Li Magazine 49th Edition by Landlord Investor Magazine

LANDLORD INVESTOR

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

LANDLORD | PROPERTY | INVESTMENT

49TH EDITION | 2019

Remember, Remember th the 5 of November... Landlord Investment Show returns to Olympia London 05/011/19. Expect fireworks. S E E PA G E 4

ALSO IN THIS ISSUE... Tenant fees ban spells change for landlords.

No money down property investing.

Best locations for buy-to-let investment return.

Market sentiment overview.

Evicting tenants: how much does it cost landlords?

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I'm thrilled to welcome you to the 49 Edition of Landlord Investor Magazine.

IN THIS ISSUE...

SHOW UPDATE A sell out exhibitor floor and the return of the political big guns at Olympia London...

Bienvenue. Willkommen. FĂ ilte. At the time of going to press Parliament has just been recalled, and it's anyone's guess as the where the exit from the EU is going to go. We all have a vested interest in the UK property market and with a no-deal Brexit on the cards, and a possible change of government, it's an unsettling time for the buy-to-let landlord. We don't have a crystal ball, but we can bring you the expert opinion from the cream of the industry. In this edition of LI Magazine: John King looks at how the tenant fees ban spells change for landlords. Simon Zutshi looks on the brighter side with the truth about 'no money down' property investing. Paul Mahoney continues the positive vibes by looking at the best locations for buy-to-let investment return. Peter Littlewood keeps you on the right side of the law with his usual round-up in Market Update. I'll be taking the temperature of the private rental community with a market sentiment overview, looking at how much it costs landlords to evict problematic tenants, and the continuing trend for landlord remortgaging. In the eye of the Brexit storm we hope this issue offers a small degree of comfort. We have two shows remaining this year, both packed with experts from government, media and the property industry, who are only too happy to answer your questions. The next event is at Manchester United Football Club on October 8th, just before the proposed Brexit deadline. We have a sold-out exhibitor floor and a packed agenda. If you're reading this at the show then thank you for coming. We head home to London for the last show of 2019 at Olympia London on November 5th, a mere matter of days post the Brexit deadline â&#x20AC;&#x201C; so you can expect some fireworks. Again, we have a sold-out exhibitor floor and three superb panel debates. We're thrilled to announce the return of the political big-guns to our Fireworks of Brexit debate, chaired by Andrew Neil and featuring the Rt Hon Iain Duncan Smith MP. As always our events are completely FREE to attend, all you have to do is register at www.landlordinvestmentshow. co.uk. We've also announced the shortlist for the 2019 National LIS Awards (see page 34) and we look forward to seeing you for a well deserved rest at the LIS Awards Show on November 21st. As the 2019 exhibition season hits the home straight I'd like to wish you all the very best on your landlord investor journey, and thank all the exhibitors, speakers, sponsors and attendees who've supported us on ours.

LANDLORD INVESTOR MAGAZINE Editor Tracey Hanbury

Editorial Contributors

Design Marc Riley

Paul Mahoney Peter Littlewood John King Simon Zutshi Tracey Hanbury

Advertising Beverley Meliniotis

Marketing Holly Maslin Ben Michaelis

Printing IOP Marketing

TENANCY AND DEPOSITS Tenant fees ban spells change for landlords

INVESTMENT No money down property investing

INVESTMENT Best locations for buy-to-let investment return

PRS UPDATE Market sentiment overview

MARKET UPDATE The latest industry news

PRS UPDATE Evicting tenants: how much does it cost landlords?

PRS UPDATE Landlord remortgaging trend continues

Contact

Telephone: 020 8656 5075 landlordinvestmentshow.co.uk

@LandlordInShow

Tenants History Ltd, 27 Stafford Road, Croydon CR0 4NG

@LandlordInvestmentShow

Statements and opinions expressed in articles, reviews and other materials herein are those of the authors; the editors and publishers. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. Tenants History Limited and our contributors will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through the promoted links.

LIS AWARDS 2019 Shortlist announced

Meet the team TRACEY HANBURY EDITOR & SALES DIRECTOR T: 0208 656 5075 M: 07931 308 875 tracey@landlordinvestmentshow.co.uk

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

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HOLLY MASLIN MARKETING MANAGER T: 0208 656 5075

Landlord Investor Magazine gives property professionals, landlords and investors monthly advice and information on the topics, news and legislation that matter to the industry.

