Li Magazine 36th edition by Landlord Investor Magazine

LANDLORD INVESTOR LANDLORD | PROPERTY | INVESTMENT

36TH EDITION | 2018

LIMAGAZINE

MEET THE LIS FOUNDERS + THE LATEST INDUSTRY NEWS + SELLING YOUR BUYTO-LET PROPERTY + PROFESSIONALISATION OF THE LETTINGS SECTOR + IS THERE STILL A PLACE FOR THE AMATEUR LANDLORD? + WHY BIRMINGHAM HAS BECOME A BUY-TO-LET HOTSPOT + LANDLORDS CAUGHT IN HMO LICENSING NET

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#LIMAGAZINE

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WELCOME Welcome to the 36th Edition of Landlord Investor Magazine! I am delighted to announce that the National Landlord Investment Show celebrates its 5th Birthday on May 16th at our Midlands event taking place at Aston Villa Football Club, this will be the 56th show since our launch in 2013. This issue is jam-packed with great information and updates within the industry. Tom Entwistle writes about the change from “accidental landlord” to professional landlord. I investigate why Birmingham is now a leading buy-to-let investment hot-spot and what it has to offer. Ryan Hughes explains that a recent survey conducted by Knight Knox has found that more landlords consider Brexit to be more of a threat than an opportunity. Meet the founders of The National Landlord Investment Show – Tracey & Steve Hanbury and find out why property makes them tick! Paul Mahoney gives us an insight into the Northern Power House and Simon Zutshi explains how to buy a whole property portfolio in one go. Peter Littlewood explains the changes in licensing and Gareth Bertram from The Landlords Pension looks at SIPP or SSAS, which is right for you? We talk to Vesta a new tech company who have created an online market place for buying, selling & investing. Steve Cox gives us a guide to landlord insurance, we get more insight from Andrew Turner on HMO licensing and last, but not least I have written an article on the recent Government announcement that aims to professionalise the letting sector.

Dates for your diary 16th May – Midlands Show – Aston Villa FC – meet over 60 suppliers, attend 14 seminars, networking opportunities. 14th June – London Olympia – meet over 100 suppliers – 37 seminars – networking – UK’s largest expert panel with over 450 UK portfolio landlords in attendance – UK’s largest council debate with 5 councils on the panel to answer your questions. Get your complimentary show tickets by visiting www.landlordinvestmentshow.co.uk

C O N T E N T S

EXPERT ADVICE Is there still a place for the amateur landlord?

8 SPOTLIGHT ON BIRMINGHAM Here's why Birmingham has become a buy-to-let hotspot

12 BUYING AND SELLING? Selling your buy-to-let property

SHOW UPDATE Meet the LIS founders

18 INVESTMENT The Northern Powerhouse

21 INVESTMENT How to buy a whole property portfolio in one go

MARKET UPDATE The latest industry news

PENSIONS SIPP OR SSAS?

29 TECH NEWS New buy-to-let site that doesn’t leave tenants out in the cold

LANDLORD INVESTOR MAGAZINE

GETTING TO KNOW

Editor Tracey Hanbury editor@landlordinvestmentshow.co.uk

Editorial Contributors Tom Entwistle Tracey Hanbury Ryan Hughes Paul Mahoney Simon Zutshi Peter Littlewood Gareth Bertram

Vesta Steve Cox Andrew Turner Jim Haliburton Design Marc Riley Advertising Beverley Meliniotis

Jim Haliburton [AKA the HMO Daddy]

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.

INSURANCE A guide to landlord insurance

LICENSING UPDATE Landlords caught in HMO licensing net

LETTINGS UPDATE Professionalisation of the lettings sector

Meet the team TRACEY HANBURY

BEVERLEY MELINIOTIS

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

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

STEVE HANBURY

CHARLOTTE DYE

EDITOR & SALES DIRECTOR

DIRECTOR

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

ADVERTISING SALES MANAGER

HEAD OF CLIENT RELATIONS AND OPERATIONS T: 0208 656 5075 M: +44 (0)7931 308 856 info@landlordinvestmentshow.co.uk

ALICIA CELA

MARC RILEY

ACCOUNTS

DESIGN MANAGER

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

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

LES HANBURY DIRECTOR

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 8 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

LANDLORD INVESTOR 36TH EDITION

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EXPERT ADVICE

TOM ENTWISTLE LANDLORDZONE

Is there still a place for the amateur landlord? 4

LANDLORD INVESTOR 36TH EDITION

EXPERT ADVICE

The days of the amateur landlord and the so called “accidental landlord” are at an end and we are entering the age of the professional landlord, the landlord of experience who knows all the rules and regulations, knows how to find and select good tenants, and how to make sure their property meets all the new regulations that keep coming along.

Well no, that’s not the case! According to a recent analysis by agents Bairstow Eves, a part of the Countrywide Group, slowing house sales, particularly in the South of England, has resulted in a spurt of accidental landlord lettings as more people are deciding to let their properties instead of waiting for a sale. According to the report approximately one in 12 homes that came onto the rental market in 2017 had been up for sale within the previous six months. And it’s the third consecutive year that this proportion has increased, though Bairstow Eves point out that this remains well below the peak of letto-buy in 2010, when over 11 percent of for-rent homes had previously been put up for sale. The capital is the accidental landlord hub with 12.5 per cent of homes previously for sale, coming onto the rental market, the highest figure, Countrywide claims, since its records began in 2007, even surpassing the 2010 peak. There are many reasons why people choose to rent out their homes, not just when they want to sell. Working away for a time, or taking a sabbatical from work to travel, moving to be near sick relatives, the list goes on. So the point is, there will always be those people who need to rent out their home, out of necessity, not just to make money, but to save money by making their home pay for itself while they need to live elsewhere.

LANDLORD INVESTOR 36TH EDITION

With amateur landlords though, there are trips and traps they may not be aware of; some dangers in the process unless they know what they are doing. To the uninitiated, letting out a property is simple, you just need a tenant willing to pay the rent and you hand over the keys; even signing an agreement may seem like going a bit too far if they are letting to a friend, a friend of a friend, or a relative. After all, you do feel a bit uncomfortable asking for a formal contract to be signed when it’s someone so close, and asking for references and credit checks would be a step too far, really intrusive, so let’s dispense with all of that! Well in my experience that’s a scenario that is not uncommon, but one that’s simply asking for trouble. Friends and family definitely, in most cases, are the worst kinds of tenants to have, because eventually some form of resentment creeps in. They say that if you want to lose a friend, lend them money - neither a lender nor a borrower be, as wise Polonius says! Well pretty much the same applies when letting a property. Letting a property is really a business transaction, whichever way you look at it, and it should always be conducted in a business-like fashion.

But not every amateur or accidental landlord wants to pay for the services of a letting agent, and not every agent is all that good. When money is tight, paying out up to 15% of the rental income makes a big difference when you’re buying a new property elsewhere, or needing money to spend on travel. And a bad agent could easily land you in as much mess as doing it badly yourself! However, anyone embarking on a path of letting their house for the first time must be aware of what they are getting into, and the risks they are taking should things start to go badly wrong.

Letting a property is really a business transaction and it should always be conducted in a business-like fashion.

The safe way of course is to keep the arrangement at arm’s length and employ a professional agent to do the letting and management. A good agent will handle everything, acting as an independent middleman, and making sure that all the letting and legal formalities are complied with, and worry free for the landlord.

EXPERT ADVICE

The most important part of the letting process for the landlord, if he or she is to be pretty certain of an income stream from the house, and tenant troubles are to be avoided, is selecting good tenants.

With all the new rules and regulations now applying to renting out a property, and the risks involved if you select a bad tenant, even the professionals can fall fowl of this at times. The amateur really needs to do their homework before taking the plunge. That’s not to say it can’t be done, and done very successfully: in my experience, 95% of tenants are excellent, they pay their rent on time and they look after the house, so if it’s the landlords’ own home, they can return to it in more or less the same condition they left it in. But generally, tenants do not look after things quite as well as you would yourself in your own home, so you must expect more wear and tear. One little known safeguard for the accidental landlord letting out their own home is section 1 of schedule 2 of the Housing Act 1988. This is one of the mandatory grounds for possession under section 8 of the Act, which is a very important one for anyone letting out their own home. It gives important protection, allowing them to regain possession should they wish to return to live in the property relatively quickly. It simply involves serving on the tenant a notice that ground one is to be relied upon, should possession be required in

the future, a notice which must be served before the tenancy starts. The ground states: “Not later than the beginning of the tenancy the landlord gave notice in writing to the tenant that possession might be recovered on this ground or the court is of the opinion that it is just and equitable to dispense with the requirement of notice and (in either case): (a) at some time before the beginning of the tenancy, the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them occupied the dwelling-house as his only or principal home; or (b) the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them requires the dwelling-house as his, his spouse’s or his civil partner's] only or principal home and neither the landlord (or, in the case of joint landlords, any one of them) nor any other person who, as landlord, derived title under the landlord who gave the notice mentioned above acquired the reversion on the tenancy for money or money’s worth.”

