

All too often, landlords have grown their portfolios with very little planning, and not every rental property makes a profit. Some lenders may take an ‘overall portfolio profitability’ view, whereas others will require each unit to make money. Either way, the new rules mean that lenders will need to make sure that your rental income makes you a profit.

So what do the latest ‘PRA’ headlines actually mean?

Lenders will be looking at your whole buy-to-let portfolio This is how commercial portfolio lending works, and the way all the truly big

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Tougher underwriting criteria for portfolio landlords According to the PRA, “A landlord will be considered to be a portfolio landlord where they have four or more

mortgaged buy-to-let properties across all lenders in aggregate”.

In addition to the usual affordability checks, lenders are being required to have robust underwriting processes in place for portfolio landlords, which means they’ll be asking for: • bank statements • tax returns • future liabilities • SA302s • ASTs • rental accounts • income and expenditure statements, and • a business plan.

32ND EDITION LANDLORD INVESTOR

TAXATION

Simply put; paying more tax will reduce how much you can borrow and therefore grow.

The new stress test on buy-to-let mortgages

financially independent whilst you’re still young enough to enjoy it.

Will I still be able to raise capital to spend rather than to reinvest?

What, it’s not hard enough being a landlord?

So what should your business plan look at?

The stress test forces lenders to check a borrower can afford repayments, if or when interest rates hit 5.5%. That’s no bad thing, as anyone who lived through the early 90s saw interest rates hit 15%

It doesn’t have to be War & Peace, just a written document that clearly states what your financial targets are, why they are important to you, how they are going to be achieved, and whether your current investment strategy will actually get you there. In particular, it’s the focus on the hard numbers that will get you to the point where you no longer have to work; unless that is you want to.

Some lenders like Santander have already said that It will not accept applications from portfolio landlords for the purpose of personal capital raising. Others will have different criteria.

Lenders should take into account the impending changes as to the amount of tax relief landlords can claim against mortgage interest S24 changes can easily make a basic-rate taxpayer a higher one, or push a higherrate one into advanced rate.

And now it’s not just the tax increase that hurts; the cumulative effect on your cash flow when making payments on account and the knock-on effect to your borrowing ability should not be underestimated.

Simply put; paying more tax will reduce how much you can borrow and therefore grow.

This more than anything will cause the biggest problems, and if you want to borrow more, then minimising the amount of tax you have to pay is essential.

Please note, don’t think that incorporating will solve the problem, rate differences, restrictive terms, redemption penalties, and transactional costs to one side, limited companies are subject to seven layers of taxation, further reducing your profit and thus how much you can borrow.

Lenders will also ask to see a business plan.

Failing to plan means that you are planning to fail, and no lender wants to provide a mortgage to a failing business.

Not only does having a well thought through business plan make borrowing that much easier, it significantly increases your chance of becoming

LANDLORD INVESTOR 32ND EDITION

Your business plan will need to include: • all your sources of income (not just rents) • a summary of your experience in residential investment property • details of the operating model • tenant profiles •

the supporting business infrastructure (including professional service providers, letting agents, solicitors, accountants, property management, etc.)

•

details of any voids / tenant defaults / evictions that you have experienced and how these situations were managed, together with what plans you have to manage those in the future)

• your future funding requirements for the next 18 months, and •

proposed future purchases, improvements and disposals including property type, tenant type, sources of funding and funding voids during improvements etc.

Can lenders take into account rental rises?

Yes, but only to a very limited degree.

When assessing affordability, a mortgage lender can take into account rental increases, but these must not exceed the Government’s inflation target of 2%.

That highlights the business case even more, in that if you’re having to remortgage just to get the money out because the rents aren’t high enough and are relying on house price inflation, then you’re in real danger of going bust.

In summary, BTL lenders will be looking at: • Your property investment experience • The total amount of your mortgage borrowing across all properties • Your assets and liabilities, including tax liability •

The merits of any new lending in context of your existing buy to let portfolio together with your business plan

• Historical and future expected cash flow from your portfolio • Your income both from property and elsewhere If you’re running a professional property business, then you’ll have all of this to hand and be confident in the numbers. If not, expect a hard time.

So, going back to the beginning; it’s time to take the 'kick me' sign off your back, and replace it with the one that says; “I’m a professional landlord with a thought through deliverable business plan with maximised returns and the lowest tax bill the law allows. You can lend to me with confidence”.

On the 22nd November, Less Tax 4 Landlords is holding a free evening event in London for Portfolio Landlords with 4 or more investment properties who will be affected by the changes. To secure a complimentary ticket (limited availability), please write to events@lesstaxforlandlords. co.uk quoting Landlord Investment Show.

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FINANCE

Rolling with the punches 24

32ND EDITION LANDLORD INVESTOR

FINANCE

EMMA COX SHAWBROOK COMMERCIAL MORTGAGES

I think it’s safe to say that we have experienced a fair degree of turbulence across the buy-to-let space over the past 18 months.