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LES HANBURY NON- EXECUTIVE DIRECTOR

OLLIE HANBURY HEAD OF SECURITY AND ENTERTAINMENTS MANAGER

• legal services & tax • insurance • investments • deposit schemes & landlord associations • property hotspots

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LANDLORD INVESTOR 49TH EDITION

SHOW UPDATE

A sell-out exhibitor floor and the return of the political big guns... OLY M PI A L O N D O N N OV E M B E R 5 T H 2 019

LANDLORD INVESTOR 49TH EDITION

SHOW UPDATE

Returning to Olympia London for the last show of 2019, the proximity to the deadline for exiting the EU stands to make this a landmark event. At the time of going to press the future of Brexit remains uncertain. We don't have a crystal ball, and by the time this issue is circulated anything could have happened. There's obviously broader issues afoot, but if you're reading this then it's likely you're a buy-to-let landlord with some degree of anxiety about how Brexit will impact the housing market, and of course, the private rental sector. The good news is that our exhibitor list and panel debates are packed with experts from government, media and the property industry who are only too happy to answer your questions. If you're interested in growing your network then our Morning Networking Event, hosted by property expert John Howard is perfect for meeting new contacts. As always, our events are completely free to attend, all you have to do is register via our website: www.landlordinvestmentshow.co.uk/olympia-5-november.

Panel debate One. Auditorium, 10am - 11.15am

Fireworks of Brexit: The UK’s Divorce from the EU Chaired by Andrew Neil and featuring the Rt Hon Iain Duncan Smith MP Sponsored by:

Due to the massive success of our 2019 Panel Debates we are delighted to announce their return for the 3rd time this year. Kicking-off the November 5th debates we have Fireworks of Brexit: the UK's divorce from the EU. As the agreed date for the UK’s departure from the EU (with or without an exit deal), October 31st is a date which is likely to go down in history. With the EU's decision to delay the UK's departure twice already, EU leaders insist that, by this point, the UK must choose whether to ratify the exit treaty, opt for a no-deal Brexit, or cancel its departure completely. What will happen is anyone’s guess, but the possibility of a no-deal Brexit is highly possible. A mere mater of days post the departure date, this panel debate will take place right in the eye of the storm: so you can expect some November 5th Fireworks.

LANDLORD INVESTOR 49TH EDITION

ANDREW NEIL

TONY GIMPLE

RT. HON. IAIN DUNCAN SMITH MP

GAVIN FRASER

Publisher and Broadcaster

Former Conservative Party Leader

Founder, Less Tax 4 Landlords

MD, High Street Residential

DAVID SMITH

Economics Editor of The Sunday Times and PropertyNotify Columnist

SHOW UPDATE

Panel debate Two. Auditorium, 1.30pm - 2.30pm

Investing in Property? North Vs South Chaired by John Howard Is the North vs South divide getting bigger? Is it better to invest in the North or in the South? These questions and more will be discussed in this debate. 500 UK Landlords and Investors will be discussing the best areas to invest in, what's hot what's not, avoiding the pitfalls plus much more. Please submit a question to the panel when registering to attend the show. Go to www. landlordinvestmentshow.co.uk/ olympia-5-november to register for FREE admission.

REECE MENNIE

JOHN HOWARD

John Howard Property Consultants

Hunter Jones

PAUL MAHONEY

KAM DOVEDI

Nova Financial Group

Premier Property Education

Panel debate Three. Auditorium, 3.30pm - 4.30pm

Living by Numbers Tax, Finance & Legal Debate Chaired by Paul Shamplina Discussing exactly what the title suggests, attendance at this panel debate is free and on a firstcome, first-seated basis - so get to the auditorium early to avoid disappointment. Are you an accidental Landlord? Have you inherited some money? Are you thinking about getting into property? Then this is the seminar for you. Come with your questions and have them answered by industry experts who are willing to help you on your landlord / investor journey. Go to www.landlordinvestmentshow.co.uk/ olympia-5-november to register for FREE admission. 6

PAUL SHAMPLINA

SEAN HUGHES

JENI BROWNE

VINCENT BURCH

Landlord Action

Mortgages for Business

Comprehensive Tax Planning

Vincent Burch Mortgage Services

LANDLORD INVESTOR 49TH EDITION

As featured in: The Times, The Telegraph, The Mail Online, Huffington Post, Property 118 & Property Tribes