Prior to letting any property today there are certain legal requirements to be met, and these apply to the amateur landlord just as much as they do to the professional landlord who perhaps has a whole portfolio of let property? In England as from the 1st of April this year any property marketed to-let must have an energy performance certificate (EPC) which gives the property a minimum energy rating of “E”. Secondly, if the property has gas, then it requires a gas safety inspection by a Gas Safe Registered engineer. It is likely that a similar requirement will apply to the electrical system in the property, but currently, unlike Scotland this in not a legal requirement in England at present, though it is recommended that an electrical inspection is carried out. If there’s a mortgage, the lender may wish to make changes if the property is to be let for any length of time, and a buyto-let mortgage may be required. The most important part of the letting process for the landlord, if he or she is to be pretty certain of an income stream from the house, and tenant troubles are to be avoided, is selecting good tenants. Like many things in life, this is as much art as it is science:

LANDLORD INVESTOR 36TH EDITION

EXPERT ADVICE

it sometimes relies as much on being a good judge of character as it does on methodically analysing all the background information, the checks and the referencing and the factual reasons for renting – but in reality, both are important. You cannot afford not to do credit checks and referencing and get the tenant applicant to complete a good tenancy application form so that all the background details of the tenant are supplied, including proof of identity. I strongly recommend reading the 20 – point letting checklist produced by www.TenantVERIFY.co.uk available free by registering on their website – it gives a quick overview of all the current pre-letting requirements. The letting process can seem complicated but if it’s broken down into easy to follow steps and these are conscientiously followed, then it need not be all that daunting, and amateurs stand as good a chance as anyone of having a successful letting experience. With any new applicant, making sure they are genuine by asking the right initial questions prior to any viewings is key: • What’s your reason for renting in this area, and where are you moving from?

LANDLORD INVESTOR 36TH EDITION

• Is this for yourself and how many people will be renting? • How long do you expect to stay? • Where do you work, how long have you worked there and what’s your occupation (job title)? •

What is your salary, and in proportion to the rent – ideally rent should be no more than one- third of the gross income.

• Do you have enough to cover the initial month’s rent and a deposit of £x? • When do you want to move in, do you need to give notice to an existing landlord? • Will you be happy to provide references from your landlord and employers? • Would you be able to provide a guarantor? • Will there be any smokers and do you have any pets? Additional deposit may be required. Under the Right to Rent legislation in England it is incumbent upon the

landlord to check documents (e.g. Passports) on everyone (including UK & EU nationals) and make copies of these (with photograph) to make sure you can prove they have a right to be living in the country. By going through all the checks, by carefully interviewing the applicant prior to the viewing, and observing them during the viewing, your instincts should by now be telling you whether or not they would make suitably good tenants. Bearing in mind you are subject to the Equality legislation and must not discriminate except on suitability and affordability grounds, you should be in a good position to make a letting decision, subject to all the necessary checks. So the amateur landlord and the accidental landlord are here and here to stay; there will always be room for and a need for these groups, so there is work here for letting agents, but also there’s an educational need for those that decide to go it alone. Tom Entwistle is Editor at LandlordZONE and an experienced commercial and residential landlord.

SPOTLIGHT ON BIRMINGHAM

TRACEY HANBURY

Here's why Birmingham has become a buy-to-let hotspot 8

LANDLORD INVESTOR 36TH EDITION

SPOTLIGHT ON BIRMINGHAM

As the next instalment of the National Landlord Investment Show descends on Birmingham on May 16th, we take a closer look at why England's second city is now a leading buy-tolet investment hotspot.

London has long been considered the UK's premier property investment location thanks to its status as one of the globe's leading cities, but in recent times there's been increasing signs that there's a new kid on the block. The UK's second most populous city with a population of around one million, Birmingham is increasingly being touted as a hotspot for investors looking for healthy long-term returns and minimal void periods. Thanks to impressive infrastructure development and millions of pounds of investment, the West Midlands city is certainly one of the locations of the moment and investors who act quickly could reap the greatest rewards. Positive signs for a rapidly growing city Birmingham's status as an area to keep tabs on has been boldened by several recent announcements. Firstly, Birmingham is set to host the next Commonwealth Games in 2022 - a move which has proved extremely successful for the growth of both Manchester (2002) and Glasgow (2014) since the turn of the century. Anne Underwood, Lord Mayor of Birmingham, says hosting the games will provide the city with the opportunity to showcase its 'youth and diversity' to the world. As well as sporting success, Birmingham has received numerous business boosts to boot, demonstrating the appeal of its growing economy. One of the UK's largest banks, HSBC, is relocating its headquarters from Canary Wharf to

LANDLORD INVESTOR 36TH EDITION

Birmingham, moving around 1,000 jobs. Meanwhile, Deutsche Bank also employs over 1,000 staff in the city, supporting over 500 clients who used to be serviced from the capital. It's not only financial firms choosing Birmingham as their preferred operating locations - over 3,500 HMRC tax workers are set to move to a brand-new office complex in Broad Street from 2020. As more financial and tech businesses move to Birmingham, the workers will follow which will provide a healthy boost for the city's private rental sector. And this is one of the main reasons why Birmingham has recently been named as one of the best worldwide investment locations in IP Global's Real Estate Outlook Report as well as one of Europe's most appealing cities in PwC's as well as PwC's 2018 Emerging Trends in Real Estate Europe study. Impressive investment and development continues Another reason Birmingham's stature as a premier property location continues to grow is thanks to various infrastructure and development projects funded to the tune of millions of pounds of investment.

for landlords in the form of increased office space and new apartment blocks in a transformed city centre. The focus on an employment influx will once more help to boost demand for rental homes. Moreover, already impressive transport links have been bolstered by the redevelopment of New Street station and the launch of the HS2 Curzon Masterplan. Private investment in the student property market is also on the rise, exemplified by AZ Real Estate's recent ÂŁ10+ million acquisition of City Edge, a 136-apartment student accommodation block in the city.

Birmingham's status as an area to keep tabs on has been boldened by several recent announcements.

Perhaps the best known of these is the Big City Plan which aims to create over 50,000 jobs and contribute an additional ÂŁ2.1 billion to the economy each year over the next 20 years. This regeneration project will see numerous investment opportunities

SPOTLIGHT ON BIRMINGHAM

Fantastic transport links and a buzzing, cosmopolitan city centre mean Birmingham is fast becoming one of the UK's best rental locations outside the capital.

Over the next few years, it's expected more projects will be announced and the city will benefit from further inward investment. And as some of the existing projects near completion, the second city's investment credentials will only be further enhanced. Affordable prices and healthy yields for landlords Impressive infrastructure and development projects are all very well, but what's the nitty gritty for landlords? How much does property cost and what do average yields look like in Birmingham? Well, you'll be interested to find out that average prices in Birmingham are some of the fastest growing in the country, according to Hometrack. The average price in Birmingham in March stood at £157,200, reflecting significant annual growth of 7%. The combination of growth and affordability is what makes property in Birmingham so attractive for landlords. Hometrack's figures show that the average cost of a Bristol property in March was significantly higher at £276,800. Meanwhile, in London average prices rocket to £490,900 which would have a significant impact on yields. According to research by IP Global, the average yield in Birmingham is now

over 4% after steady growth. Recent figures from LendInvest calculate the average yield in Birmingham at 4.6% following rental price growth of almost 4% and capital gains nearing 7%. The figures for Birmingham are extremely positive and landlords will be hard pushed to find a UK city with more affordable property where rental prices and capital gains are growing so steadily. A modern city which appeals to private renters The private rental sector across the UK continues to grow and now represents around a fifth of all English households, according to the most recent English Housing Survey. And as more people are looking to rent privately for longer and due to lifestyle choices, tenants are becoming increasingly drawn to Birmingham as somewhere to call home. The affordable property purchase prices for landlords and buyers are reflected by rental prices that don't break the bank and as we can see from the developments already mentioned, Birmingham is increasingly becoming an employment hub. This combination of affordable rental living and an abundance of work opportunities provides the perfect combo for the country’s huge population of young professional renters.

What's more, this West Midlands hotspot has long been an attractive location for students with around 70,000 living in the city each year. Of course, Birmingham has three of its own universities, but is also within an hour's drive of 20 others. Fantastic transport links and a buzzing, cosmopolitan city centre (which is improving each year) mean Birmingham is fast becoming one of the UK's best rental locations outside the capital. Ready. Get set. Invest! As we can see, Birmingham really is somewhere to get excited about and incorporating this great city into your investment plans now could be one of the smartest decisions you ever make. We look forward to welcoming you to our 5th Anniversary National Landlord Investment Midlands Show which takes place from 9.30 to 15.30 at Aston Villa Football Club on Wednesday 16th May. We have a host of industry experts, exhibitors and seminars which will provide you with all the Birmingham investment advice you need! For more information, visit: www.landlordinvestmentshow.co.uk/ midlandsshow Tracey Hanbury

LANDLORD INVESTOR 36TH EDITION

BUYING AND SELLING?