Following a shifting tax regime, the consequences of which are still yet to be fully understood, we saw the Prudential Regulation Authority (PRA) lead a series of changes to affordability designed to bring consistency to the lending landscape. Specifically with regard to minimum affordability requirements and what stress testing should be applied for different customers paying varying levels of tax within the transaction. This was with a view to protecting the investor community by ensuring they were only provided with sensible levels of debt that would be open to future refinancing.

The next evolution to the underwriting standards landed on the 1st October 2017 and asked lenders to ensure they have a full picture of the customer, and a complete understanding of their position with regard to their investment portfolio: "The PRA expects firms undertaking buy-to-let lending to have regard to its potential business characteristics. The PRA considers that borrowers with four or more distinct mortgaged buy-to-let properties, either together or separately, in aggregate, should be treated as ‘portfolio landlords’."* This second raft of changes categorises more clearly, the difference between portfolio and non-portfolio landlords.

Positively, Shawbrook has not been forced to make the same degree of strategic shift announced by other

LANDLORD INVESTOR 32ND EDITION

institutions operating within this space, as a sustainable approach to affordability and a case-by-case mentality is something that has always underpinned our business. In terms of the impact for the wider the lending community, there are several possibilities. Our thoughts are that the increase in resource necessary to cope with the somewhat onerous underwriting requirements will have an impact on pricing, and that the time to assess an application will increase compared to the automated online processes most mortgage brokers and customers would be familiar with.

In addition, where the portfolio is geared in excess of 75%, some lenders are likely to have some sensitivity around refinance risk. This may result in less funding being made available in order to reduce exposure across the overall portfolio. Lenders may also ask investors to deleverage the higher loan-to-value properties, or in some cases, may choose not to lend at all based on the view that the portfolio is not sensibly geared and that they would potentially be lending to a vulnerable investor.

The impact may also be felt across those properties that are due to be refinanced within the next 12 months, as lenders will likely check if this is possible. Plus, if the income or loanto-value is tight, there may well be a requirement to deleverage. There will

also be the assumption that portfolio landlords are higher rate tax payers and therefore any cases that move forward within a lower tax band are likely to require confirmation of investors’ tax position. The customer will need to provide evidence to demonstrate that they have sufficient income to support their personal living expenses, and may even need to provide proof of all rental payments made over the last 12 months.

It is also important to note that we may see more institutions pulling out of the portfolio landlord market altogether and focusing purely on the “simpler” customers with one to three mortgaged properties. This just highlights the need for customers to work with specialists to ensure they have the fullest picture across their borrowing – this would include mortgage brokers, tax and financial advisors, as well as the specialist lending community.

Whilst I remain hopeful for a period of calm and reflection as we all seek to adjust to the newer world, with all things in this fast-paced environment the next shift could be just around the corner, so it might pay not to rest on our laurels for too long…

Emma Cox is Sales Director at Shawbrook Commercial Mortgages *Prudential Regulation Authority (PRA)

25

ADVERTORIAL FEATURE

KEVIN WRIGHT NINJA INVESTOR PROGRAMME

Are you finance savvy?

I talk to a lot of property investors. Some I’ve known and worked with for years and many who are new to property investment or people who have had one or two properties as a ‘sideline’.

I find that very few really understand the most efficient ways to finance their property investment. The outcomes of this are: · Their property portfolio growing very slowly while they save up for the next deposit · They lose out on really juicy deals because they can’t get a BTL mortgage due to their current credit status · They miss out on opportunities because no mortgage lender will touch the property for a whole variety of reasons · Their borrowing power is limited to what they are paying for the property · Their profit margins are much, much lower

unmortgageable, so it’s a bad deal and I can’t finance it anyway.’ Wrong!

accommodation – and combinations of many of these.

‘This property is a great deal at £100K less than its full market value – so a 70% mortgage is going to cost me less than if I bought it at full market value.’ Maybe – but you’ll make less profit on it too.

What is their secret? They understand bridging finance and use it intelligently.

There are legitimate ways around every one of these situations – and the assumptions are, in the main, completely inaccurate.

Ninja Investors finance smarter Over the past few years I have been teaching hundreds of people how to use alternative methods of financing to enable them to: · Grow their property portfolio faster

Most of these are caused by people making assumptions – and often their assumptions are incorrect.

· Make much bigger profits on their property sales and buy-to-lets

Here are a few assumptions that I’ve come across:

· Speed up the process of acquisition, without needing a massive bank account or someone else’s money to fund purchases

‘My poor credit record means I can’t get finance to purchase property.’ Wrong!

‘I don’t have enough to put a deposit down on this property and refurb it – so I can’t buy it.’ Wrong!

‘The only way I can buy this is by getting a JV partner and sharing the profits.’ Wrong!

‘My mortgage lender says the property is

These are the people I call Ninja Investors. Many of them have really put their learning to good use in a number of ways including buy-to-let, buy-tosell, specialising in HMOs, rent-to-rent, buy-to-convert, specialising in buying so-called ‘unmortgageable’ properties, buying and/or selling at auction, buyno refurb-sell, specialising in serviced

Why is ‘bridging’ a dirty word?