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TENANCY AND DEPOSITS

JOHN KING HEAD OF MEMBER SERVICES, TDS

Tenant fees ban spells change for landlords

LANDLORD INVESTOR 49TH EDITION

TENANCY AND DEPOSITS

On the 1st September 2019, Wales joined England with the introduction of legislation to facilitate a tenant fees ban. John King, Head of Member Services at TDS, reviews how the latest legislation is impacting landlords and what they can do to avoid penalty. Before the 1st June 2019, tenants could be charged fees for a number of extra services in England and Wales, including inventory reports, credit checks and cleaning services. Those fees are banned in England and Wales, and has now withdrawn the ability, from letting agents and landlords, to charge tenants some fees along with any charges associated with tenancy deposit protection; even though the service remains a legal requirement. Anyone caught illegally charging tenants in England could now be fined up to £5,000, which highlights how seriously the government is taking the issue. Landlords have been battling through a storm of change this year with the ban and recent Deposit Cap ruling in England, and there is still great confusion surrounding the new legislation covering both regions. Since the introduction of the Tenants Fees Act in England, the Residential Landlord Association (RLA) have seen a rent price hike across the country as landlords take measures to protect themselves, potentially defeating the purpose of the ban in the process. That, coupled with the Welsh Government’s own guidance on tenancy fees ban being called out for containing ‘serious errors’, demonstrates the pressing need for greater clarity and guidance to help landlords understand the best course of action.

Key differences between England and Wales tenant fees ban Firstly, it helps to understand that the tenant fees ban is not the same in both regions. The legislation in England includes a cap on deposits at the value of five

weeks’ rent where the annual rent is £50,000 or less, and six weeks’ rent where the annual rent exceeds £50,000. There is no deposit cap mentioned at all in the Wales fees ban currently, but there is provision in the Wales legislation to introduce one if required.

DEPOSIT TYPE

ENGLAND

WALES

Holding deposit

Capped at 1 week’s rent

Security deposit

Capped at 5 week’s rent (or 6 week’s over £50,000)

No cap

Pet deposit

If you have taken the maximum security deposit, you cannot take any further monies towards a pet deposit

Not referred to within the Act

No change to tenancy deposit protection Whilst the costs of tenancy deposit protection can no longer be passed onto the tenant, it’s important to note that legislation on tenancy deposit protection has not changed. The way in which deposits are protected by TDS haven’t been affected either. What landlords can do to avoid penalty In April 2019, TDS introduced a suite of online tools which included an easyto-use Deposit Cap Calculator to help landlords in England prepare for the legislative changes. The tools and calculator, which are completely free to use, are available at depositcap.com. The online tools include a suite of information on the legislative changes

including a graphical timeline, example scenarios and case studies, guides, information and other tools to help provide clarity on how the Deposit Cap in England affects landlords. They also show landlords how to easily reduce the deposit they hold whether they use TDS’s Insured or Custodial scheme. Landlords with properties in Wales can also find out more information on the Renting Homes (Fees etc.) (Wales) Act by visiting tenancydepositscheme.com/ tds-wales.html. Clear and straightforward education is key in helping landlords navigate the changes. TDS is committed to providing impartial advice and support as part of their tenancy deposit schemes. It’s quick and easy to join TDS. Find out more here: www. tenancydepositscheme.com

Anyone caught illegally charging tenants in England could now be fined up to £5,000, which highlights how seriously the government is taking the issue.

LANDLORD INVESTOR 49TH EDITION

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INVESTMENT

SIMON ZUTSHI

No money down property investing. Is it possible or all just BS?

LANDLORD INVESTOR 49TH EDITION

INVESTMENT

In this month’s article, I want to share with you some thoughts and ideas about no money down property investing in the UK.