RYAN HUGHES INTUS RESIDENTIAL

Selling your buy-to-let property

LANDLORD INVESTOR 36TH EDITION

BUYING AND SELLING?

It is not exactly news at this point to say that the UK buy-to-let market is an extremely strong investment prospect. Rents and house prices are growing in almost every part of the country – with the notable exception of Central London – and regional cities such as Manchester have seen increases of more than 35% over the last five years according to Zoopla in April 2018.

The number of people who rent is also growing rapidly. The best recent estimates state that approximately a quarter of the population will be in the Private Rented Sector by 2021 as renting continues to become a normalised, long term option for many. This applies doubly to younger people who are renting in almost unprecedented numbers. This changing attitude towards renting – particularly in key urban centres – means that the supply of high quality accommodation is shrinking. When these potential financial returns are combined with a growing renter base, it is clear to see why property remains one of the most popular options for investors who are eager to secure their financial future. Why invest in stocks and shares when you can get higher returns from property? However, there has been much hand wringing over the last year about the possible impact of the Brexit process on the housing market. According to a recent survey by Knight Knox, an expert property consultancy based in Manchester, more landlords consider Brexit to be a threat than an opportunity. In addition, the government’s much publicised tax reforms have got many landlords worried for the future. Given that recent research from London Central Portfolio shows that a huge percentage of all Stamp Duty comes from buy-to-let purchases, it is not surprising that many landlords have begun to wonder if they are being treated like cash cows.

In these circumstances it is reasonable for an investor to wonder whether the time has come to consider streamlining their portfolio and begin to sell some buy-to-let properties. Unfortunately, this is where many run into a problem: selling a buy-to-let property can be far from simple – and if you can’t sell your property, you can’t enjoy the capital appreciation which has built up over the years you have owned it. When you sell a regular residential property to an owner-occupier, it is obvious where you start – Rightmove, Zoopla or your local agent. When selling buy-to-let, the process can be much less clear. The aforementioned growth of the buy-to-let sector has created a new class of landlords, and there are more potential investors than ever before who want to get involved – the latest figures from HMRC show that the total number of landlords has grown to at least 2.5 million, an increase of 27% since 2011/12. This is where Intus Residential comes in. Despite there now being a surplus of potential landlords looking for new investments, there was no easy way for existing investors to sell their buy-to-let properties to this growing base of buyers. There’s no reason why this process should be complicated or inefficient, but the platform didn’t exist; now it does.

of serious, pre-qualified investors in order to sell your buy-to-let property as efficiently as possible on this underutilised market. Our specialist team works nationwide across the UK’s premier cities and our tailored after-sales service works to reduce the frustrating risk of buyers pulling out at the last minute. If you have any questions about how Intus Residential can help you sell your buy-to-let property, please call 0161 772 1395 or email info@intusresidential.com.

According to a recent survey by Knight Knox, more landlords consider Brexit to be a threat than an opportunity.

Having sold more than £23.6m worth of buy-to-let property on behalf of investors since our formation, we have a wealth of experience in the field. We work with the UK’s largest database

Sources www.lettingagenttoday.co.uk/breaking-news/2018/4/stamp-duty-figures-show-massive-reliance-on-buy-to-let-purchases www.landlordtoday.co.uk/breaking-news/2018/4/number-of-uk-landlords-rises-to-1-75-million www.zoopla.co.uk/house-prices/manchester/ www.theguardian.com/money/2017/jun/12/one-in-four-households-in-britain-will-rent-privately-by-end-of-2021-says-report

LANDLORD INVESTOR 36TH EDITION

SHOW UPDATE

TRACEY HANBURY

STEVE HANBURY

Meet the founders of the National Landlord Investment Show Q&A with Tracey and Steve Hanbury

LANDLORD INVESTOR 36TH EDITION

SHOW UPDATE

As the National Landlord Investment Show prepares to celebrate its fifth anniversary at Aston Villa Football Club on Wednesday May 16th, it's time to meet the people behind the shows to find out what makes them tick. The Midlands event taking place on May 16th marks five years to the day that the first National Landlord Investment Show took place in Croydon, South London in 2013. Ahead of the fifth birthday celebrations and another jam-packed show, Tracey and Steve Hanbury, directors of the National Landlord Investment Show and Landlord Investor Magazine, tell us all about how the shows started, their long-term involvement in the property market and provide some useful advice for landlords... Q: What's your background and why did you decide to launch the National Landlord Investment Show? Tracey: “I started my career in advertising back in 1997 and worked for Trinity Newspaper Group. I then went on to work for a publishing company and sold portfolio advertising solutions across magazines such as OK! and Sainsbury’s.” “I then landed a job as an international sales executive for an American company and travelled all over the world, working on a portfolio of magazines and trade exhibitions across the telecoms sector.” “Steve and I met at a marketing company back in 2002 and so the journey began…” Steve: “I worked for a marketing and telecoms company heading up sales. I then went on to work for Countrywide as an estate agent. In 2011, I went into property full-time with my Dad and then Tracey and I launched the shows in 2013.” Tracey: “We started the National Landlord Investment Show as a regional show after seeing a huge gap in the market where we could offer landlords a great event that would help them grow and retain their portfolios.”

“We chose buy-to-let hotspots throughout the UK and then set up the shows in these locations. We looked at our own experience of being fairly new into the market place and thought it would be a great idea to provide a platform where new and seasoned landlords could attend a one-day event in their area, providing them with the opportunity to meet with leading suppliers and attend seminars to gain valuable information.”

the gradual phasing out of buy-to-let mortgage interest tax relief.”

Steve: “Since then, we have grown into a national company, running our events in major cities. This includes three events per year at London Olympia, each attracting over 4,000 UK portfolio landlords. We also take our events to Manchester, Cardiff, Liverpool and still run some regional shows.

Tracey: “We are landlords and this part of the business we run with Steve’s dad, Les. We purchased our first House in Multiple Occupation (HMO) in East Croydon back in 2004.”

Q: Have you always been interested in the property market? Steve: “I have been brought up around property my whole life. My dad, Les Hanbury, has been a landlord for over 40 years. I spent a lot of time going to properties with my dad, helping him strip them out and getting them ready for rental. We attended many auctions and I got the buzz for property at a young age.”

Steve: “It’s industry changes like these that make the shows even more important. Landlords need somewhere to go to gain advice, keep updated about what’s going on and speak to other landlords in a similar position.” Q: Are you landlords? What type of properties do you own?

Steve: “As a family portfolio, our properties range from three to fourbedroom properties which are let to the private sector and we also let out through various council schemes in areas such as Bromley, Croydon, Lewisham and Sutton.” Tracey: “We have also ventured into the Build to Rent market and this is headed up by our brother-in-law, who is currently in the final stages of a five four-bedroom house development in Kent.” Q: What is the best thing about being a landlord?

Q: How has the market changed since you started the National Landlord Investment Show?

Tracey: “Hopefully building a bright future for our families and providing good property for our tenants.”

Tracey: “We launched the shows in May 2013 and we have seen a huge amount of change during this time, most notably increased government intervention in the rental sector.”

Q: What is your one piece of advice for landlords starting out?

“Some of the biggest changes that have occurred while we have been running the shows are the introduction of the Right to Rent scheme, the 3% stamp duty surcharge on additional properties and

Steve: “Make sure you do your due diligence. Check everything like transport links and local schools. Is the area a good regeneration area that will be more profitable in the future? Seek professional advice, attend events like ours where you can meet with reputable suppliers and attend invaluable seminars.”

We chose buy-to-let hotspots throughout the UK and then set up the shows in these locations.

LANDLORD INVESTOR 36TH EDITION

SHOW UPDATE

Q: Birmingham is fast becoming a buy-to-let hotspot. What opportunities does it offer investors? Tracey: “Birmingham has quietly been becoming one of the UK’s best investor hotspots in recent years. This is down to a number of factors, including huge regeneration, affordable property prices, growing employment opportunities and ever-increasing rental demand.” “Ahead of the show, we’ve taken a closer look at Birmingham and what it has to offer in our article ‘Here's why Birmingham has become a buy-to-let hotspot’.” Q: What is the most challenging part of your day-to-day job? Tracey: “Steve and I have organised 56 events since our launch in 2013 and

also launched this magazine back in 2014. Working in events and publishing is not for the faint-hearted and we have to make sure that we are super organised. Our day-to-day can involve client meetings, marketing schedules, sales meetings and much more!”

Tracey: “The shows are all about getting out there and seeing what is going on in the industry. Things change so quickly that it’s vital for landlords to stay one step ahead.”

Steve: “As event organisers, it is our job to ensure that we have the correct type of exhibitors at our events, engaging speakers and also attract an audience of UK portfolio landlords. Our daily schedule is jam-packed and with two boys aged 14 and 11, you can imagine there are not enough hours in the day to get everything done! That being said, we absolutely love what we do and would not change it for the world.”