Ask most lay people about bridging finance and there’s a sharp intake of breath, headshaking and usually a remark like ‘Oh, that’s very expensive.’

If you’re using it to finance your main residence, yes it is. However, it you know how to use it properly it can increase your profit margins significantly.

I am always surprised when people are willing to set up a JV and give away 50% of their profits, but won’t touch bridging finance, because it’s expensive. The right bridging will never cost more than 25% of your profits – or it’s not a good deal.

Of course there are bridgers ... and there are bridgers! They have their own approach to lending, so you need to know which are the right ones to enable you to take advantage of those really juicy deals.

That’s where a good broker comes in – but, as a broker, you’d guess I’d say that!

So – if you’d like to explore this further – I’ve created a free document for you to download: 17 Property Finance Mistakes investors Make – and how to avoid them. You can download it here: www. ninjanetworkingblitz.co.uk/17mistakesguide

Kevin Wright is always happy to discuss how best to finance your property deal. Call him on 07889 526979. Kevin runs the Ninja Investor programme teaching these strategies www.ninjainvestorprogramme.co.uk.

26

32ND EDITION LANDLORD INVESTOR

London 11/12 November Birmingham 25/26 November Leeds and Bristol: check website for 2018 dates

TENANCY DEPOSIT SCHEME

MIKE MORGAN TENANCY DEPOSIT SCHEME

I'll pay if you pay?

For The Adjudication Digest Michael Morgan, Director of Dispute Resolution at TDS, takes a recent decision by a TDS Adjudicator and sets out the reasoning behind the decision. The aim of these digest reports is to help tenants, landlords and agents better understand how we make our adjudication decisions. The names of the landlords and tenants involved have been removed and this is only a brief summary of the dispute.

Amount of deposit in dispute: £150.00

Dispute initiated by: Agent

Award made Tenant £150.00

In this case an agent claimed, among other things, the payment of the check out fee from the tenant. They pointed to a clause in the tenancy agreement making the tenant responsible for its payment at the end of the tenancy.

evidence presented included an invoice from the inventory clerk, which matched the sum claimed from the tenant. On that evidence the adjudicator was not able to accept that the tenant was only expected to pay half of the check out fee.

The tenant disputed the payment because a different clause in the tenancy agreement required the check out fee to be paid by the landlord. The tenant also argued that because the clause referred simply to paying the cost of a check out fee, without specifying an amount, they could not in any event be required to pay a charge for an undisclosed amount.

The adjudicator next had to decide whether the tenant was obliged by the tenancy agreement to pay for the check out fee. The clause requiring them to pay would, in the normal course of events, not be a problem. However because the tenancy agreement also required the landlord to pay, the tenancy agreement was ambiguous. In these circumstances, the adjudicator could not conclude with any certainty that the obligation to pay the check out fee in full was the tenant’s. No award was made as a result.

The agent argued that the two clauses taken together meant that the landlord and tenant were to pay half each. The

28

Agent/landlord £0.00

So what are the key points here?

‘Standard form’ tenancy agreements containing many ‘small print’ clauses need to be read carefully and regularly to ensure that they are correct and consistent. It appeared in this case that one clause had been added to the tenancy agreement without removing the other clause which it was intended to replace.

On the second issue, if the tenant was required to pay the check out fee, the adjudicator would award what they considered to be a reasonable sum. If the tenancy agreement specified a fee, or calculated it by reference to a formula (e.g. a percentage of the deposit) the amount claimed would be awarded provided it was not disproportionate.

32ND EDITION LANDLORD INVESTOR

LANDLORD INVESTOR 32ND EDITION

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MY HONEST VIEWPOINT

MARIE PARRIS GEORGE ELLIS PROPERTY SERVICES

The survival of the buy-to-let landlord Trying to cut corners and saving money is not going to be the route to survival of your buy to let properties As an industry, we currently house 20% of all UK households living in the private rented sector. These figures are set to increase, yet our governments show no admirations for the UK landlords or letting agents in this country. Our government instead punish us with punitive tax rules, that until 2020 we will not really know the full impact. The other, is proposing rent caps. Not to mention the proposal to ban tenant agency fees – again which will cause havoc for landlords and agents alike.

Landlords will be tempted by lower fees from unknowledgeable agents and tenants will relish in the opportunity to pull out of their commitments at the last minute leaving a landlord stranded if they find a “better deal”. As there will no longer be any financial penalty that the tenant will have to forego if they pull out. Many agents will suffer as a result in the loss of that revenue stream. Therefore outlining

32

the finer details before it becomes law is imperative. In addition to this, there are soaring licensing costs and not to mention the huge amount of legislation that landlords and letting agents have to jump through.

It is true there are a number of agents who charge astronomical tenant fees.

However, The Consumer Rights Act 2015 ensured that all letting agents had to be transparent with their costs and display these on their websites and in their offices. This meant that tenants could make informative decisions before they decided to view with that agent.

