LANDLORD INVESTOR
WRITTEN BY INDUSTRY EXPERTS COVERING ALL ASPECTS OF BUY-TO-LET
LANDLORD | PROPERTY | INVESTMENT
45TH EDITION | 2019
Andrew Neil returns to Olympia London TURN TO PAGE 8
ALSO IN THIS ISSUE... Are investors expanding their portfolios in 2019?
Score top marks for protecting students’ tenancy deposits
Top cities for millennial renters revealed
HMRC to continue tax crackdown on landlords
The best strategy for 2019 (Part III)
T T he Po he Ti As M m f Tr st, P ail es eat ib r O , T ur es op nl he ed , p er ine T in lu ty , H ele : s m 11 u g an 8, P ffin rap y ro gt h, m p o or er n e. ty ..
LANDLORD INVESTMENT SHOW RETURNS 13 JUNE 2019
The UK’s leading landlord and property investment exhibition. Our shows are 100% committed to the UK landlord and investor market. Key Features of the Show: The National Landlord Investment Show connects 1000s of property professionals at venues throughout the country and is the UK’s leading buy-to-let event. The shows give landlords and investors the chance to connect with suppliers, network and increase their knowledge.
+ The return of Andrew Neil, chairing the Future of the UK Housing Market Debate + Women In Property Debate + UK Property Development Hot Spots Debate + 100 plus exhibitors + 45 plus seminars + Networking opportunities
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I'm thrilled to welcome you to the 45 Edition of Landlord Investor Magazine. th
IN THIS ISSUE...
4 SHOW UPDATE Birmingham Show preview
8 SHOW UPDATE Blossom by blossom spring begins and brick by brick the private rented sector prepares for change. Although, as the rain bounces off the patio and the thermostat stays firmly on 22 degrees I'm wondering what's happening this year? It’s not a bad metaphor for all-sorts really and I'm not even going to mention the B word. Hopefully some solace can be found in this issue of Landlord Investor Magazine. Simon Zutshi brings us part III of his series The best strategy for 2019. Paul Mahoney discusses Leverage: the differentiating factor between property and other investment options. Sandy Bastin explains how you can Score top marks for protecting students’ tenancy deposits, Peter Littlewood has his usual round-up to keep you on the right side of the regs in Market Update, and we have an interview with Kam Dovedi, founder of Premier Property. In my PRS update I'll be looking at how the HMRC continue a tax crackdown on landlords. I'll also be asking the question are investors expanding their portfolios in 2019; before reviewing the top cities favoured by millennial renters. On the Landlord Investment Show trail, we're just preparing for Birmingham on May 15th. As always we have a superb agenda of speakers, a packed roster of exhibitors, and the Morning Networking event hosted by Saj Hussain should be a cracker. More info on page 4. If you're reading this at the Birmingham show then thank you for coming. Returning to Olympia London on June 13th we're thrilled to confirm that: Andrew Neil will be chairing the The Future of the UK Housing Market Debate, Sara Damergi will be chairing The Women in Property Seminar, and Paul Mahoney will be chairing the UK Development Hot-Spot Debate. See page 8. For a full list of speakers and exhibitors at both events please visit our website www.landlordinvestmentshow.co.uk - and don't forget to register for free admission. I hope you enjoy this issue.
Andrew Neil returns to Olympia London
11 INVESTMENT The best strategy for 2019 (Part III)
14 INVESTMENT Leverage: the differentiating factor between property and other investment options
16 TENANCY AND DEPOSITS Score top marks for protecting students’ tenancy deposits
18 PRS UPDATE HMRC to continue tax crackdown on landlords
22 PRS UPDATE Are investors expanding their portfolios in 2019?
24
Tracey Hanbury
PRS UPDATE Top cities for millennial renters revealed
LANDLORD INVESTOR MAGAZINE Editor Tracey Hanbury
26
Editorial Contributors
Design Marc Riley
Paul Mahoney Peter Littlewood Simon Zutshi Sandy Bastin Tracey Hanbury
Advertising Beverley Meliniotis Marketing Holly Maslin Ben Michaelis
MARKET UPDATE The latest industry news
30 PROPTECH NEWS
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Property experts launch innovative news and investment platform
34 INDUSTRY SPOTLIGHT Interview with Premier Property founder, Kam Dovedi
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LANDLORD INVESTOR 45TH EDITION
SHOW UPDATE
Landlord Investment Show lands at Aston Villa FC 4
LANDLORD INVESTOR 45TH EDITION
SHOW UPDATE
Nat iona l L a ndlord Invest ment Show A s t o n V i l l a Fo o t b a l l C l u b , W i t t o n L a n e , Birmingha m B6 6HE 15 M a y 2 019
M O R N I N G N E T WO R K I N G E V E N T HOSTED BY SA J H U SSAI N - 9 am to 1 0am . This networking event is held prior to each National Landlord Investment Show and is designed to give you an opportunity to meet and discuss local issues, share best practice and experiences, with landlords, investors and property professionals. It’s a great way to start the day and meet new people. If you are in attendance at the morning property networking event you will receive a
complimentary copy of our Landlord Investor Magazine. Your Host Saj Hussain is a property entrepreneur and is well known as The Property Joint Venture Expert and The HMO Expert. In the last 12 years, he has built a multi-million pound property portfolio and he now uses his time, skills and experience to find great investment opportunities
and partners-up with cash rich investors to create a fantastic return on investment. In 2013, he founded Very Nice Homes, a specialist HMO Lettings and Management agency who currently manage 500+ rooms across Birmingham. Saj brings property people together every month at his Property Peer MeetUp which is fast becoming Birmingham's most popular Property Networking event!
SEMINAR ROOM 1
10.30am
11.10am
11.50am
12.20pm
Buy to Let Property Investment Fundamentals, Mistakes and Changes Paul Mahoney, Nova Financial Group
Investing in 2019? In property, it's easy to make big mistakes. It's also easy to avoid them Sim Sekhon, Legal for Landlords
Levelling the Tax Playing Field for Landlords Sean Hughes, Comprehensive Tax Planning
Funding your property journey Sarah Woolf, Shawbrook Bank
1.00pm
1.40pm
2.20pm
The changing face of BTL Joseph Aston, Vantage Finance
Speaker TBC
Purrfect Landlords - How you could maximise your property investment through considering tenants with cats Jacqui Cuff, Cats Protection
LANDLORD INVESTOR 45TH EDITION
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SHOW UPDATE
SEMINAR ROOM 2
10.30am
11.10am
11.50am
12.20pm
2019 - Opportunities and threats to you as a property investor Simon Zutshi - property investors network
BTL vs Commercial Funding Gavin Elley - Head of Sales, Mortgages for Business
Hotspots or Notspots: Investment Choices & Consequences Richard Bowser, Property Investor News
Property Standards and Enforcement Alex Nolan, Residential Landlords Association (RLA)
1.00pm
1.40pm
2.20pm
The Definitive Tenant Referencing Masterclass Marie Parris, George Ellis Property Services
How to retire through property Paul Mahoney, Nova Financial Group
Speaker TBC
SEMINAR ROOM 3
10.30am
11.10am
11.50am
12.20pm
Do's-and-Don'ts-of-PropertyMaintenance that will help all Landlords Pedro Singh, RTS247
How to Make Property Work for You John Howard, John Howard Property Consultants
Deposits made easy John King, Tenancy Deposit Scheme (TDS)
Rapid Eviction of Tenants from Residential Property David Savery & Irvine Pickett, The Sheriffs Office
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1.00pm
1.40pm
2.20pm
How to invest your pension in property Simon King, The Landlord’s Pension
Why HMOs are a waste of time and money... unless you know how to do them properly Saj Hussain, Saj Hussain Wealth Creation
Speaker TBC
LANDLORD INVESTOR 45TH EDITION
Short Term & Refurbishment
Short-term finance. Long-term relationships.