Steve: “We aim to put on a varied programme which includes exhibitors, seminars and expert advice to cater to all needs. We’ve also found that it can be difficult for landlords to interact with each other, learn from one another’s mistakes and make friends with people in a similar situation. The National Landlord Investment provides the platform for this and we look forward to the next five years of shows across the country.”

Q: What can landlords learn from attending the National Landlord Investment Show?

For more information, visit: www.landlordinvestmentshow.co.uk/ midlandsshow

Registration is live for the June 14th National Landlord Investment Show at Olympia. National Landlord Investment Show is heading back to London Olympia on June 14th. Due to the success of the March show at London Olympia which saw over 4,000 UK portfolio Landlords in attendance we are delighted to be back at this fantastic iconic venue for our 57th show since our launch in 2013. The Olympia provides solutions, networking and advice for new seasoned and investors in the buy-tolet market throughout the UK. The Expert Property Panel, is also returning to the June show and is expected to host 450 + landlords and investors at what is the UK’s largest series of landlord debates. This open panel debate focuses on tax and how landlords can manage their taxes and finances effectively; the afternoon session covers local councils – understanding their processes, legislation and differences in each borough. Speakers this time include Tony Gimple, Founding Director at Less Tax 4 Landlords, David Whittaker, CEO of Mortgages for Business and Key Stone Property Finance, Nicole Bremner, Property Investor/Developer and founder of two real estate companies,

Charles Haresnape, CEO of Gatehouse Bank, David Smith Partner/mediator at Anthony Gold more to be announced soon... Council Property Panel Visitors will be able to join a complimentary panel hosted by some of London’s councils to find out about the checks, fees, standards and procedures in each London Borough. Attendance at the panel is complimentary and on a first come, first served basis. New features including workshops & regional features National Landlord Investment Show will also be offering workshops for landlords and investors giving advice in areas such as accreditation. There is substantial support from northern powerhouse suppliers from Manchester, Liverpool, Leeds, Sheffield and Newcastle. Renowned industry suppliers and seminar speakers confirmed Exhibitors include renowned industry suppliers that can offer advice and service in areas including tax, HMOs, Article 4 and incorporation. This is the perfect opportunity for investors to

get advice on what to do about the new tax regulations affecting landlords. Exhibitors include Buy Association, Bedford Insurance, Elfin Kitchens. Envirovent, Glide, Howdens Joinery, State Bank of India, Mortgages for Business and The Loan Partnership. The shows are a vital platform for brands to launch new products and services direct to the property market. Visitors can also keep up-to-date via 37 additional complimentary seminars in the seminar rooms around the show floor. Shawbrook Bank attests to the importance of the education at the event, “Shawbrook is proud to support the Landlord Investment Show for 2018. We have worked together for a number of years and it has always been important to Shawbrook to partner with organisations that support an educational approach designed to shed light across a variety of important topics including the economic environment and the regulatory landscape” Visitor can register for the show at landlordinvestmentshow.co.uk For exhibitor enquiries, please call 020 8656 5075 or visit landlordinvestmentshow.co.uk/exhibit

LANDLORD INVESTOR 36TH EDITION

SHOW UPDATE

Standing room only: At our 2017 shows the Expert Property Panel proved a huge draw with the speakers addressing packed audiences, while the bustling exhibitor floor was a hive of activity offering access to experts from all areas of the buy-tolet market. If you missed us last year we have plenty of 2018 dates in various locations up and down the UK. To find out more visit www.landlordinvestmentshow. co.uk/2018-shows

LANDLORD INVESTOR 36TH EDITION

INVESTMENT

PAUL MAHONEY NOVA FINANCIAL

The Northern Powerhouse As property investment advisors, when determining an area to invest, we look for as much market depth as possible in an area.

LANDLORD INVESTOR 36TH EDITION

INVESTMENT

We like depth in factors such as the tenant pool, it should be vast with as much tenant demand as possible which gives us confidence in being able to rent a property. A broad range of industries and therefore employment as well as diversity in those industries and employment so that if one starts to struggle, others prop up the demand. Facilities, amenities and infrastructure which give people a reason to live in those areas and that tend to attract the right type of people and result in strong social economic levels and lower vacancy rates. When you consider the above mentioned, you simply cannot look past the likes of Manchester and Liverpool which are the heart of the Northern Powerhouse. People are moving to these cities in droves, for the first time in a very long time that net migration within the UK is significantly positive to the North away from the South East due to affordability. When you have land as a limited commodity within central locations that offer the above-mentioned depth and a strong growing demand further combined with a lack of ability for supply, prices will rise and this is what is now being experienced in the major cities of the Northern Powerhouse. Given that these cities are coming from a much lower base than the likes of London, lower property prices and significantly higher yields as well as the right fundamentals for growth, this opportunity is difficult to overlook. When advising clients, we were in the past very London focused as the safe haven not just for the UK but the world and London still offers the fundamentals that it did before however property prices have

skyrocketed and yields have not kept up. This has made property in London, in most cases an unviable option. The changes in the UK buy to let market recently such as section 24 which reduces the ability to offset mortgage interest, the stamp duty premium, and further restrictions on mortgage serviceability which reduces the amount that you can borrow on low yielding properties. Each of these changes are causing a strong shift away from high value low yield assets predominantly London and the South East areas toward lower value and high-yielding assets. However, buyers still want to invest in locations with fundamentals and with the market depth which is shifting the focus to the Northern Powerhouse. If we look back to the last financial crisis pre-2007, property in areas in the Northern Powerhouse were doing quite well however this was solely based upon confidence and speculation due to the fact that London had become expensive, not solid fundamentals. However, with strong growth in infrastructure spending, job availability and population experienced since 2007, these areas are significantly stronger and offer a lot more depth than ever before. This growth is expected to continue and increase substantially over the coming decades which is the opportunity being offered to property investors. The major cities in the Northern Powerhouse offer yields of 7%+, more than double what is available in London and prices significantly lower and more affordable. If we look at the performance in the property market over the past couple of years to early 2018, both Manchester and Liverpool at the centre of the Northern

Powerhouse have outperformed London from a growth perspective for the first time in a long time. For a property investor who might have funds available to invest, let’s run an example; With funds of £200,000 they could buy a property in the Southeast of England to the value of circa £450,000 which is a 64% loan to value and the reason for this restriction is the lack of yield which limits the amount they can borrow. On this property the buyer would be lucky to be making any positive cash flow or ROI on the cash invested and therefore is relying solely on growth speculation. With that same £200,000, the investor could split their money into four lots of £50,000 and buy four £200,000 properties in the Northern Powerhouse ideally in or around the major cities such as Manchester and Liverpool. They will quite easily be able to borrow the full 75% loan to value due to the high yield so a better utilisation of their funds. That gives them four properties enabling diversification and they should be achieving a yield of 7%+. At current interest rates, they should quite easily be able to achieve net cash flow or an ROI of 10%+ on the cash they invested. When we compare the options of buying one high value property with a limited mortgage and no cash flow to four high yielding assets with a higher loan to value and in our opinion more potential for growth, it is really a no-brainer. For more information, please contact Nova Financial group on 0203 8000 600 or visit our website at www. nova.financial

The major cities in the Northern Powerhouse offer yields of 7%+, more than double what is available in London.

LANDLORD INVESTOR 36TH EDITION

INVESTMENT

SIMON ZUTSHI

How to buy a whole property portfolio in one go

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INVESTMENT

If you want to speed up the process of building your property portfolio, or like the idea of doing one deal to replace your income, then maybe you should consider buying an existing portfolio from a tired or retiring landlord. In this article, I am going to explore the pros and cons of this strategy, and provide a real life case study to provide you with inspiration of what you could achieve.

First of all, let’s consider some of the reasons why you should be buying portfolios: Replace your income with one deal Most of the investors I meet want to replace the income from their job, with passive income from property. If you find the right portfolio, then it is possible that the cash flow from that existing portfolio could be enough to completely replace your current income. Save a huge amount of time Instead of having to find lots of individual properties to buy, and deal with lots of different owners, you could save a huge amount of time by dealing with one person to do one big deal. Having said this, it does take some time to find these portfolios, and you need to make sure you spend sufficient time analysing the portfolio to make sure you are buying a good one. Opportunity to add value Very often when you are buying a portfolio, there is scope to add value through renovation and modernisation. This means that you can raise the value of the properties in the portfolio and often refinance to get a lot of the deposit money out. In some cases this means you can buy the portfolio, and have none of your money left in. Opportunity to raise rents Often you will find that landlords have not raised the rents to keep up with the current market rates. This means

that you could raise the rents to increase the cash flow, especially if you have modernised and decorated the properties. So as you can see, there are many benefits to buying portfolios, but it is really that easy? Well, No, it is not easy and here are some downsides: It’s a numbers game To find a really good portfolio that you want to buy from a willing landlord you are going to have to look at a number of portfolios. Many of them won’t work for you or you just can’t agree a win win deal with the owner. It is definitely something that takes persistence. You will have to overcome a number of issues, otherwise everyone would be doing it. You need to know what you are doing If you are new to property, it may not be such a great idea to try and buy a portfolio as your first deal. You really do need to know what you are doing and do your due diligence on each property to make sure you know what you are buying. Having said that, this is no different to what you would do for one property that you wanted to buy, you just need to repeat the process for each property in the portfolio. Over optimistic landlords Very often you will find that landlords have an inflated view of what their property is worth. This is usually for one of three reasons: 1) The property is in negative equity and to sell they