If the tenant fees were causing impact, tenants could try an alternative property elsewhere, if another agent was not advertising the same at a lower fees.

A sensible cap on tenant fees would have been the better solution. Agents are providing a service and many sub contract these to third parties when it comes to referencing and credit checks.

The government “consultation” was a farce and besides too few in our sector even bothered to respond.

Landlord and tenant law is not a level playing field – too long to evict tenants for rent arrears. It should be one month and then another 30 days before we can legally evict them.

There is no doubt that the law is heavily in favour of the tenant in this country. When a tenant does not pay rent they can continue living in the accommodation for two months before we are even able to start legal action. Even then, with many court closures it can take months longer to evict as court staff struggle to log all cases within 14 days. More like 35 days plus, in certain parts of London and no recourse for landlords to complain.

On top of this if you have incorrectly completed the N5b form it will set you back even further.

32ND EDITION LANDLORD INVESTOR

LANDLORD INVESTOR 32ND EDITION

33

MY HONEST VIEWPOINT

Buy-to-let will definitely be here in the next five years or so, but there will be massive changes.

Landlords need to help themselves too, why is it that there are still some landlords who will give tenants good references when they know they should not. We MUST NOT pass on tenants within the private rented sector, who have been in rent arrears, caused deliberate damage or anything else that is undesirable to our fellow landlords or letting agents. It is wrong on all counts and only ends up destroying our industry. Rogue tenants must stay out of the PRS – fact! No government is going to help us achieve this. The turnover of tenants leaving in relation to reference requests for tenants that we have received over the years is lower in comparison. Why is this I ask myself? Simply because there are many landlords (and agents) who do not even reference check on a basic level, allowing rogue tenants to pass through the system undetected.

Some landlords, have got to stop being cheap! (sorry - yes I did say it), you have got to start investing in good property management – choose wisely. There is too much at risk, fined if the deposit is not registered to prescribed guidelines, fined if you are not licenced, fined if you do not do the proper right to rents checks, fined if you do not have a current gas safe certificate, sued by the tenant via the gluttonous “no win, no fee” solicitors – do I need to go on! For the last 11 years or so, I have been one of very few, (if not the only), London-based letting agents who has spoken consistently at property events, and whilst I have always been an advocate for those 50% of landlords who want to do it themselves – there are many factors that say there are now too many rules and regulations. So much so that if you are not doing so on a daily basis, you can be forgiven for not knowing.

I am constantly educating myself on the knowledge within our industry, by getting more CPD points. I have always believed all agents should be qualified, and all agencies should have client money protection. Landlords should strive to do the same, and at the very least join a landlords association, read their magazine, website. Landlord associations lobby on our behalf and your membership fee is tax deductible.

34

However, make your own decisions about which suppliers you want to use.

A real recommendation is one where no money has been exchanged for “preferential supplier’s titles”.

Landlords must check to see if your existing paperwork of your current tenancies is correct and where possible make amends to get it right.

You must also set up your meetings (if you have not already done so) with your tax advisor/finance broker/ accountant. Visit your investments and make sure they are up to standard.

We are in a slow market currently in London with property taking longer to rent, this is not the time to scrimp and save. Besides if you have to do a quick exit, it will help.

This year, I have seen a number of landlords exit the business for various reasons and if the trend continues the government will have a job on their hands trying to re-house all of these families. With Brexit and the uncertainty that it brings it is affecting landlords and job security. More and more landlords are especially reluctant to provide accommodation to those requiring Universal Credit. There is no stigma to UC, it is there for us all - it is just that the system does not work for landlords. Perhaps Shelter (after 50 years) should opt to build homes for the numerous people that will be evicted and start putting their voice to better use and do what their name suggests and stop bashing landlords!

Our government will continue to introduce more unnecessary legislation until they destroy the private rented sector as landlords try other alternative investment strategies.

Our government did not want the buyto-let to have 20% of the market, they want to institutionalise the industry taking away the dream of leaving something in your old age, providing for your children or just trying to have a better quality of life. Most landlords are either accidental landlords (who have inherited a property/or cannot sell it) or with a small portfolio of 1-4

properties. No matter how much we are reviled, by media and the likes of Shelter, buy to let was an opportunity that was opened to all that were over 18 years of age in the late 90s. There have been success stories and some terrible casualties of this industry – it is a business and it is the chance any landlord takes when you decide. But hating on a community of landlords because you were too risk adverse at the time or feel it is immoral to make profit from houses are views that some people should really keep to themselves.

Buy-to-let will definitely be here in the next five years or so, but there will be massive changes and we would have lost some landlords and agents along the way. Changes within the mortgage market to allow landlords to rent their properties in other ways and not just on an AST have to be looked at, as well as some of the regulations rules around licensing and HMO, as more tenants struggle to rent separate units, the house share will become a continued steady favourite.

Of all of the landlords and agents that I personally have had dealings with, they are honest and law abiding, none want a situation like Grenfell (indeed if it was a private landlord – they would have been in prison). Safety, rules, regulations and procedures are necessary, but of late some of the things that the government have introduced are a step in the wrong direction and unnecessary in my opinion. The real impact is that no one has the answer, because only time will really reveal that.