Whether you are looking to refurbish a property for a quick turnaround, or simply replace current development finance awaiting sale, we can help you maximise returns in a time frame to suit across light and heavy refurbishment projects. This award-winning range can also give you access to 100% of the refurbishment costs up to 85% LTV, with funds available on day one to help you realise your property ambitions.
Contact us today
0330 123 4522 salesdesk@shawbrook.co.uk shawbrook.co.uk
ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. A BROKER FEE MAY APPLY
SHOW UPDATE
Andrew Neil returns to Olympia London 8
LANDLORD INVESTOR 45TH EDITION
SHOW UPDATE
Nat iona l L a ndlord Invest ment Show Oly mpia L ondon, Ha mmersmit h Road, K e n s i n g t o n , L o n d o n W 14 8 U X 13 Ju n e 2 019 CO-SPONSOR:
MAIN SPONSORS:
Due to the massive success of our Government Panel Debate at Olympia London on 21st March 2019 we are delighted to announce the return of the panel which will contain a variety of Industry Experts. The debate will be the "Future of the UK Housing Market", chaired by Andrew Neil. Again this is an
open panel debate where Landlords can voice their opinions on subjects which include Brexit, Universal Credit, Social Housing, Finance, Landlord Tax, and more. Entrance to this fantastic event is on a first come first seated basis. If you are interested in attending the expert panel, you'll be able to indicate your
interest when you register. In addition to the debate meet 100+ exhibitors, choose to attend 45+ seminars which are very popular. Please arrive before each seminar starts to avoid disappointment in getting a seat. All seminars are complimentary, including the expert panel session.
THE FUTURE OF THE UK HOUSING MARKET CHAIRED BY ANDREW NEIL AU D I TO R I U M , 1 0 a m t o 1 1 .1 5 a m
SPONSORED BY:
This expert panel will take place in the Auditorium Theatre which seats over 450 delegates, register now for FREE admission. Seats for this event are allocated on a first-come, first-served basis: register now and get to the venue early to avoid disappointment. Please note doors to the show open at 8.30am.
For more information and to register for FREE admission, please visit www.landlordinvestmentshow.co.uk
LANDLORD INVESTOR 45TH EDITION
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SHOW UPDATE
WO M E N I N P R O P E R T Y S E M I N A R C H A I R E D B Y S A R A DA M E R G I AU D I TO R I U M , 1 . 3 0 p m t o 2 . 3 0 p m
S P O N SO R ED BY:
This seminar will attract female UK landlords, investors and developers who can share their stories, discuss their highs/lows and inspire the female property community. It is an open debate where likeminded women can get together and engage in open discussion. Panel members to be announced, visit www.landlordinvestmentshow.co.uk and join our mailing list to receive alerts and updates.
U K D E V E LO P M E N T H OT- S P OT D E B AT E C H A I R E D B Y PAU L M A H O N E Y AU D I TO R I U M , 1 5 . 3 0 p m - 1 6 . 3 0 p m
Many UK investors are still looking for great opportunities to grow their portfolio in the myriad booming cities across the UK. This debate will showcase opportunities and highlight developments within the private rented sector which offer the best possible returns. Expert panel speakers to be announced shortly. Attendance at this panel debate is free and on a first-come, first-seated basis so get to the auditorium early to avoid disappointment.
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LANDLORD INVESTOR 45TH EDITION
INVESTMENT
SIMON ZUTSHI
The best strategy for 2019 (Part III)
LANDLORD INVESTOR 45TH EDITION
11
INVESTMENT
In my last two Landlord Investor articles, I shared why I believe Purchase Lease Options (PLOs) are one of the best strategies (or tools) to use in 2019. In this final part of the article, I am going to explain why PLOs are perfect to use if you want to source property deals to sell to other investors for a fee.
Before I get into too much detail, just in case you did not see Part 1 & 2, of this 3-part article, let me quickly explain what we mean by PLOs and how they can benefit everyone involved. A PLO is where you enter into a legally binding agreement with a property owner, whereby you have the right (but not the obligation) to purchase their property, for a fixed price agreed upfront (The Option Price), within a certain time period (The Option Period), and in the meantime you pay them a monthly payment (Monthly Option Fee), for which you are entitled to use the property. There is also a consideration (Upfront Option fee) required to make this a legally binding agreement. This upfront fee can be anything from as little as £1, but can also be several thousand pounds in some circumstances. During the Option Period you look after the property as if it were your own, and take care of all of the maintenance. For example, you might have the right to buy a property, for the current market value of £200k, anytime within the next 5 years. In the meantime, you pay the owner a guaranteed monthly rent and take care of all the bills, repairs and maintenance. You could then rent this property out in a way to generate a much higher income, such as a HMO or Serviced Accommodation and you make a profit on the difference between the rent you pay to the owner and the rent you achieve, less all the bills. This is cash flow for a property that you don’t own.
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Make money selling PLOs PLOs are a very powerful tool which you can use to control property. But what do you do, if you find a landlord who is happy to enter into a PLO, but the property is either, out of your area, or will not work for the property investing strategy that you are pursuing? Well, one of the best things about PLO’s is that they are assignable. That means that you can pass the benefit of the PLO onto a third party, for a fee. Therefore you can package it up to make £3k to £5k for a property deal that you don’t want. A very popular way of making money, for people who are new to property investing, is to source property deals for other investors, and sell these deals for a fee. This can be a great way to create the deposit money to buy your own investment property. When sourcing property to sell to other investors, it is really important to secure the deal, so that no one else can purchase it. The best way to secure property when sourcing deals is with a PLO. How much is a PLO worth? A good PLO can be worth a lot of money and sell for more than a normal sourced property deal. Why? Well remember the person buying the sourced deal will not have to get a mortgage, or put in a large deposit if it is a PLO. Thus the return on investment they get could be much higher than a property which they have to purchase.
The value of a PLO will depend on three factors. 1) The amount of cash flow generated from the PLO each month, 2) the length of the option period and 3) The equity in the property from Day 1 (if any). Let’s consider two examples. Property A which is worth £200k in the current market. Assume you have an option to buy this property for £190k anytime in the next 3 years. The monthly cash flow is £400 profit per month. How much would you pay for this PLO if it was in your investing area? What is it worth? I would say that the value is as follows: The monthly cash flow multiplied by the number of months you have the PLO for, plus any equity on day 1. Therefore, the current value would be ((£400 x 36) + £10,000) = £24,000. This does not include any future capital growth during the options period, which may, or may not happen. Property B is currently worth £150k. Imagine that you have the right to purchase this property for £155k anytime in the next 7 years. The cash flow is £500 per month. How much would you pay for this PLO? How much is it worth? I would calculate the current value as follows: The monthly cash flow multiplied by the number of months, plus any equity on day 1. Therefore, the value would be ((£500 x 84) - £5,000) = £37,000. Note that the option price is £5000 more than the current value, and so we have taken £5k off the current
LANDLORD INVESTOR 45TH EDITION
INVESTMENT
value. However, in 7 year’s time there is a good chance that the value of this property could be significantly higher than the current value of £150k today. I have often shared the above example at live events and asked the audience what they would pay for the PLO on Property B. The response from the audience is fascinating. Some people would only pay a few thousand pounds for this PLO. Most people would pay up to £6k for this PLO, as that is the cash flow in the first year. Whenever, I do a PLO, I like to get all of the money I have invested back in the first year, in other words I want a 100% Return On Investment (ROI). But some people would have been prepared to pay up to £20k for the PLO on property B. Why? Because they believe the value would increase significantly over 7 years. They also know that they would still get over a 100% ROI over the 7 year option period, even if prices did not go up. Just goes to show different people attribute different value to property deals. Don’t assume everyone is the same or like you. This can make you money This is a really important point that I want you to understand, because you can make a lot of money from it. Most people have no idea of what PLOs are worth. You could find someone who has found this PLO on Property B, but for whatever reason, they don’t want to do it themselves, and so they may be very happy to sell it for say £5k. You then find another investor who
LANDLORD INVESTOR 45TH EDITION
understands the value of this PLO and would pay £15k for it. You can sit in the middle and make £10k by putting these two investors together. If you were to sell just one PLO per month, how would that change your financial position?