need to clear the debt, 2) The landlord has spoken to an Estate Agent who has helped inflate the value of the property in the landlord’s mind, in order to secure the right to sell the property for the landlord, or 3) the landlord has decided how much money they want from the sale, and so are working backwards to work out how much they need to sell the property for. If the property is overpriced, the reality is that it just won’t sell at that high price and so, given some time, the landlord may come to realise this and as the motivation to sell becomes greater, they usually adjust their price down. That is of course as long as it is not in negative equity in which case the landlord may not be able to lower the price. In this situation you could maybe offer to pay the higher price if the landlord is flexible about when they get paid, for example by using a Purchase Lease Option. The good with the bad In every portfolio there are bound to be some properties that are better than others. They won’t all be great properties and some of them may not stack up very well. However, when buying a portfolio, you need to consider the overall situation and remember that although the landlord wants to sell all of the properties in one go, you don’t have to buy them all. Some of them you could package up and sell to other investors for whom they do stack up. This is particularly the case when a portfolio is spread all over the UK and you only really want the properties which are in your area.

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INVESTMENT

Now is the time

Using Purchase Lease Options (PLO)

There are always landlords who will be looking to retire. These are people whose full time job is managing their portfolio. They do everything from finding tenants, doing the contracts, moving them in, collecting rent, chasing debts, kicking out bad tenants, organising maintenance - everything. Many of these people plan to one day sell their portfolio and sit on a beach with a big pile of money.

This is a massively misunderstood strategy which you can use to control property, gain cash flow and equity growth on property, without the need for a mortgage, or even a large deposit. I have heard supposed property experts say that it only works with negative equity. Whilst it can be a great solution to the problem of negative equity purchase lease options work just as well with properties where there is no mortgage at all.

However, right now and over the next two years more and more landlords are considering retiring early as a direct result of the Section 24 tax changes. They don’t like the idea of doing the same work as before, but being paid less and less over the next few years as the full effect of Section 24 comes into force. We are seeing more and more of these landlords come to our network meetings looking to sell. I am personally looking to buy a number of portfolios over the next two years. (If you have one to sell, or you know someone who does, please get in touch with me!). This is an opportunity which I think will be available for the next 12 to 24 months so it is important to take action now. How to find portfolios There are a number of ways of finding portfolios for sale including: attending property networking events, telling people on social media that you are looking to buy, writing to registered HMO landlords, registering with local commercial property agents and normal Estate Agents, and also direct marketing to landlords who are advertising their properties for rent. All of these methods work to attract motivated landlords to you. Financing portfolio purchases You need to keep up to date with changes in the mortgage market. Best way to do this is to attend property networking meetings where there should be a broker who provides and update on the market. As long as they have access to the full market, they should be best placed to advise you. There are some new products which have just come out to help you purchase these kind of portfolios. Some of my students are doing very well from this.

The idea is that you have the right to buy a property in a number of years and in the meantime you take away the hassle from the owner so they can go and sit on a beach if they want. The price is fixed at the start of the option period. By phasing the sales over a number of years, the owner can maximise the use of their personal Capital Gains Allowance each year. There are many other benefits of PLO’s and you really need to understand these if you want to use them to make money from property. Portfolio case study One of my Property Mastermind delegates, Ashley Canning and his business partner, Neil Culshaw, both from Manchester, have just secured a deal where they have taken over control of a portfolio of 18 units over 14 properties from a landlord who was looking to retire. The landlord responded to a letter that Ashley has sent to him as part of his HMO landlord letter campaign, and explained to Ashley that he needed help in finding a creative solution. When structuring a creative deal it is important to understand what is important to the property owner. In this case the landlord wanted to retire but could not really sell his portfolio because although there was some equity overall, there was not enough to cover the capital gains tax he would have to pay. The portfolio was cash flow positive but needed some attention to bring it back to a good state to ensure it could be strategically purchased over the options period of 7 years, using the income generated from the portfolio to fund the purchases.

Having studied my PLO Bootcamp Home Study Programme, Ashley and Neil completely understood options and how to use them and so were able to structure a deal where they were able to take on the £1.1M portfolio with a gross income of £93k p.a. Most of the properties were tenanted but a few were empty and in need of some refurb. The landlord was unable to finance the cost of the refurb and so had left the properties empty. He also had not raise the rents for 7 years. So as usual when buying portfolios there was scope to increase the value and also raise the rents. To take the control of the portfolio Ashley had to pay £1 option fee, carry out the refurb and now has a positive cash flow after the expenses of £54k. I do hope you have enjoyed reading this article and it has stimulated your thinking about how you could purchase a portfolio. Invest with Knowledge, Invest with skill. Simon Zutshi Founder of Property Investors Network and Property Mastermind Programme, Author of Property Magic.

When structuring a creative deal it is important to understand what is important to the property owner.

What's your next step? If you want to learn more about using Purchase Lease Options to control property, so that you can gain positive cash flow and equity growth, without the need to put down big deposits or even to have a mortgage, then you need to register for a no cost, on line Master Class with Simon Zutshi this month. You can register for no cost here: http://bit.ly/YPNPLO

LANDLORD INVESTOR 36TH EDITION

INDUSTRY MARKET UPDATE UPDATE

PETER LITTLEWOOD SOUTHERN LANDLORDS ASSOCIATION

Market update Things are a’changing Firstly, I need to introduce myself. I am still Peter Littlewood, and I am still a Director of a Landlords Association. In view of the fact we are expanding the time has come to rebrand. So we are now iHowz (as in ‘I house tenants’); where the i is for information and the How is how to do things. See our web site for more information – iHowz.uk.

Homelessness Reduction Act This new Act started in anger April 3rd, I say in anger because many Local Authorities (LA’s) have already adopted this piece of legislation – they all had to fully adopt it from April 3rd. Whilst you might not think it will affect landlords, think again. It is a fairly complicated piece of legislation designed to make it easier for anyone threatened with homelessness to keep a roof over their heads. Government have had to issue 16 separate fact sheets for Local Authorities (LA), but many are still not ready.

In summary: • anyone threatened with homelessness can apply to their LA for assistance within 56 days of the threat of homelessness - this is roughly the duration of a Section 21; • if a legitimate claim the LA has to take action; the significant things for landlords are: The validity of the Section 21 will be scrutinised, and if found to be incorrect the tenant will be advised so. Don't get future Section 21's wrong, else you will have to start again. A Section 8 is not covered by this, because the tenant(s) is deemed to be

intentionally homeless. If your tenant is in rent arrears and you are unable to negotiate a settlement use a Section 8 rather than a Section 21. All Local Authorities are desperate for accommodation to house these people. Now is the time to start a good relationship with your LA. Note that it was always intended that these changes would result in changes to the ‘How to Rent’ booklet, and the Section 21 to tell the tenant that the LA will have to deal with their forthcoming homelessness. I am writing this at the end of March and so far there has been no announcement on these.

LANDLORD INVESTOR 36TH EDITION

MARKET UPDATE

Changes for Licensing Extension of Mandatory Licensing Some major changes have been announced for licensing. Government have now confirmed that mandatory licensing will be extended from October 1st this year. From that date any HMO with 5 occupants or more will have to have a license. Firstly let me remind of the definition of an HMO. It is any property occupied by 3 or more people who are not related, and share vital facilities. Vital facilities are things such as a bathroom; toilet; kitchen. It doesn’t include a sitting room as this is not considered vital. Note that I have not used the word tenants; I have used the word occupants. So be careful of your existing tenants moving a non-related person in – they might be creating an HMO without your knowledge. iHowz recommend the use of an application form to be able to confirm the relationship of intended occupants. Note that there is no grace period; it is up to the landlord to apply for a license if they have an HMO of 5 or more – previously the rule was that an HMO of 5 or more, on 3 or more storeys had to be licensed. By dropping the storeys rule it is anticipated that the number of mandatory licensable properties will go from approximately 60 thousand to quarter of a million. I need to repeat that the landlord needs to apply for a license if they now fall into mandatory licensing. The act of applying is sufficient, if the LA is slow in responding that is not the landlords’ problem.

by Parliament; so whilst it is almost certain that this will become law October 1st 2018 it will have to wait for a Parliamentary vote. What is being proposed is that the minimum room sizes for bedrooms will be: a) at least 6.51 square metres for one person; b) 10.22 square metres for two persons both of these are for anyone over the age of the 10:c) for one person under 10 the bedroom has to be at least 4.64 square metres. Therefore any room of less than 4.64 square metres cannot be used for sleeping at all. Interestingly enough the proposal talks about over 10 and under 10. Unless they amend it anyone actually aged 10 cannot be housed!! This will apply to any new lets after October 1st, and unless they amend the wording would apply to any existing HMO AST going from Fixed Term to Statutory Periodic after October 1st. Additionally, let me briefly explain the difference between the three types of an AST: 1) Fixed Term – most AST’s start as Fixed Term, but don’t need to. This might be brought about by the statement ‘this AST commences date for a period of n months’; or might give a start date and an end date.