Marie Parris is CEO & founder of George Ellis Property Services, the company operates across six disciplines to include lettings & management across London, an independent tenant referencing service, inventories and sales. Marie also provides personal landlord tuition courses – see website for more details.

She is the only London based letting & management agent to consistently speak at property events for the past 11 consecutive years.

32ND EDITION LANDLORD INVESTOR

LEGAL

LOUIE BURNS LEASEHOLD SOLUTIONS

Leasehold Solutions calls for reform to leasehold law [On 50th anniversary of the Leasehold Reform Act 1967] 50 years since the Leasehold Reform Act 1967 was passed into law on 28 October, Leasehold Solutions, the UK's leading leasehold enfranchisement specialists, has called on the Government to radically overhaul the 1967 Act to ensure leaseholders are treated fairly.

Louie Burns, Managing Director of Leasehold Solutions, said: â&#x20AC;&#x153;The Leasehold Reform Act 1967 is an unfair, muddled law that requires radical amendments to make it fit for purpose.

For example, the Act does not currently include any clear definition of what a 'house' is, despite hundreds of costly court cases on the subject over the past 50 years.

"It beggars belief that the main legislative vehicle governing freehold purchases in this country can't even agree on a legal definition of a house, particularly when new-build houses are being sold on a leasehold basis.

We would like to see an immediate ban on the sale of leasehold houses, and the introduction of a clear definition of what a house is for the purposes of the Act.

36

"Furthermore, there are no prescribed timelines in the 1967 Act that specify how long a freehold acquisition should take; the freeholder decides how long this process will be and, of course, they can bend the rules to suit themselves.

"We would like to see the Government change the current legal process to introduce defined statutory timeframes, so that leaseholders can complete their enfranchisement within a clearly specified and acceptable period."

The Leasehold Reform Act 1967 gives leasehold tenants of flats and houses the right to buy the freehold of their property via a process called "enfranchisement".

The 1967 Act has been amended and extended over the years, which has made the rules for calculating the price of purchasing the freehold very complicated.

Burns continued: "There are three different ways to calculate the cost of buying the freehold of a property depending on the terms of the lease, and each one is more complex than the last.

What they all have in common is that they give leaseholders a legal headache and

unfairly cost them thousands of pounds to buy the freehold, in addition to costly legal fees.

"In addition, there is no simple way to remove unnecessary fees or restrictions when the leaseholder buys the freehold.

Clauses that require the leaseholder to pay hundreds of pounds to their freeholder for permission to change the carpets in their home, for example, have been put there simply to make money for the freeholder and are totally unacceptable. Leaseholders currently have to apply to the Upper Tribunal to make a case or the removal of such restrictions â&#x20AC;&#x201C; for which they incur further legal costs.

"We believe that the Government needs to urgently introduce a single, transparent method for calculating the cost of freehold purchases, so that leaseholders and their advisors are able to understand and agree a fair price with their freeholder.

"In addition, we'd like to see legislation included to enable leaseholders to remove onerous licences and permissions during the freehold acquisition."

32ND EDITION LANDLORD INVESTOR

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INVESTMENT

PAUL MAHONEY NOVA FINANCIAL

The value of advice when it comes to property investment When you’re sick you go to the doctor, to do your taxes you go to an accountant, when investing in property you should seek advice.

Property is often the largest purchase you will ever make in your life, with the current average property price of circa £225,000. Most people don’t spend that sort of money every day and it therefore shouldn’t be taken lightly.

Despite this, property investment tends to be a very Do-It-Yourself (DIY) activity which for me is difficult to understand.

I include myself in this, I would like to think that my level of understanding of property and investments is slightly higher than your average person through years advising others, investing myself and over a decade of study but I would not make such a large decision without seeking the advice of others who know what they are talking about and are independent in their advice.

We as humans are emotional creatures and I’ve been saved from many bad decisions simply by using a trusted advisor as a sounding board which allowed me to see reason.

Ensure that when seeking advice that you meet with a company that is independent and not just selling

38

products or investments. I am a strong believer that prescription without diagnosis is malpractice and by this, I mean you need to seek the advice of a company or person who takes the time to very clearly understand your situation, goals and preference prior to providing advice. Avoid those that advertise specific investment options or products as more often than not, that is what you are going to end up with.

Also, be wary of those that try to convince you of investment options that are completely outside your comfort zone. It really doesn’t matter how much sense an investment makes on a spreadsheet, if you’re not comfortable with it and you’re going to lay awake at night worrying about it, then it isn't right for you.

Although some advisors will show you fancy graphs and stats to back up their advice, “a man convinced against his will is of the same opinion still” so don’t let the hype fool you into something you’re not ok with.