A very popular way of making money, for people who are new to property investing, is to source property deals for other investors, and sell these deals for a fee. What about PLOs where there is no cash flow or any equity in the deal? Who would buy them? Well most investors probably would not want to buy that deal but you could always sell them on to tenant buyers. These are people who would love to get their foot on the property ladder, but for whatever reason can’t get a mortgage right now, but would be able to get a mortgage in the future. They can move into the property with
the right to buy in the future at a fixed price. In the meantime, they pay the mortgage for the owner and take care of the property as if it was theirs. They would pay an upfront option fee, of say £5k, which would come to you for facilitating the deal. This is another great way to monetise PLOs that most investors are not aware of. I do hope that these articles over the last three months, have helped explain why I believe that PLO’s are such a powerful strategy and perfect for the current market conditions, where we are seeing many landlords thinking about retiring early, due to changes such as the introduction of Section 24, which means landlords with property in their own name, who are higher rate tax payers, will be paying more tax. There has never been a better time to use this PLO strategy, and yet it is a massively misunderstood strategy, that most investors really have no clue about how to use properly. That is why I am writing a new book all about PLOs which should be available in the next few months. If you would like to be one of the first people to be notified when this book is available and also benefit from some free bonus training for people who buy the book when it is first released, then you can register your interest here: www. NoMortgageRequiredBook.co.uk Invest with knowledge, invest with skill. Simon Zutshi Author of Property Magic Founder of property investors network
13
INVESTMENT
PAUL MAHONEY NOVA FINANCIAL GROUP
Leverage...
...the differentiating
factor between property and other investment options! 14
LANDLORD INVESTOR 45TH EDITION
INVESTMENT
When it comes to making an investment, you must decide whether it will be solely a cash investment or if you plan to leverage your cash to make a larger investment.
Taking on debt to invest can be higher risk, but not taking on any debt can put you at risk of not meeting your goals and under-utilising your money. Unfortunately, most people struggle to save sufficient funds over their working life for retirement, so the prudent use of investment debt is, in many cases, essential to reach their goals.
Property investment enables you to borrow at a low interest rate of 2% to 3% at the time of writing, for twenty years or more, with no ability for recall and at loan to value rates of 75% or greater. Low risk, low cost, and hence even an average return can actually result in a greater overall return on the cash invested, given the multiplying factors that debt provides.
What investments should debt be used for?
For example, if you invest £25,000 in a £100,000 property, then with just a 5% increase in value, which is less than the historical average, you will get a 20% return on your £25,000 of £5,000. Assumes that your rental income is sufficient to cover and exceed your interest repayments and costs, which they usually are depending on location, then you can also add net income to your overall return. This is the beauty of leveraged property. Fairly average returns on the overall property value can result in great returns on your cash applied. Consider the fact that you can re-mortgage properties every few years to release the equity from capital growth and invest further as well as, pay down debt with the income, and you have a strong strategy for building an investable asset base over the long term.
If you’re investing in interest bearing investments, then in most cases borrowing doesn’t make any sense. This is because the cost of borrowing will outweigh the return and defeat the purpose. When investing in shares, you can borrow to invest with what is called a margin loan. Margin loans work on the basis that your lending can only be a certain percentage of your portfolio value. The risk here is that if the value of your shares falls, the loan percentage increases. You can then be forced to sell at the worst time, or add more money in a falling market. Interest rates tend to be high at 6% or more at the time of writing in 2018, with the maximum loan to values of around 60%. Borrowing to invest in shares is high risk and high cost, meaning the return you need to generate must be higher to make it worthwhile.
LANDLORD INVESTOR 45TH EDITION
Margin loans work on the basis that your lending can only be a certain percentage of your portfolio value.
If you have any questions or would like assistance with property selection, strategy or finance contact Nova Financial Group on 0203 8000 600, www.nova.financial or info@ nova.financial
15
TENANCY AND DEPOSITS
SANDY BASTIN TENANCY DEPOSIT SCHEME
Score top marks for protecting students’ tenancy deposits
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LANDLORD INVESTOR 45TH EDITION
TENANCY AND DEPOSITS
Tenancy Deposit Scheme’s (TDS) Head of Adjudication Services, Sandy Bastin, provides a crash course in student tenancy deposit protection.
The student rental market presents significant opportunities for landlords and letting agents, but student tenancies pose challenges that are often less common in other areas of the sector. When managing properties with students or multiple sharers, it is not uncommon to be presented with a scenario where one tenant wishes to move out, and to be replaced by a new tenant. Leaving the tenants to sort it out among themselves is never wise – you may not know who is ending up in the property – and just because the tenancy deposit was originally protected does not mean that protection ‘rolls over’ when the tenants change. It’s important to remember that a tenancy agreement will still be in force, so if the tenant who wishes to leave doesn’t find a replacement, they cannot simply up-root and leave. If they do, where there is a joint tenancy, the housemates left behind will be jointly and severally liable for the full rent. Where tenants do change, it’s not practical to insist that all parties vacate, have a check-out report conducted and take a new deposit for an entirely new tenancy agreement. Unlike students, landlords don’t have three or four years to get to grips with their subject matter, so here’s a crash course in renting to students and managing student change-overs: Explain the release clause Make it clear to the person leaving the tenancy early that they can only be released from their obligations once the replacement tenant has signed a tenancy agreement. Collect the new deposit Collect the appropriate share of the tenancy deposit from the replacement
LANDLORD INVESTOR 45TH EDITION
tenant, once references have been agreed and all the other steps you would usually take before agreeing to a tenancy have been completed. The tenancy deposit collected should be the amount detailed in the tenancy agreement, or where it is not specifically stated, the amount proportionate to the number of tenants. For example, if there were four tenants, the agent would collect 25% of the deposit amount held from the incoming tenant. If this is not the case it must be clearly documented.
giving the tenants security of tenure for a further six months. Add an individually negotiated clause to the tenancy agreement to bind all tenants to the inventory from the start of the initial lease period. Make sure this is included as a special condition which the parties should sign. You will need to make it very clear that you will be assessing the incoming tenant’s deposit as per the original inventory. Update the rent account You should ensure the rent account is also brought up to date before the swap takes place. Leaving it short before the change-over can have a knock-on effect on the transition of any tenancy deposits. Pay up
Don’t forget the TDS database! It is vital that midtenancy changes are reflected on the TDS Tenancy Database. Allow an initial inspection Explain that the new tenant will be liable as per the original inventory, so it is important they are given the opportunity to review and agree to it – and also make sure that the property they are moving in to isn’t subject to damages already. It’s best to document this in writing to avoid disagreement further down the line. Draw up a new tenancy agreement The tenants currently in occupation of the property and the incoming tenant(s) need to sign the new tenancy agreement. However, do be aware that by creating a new tenancy, you will be
Pay the share of the tenancy deposit to the outgoing tenant once agreed, and in exchange, obtain written consent that they have received their share and will make no further claim to the deposit for the new tenancy. Let us know Don’t forget the TDS database! It is vital that mid-tenancy changes are reflected on the TDS Tenancy Database. Just because you may have registered the first tenancy deposit does not automatically carry protection over to the second tenancy agreement, as some of the tenant names will be different. This could mean that effectively, the deposit for the second tenancy is unprotected – and potentially leaves you vulnerable to court action from your tenants. Once you’ve updated the TDS Database, remember to serve your tenants with the new Prescribed Information. By following these simple steps, your student tenancies will finish top of the class!