Minimum room sizes

Either way this will constitute a Fixed Term agreement.

Government have also announced the requirement for minimum room sizes for all HMO’s. Unlike the mandatory licensing this measure has to be passed

2) Statutory Periodic – if the AST is silent on what happens at the end of a Fixed Term it will become Periodic by law (by statute) technically known

as a Statutory Periodic, often called a ‘Rolling Tenancy’. For some perverse reason any tenancy going from Fixed to Statutory Periodic is technically a new tenancy, therefore any legislation applying to a ‘new’ tenancy will apply. 3) Contractual Periodic – this is where the AST (the contract) states that the term will either commence as periodic, or will become periodic after a fixed term and thus is known as Contractual Periodic, i.e. the contract (AST) states it is to be periodic. iHowz strongly recommend a Fixed Term of 6 months or more, followed by Contractual Periodic. There is no point in doing less than 6 months because of the new Section 21 (form 6a) rules that won’t allow a S21 in the first 4 months. Additionally any tenancy not meeting this criteria might result in the landlord becoming liable for the Council Tax. Landlord liability for household waste Additionally there is to be a condition that the licence holder must ensure that the HMO complies with any rules the LA has regarding household waste disposal. The original wording suggested that all HMO’s must have dustbins, and some LA’s don’t actually allow dustbins in some areas – e.g. no property in central Brighton doesn’t have a dustbin, it is up to the occupier to dispose of their household waste via communal bins on every street. All these changes are in addition to those I have discussed in previous magazines: • Banning orders; • Minimum Energy Efficiency Standards – whereby any property with a low EPC rating will not be able to be let.

Be careful of your existing tenants moving a non-related person in – they might be creating an HMO without your knowledge.

LANDLORD INVESTOR 36TH EDITION

PENSIONS

GARETH BERTRAM THE LANDLORDâ&#x20AC;&#x2122;S PENSION

SIPP or SSAS which is right for you?

LANDLORD INVESTOR 36TH EDITION

PENSIONS

Gareth Bertram goes through the benefits of each and answers the burning question for business, property and pension investors.

Here at The Landlord’s Pension one of the most frequent questions we hear from new clients is whether they should be choosing a SIPP or a SSAS to help with their business and property investing journey. From my perspective and in standard circumstances there is only ever one winner and that is a SSAS (technically known as a Small Self-Administered Scheme), and here are the reasons why. Self-Invested Personal Pensions are very inflexible due to tough regulations imposed by the FCA who control and regulate the Trustees of these schemes. With severe penalties for mismanagement of client money or indirect financial advice the SIPP operators have withdrawn in numbers from giving their clients full control of the pension funds. Most clients that we speak to only tend to stick with their existing SIPP or open a new one if they want to invest in funds or equity-based investments. It’s still possible to invest in commercial property with a SIPP and if you are not a Company Director registered with Companies House then this may be the best option for you. If you are a Company Director or are planning to become one, then there is no reason that you should not have a SSAS pension. SSAS pensions have been around since the late 70’s but have never really taken off within the pension market. This is mainly due to the IFA market promoting investments in hedge funds or equities rather than considering how a SSAS could help a business owner. It has left many new clients asking us why they have never been told about this before – now they and you know the answer.

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SSAS pensions benefit from legislation that allows for more flexibility in how the client can control the funds. There are exactly all the same benefits that a SIPP or a standard personal pension benefit from such as investment in property, tax relief on contributions and full withdrawal at age 55 but SSAS pensions have much more to offer. When you establish a new SSAS, one of the main benefits is that it creates the opportunity to use up to 50% of the fund as a cash injection in your business, and that money can be used for almost any purpose (remember that only a Company Director registered at Companies House can legally establish a SSAS). If you plan to transfer in funds from former personal pensions, SIPPs or final salary schemes from old employers then you have an immediate drawdown facility to help grow and invest in your own business. You can also invest this money into property in many forms, for example land for development or agricultural land, commercial property for development or letting or business premises. If you’ve been a Company Director for some time and you have pension funds being managed for you which are invested in equities, it’s about now that you should be asking ‘why was I never told about this?’ If so, it’s possibly time to consider a SSAs pension.

Financially astute company directors with a need for cash to use in their business often do not need help to invest their money. We find that they know what they want but just need help creating the SSAS facility. The Landlord’s Pension has a team of pension consultants benefiting from experience in both SIPP and SSAS market places we can quickly determine whether a SIPP or a SSAS is right for you. The Landlord’s Pension is authorised to administer pension schemes in the UK. This article is the view of the author only and does not constitute financial advice. Pension transfer specialists may be required to provide transfer advice.

Establishing a SSAS is simple. There’s often a myth that follows SSAS pensions.

Establishing a SSAS is simple. There’s often a myth that follows SSAS pensions; that they’re difficult to set up or that they’re very expensive. When compared online to SIPP costs, a SSAS is often much cheaper. If you then strip out the costs of an IFA managing your fund the cost plummets. SSAS pensions rightly hand control to the owners of the fund.

TECH NEWS

New buy-to-let site that doesn’t leave tenants out in the cold Vesta, the online marketplace for buying, selling and investing, is the first in the UK to prioritise tenants by offering buy-to-let properties for sale with tenants already in place. This innovative concept makes owning rented property easier, while promoting longer terms for tenancies. Recent research by Cambridge Centre for Housing highlighted that more than 40,000 tenants in England were evicted in 2015 – the highest level ever recorded. The high number of “no fault” evictions had driven up the number of renters being forced to move home and that more than 80 per cent of the extra evictions recorded were a result of the Section 21 notice, which gives tenants two months to vacate their property. Russell Gould, Vesta’s Chief Executive, commented:

“Our aim is to create an easy way to buy or invest in property that is fairer for tenants, buyers and investors. Our new model is addressing the growing issue of tenants and rented property; existing accepted practice for selling a rented property is to sell it vacant possession, meaning that tenants need to be evicted, leading to the high level of ‘no fault’ evictions over the past few years. This is disruptive and debilitating for tenants. By selling properties with tenants in place, Vesta is not only providing more reassurance to tenants, but is also aligning itself with the stated government aim to increase longer tenancies. What is more, it is supporting landlords who often have big gaps in rent when they evict tenants and buyers who will earn an income from day one." Vesta is the brainchild of a strong team of experienced fintech and

LANDLORD INVESTOR 36TH EDITION

property sector experts who saw the need for a new model to enable the buy-to-let sector in the UK to thrive, while promoting the needs of tenants, investors and landlords alike."

landlords, housebuilders and developers in the UK. Landlords wanting to sell their properties through Vesta will benefit from its Sure Sell product; a fixed fee of £900.

How does Vesta work?

For more information about Vesta’s core products and the Vesta process, visit the Vesta website at www. vestaproperty.com.

Vesta has two options: Buy a rented property online. From Institutional landlords to someone owning a single property, the Vesta platform offers the low-costs and flexibility of an online estate agent allowing landlords to make an offer or ‘Buy it Now’ - at a guaranteed price, with no surprises, as all properties are all fully documented including rental history and Home Buyers Report (including RICS valuations). Landlords are able to earn income from day one as tenants are in place. Invest online in a Vesta portfolio. Vesta will soon provide private investors, property investors and institutional investors with the chance to invest in, build and manage a property investment portfolio online with as little as £1,000, and without the need to manage properties; all Vesta investment portfolio properties are professionally managed by a property management service.

An Innovative concept to reduce levels of ‘no fault’ eviction and an ethical property site which makes investing in property accessible.

Vesta is sourcing its properties through partnerships with some of the leading

GETTING TO KNOW

When I see an opportunity that I know I can make work, I take it!