The property industry unfortunately tends to be very sales focused which means when it comes to making a purchase you are often dealing with a salesperson in the form of an estate agent or property marketer. The difference between sales and advice is that in the right circumstances, advice focuses on benefits whereas sales focuses on features. When dealing with an estate agent they will often tell you how great the property is because it has a south west facing garden and a period fireplace but do those things really matter? In some cases, they do if that is what your target market wants but how does that relate to you? That’s where advice becomes very useful as good advice focuses on benefits specific to you and your goals. Benefits being what the property can do for you and how it relates to you. Another way of putting it is focusing on the outcomes rather than the offering.

For independent advice feel free to contact Nova Financial on 0203 8000 600 or info@nova.financial

32ND EDITION LANDLORD INVESTOR

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LANDLORD INVESTOR 32ND EDITION

39

INDUSTRY SPOTLIGHT

Total Landlord Insurance wins “Best Landlord Insurance Provider” Hamilton Fraser Total Landlord Insurance has won ‘Best Landlord Insurance Provider’ at the Insurance Choice Awards against some of their largest industry competitors, including Direct Line for Business and Simple Landlords Insurance.

The Insurance Choice Awards help consumers to find the best possible insurance products and providers on the market and is the only independent insurance awards voted for by UK customers. Companies must receive a minimum of 100 reviews during the voting period to be eligible and the highest-rated firm in each-product category wins.

Winners of the 16 product specific awards and 7 top level awards were announced at The Insurance Choice Awards held on Thursday 12th October at The Lansdowne Club, Mayfair.

As part of Hamilton Fraser, also parent company to leading industry services such as mydeposits, the Property Redress Scheme, Client Money

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Protect and Landlord Action, Total Landlord Insurance has an unrivalled understanding of the buy-to-let industry, enabling them to offer landlords the best advice on protecting their investment.

Some of the reviews left by Total Landlord Insurance customers, which contributed to their success, described them as “one of a kind”, going “above and beyond to do their best to get you the cheapest quote” and offering “practical advice for landlords, and updates on relevant legal matters.

Excellent.”

Having previously been awarded the prestigious Investor in Customers (IIC) award, Total Landlord Insurance is regularly praised for its exceptional customer service, particularly through

their “same name claim handler” operation. Recent claims feedback questionnaires (received between 03/04/17 and 31/07/17) revealed that 91% of customers would recommend Total Landlord Insurance.

Eddie Hooker, CEO of Hamilton Fraser Total Landlord Insurance says: “It goes without saying that I am absolutely delighted to have achieved this accolade.

This is not only recognition of the quality of service we are providing, but also that customers value the additional work we put into providing reliable support and accurate advice. Now more than ever landlords need guidance so protection and raising standards is of greatest importance to us. Thank you to all our valued customers who took the time to write a review.”

32ND EDITION LANDLORD INVESTOR

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32ND EDITION LANDLORD INVESTOR

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Property?

Investing Investing in Property?

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Fast and effective eviction of tenants

0333 001 5100 thesheriffsoffice.com

INSURANCE

MARK BOWERS BOLLINGTON

Taking the hassle out of insuring your property There is no such thing as a standard landlord; the range, number and location of properties is vast, as are the risks presented by a variety of tenants.

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32ND EDITION LANDLORD INVESTOR

INSURANCE

If you don’t declare to your insurer that you have tenants in your property, there is a possibility they could refuse to settle a claim.

Equally, then, it can be argued that there is no such thing as a standard insurance policy to protect all landlords. Assessing your risks and making sure you are properly protected is the concern of a good insurance broker, who analyses your needs and recommends suitable covers. Should the worst happen, you want to make sure that you are in the best possible position to make a successful claim.

Bollington Insurance discusses some of the issues affecting landlords, providing straightforward answers to common questions to help ensure you get the right insurance for your specific circumstances.

Why do I need a landlord insurance policy?

A standard home insurance policy isn’t enough to cover your needs, and there are many reasons for this.

Firstly, if you don’t declare to your insurer that you have tenants in your property, there is a possibility they could refuse to settle a claim or may even void your policy – the worst outcome for anybody relying on their insurance. You need to make sure your property is covered for letting purposes.

Secondly, if one of your tenants, a tradesmen or other member of the public was to suffer an injury or damage to their person or property while in premises you let, you could find yourself defending a claim.

Standard household insurance is not designed to cover liabilities like these.

You should make sure that public liability cover is provided as part of your landlord insurance policy, as the cost of defending a claim alone could be crippling.

Thirdly, if you have more than one property, landlord insurance can cover your risks under one policy,

LANDLORD INVESTOR 32ND EDITION

making it easier and potentially cheaper to administer your insurance arrangements.

asylum seekers or benefit claimants (still largely referred to as DSS tenants), for example.

There’s also the possibility that you will need specialist cover for the type of property and tenancy arrangement you have – for example, homes of multiple occupancy. Some landlord policies won’t cover HMOs, so you’ll need to make sure that the insurance you purchase is appropriate.

If you have a mix of property types in a portfolio – whether they be residential or commercial properties – then make sure your insurance covers them all.

There are other covers that may be needed as a landlord that wouldn’t be applicable to a general homeowner, too.

What other insurance should I consider?