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PRS UPDATE
TRACEY HANBURY
HMRC to continue tax crackdown on landlords
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LANDLORD INVESTOR 45TH EDITION
PRS UPDATE
Despite relatively poor results, HMRC’s Let Property Campaign – first launched in 2013 – is set to continue, so what do landlords need to know?
Since 2013, HMRC has been running the Let Property Campaign, with the aim of recouping millions of pounds of unpaid landlord tax. The voluntary campaign allows landlords who think they may have underpaid their tax bill to come forward and repay what they owe on favourable terms.
However, a recent Freedom of Information request by Saffery Champness has shown that the campaign has failed to recoup anywhere near that amount. The accountancy firm found that between 2013 and 2018, approximately £85 million (17%) was recovered from just 35,099 (2%) individuals.
This is opposed to HMRC finding out independently and subsequently launching an investigation which could culminate in a substantial fine or custodial sentence.
The tax year 2015-16 was the most successful with the highest number of disclosures (10,040) and taxpayer offers (9,038), as well as the highest yield recovered (£25.2 million).
The campaign is aimed at landlords with multiple or single property portfolios, accidental landlords, those with holiday lettings and those letting a room through the Rent a Room scheme. It also targets those who live abroad or intend to live abroad for more than six months and let a UK property.
The most common reasons for disclosure were a failure to notify HMRC and making a mistake having taken reasonable care. A much smaller proportion of landlords have disclosed not taking reasonable care or deliberately misleading HMRC.
How does Let Property work? If landlords have undisclosed income, they're encouraged to contact HMRC through the Let Property Campaign immediately and then have 90 days to work out and pay what they owe. Once a landlord notifies HMRC that they want to take part, they are required to disclose any income, tax, gains and duties they've not previously told the authorities about. They must then make a formal offer to HMRC and pay what they owe. The campaign offers landlords the 'best possible terms' to get their tax affairs in order and there are reduced penalties available for those who provide the most accurate information. Landlords will pay a penalty depending on why they've failed to disclose their income. Those that have deliberately withheld information will pay a higher penalty than those who have simply made a mistake. Has the campaign been a success? When it was initially launched, Let Property was intending to recoup an estimated £500 million of underpaid tax by approximately 1.5 million landlords between 2009 and 2019.
LANDLORD INVESTOR 45TH EDITION
Landlords that feel they may have underpaid tax are advised to contact HMRC through the Let Property Campaign. What do landlords need to do? Landlords that feel they may have underpaid tax are advised to contact HMRC through the Let Property Campaign immediately. Despite its limited success, the campaign remains open and HMRC will be keen to recover as much unpaid landlord tax as possible. "The tax system is becoming more complex and the burden is shifting further towards the taxpayer. This inevitably means individual mistakes and misunderstanding can happen," says James Hender, head of private wealth at Saffery Champness. "HMRC have been tightening the net on non-compliance and there are
increasingly few opportunities for taxpayers to mitigate the risk of an investigation." "This campaign is one of the few that remains open but, with the Common Reporting Standard online and the Failure to Correct penalty system in place, it’s likely to remain that way for only so long," he says. "There are clearly many more landlords who have additional tax to pay, but have yet to come forward. These people would be well advised to contact the taxman sooner rather than later." An uncertain tax future for landlords? Following a range of tax changes targeting the buy-to-let market in recent years, including the reduction of mortgage interest tax relief and the 3% stamp duty surcharge, it remains unclear whether the government intends to make further changes to the landlord tax system. “We are picking up signals from the Treasury that some of the biggest money spinners for the last century, including tobacco, alcohol and fuel duty, are due to decline due to changing lifestyle habits,” says Lucy Brennan, partner at Saffery Champness. “There seems to be a pattern emerging of HMRC targeting other sources of tax revenues, with property being an asset that they could look to levy additional taxes on.” “You only need to look at countries such as France and the US to see that, in comparison, UK property is a relatively lightly taxed asset.” She says, however, that any new taxes are likely to provoke further backlash from the rental industry. If you are concerned or have any queries about landlord tax, you are advised to seek independent advice from an industry expert. You can find out more about the Let Property campaign at www.gov.uk. Tracey Hanbury
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Build your property portfolio. With property finance built around you. Our Real Estate Managers know about property finance. And they always put in the groundwork to cement a strong relationship. They’re hands on and spend time with their clients so they can understand their portfolio and help them build it. To find out more about how our Real Estate Managers can support you, visit: barclays.co.uk/real-estate Let’s go forward
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ADVERTORIAL FEATURE
MATT WEAVER HEAD OF BUSINESS BANKING REAL ESTATE, BARCLAYS UK
Why we’re trusted partners to our real estate clients Meeting the changing needs of our customers and the markets they operate is one of the important goals of our Real Estate team. We’ve had property specialists for more than a decade, but in 2017 we realigned the team with a dedicated focus on working with real estate SMEs with lending requirements of up to £5 million, supporting clients across the residential and commercial sectors. The team has since expanded with more than 60 dedicated relationship managers operating across the UK. The growth has partly been down to our expanding product offering, like our new enhanced buy-to-let proposition. Prompted by recent legislation changes that have seen more property clients operating as limited companies, this is just one example of how we’re changing with the market.
What gives me a huge sense of pride is the client survey feedback we receive that shows we’re seen as trusted partners. It's probably why our customer base has already grown to over 7,000 customers across the UK, and why yet further growth is projected, which is very encouraging.
Our local knowledge of property trends is key to helping our clients seize opportunities.
available to portfolio landlords with four or more properties, our Limited Company buy-to-let offer now extends to those with 1-3 properties and is aimed at those who want to borrow up to £1m spread across three properties through a limited company or an LLP. We’re anticipating a high volume of enquiries from brokers about this as minimum lending starts from just £50,000, and we’ll be able to consider company owners’ personal income as well as rental income in the lending decision. This offering ensures we can meet the demand of investors who would have previously borrowed in a personal capacity but have now incorporated. In a period of uncertainty, it’s more important than ever for clients to be able to find the insight and help to move their businesses forward, and that's why we have also been delivering a number of clinics on business resilience and opportunities that come their way. Barclays will work closely with our clients to help finance those opportunities, and to continue to support both new and existing clients in whatever way we can.
Trusted partners with local knowledge
Opportunities in a changing market
One constant is our relationship-based way of working with clients. Each will have their own dedicated Real Estate Manager, with local knowledge, who will take the time to understand the challenges their business faces and provide tailored property finance solutions. In addition, there’s the benefit of being able to access the wider Barclays network of expertise. We know our customers are busy people, so we also employ new technology to help – but personal relationships that help to guide clients and provide clarity will always remain paramount.