Getting to know Jim Haliburton [AKA the HMO Daddy] Introducing Jim Haliburton, BBC featured Speaker, Author, Entrepreneur, Multi-Millionaire Property Investor and Mentor. 30

LANDLORD INVESTOR 36TH EDITION

GETTING TO KNOW

Jims remarkable rise from the bottom started out in a Scottish children’s home. “I know what it’s like to be homeless” he says indifferently. “It’s probably one reason I don’t live a flash life style, but I always re-invest”. Where are you based? “In Darlaston, a small town on the outskirts of Sandwell. I started investing around here in the 90s. I find it important to have all my properties close together. It became more significant as my portfolio grew. I have a team of around 35”. Employing staff for Jim hasn’t always been easy. “I grew up alone, only trusting myself, but learning to trust others has been vital for my portfolio to grow the way that it has”. Jims portfolio now holds a massive 180 properties and mainly consists of HMO style multi-lets. “I fell into HMOs accidentally” he stated. “I was a law lecturer in Walsall and saw a demand from my students. The only issue was that I had no money. I had thought about it for years prior but I knew that at the age of 40 if I didn’t move soon, I would be left behind” Laughed at by his colleagues, Jim took his first big risk and purchased his initial property for £35,000 in 1991 using credit cards. “I had no idea how it was going to work but I knew that It would. When I see an opportunity that I know I can make work, I take it!” he stated boldly. “My friends and family thought I had lost the plot. I can see why looking back, but I knew in my head that it was right”. Continuing to build his portfolio, his next 10 properties were also purchased on credit cards. “I had no idea how big my portfolio would become. The demand was there so I provided the supply. I have no interest in a flash lifestyle, I was brought up in Scotland with a Presbyterian background. It stopped me from squandering money, buying flash jewellery and living a life of luxury holidays”. As an avid speaker within the property circuit the HMO Daddy is known for his straight forward and honest approach. “I like to say it how it is. In today’s world people are so caught up in how other people perceive them they forget the importance of being themselves”. “If I was to give advice to an aspiring property investor I would suggest that understanding reciprocity and resourcefulness is key. When you set out to help other people, people want to help you back. It’s that simple. LANDLORD INVESTOR 36TH EDITION

We also have a tendency to overthink things. I know it isn’t easy, especially when you are new to the game but what we think will happen is usually far different from what does happen. If you want something enough, you can always make it materialise”.

Wolverhampton for only £1 down. “I have six step creative finance system that I teach and use. It’s a common misconception you need deep pockets to become a property investor. In fact, it’s one of the things I love most about what I do…

“Take the risk, stay calm and tackle one problem at a time. It gets easier.”

As a mentor, you get to help someone with next to no money move from a 9-5 job they detest to living a free life as a property professional. There is nothing like being part of that transition.

“Things have changed, when I say take the risk I don’t mean to take the same credit based approach that I did but I would suggest that if someone’s looking for success they need to teach themselves to become comfortable with risk and keep the end goal in mind” he states confidently. Jims empire was not built over night. “my wife left me early on in my property journey, she also took the cat! Often we have to make sacrifices to succeed but in saying that I do miss the cat”. He jested. “focusing on the past can be dangerous, it would have been easy to concentrate on what I had lost during the process but I instead used it as my motivation” he stated firmly. “Looking back, I now recognise that it was all necessary. I now get to enjoy living through my two passions in education as a property professional”. You used to be labelled as a slum landlord, is this still the case? “I always understood what it felt like to not have a home. To have nothing. I guess that’s why I always felt the need to offer affordable housing to those less fortunate than me”, he said smiling warmly. “I still house the less fortunate but demand for single rooms has dropped drastically and with that my strategy has shifted”. “It’s becoming increasingly difficult to become a HMO landlord. Lending has tightened and the introduction of new legislation has really put the landlords backs against the wall”. What advice would you give to someone looking to invest in HMOs? “If you’re looking to get into the HMO game then you need to study your tenant demographic. People want cheap and affordable but they also want homes. I’ve moved away from room only and now only operate with en-suite style studios. You have to consider the barriers for first time buyers in today’s market. The HMO market is still incredibly lucrative but only with the right strategy. I now only purchase and convert commercial buildings into residential regarding HMOs”. Jim recently acquired a 24 bed HMO in the centre of

Do you only invest in Multi-Lets? “The name HMO Daddy would suggest that I only deal in HMOs. This is far from the truth. Within my portfolio I have single lets, serviced accommodation, Multi-Lets and commercial units… I also deal source and have helped my employees set up rent to rents. You get to learn all aspects of property when you’ve been in the game for 27 years. I would never stop myself from a potential opportunity, as I mentioned before – if I see an opportunity I take it!” You wrote the DIY Eviction manual. What is your stance on eviction? Over my tenure I have evicted over 1000 tenants but I have never evicted a tenant that could not pay the rent. As landlords, we have a responsibility to take care of the people under our roofs, eviction should always be the last resort. In saying that, tenants do not always make it easy. Speaking on the battles facing landlords Jim’s views were clear. “I believe that landlords get a bad rap. It's a topsy-turvy world where the victims are portrayed as the villains. In buy-to-let, landlords are painted as the villains and the tenants are the good guys. I’m not making a gross generalisation, there are plenty of brilliant tenants out there. Some of mine fit into that category perfectly. Some of them have been with me for nearly 12 years and I take them Christmas cards and gifts during holidays. I’ve got to know them very well”. Jim on the panel at the National landlord’s investors show “I had a fantastic time, the panel was interesting with a lot of different views. The crowd was receptive and the energy was high, I had a good laugh. It still surprises me how many new questions I have asked to me!” He said smiling. “I still get the same buzz from when I first started public speaking about property”. For more information, you can contact Jim by emailing jim@hmodaddy.com or visiting www.hmodaddy.com 31

INSURANCE

STEVE COX ALAN BOSWELL GROUP

A guide to landlord insurance If you’re struggling to decipher the insurance jargon that comes with your buy-to-let property, you’re not alone, says Alan Boswell Group’s Steve Cox. Getting to grips with the terminology associated with landlord insurance is probably one of the most confusing parts of the process.

LANDLORD INVESTOR 36TH EDITION

INSURANCE

That’s why we’ve put together a handy guide to commonly used terms – so you can easily navigate your insurance options. Accidental damage An unintentional, one-off incident that causes damage to the property or its contents, such as a glass of red wine spilled on the carpet or a window smashed by next door’s football. Buildings insurance This protects the bricks and mortar (and usually fixtures, fittings and outbuildings) of your property. It covers the cost of repair or rebuild following such events as fire, flood, theft, malicious/accidental damage and subsidence. It’s not compulsory for landlords to have buildings insurance, but if you have a buy-to-let mortgage, your mortgage provider will normally state that you need to have adequate buildings insurance. Contents insurance A landlord contents insurance policy covers the movable items inside the property. If you’re renting your property unfurnished, then your contents are likely to be minimal. But don’t forget to consider carpets, curtains and white goods, if applicable. Condition of average This refers to the insured rebuild value of your property, which you declare at the outset of a buildings insurance policy. Essentially, it’s a warning that claim amounts are paid based on the insured value – and won’t be increased if you undervalued your property when arranging cover. For instance, if you gave an insured value that was 80% of the true value, you will only receive 80% of your claim. Employer’s liability insurance You may need to consider this if you employ anyone at your property, such as a cleaner or gardener. It will protect you against the cost of compensation if they sustain an injury or illness as a result of working for you. Exclusions These are things your insurance provider won’t accept claims for. They should be detailed in your policy documents. Good state of repair Most insurers expect your property to be kept in ‘a good state of repair’ for a policy to be valid. This means, for example, no rot, damp, unfinished building work, unsafe electrics or vermin infestations.

LANDLORD INVESTOR 36TH EDITION

Ground movement Movement of the ground under the property – either upwards (heave), downwards (subsidence) or horizontally/ downwards (landslip) – which can cause damage to the building. House in multiple occupation (HMO) This term refers to properties rented to three or more tenants who are not from one ‘household’ (e.g. a family), and share facilities such as a kitchen, bathroom and toilet. Certain standards must be met by law and you may need a licence from your local council. Specialist HMO insurance is available to provide landlords with cover for this type of rental arrangement. Index linking If your property is index-linked, its value under a buildings insurance policy will be automatically adjusted at each policy renewal, according to inflationary changes to rebuild costs. This helps to prevent your property being undervalued, and therefore underinsured. Indirect loss Damage or loss that occurs as a result of other damage or loss. This is not necessarily covered under standard insurance policy terms and conditions. Inspection Your insurance provider may need you to carry out regular checks to make sure everything is in order and to alert them to any potential claims. Key protection insurance This will cover the repair or replacement of your property’s locks and keys. Landlord home emergency cover This provides support in the event of a sudden emergency, such as a plumbing problem, broken window, vermin infestation, or complete failure of the heating. Landlord excess protection insurance With this add-on, you can be reimbursed for the excesses that you have to pay when making certain claims under a buildings or contents insurance policy. Landlord legal expenses insurance This provides cover in the event of property disputes such as eviction, repair and renovation disputes, health and safety prosecutions and tax investigations. Landlord liability insurance This covers claims made against you following an injury sustained or the death of an individual on your property. It also covers damage to another person’s

property or possessions as a result of an incident connected with your property. Landlord portfolio insurance This is designed for landlords with multiple rental properties, who want to insure them under a single policy. Loss Damage, whether full or partial, to an insured building or its insured contents. Loss of rent insurance This is often included in a landlord buildings insurance policy, and covers loss of income following a claim if your property is rendered uninhabitable. Malicious damage Damage carried out deliberately, such as vandalism. Policy excess This is the amount you must pay towards an insurance claim if you make one. Excesses are agreed at the outset of insurance policies. Most are compulsory, set by your insurance provider, but sometimes you’ll be given the option of choosing voluntary excess amounts. Rebuild value/cost This is the amount it would cost to rebuild your property to the same specification in the event of total destruction/loss. It usually differs to the market value of the property and can be worked out using a rebuild calculator, or through a professional survey. Rent guarantee insurance This covers income lost as a result of tenants defaulting on rental payments. Tenancy agreement A legally binding document stating all rental terms between the landlord and tenant(s). Most insurance providers require a formal rental agreement to be in place under your policy terms. Unoccupied property insurance This provides cover when your property is empty for an extended period of time (usually 30 consecutive days or more) – for example, during renovation work or in between lettings. Wear and tear The gradual decline in the condition of something as a result of its day-to-day use. This is not generally covered by insurance policies. If you want to know more about landlord insurance, visit www.alanboswell.com/investor2018 or call Steve Cox on 01603 218031

LICENSING UPDATE

ANDREW TURNER COMMERCIAL TRUST

More landlords in England set to be caught in HMO licensing net from October Updated Government rules are set to draw thousands more buy to let landlords into the HMO licensing net from 1st October 2018.