Landlords employing tradespeople or property managers – or anybody else, for that matter – will need employers’ liability insurance to protect against claims for ill health or injury from their employees. This isn’t just a recommendation – it’s a legal requirement for the vast majority of landlords or business owners.

There are specific covers that landlords should consider taking out including cover for loss of income, liability exposures for management agencies or residents’ associations, and legal expenses cover, to name but a few.

Beyond insurance, you may also want to look at bespoke risk management advice to ensure you remain compliant with current legislation.

Anything else I should look out for?

As discussed previously, some types of property – such as those with a thatched roof, listed status, or converted mills and warehouses, for example – will not be covered by all insurers. Likewise, some insurers won’t cover certain tenants – students,

Other property that a general landlord insurance policy may not cover includes plots of land or property that is up for sale. Specialist policies may be able to provide cover for these, too.

Where does an insurance broker add value?

Hopefully, you’ll have seen there are many circumstances in which not having the right insurance can prove costly to you. It can be a hassle looking for the right insurance – and it’s not always easy to know what you should look for.

If you tell an insurance broker like Bollington how much property you own, how much it is worth, where it is located, who your tenants are, what type of property it is and so forth, we build a picture of how much cover is needed to recommend the right insurance products and levels of indemnity to meet your needs. You don’t get that kind of personalised service if you simply go online to find the cheapest price for a landlord insurance policy, which is why we believe our service offering adds value and provides you with essential support to underpin your arrangements.

Bollington also have access to a range of different insurers, not only offering good quality insurance cover but also comparing prices to offer the best value products from our panel. Call 01625 348114 or visit www.bollington. com/landlord-investor to find out more about our award-winning service.

47

LANDLORD SERVICES

SAVEWATER SOUTH EAST

Why should landlords improve the water efficiency of their stock?

And how can SaveWater South East and water companies help?

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32ND EDITION LANDLORD INVESTOR

LANDLORD SERVICES

Did you know water companies provide their customers with free water saving devices?

Visit your water company’s website to order yours.

Who is SaveWater South East?

SaveWater South East (SWSE) is a partnership between six water companies – Affinity Water, Portsmouth Water, Thames Water, South East Water, Southern Water and SES Water together with Waterwise and the Environment Agency. It was established in March 2016 to promote water efficiency across the South East and to help households save water, energy and money.

Why do we need to save water?

The South East of England is the most water-stressed region of the UK, and has less water available per person than Dubai and Spain. There are a number of factors that contribute to water scarcity including: • population growth – by 2040 the population of the South East is forecast to rise by 14% • climate change – longer, drier winters means that there is less water available during the summer months • environmental regulation – we need to ensure we leave enough water in the environment to support habitats Across the UK more new homes need to be built to meet the needs of an increasing population and much of this housing is required in the South East which is already water stressed. This adds extra pressure on to water companies, many of whom are already working under restricted abstracted licences, to deliver more water than before.

How is water used in our households and how can being water efficient help?

On average we use 139 litres of water per person per day. Yet only 4% of this is used for drinking, the remainder is used for other activities such as personal washing (showers, baths, hand-washing), toilet flushing, clothes washing, cleaning, cooking and outdoor activities.

Water efficiency is an important tool to contribute to a resilient water supply and across the UK many water companies

LANDLORD INVESTOR 32ND EDITION

and other organizations are running large-scale water efficiency programmes.

efficiency and other home improvements and resident communication.

By encouraging people to develop more sustainable lifestyles, households can reduce their water and energy consumption and save money on their bills. Moreover, water efficiency has a key role to play in helping mitigate climate change - heating water in homes for activities such as cooking, personal washing and cleaning produces 5% of the UK’s greenhouse gas emissions and a quarter of carbon emissions from homes. Nearly 75% of today’s homes will still be in use in 2050 and beyond, hence retrofitting more efficient fixtures and fittings will contribute to wasting less water today and in the future and help meet carbon targets.

Housing providers are trusted organisations with existing relationships with residents and expertise and experience in engaging with their residents. Many housing organisations are visiting homes every day to help with maintenance issues or to give energy advice; we believe that together we can help to increase the awareness of water efficiency and give residents the tools and advice they need to be water efficient.

Why is saving water important as a landlord?

To help combat the growing water scarcity problem we can all play a part and reduce our water use by becoming more water efficient. Projects like retrofitting existing houses and fitting new houses with the most water efficiency products not only achieve green aims, they also make economic and social sense too. Being water efficient is of value to landlords and housing associations as it can contribute to sustainability and fuel poverty alleviation goals as well as improve resident satisfaction. Nearly 50% of water used in the home is heated, so reducing water use can save energy, carbon and reduce householder’s fuel bills.

The shortage of new homes in the South East is apparent but if we are to have a sustainable housing sector, it needs to make the link between water and energy efficiency and deliver them in synergy.

Unlike energy we cannot make new water, therefore we need to make the water we do have go further. Conserving water is not just the responsibility of the UK water industry; it is all of our responsibility.

Why do water companies want to work with the housing sector?