Our local knowledge of property trends is key to helping our clients seize opportunities. In the residential investment sector, we’re seeing a softening of the housing markets overall, but there are wide variations across the regions and that’s why its so important we have a relationship team based across the UK who understand their own local market.
I'm delighted that we have supported numerous clients with residential development and residential and commercial investment in 2018, and going into 2019 we fully expect this trend to continue despite the current economic headwinds. There are many opportunities that exist across the real estate sector and we’re working hard with our clients to understand their objectives and help make these a reality.
As I mentioned, we’re really excited to have launched a new proposition to help property investors. Previously only
To find out more about our Real Estate team, visit barclays.co.uk/real-estate
LANDLORD INVESTOR 45TH EDITION
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PRS UPDATE
TRACEY HANBURY
Are investors expanding their portfolios in 2019?
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LANDLORD INVESTOR 45TH EDITION
PRS UPDATE
As a range of factors continue to impact the rental market, we take a closer look at the figures to see whether landlords are buying or selling investment properties this year.
The majority of landlords would agree that rental property market conditions are particularly unusual this year. Alongside the unprecedented Brexit situation causing uncertainty, landlords are also having to contend with a range of tax and regulatory changes. And all of this is taking place at a time when more people are renting privately than ever before. This complicated combination of circumstances leads naturally to numerous questions, one of which being: is now a good time to expand a rental property portfolio?
Research shows that the average agency branch was marketing nine buy-to-let properties, compared to a national average of four. What's more, late last year, 78% of ARLA Propertymark members predicted that the number of landlords operating in the rental sector would dip in 2019. The letting agents' prediction seems to be ringing true in some quarters, with a significant number of landlords deciding they've had enough, but are some investors taking the opposite approach?
It’s time to figure out what other landlords think and what’s really going on in the market… Some landlords are exiting the buy-to-let sector Due to the challenges outlined above, industry commentators have been predicting for some time now that many landlords will be forced to sell up as letting property becomes less financially viable. In recent months, there have been various studies and surveys to suggest that landlords are selling properties. ARLA Propertymark said at the end of March that landlords have been increasing rents as an exodus of investors continues. The trade association reported that very few new properties came to the market in February as existing landlords look to reduce activity and new landlords are discouraged from entering the market. "We warned this would happen, as landlords continue exiting the market and increasing legislation deters new ones from entering," said David Cox, ARLA Propertymark chief executive. "Unless the government commits to making the prospect of investing in the PRS more attractive, and introduces measures to increase supply, tenants will only continue to feel the burn." The association went further this month, reporting that the number of landlords offloading properties in London in February was 125% higher than the national average.
LANDLORD INVESTOR 45TH EDITION
Despite the doom and gloom in some sections of the market, there are many landlords out there who are keen to expand their portfolios this year.
Optimistic landlords still looking to expand Despite the doom and gloom in some sections of the market, there are many landlords out there who are keen to expand their portfolios this year, rather than selling up or even just sitting tight. A recent survey of more than 500 landlords, carried out by Experience Invest, found that 39% of respondents are planning on expanding their portfolios this year, compared to 11% who intend to reduce theirs.
The study shows that landlords in London, Manchester, Liverpool and Nottingham are most keen to acquire more properties, while those in Sheffield, Edinburgh and Glasgow are less enthusiastic. Many of those surveyed said they were considering investing in houses instead of flats, while new build properties and student accommodation were also popular choices. It's likely that these optimistic investors will be looking to capitalise on those who have lost faith in the buy-to-let sector. For landlords looking to expand their portfolios, there will be no better target than existing rental properties. These homes are tried and tested in the rental market and may also be available at a lower price if owners are looking for a speedy departure from the sector. The pros and cons of expanding or reducing a portfolio As we can see, the figures paint various pictures as to whether landlords are looking to buy or sell this year. It is therefore fair to deduce that the decision to expand or reduce activity will rely on a landlord’s individual circumstances. There’s no denying that market conditions are tough as the cost of letting property continues to rise, with more obstacles on the horizon in the form of the tenant fees ban and further reductions to buy-to-let mortgage interest tax relief. However, Brexit uncertainty has slowed the sales market so offloading a property may take longer than usual. And with no sign of rising tenant demand slowing anytime soon, there are still plenty of opportunities for landlords to generate solid returns if they have the right mortgage deal in place and invest in the best areas. Whatever you decide to do this year, it’s important that you take some time to assess your options, do your research and seek advice from a range of property experts to give you the best possible snapshot of the current rental market. Tracey Hanbury
23
PRS UPDATE
TRACEY HANBURY
IN V ESTMEN T HOTSPOTS
Top cities for millennial renters revealed
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LANDLORD INVESTOR 45TH EDITION
PRS UPDATE
With tax and regulatory changes putting pressure on landlords, new research has revealed the thriving, millennial-heavy cities where investment can still bring great rewards.
Landlords have faced a host of changes and challenges in recent years, with more still to come in the future, but there is strong evidence to suggest that those who invest in the right areas can still generate excellent returns on their investment. With millennials – a group broadly defined as those born between 1980 and the early 2000s – making up a large chunk of the private rented sector, it makes sense on a number of levels for landlords to target areas with a high concentration of people from this demographic.
The top 10 included Liverpool, Bristol, Gloucester, Southampton, Cambridge, Cardiff and Middlesbrough.
Big cities, in particular, are often booming rental hotspots – none more so than London, where renting is now the largest form of tenure according to the most recent English Housing Survey. The best cities for Generation Y? Recent research carried out by TotallyMoney claimed to have found the best cities for millennials to live in based on a number of factors. These included the cost of buying or renting a one-bedroom home, employment considerations such as average weekly earnings and the number of business startups and graduate hires. They also covered cost of living factors like the price of gym membership, a posh coffee and a meal for two in a local restaurant. The survey also factored in the percentage of 'Brexit Remain voters' when highlighting the most ideal cities for Generation Y. Studies suggest that more than 70% of 18-24 year olds voted Remain in June 2016, while data released last year also revealed that most younger people would vote Remain if a fresh referendum was held now. Glasgow took first place, helped to top spot by good weekly wages, a huge range of entertainment and cultural hotspots, and house prices well below the national average for both renting and buying. One-bedroom properties in Scotland's second city have an average monthly rent of £584 per month.