LANDLORD INVESTOR 36TH EDITION

LICENSING UPDATE

RLA Pearl recently predicted that as many as an additional 177,000 homes could now be subject to HMO licensing. Failure to comply with the new regulations could see landlords subjected to unlimited fines. In early March, the Government introduced the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 (2018/221) (LHMO 2018), which comes into effect from October 1st, 2018. Houses in Multiple Occupation (HMOs), are defined by the Government as “a property rented out by at least 3 people who are not from 1 ‘household’ (eg a family) but share facilities like the bathroom and kitchen. It’s sometimes called a ‘house share’.” At present, landlords operating an HMO, are subject to the Licensing of Houses in Multiple Occupation (Prescribed Descriptions) (England) Order 2006 (2006/371), which is applied in certain regions of England and Wales.

extending the scope of the mandatory licensing requirements relating to Houses in Multiple Occupation (HMOs), under section 55(3) of the Housing Act 2004 (HA 2004). Under the new rules, licensing will apply to HMOs occupied by five or more people, irrespective of the number of storeys.

There will be transitional provisions for HMOs that are already licensed under the selective licensing provisions, which will last for six months, but which will be subject to mandatory licensing from 1 October 2018.

Jorden Abbs, director of operations at Commercial Trust Limited commented:

According to RLA PEARL, 16% of landlords currently rent to people in HMOs and the projected 177,000 extra properties likely to be affected by the changes, will in probability affect thousands of landlords.

Under the present rules, the Government states:

Properties will require a mandatory licence if the following criteria applies:

You must have a licence if you’re renting out a large HMO. Your property is defined as a large HMO if all of the following apply:

• It is occupied by five or more persons;

• tenants share toilet, bathroom or kitchen facilities Even if your property is smaller and rented to fewer people, you may still need a licence depending on the area. Check with your council. At the moment, HMO licensing is limited to specific local authorities, so whether a landlord’s property is subject to one, depends on its location. Landlords can check whether their local council will require an HMO licence on a relevant property, by visiting the following page: www.gov.uk/house-in-multipleoccupation-licence The new rules However, the law amendment will change the above conditions,

LANDLORD INVESTOR 36TH EDITION

• the landlord must install and maintain smoke alarms; •

HMOs will become subject to mandatory licensing in England.

• it’s at least 3 storeys high

• the local council must be sent an updated gas safety certificate annually;

Additionally, from October, HMO licensing will apply to purpose-built flats where there are up to two flats in the block.

Local authorities set the cost of obtaining such a licence.

• it’s rented to 5 or more people who form more than 1 household

proper’ and must have no criminal record or history of breaching landlord laws of code of practice;

• is occupied by persons living in two or more separate households and meets; - the standard test under section 254(2) of the Act; – the self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats; or – the converted building test under section 254(4) of the Act. A licence is valid for five years and a separate licence must apply to each HMO property. Licence requirements In order to operate a licenced HMO, landlords must comply with a number of standards: • the house must be suitable for the number of occupants; • whoever manages the property – whether that is the landlord or an agent, must be considered ‘fit and

the landlord must provide safety certificates for all electrical appliances within the property when requested.

It is imperative that landlords check whether their property is classified as an HMO requiring a licence by October 1st, or they risk falling foul of the updated laws. This extension of the HMO laws will place further pressure on landlords and local authorities, but can also be viewed as a further initiative aimed at raising standards within the private rental sector. It does seem clear that there is a shift towards creating a greater degree of professionalism amongst landlords and this latest move may well provide further impetus. We have not, as yet, received any comment from lenders as to whether this will affect existing borrowers, although realistically we can expect a couple of potential outcomes. Lenders who currently offer mortgages to HMO’s that are not currently licensed, but will be under the new rules, can either change their criteria to accommodate these properties and continue to transact; or they will not and at renewal the borrower will have to look elsewhere. With the range of lenders we work with and the appeal of HMO lending, there will always be a choice of options available. As a specialist in the field we are constantly monitoring changes in criteria to ensure we recommend the most suitable product for our clients. I urge any HMO landlord in any doubt, to come and talk to us. Andrew Turner is Chief Executive of Commercial Trust Limited. www.commercialtrust.co.uk

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LETTINGS UPDATE

TRACEY HANBURY

Professionalisation of the lettings sector - what does this mean for landlords? 38

LANDLORD INVESTOR 36TH EDITION

LETTINGS UPDATE

Following the government’s recent announcement that it intends to professionalise the lettings sector with further regulation, The National Landlord Investment Show discusses what this could mean for the nation’s landlords.

It's fair to say most of us involved in the rental industry were a little surprised when the government announced on Easter Sunday that it intends to professionalise the letting agency sector by introducing a mandatory code of practice and qualification.

The idea of a professionalised lettings sector has been welcomed by most in the industry. ARLA Propertymark's David Cox described the proposals as 'a very sensible shift towards focusing on the root cause of the issues affecting the sector'.

Letting and management agents who fail to comply could be banned from trading while those who break the code will be prosecuted by a new independent regulator.

Meanwhile, Isobel Thomson of the National Approved Letting Scheme said they will 'eliminate poor practice and dishonesty'.

There will also be additional support for leaseholders fighting unfair fees and contracts as well as a requirement for all agents to undertake ongoing training and professional development. The government says the proposals are intended to stop renters and leaseholders from 'suffering at the hands of rogue agents', but how could they affect landlords and investors? A fully professional sector These proposals are considered by many to be one of the final steps towards a fully professional lettings sector. Alongside now having to abide by a code of conduct and obtain a qualification, letting agents are also required to be a member of a property redress scheme, comply with deposit protection legislation and fully disclose the fees they charge. It is now also not long until all agents will have to join a government-approved Client Money Protection (CMP) scheme. With a ban on letting agent fees and a cap on security and holding deposits soon to be introduced, the landscape for letting agents - and by association landlords - is becoming vastly more professional and regulated. It's clear that the majority of these new measures have been introduced to benefit renters, but there are also advantages for landlords.

LANDLORD INVESTOR 36TH EDITION

The end of ‘rogue’ agents? In its announcement, the government was keen to stress that most agents are 'thorough' and 'professional', but there have for many years been calls to rid the industry of a minority of 'rogues' who take advantage of tenants and landlords. One of the key purposes of these measures is to make it no longer possible for anyone to start a letting agency thanks to the introduction of a minimum standard in the form of a qualification. On top of this, at least one person in every organisation will be required to have a higher qualification. The mandatory code of conduct, which will be enforced by a new regulator, will make it easier for prosecutions to be handed to agents that step out of line. It's hoped that this industry-wide professionalisation will make it easier to identify rogues and discourage any criminal operators from acting as a letting agent. Combined with the introduction of mandatory CMP scheme membership, hopefully the days of a minority of agents running off with landlords' money could be a thing of the past. Higher levels of service One potentially huge benefit of these industry changes for landlords could be an increase in levels of service from all letting agents.

If there is a level playing field between agents, as well as a minimum standard of service, competing agents will have to do more to stand out in a crowded market. What’s more, bearing in mind that some agents will be increasing landlord management fees to combat the effects of the ban on up-front fees, these firms will have no option but to increase their service offering to landlords to remain competitive. A positive boost for the industry A more professional sector will also provide wider reputational benefits for everyone associated with the industry. If the minority of rogue agents ceases to exist, this could have a positive impact on the public perception of the private rented sector (PRS). An improved image for the industry combined with higher professional standards could lead to fewer one size fits all negative media coverage and more acknowledgement of the great work that many landlords and agents do for their tenants. The PRS is the UK’s fastest growing housing tenure which provides ideal living solutions for millions of people across the country and wider recognition of this is something the whole industry should be working together to achieve. You can find out all you need to know about the government's plans to make letting agents more professional at our upcoming National Landlord Investment Midlands Show, taking place on Wednesday 16th May at Aston Villa Football Club between 9.30 and 15.30. For more information, visit: www.landlordinvestmentshow.co.uk/ midlandsshow. Tracey Hanbury

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