Water companies and SWSE would like to work with the housing sector to utilise the synergies between delivering water

How can we help?

Water companies and SWSE can provide expert advice on water efficiency and technical requirements, legislation, new technology as well as free or subsidised water efficiency products, behavior change advice and guidance. At SWSE we are seeking to work with partners to help raise the awareness of the need to be water efficient and to help deliver effective water efficient projects that ultimately help householders save water.

Last month SWSE held their first water efficiency event developed specifically for local authorities and the housing sector. The event focused strongly on two-way communication and provided opportunity for delegates to give their views via a workshop. The event was very well received and we are planning on holding more in the future. We have also recently launched a toolkit for local authorities and the housing sector - this is a mixture of advice, guidance, case studies and contact details specifically on water efficiency in the housing sector and which will be continually added to.

For further information please go to the SaveWater South East page of the Waterwise website.

Get in touch If you would like to find out more about SWSE or are interested in working with us or your local water company, please contact Sharon at srussellverma@waterwise.org.uk or your local water company. Thames Water can be contacted directly at waterefficiency@ thameswater.co.uk.

49

BUY-TO-LET UPDATE

ANDREW TURNER COMMERCIAL TRUST LIMITED

New tax filing requirements deadline looms for buy-to-let landlords Some buy-to-let landlords have only a few months left to come to terms with new HMRC requirements regarding using its new digital filing service.

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32ND EDITION LANDLORD INVESTOR

BUY-TO-LET UPDATE

HMRC expects businesses, including buy-to-let landlords, to maintain accurate records and to provide them with quarterly updates.

From April 2018, the Making Tax Digital for Business (MTDfB) system will require businesses, self-employed people and landlords to file tax returns digitally, if they have profits chargeable to Income Tax and pay Class 4 National Insurance Contributions (NICs).

The new rules are being phased in and from April 2019, people who have registered for and are paying VAT will have to join the system. In April 2020, those paying Corporation Tax will also be required to use MTDfB. There are exemptions however, and HMRC has stated that people in employment and pensioners will not have to use the digital service unless they have additional income that exceeds £10,000 per year from self-employed earnings or property.

Furthermore, the Government has indicated that it is also considering giving exemption to small unincorporated businesses.

The Government is expected to deliver a further statement before the end of 2017, providing greater clarity on the above issues and it has been reported that it could also defer the mandatory start date of MTDfB for the next tier of small unincorporated businesses and landlords with annual incomes above £10,000, but below a threshold which has yet to be determined.

More regular filing HMRC expects businesses, including buy-to-let landlords, to maintain accurate records and to provide them with quarterly updates, stating: “HMRC wants to do more to help businesses get their tax right and MTDfB is a very important step in that direction.

It will help businesses steer clear of avoidable errors, and give them a clearer view of their tax position in-year.

LANDLORD INVESTOR 32ND EDITION

“Businesses (including self-employed and landlords) will keep records of their income and expenditure digitally, and send summary updates quarterly to HMRC from their software (or app).”

It was in the 2015 Budget that the government set out its original vision for a transformed tax system.

In December 2015 it published its Making Tax Digital roadmap, outlining its plans to shake up the tax system – transforming tax administration by 2020 into a more effective, efficient and simpler process for the taxpayers.

It is hoped that this process will help more businesses to get their tax and NICs right first time, eliminating around 10% of errors.

HMRC’s position Legislation was introduced in the Finance Bill 2017 in September, which set out how Digital Record Keeping will work and how businesses and individuals can keep records of trading and transactions digitally. It also outlined how to categorise expenses with help from prompts and guidance in the software.

The details included information on when businesses (including selfemployed and landlords) should record accounting and tax adjustments in order to determine a taxable profit, in addition to how to note reliefs and allowances.

The legislation also provided clarity on how businesses could update HMRC with quarterly updates, including an outline of how much details these should go into.

HMRC, but also businesses to maintain accurate and up to date records more easily through the new system.

In summary, the intended changes are outlined below: Businesses will be able to keep track of their tax affairs digitally using software or apps and the regulations will specify what records must be recorded using digital tools Businesses will submit summarised tax data to HMRC on a quarterly basis using digital tools In the case of VAT, these quarterly updates will replace the VAT return In the cases of Income Tax and Corporation Tax, the quarterly updates will help to build a clear picture of the business’ tax position during the course of the year Businesses will digitally provide a finalised end of year tax position to HMRC. Returns must be submitted 10 months after the fourth quarter and reconcile with earlier data and hence confirm the taxable profits of the business for the previous year: In most cases, the final end of tax year return should simply be a case of checking and agreeing the data already provided in the relevant four quarters.

However, in cases where businesses have more complex affairs, this will provide an opportunity to add and apply annualised reliefs and allowances would not have been reflected in the summary updates.

In summary The HMRC changes are aimed at helping to streamline the filing system and are intended to not only help

Andrew Turneris chief executive at buy-to-let mortgage broker Commercial Trust Limited. www.commercialtrust.co.uk.

51

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