LANDLORD INVESTOR 45TH EDITION
London, in spite of its high rental costs, also performed well. It's a key employment hub, a Remain stronghold, a cultural behemoth and home to a significant number of startups and graduate opportunities. While the average rent for a onebedroom property in London is £1,633 pcm, house shares are very popular in the capital and can make renting more affordable. Third place went to oil-rich Aberdeen (a graduate jobs hotspot with an average rent of £478 for a one-bedroom home), while the rest of the top 10 was made up by Liverpool, Bristol, Gloucester, Southampton, Cambridge, Cardiff and Middlesbrough – all with one-bedroom average rents below £690. By contrast, Basildon in Essex languished in bottom spot in the findings. According to TotallyMoney, only 2% of graduates find work in the town, while extra-curricular activities pale in comparison to the rest of the UK. In addition, Basildon delivered the second-lowest Brexit Remain figures. “There are some things millennials have had to adjust to that haven’t been
experienced by past generations, and with this comes an entirely different set of priorities,” James McCaffrey, spokesperson for TotallyMoney, said. “Rising house prices, stagnant wages, and Brexit are just some of the hurdles this generation have to get over.” What makes a city appealing to renters? Most major UK cities have significant rental populations and thriving rental markets, helped by a large number of students and young professionals prizing the flexibility (and, in many cases, the affordability) renting provides. Cities also tend to be home to a sizeable number of tenants because they offer considerable job opportunities, ample green space, excellent transport links, numerous leisure, cultural and sporting venues, and an eclectic range of bars, restaurants, pubs, clubs and street food markets – all of which make them attractive places for renters to call home. They are also areas that landlords should be targeting if they want high demand, regular rental income and the chance to generate healthy rental yields. Students, young professionals and a rising number of family and middle-aged renters will all be looking for places to rent, and it may be that up-and-coming areas – which have flown under the radar but are now becoming cool – represent the best investment opportunity. That's because the initial costs of investing are likely to be cheaper, with lower house prices at play, but the likelihood of rents rising fast in the future are high as the area becomes much more popular. Homes near regeneration or major infrastructure projects can offer the same benefits. At our June show we will be holding a 'UK Property Development Hotspot' debate to identify where the rental hotspots of the near future might be. The show will take place at Olympia London on June 13 2019 and you can register at www. landlordinvestmentshow.co.uk. Tracey Hanbury
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INDUSTRY MARKET UPDATE UPDATE
PETER LITTLEWOOD iHowz
Market update Unfortunately it has come true In the first magazine of the year (February 2019) I posed the question The end of the Section 21? and went on to describe the lobbying by tenants groups to get rid of this ‘unfair practice’. Generation Rent and Shelter are now cock-a-hoop that they have ‘succeeded’ with their lobbying. Have they succeeded? Technically all that has been announced by the Government is that the use of Section 21 is to be reviewed with a Government consultation. At the moment we don’t know the terms of this consultation but it is anticipated that the Government will have made their mind up – regardless of the outcome of the consultation. This is strengthened by the tone of their initial announcement:
‘… the government has outlined plans to consult on new legislation to abolish Section 21 evictions – so called ‘no-fault’ evictions. This will bring an end to private landlords uprooting tenants from their homes with as little as 8 weeks’ notice after the fixed-term contract has come to an end. This will effectively create open-ended tenancies, bringing greater peace of mind to millions of families who live in rented accommodation. It will give them the reassurance that they will not be suddenly turfed out of their home and reduces the risk of being faced with having nowhere else to go.’ Does the constant use of ‘will’ rather than ‘would’ sound like a Government considering the possibility of a change, or one that has already decided? It’s part of more announcements. This surprise announcement was actually part of a larger announcement into the outcome
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of an (actual) consultation into longer term tenancies. The initial consultation and subsequent response are named ‘Overcoming the Barriers to Longer Tenancies in the Private Rented Sector’. The response gives an assortment of Government plans, of which only two are highlighted (presumably meaning they are extra important):
‘This Government will put an end to ‘nofault’ evictions by repealing Section 21 of the Housing Act 1988.’ and ‘we will also strengthen the Section 8 possession process, so property owners are able to regain their home should they wish to sell it or move into it.’ Again it would appear they have already made a decision. In terms of a longer term tenancy the Government recognised that most landlords are not adverse to longer terms, but continue to use the 6 month tenancy ‘due to the flexibility they provide and because they want to be able to gain possession easily if the relationship with the tenant breaks down’ So already they are recognising that landlords are cautious about granting longer tenancies until they have had a chance to establish the tenant is trustworthy, and that there will be a good relationship between both sides. There is also a disparity between landlords and tenants when it comes to longer tenancies, where ‘Landlords said that tenants either preferred the flexibility of shorter tenancies or that tenants had not asked for them’ but ‘Most tenants (79%) who responded to the consultation had not been offered longer tenancies by their landlords, but 81% would accept one if it was.’ Interestingly ‘there was no widespread support from either landlords or tenants for the three-year tenancy model that was proposed in the consultation’.
So the Government recommendations are: a. A minimum three-year tenancy, with a six month break clause, to allow either party to leave the agreement after the first six months, if they are dissatisfied. b. After the six-month break clause period has passed, the tenant would be able to leave the tenancy agreement by providing a minimum of two months’ notice in writing. c. Landlords can end the tenancy if they have reasonable grounds. These grounds would be in accordance with the existing grounds in Schedule 2 of the Housing Act, 1988, and would include the tenant not paying the rent or engaging in antisocial behaviour. The notice period that landlords would be required to give would be in accordance with the notice set out in Section 8. d. We recognise that these grounds will not provide landlords with enough flexibility, and so there would be new grounds covering landlords selling the property or moving into it themselves. These additional grounds would require the landlord to give two months or 8 weeks’ notice in writing. e. Rents could only increase once per year, at a rate agreed by both the tenant and landlord at the outset of the tenancy. Landlords must be clear about how rent increases will be calculated when advertising the property. There will not be a cap on the amount the rent can increase by. f. Exemptions could be put in place for tenancies which could not realistically last for three years, for example, short term lets and student accommodation. I believe the important parts of this are: •
the three year tenancy could be ended by either party at 6 months;
•
size of annual rent increases will have to be made clear at the outset of the let – but no cap.
LANDLORD INVESTOR 45TH EDITION
MARKET UPDATE
Courts The consultation also looks at the use of courts stating ‘We are working to speed-up and simplify the process for landlords when they need to use the courts to take back possession of their property’ and ‘We are also looking to free up enforcement agent (bailiff) resources to help them prioritise possession cases, as we know that there can be delays in enforcement once a court has granted a warrant for possession.’ Thus they recognise the shortcomings of using the Section 8 leading to an overuse of the Section 21. I hope that they include views on the court system in the consultation of the Section 21; whether or not they do iHowz will include comments about it. In our view: •
•
•
6. Re-development (two months' notice) 7. Tenancy inherited under a will or intestacy (two months' notice) 8. Three months' rent arrears (two weeks' notice)
Discretionary grounds
10. Tenant served notice to quit but didn't leave (two weeks' notice) 11. Persistent delay in paying rent (two weeks' notice)
16. Deterioration of condition of furniture (two weeks' notice)
In my view, one of the big advantages of the Scottish system is the actual Section 8 form – it is so much easier to use, with the grounds merely having to be ticked, not written in as at the moment.
17. Ex-employees of the landlord (two months' notice). Additionally cases go to the tribunal, taking stress of the courts. But it is a matter of time before the tribunal system also gets overladen. Any unintended consequences? Difficult to tell, but could include: •
•
Mandatory grounds
LANDLORD INVESTOR 45TH EDITION
Potentially a rise in tenants being asked to leave at the 6 month stage unless the landlord is completely satisfied. It should be remembered that most landlords only evict as the last resort, especially with the safety net of the Section 21. Many landlords will be loath to take benefit/UC tenants, not wanting to risk rent arrears. Many of our members have indicated thus.
•
Mortgage companies have always been cautious of anything out of the ordinary, e.g. greater than a 6 month let; benefit tenants; HMO’s – forgetting they have a unique ground in Section 8 to evict
3. Off season holiday let (two weeks' notice)
5. Minister or lay missionary property (two months' notice)
the potential of less rental property. However it must be remembered that canny landlords who acted in a businesslike manner still made money in the 70’s during regulated rents, etc. And has been mentioned, there has not been a mass exodus in Scotland. However I suspect that this will spur those landlords thinking of selling to bring it forward. But will they sell to families as the Government want? Probably a lot of larger portfolio landlords will be looking for a bargain, or two.
•
2. Mortgage default (two months' notice) 4. Vacation let of student accommodation (two weeks' notice)
Rent guarantee insurance will surely rise because of this coupled with the reduction in allowable deposits (5 weeks) with the Fees Act.
•
The rise of ant-social tenants. Currently a Section 21 is often used because it is so difficult to prove under Section 8.
•
The rise of Criminal Landlords. The Section 21 is currently used to police various matters, such as the gas certificate; EPC; deposit protection; licensed property. Unless all this transfers to the Section 8 there will be many unscrupulous landlords willing to flout the law. Also, who knows what methods they will use to ‘persuade’ a tenant to leave.
15. Nuisance or annoyance (two weeks' notice)
The grounds in Scotland are:
1. Landlord wants to move into the home or it was previously their own home (two months' notice)
•
13. Breach of tenancy condition (two weeks' notice)
the need to actually go to court should be examined. We favour a mechanism where there should be no need for an actual court hearing for a fully proven, uncontested Ground 8 notice (overdue rent). This would probably take the form of the current Accelerated Procedure for a Section 21;
Scotland has the joy of having the Section 21 already removed, and the Section 8 improved. According to my colleagues in Scotland they’ve not seen a mass exodus of landlords from the market, but landlords being forced to become more professional in the way they run their business – which is not a bad thing.
They (probably) are going to be very upset with a 3 year tenancy coupled with the loss of the Section 21.
12. Some rent unpaid (two weeks' notice)
14. Deterioration of the house or common parts (two weeks' notice)
The experience in Scotland.
•
9. Suitable alternative accommodation available (two months' notice)
all the grounds for Section 8 should be examined, especially the difference between the (current) mandatory and discretionary grounds;
the Civil Procedure Rules (the written guidance supplied to the courts) should also be looked at to ensure courts are co-ordinated.
(ground 2) where there are substantial mortgage arrears.
What can landlords do? The main thing is not to ignore this; it’s certainly not going to go away. The most important things are: •
Take part in the consultation; all the landlord associations will advise members.
•
be professional in the way you run your business: closely monitor your let; take all possible steps to ensure your potential tenants(s) is as appropriate as possible. Get a proper reference, seriously consider rent guarantee insurance. watch out for the first sign of damage, and/or anti-social behaviour; keep on top of rent arrears and act quickly and decisively. Don’t forget 2 months arrears (assuming it remains at 2 months) arise at the start of the second month of due rent (assuming you issue rent demands in advance). As soon as a tenant gets into arrears you must chase it, not wait for the whole two months.
Government should be aware that they have helped generate this perceived problem by not building enough property, thus forcing prices up; allowing a terrible lack of social housing, leading to people being placed in the private sector – where they often can’t cope; mishandling of the Universal Credit system – often leading to rent arrears. They have also not helped by not bringing forward the recovery of abandoned property as laid down in the 2016. The Section 21 is frequently used here.
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LANDLORD INVESTOR CLUB
11 JULY / 12 SEPTEMBER / 17 OCTOBER / 3 DECEMBER
TO FIND OUT MORE VISIT: LANDLORDINVESTMENTSHOW.CO.UK/LANDLORD-INVESTOR-CLUB
PROPTECH NEWS
THE LATEST IN PROPTECH
Property experts launch innovative news and investment platform 30
LANDLORD INVESTOR 45TH EDITION
PROPTECH NEWS
The founders of the National Landlord Investment Show and the Landlord Investment Magazine have partnered with other leading professionals in the property sector to launch a new industry news and investment platform, Pr operty Nok
The site offers readers an online news source covering both the UK residential and commercial real estate sectors, with a focus on providing property investors and real estate professionals with objective, engaging and comprehensive insights into the property market. Publishing daily onto its first-class news hosting platform, Property Notify gathers, curates and disseminates information from a number of important industry sources. These include government bodies; banks and mortgage lenders; market research companies and housing associations, to name a few. Topics covered range from breaking news on political changes affecting the industry to featured investment opportunities.
Property Notify strives to deliver up to date, accurate and informative news, as well as feature articles and commentary to provide clear, relevant and contextualised information about the changing landscape of the UK property sector. These articles, developed by writers and journalists with a keen understanding of the industry, fall broadly into three main property categories: investment, tax and finance – providing articles of the highest calibre, original quotes, exclusive interviews and five-star property investment deals. When the site launched, Steve Hanbury, co-director of the Landlord Investment Show and co-founder of Property Notify, commented: “This site is our latest project to provide the sector with genuinely valuable information during an important time of change for the nation. Throughout Brexit, there has been a lot of coverage
LANDLORD INVESTOR 45TH EDITION
about the impact on various sectors – with the real estate sector grabbing a lot of headlines.” “We hope to provide investors and professionals in the sector with timely, accurate and reliable information so that they can act with confidence and perspective.” Tracey Hanbury, co-director of the Landlord Investment Show and co-founder of Property Notify, commented: “Now is a crucial time for property investors to be completely informed. From regional house price variations to changing government housing standards and building policies, there are many advantages of having greater insight into these important issues for those with investments in the real estate sector. “In short, having as much knowledge as possible is the best way to navigate these choppy waters, and this is something we would like to offer our readers through the launch of our online news outlet, Property Notify.” Joe Alexander, director and co-founder of Property Notify commented: “The exciting opportunities in the UK real estate sector often get downplayed these days, due to various reasons such as Brexit and economic uncertainty. This is a shame because there’s actually a huge amount to celebrate today, including great investment opportunities across several segments of the market and new developments taking place across the nation.
“As the UK property sector evolves, there are sure to be ample opportunities for all kinds of investors, and this is what we want to showcase with Property Notify.”
The site also offers advertisers the chance to reach a substantial number of engaged readers with a genuine interest in products and services related to the property sector. Companies can choose to gain marketing exposure through article and press release publication, as well as banner ad displays and email marketing campaigns across Property Notify’s extensive distribution network. To learn more about Property Notify, visit www.propertynotify.co.uk
Publishing daily onto its first-class news hosting platform, Property Notify will gather, curate and disseminate information from a number of important industry sources
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13 JUNE OLYMPIA LONDON
8 OCTOBER MANCHESTER UTD FC
5 NOVEMBER OLYMPIA LONDON www . landlordinvestmentshow . co . uk
INDUSTRY SPOTLIGHT
Premier access Tracey Hanbury interviews UK property expert and Premier Property founder, Kam Dovedi.
Q1
What first drew you into the property market?
When I started in property, I didnt have a plan, or strategy, I just knew property was good and wanted to get in to it. I fell in to it. My cousin wanted to buy a property, but couldn’t because they couldn’t get a mortgage, so they asked me to be on the mortgage application. This was back in May 1989, and if you can remember, 3 months later, the market crashed by 30% and the bank of England base rate was 15% (unimaginable these days!)
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The property was in negative equity, and my cousin did not want it anymore, and just gave me the keys. So there I was, 18 year old Kam, with a property in negative equity, with a mortgage payment higher than any income I could ever make through working in a job. So I had to learn and adapt very quickly. Cut a long story short, I created a system to generate continuous cashflow even with the extortionate payments, through turning it in to a HMO. What I found was after my expenses, I was left with lump sums each month. So I refined this system, and carried on repeating it. By 24, I was financially free.
Fast forward to today, I am still active in property, and share these systems and how they have developed to work in the property market today with the great people in the Premier Property community.
Q2
What has been your biggest challenge in the property market?
There’s been a few! But I believe the great thing about challenges is that once I have gone through them, the people who follow me and Premier Property don’t have to go through the same challenges because they have the learnings and information to bypass these challenges and move forward faster.
LANDLORD INVESTOR 45TH EDITION
INDUSTRY SPOTLIGHT
I would say my biggest challenge came when I was doing a development on a prominent high street, which was sandwiched between a bank and casino, so there were a number of technical drawings and factors up to project completion that had to be addressed that were all in the control of my project manager. Unfortunately, my project manager passed away. Not only did I lose a valued member of my team, I lost a mentor and a friend. This was an emotionally challenging time. The project went over time. The loan value was in excess of a million pounds. The development was taken to a bank manager in a specialist department, which for those of you who are new to development literally means they could decide to reposess you within 28 days. I remember the day the specialist manager turned up on site, and we were looking at emptiness where a building should have been. I was honest with the manager. I took full responsibility for what had happened even though it was circumstances out of my control. Because he saw my honesty and transparency, I believe that is what allowed me to build rapport with him. He saw the potential in the development and the potential in me, so he decided to work with me, and help me to the full completion of the project. I gained 3 learnings from this: 1. Do not have one person who is in control of everything 2. Anticipate that your project may go over time and over budged 3. Factor in a contingency. Many developers get this wrong and only factor in 10%, but I know from experience from the developments I have done, you should always factor in at least 20%.
Q3
What is the best advice you have ever been given?
The best advice I was ever given was at 14. I had a Saturday job at a department store on Commercial Road in London E1 called Sammi and Salim. It was huge, a 7 storey department store. It was owned by a wealthy business man called Sammi, who gave me a piece of advice that has stuck with me. One day, as I was taking out my cling-film wrapped sandwich on my lunch break, Sammi came over to just
LANDLORD INVESTOR 45TH EDITION
have a conversation with me. I thought I was in trouble for some reason, but I noticed that he sometimes used to take the time to speak to the people who worked for him (I found it amazing considering he was so busy). What he said to me was "get as close as you can to people with experience in what you want to do because this is where you will get true learning so that you can avoid the mistakes they have made and learning from their experience will give you the confidence to succeed". This stuck with me. To this day I still apply this, and I guess it’s why people choose to learn from us at Premier Property.
Q4
In 2016 you started an annual fundraiser why was that so important to you?
Before I answer this question, I just want to say that this was an absolute dream and thank you to those of you who reading this who have supported it. Who would have thought a boy who grew up in a council estate would now be a property investor and developer, and organise a charity ball that would give thousands to those who need it the most? I suppose i'm a classic rags to riches story. There are a number of promises that I made at the lowest point of my life, and those of you who know me, and will get to know me, will know what that time was. The Premier Property Christmas Charity Ball was a way to uphold those promises. It’s the perfect opportunity to give back to a cause so close to our hearts, as property investors, we have the responsibility to provide good quality accommodation to those who would like to live in our properties, so our chosen charities are ones that work with people who are unfortunately homeless. In 2019, this will be the 4th Premier Property Christmas Charity Ball, it has sold out each year, last year we had over 150 people in attendance.
Q5
What are your 3 top tips for our readers?
1. Network in any and every environment that you can,related to property because you can meet some fantastic people to do business with. There’s always someone ahead of you
in your journey to aspire to and learn from. At the same time, it allows you to be part of a supportive community where there are solutions rather than problems in the room. I mean that’s one of the reasons we created the Premier Property Club. 2. Complete + Patience = Results – what do I mean by this? So when you are starting something complete it. If you are reading this article, complete it, if you have scheduled a viewing, complete it, if you are planning to learn how to take your property investing to the next level, complete it. Now the second part of the equation is patience. We live in a world where everything is instantaneous, instant gratification is everywhere, from workout plans saying you can lose 7 stone in 7 minutes, to push-a-buttonand-make-a-million-pound business. Here’s a reality check, if you factor in the right time frame, and set the correct objectives, you can achieve what you choose to achieve in property. For example, some of the people in the Premier Property Community are sourcing buy to lets, once you learn how to do it correctly it can take 1-3 months where you are able to generate an infinite cash on cash return; Time taken to find a conversion project can take 3-6 months where your gross margin can be between 50 - 100 %. Time frame for development project can be a year to 18 months. But you are making tens of thousands, hundreds of thousands and millions of pounds consistently. 3. The third top tip is a big one – keep up to date with the correct current information. There are so many people in the property world who are reactive rather than proactive, they do not know when changes are coming in, or even when they have happened! Add to this the people who just research but do not actually implement anything or take action. The correct current information is fundamental, a grounding of knowledge and application to get results that can be repeated. A few places you can get Information like this from public bodies and, trade publications. We also offer a bunch of free resources you can check out at Premier Property, just visit www. premierpropertyeducation.co.uk and you will see all the articles that we write.
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ADVERTORIAL FEATURE
GARETH BERTRAM DIRECTOR, THE LANDLORD’S PENSION
SSAS Property Pension set up in 24 hours! Ignore everything you’ve been told about the time it takes to set up a SSAS because The Landlord’s Pension are getting them registered in record breaking time. We caught up with the UK’s number 1 SSAS broker to hear about how the time it takes to get a SSAS set up and fully registered has now been reduced to just 24 hours. Director Gareth Bertram said: “We work with many SSAS providers throughout the UK and since March 2019, we have been able to get new SSAS property pensions set up and registered with HMRC in under 24 hours. It’s probably useful for readers to understand that a pension scheme is only lawful if it is registered with HMRC and therefore ultimately, it is HMRC who control the set-up times. What is very noticeable is that HMRC appear to be processing applications quicker for some SSAS providers than others. One would have to assume that this is down to the quality of the applications they are receiving. As an independent SSAS broker we get a clear view of how registrations are progressing at different speeds, with different SSAS providers. We’ve been seeing the HMRC registration times fall since around September when they peaked at about 12 weeks for some providers. Incredibly it now takes us longer to set up a pension bank account to transfer old pension funds into, than to set up a SSAS! As part of our service we ensure that everything is completed accurately for our clients when applying for a new SSAS.
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We never see applications rejected or returned. This adds significantly to the speed at which we can get a SSAS arranged for a new client.” Readers will be pleased to hear this given the potential use of pension funds in a property business. As Gareth explains: “This is great news because property investors can now invest in property using their old pensions faster. Some people may have been put off in the past by the perceived cost but some SSAS pension providers charge as little as £500 per year for a SSAS pension. For property investors there is no reason to have any other type of pension other than a SSAS Pension. You can transfer in old pensions or make new contributions and you get all the same tax benefits as a normal pension. However, the key additional benefit is that you can invest in property with a SSAS pension.”
“We’ve had over 1500 enquiries since the start of 2019 which shows just how popular SSAS pensions are becoming. The faster set up times are a real pressure relief for us and will make our 5-star rated administration team even more efficient (visit Google ratings). Our head of SSAS administration and processing, Teresa Quinton, is delighted that she can now deliver an even faster service to new clients.”
The Landlord’s Pension has a team of Senior SSAS advisors. Get in touch online or by phone to see if they can help with your property investment plans. The Landlord’s Pension are pleased to be exhibiting at the Landlord Investment Show, Olympia London, 13 June. Download your FREE exclusive Property SSAS Pension guide at www.TheLandlordsPension.co.uk/ ssasguide or call 0203 907 8400.
We’ve had over 1500 enquiries since the start of 2019 which shows just how popular SSAS pensions are becoming.
LANDLORD INVESTOR 45TH EDITION
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Brought to you by the National Landlord Investment Show, the National LIS Awards celebrates excellence & professionalism in the private rented sector for both landlords, property investors and services throughout buy-to-let. To find out more please visit our dedicated show website: www.national-lis-awards.co.uk