What I'm going to talk about works not only in the UK, but actually these strategies can work anywhere in the world. I have written this because a lot of people think, "Is it true? Can you really buy property no money down?". Well yes you can, I and literally hundreds of my students have purchased property using none of their own money and I'll share with you a few no money down property strategies so that, you can do the same. When you buy an investment property, typically you put in a 25% deposit to go with the 75% Buy to Let mortgage you get from a Bank. The Banks want you to put some money in because they want you to have some skin in the game. If something goes wrong, they want to make sure you don't just walk away from the property. This is what happened in the late 2000s after the credit crunch, where many people had got very low money down investments. They had high mortgages and when things went south, they just threw the keys in.

property deals. This is because no matter how much money you have, you're probably going to run out of your own money at some point. But if you get good at finding great deals, there will always be people who can fund those projects for you, if you are prepared to share some of the profits. A joint venture is typically where Person A has a great deal, and Person B has the money. Maybe Person B does not know how to find deals, they don't want to find deals, they don't have the time to find them or they don't have the inclination to do it. So Person A puts the deal and maybe the time in, and Person B puts the money in. Both parties are bringing different resources to the table. That's the first way to invest in property with none of your own money. Joint Venture with the property owner

Joint ventures

The other way, that most people don't ever think about, is maybe your Joint Venture partner could be the property owner. What do I mean by that? Maybe you find a property where you could convert it from a house into a six-bedroom HMO or somehow add value to that property. Or maybe it's a commercial building, which could be converted into a residential building, broken down into smaller units. So the key here is that you identify a property for sale where you can somehow add value to that property.

The first thing I want to talk about is Joint Ventures. I believe the most valuable skill you can learn as a property investor, is how to find great

If the seller wants to make as much revenue as they can from the sale, but they don’t need the money now, then there is a way you could partner with

Quite rightly, Banks want to see you have some skin in the game. Generally, when you buy property, some money needs to be put in, but here's the key distinction I want you to understand it doesn't necessarily have to be your money. Let me explain some of the ways you can do that.

them for mutual benefit. If they were to do the work themselves, they could increase the value of the property and so sell it for more. BUT most sellers don’t do this for a number of reasons: Often they don’t want the hassle, usually they don’t have the money to do the work or don't want to borrow it or maybe they don't have the time, knowledge or expertise to do the work. In this situation, if the numbers work, you can offer to help the owner make more money by working with you to add value, then selling the property at a higher price and you both share the extra profit. There are lenders like www. CrowdProperty.com, whereby If you have a good enough project, the owner can put the project in and you can use the money from CrowdProperty for the development, which means you don't have to actually use any of your own money. As long as it's a good enough project and the project can be funded 100% using other people's money. Then, at the end of the project, either you refinance or you sell the property. CrowdProperty get their money and interest back and you and the owner get to share the extra profits. That's another way of doing a Joint Venture, not using any of your own money. Private loans The next thing you can do is work with friends or family, who've got money in the bank, that's doing nothing for them at the moment. Interest rates around the world are really low. If someone's got money in the bank they're actually probably losing money because of inflation. The rates of price inflation

LANDLORD INVESTOR 49TH EDITION

INVESTMENT

If someone's got money in the bank they're actually probably losing money because of inflation.

is probably more than the interest they're getting in the bank. So, you can help them. I want you to realise that, that if you use someone else's money and give them a great return on their money, this is not just them helping you, it's you helping them as well. It's a win, win. Again, you go out and find a great property investment, ideally somewhere where you can buy it, add some value and then you can refinance it, or sell it to make a profit. You can use the other person's money to fund the deal and they get a fixed return on their cash. Once you sell or refinance, they get their money back, plus the interest. You walk away with the profits or if you want to retain the property hold onto it and rent it out. So you've got all their money back and you've got none of your money in the deal. Now you've got a property that's going to give you cash flow for as long as you own the asset. It goes without saying that when using other peopleâ&#x20AC;&#x2122;s money, you need to be very careful and make sure that you look after it and get it back to them with interest as promised. Often people selling their property, understandably, don't want to sell it at a discount, but once they have sold, they're just going to put the money into the bank. Maybe you could do a deal like this. You buy the property, putting in the normal deposit, ideally someone else's money and then once the owner has got all that money sitting in the bank, doing nothing for them, you get a loan from the owner and give them a much better return on their money. You can then use that

LANDLORD INVESTOR 49TH EDITION

money to pay back the person who lent it to you in the first place. Purchase lease options You can also do what's called a Purchase Lease Option (PLO). A PLO is where you have the right to buy a property, for a fixed price, at some time in the future, within a fixed time period and you rent the property in the mean time. You can rent it out, you've got your cash flow coming in straight away and then you can buy that property in the future. That is if you want to buy it. You don't have to buy it, you can assign it onto someone else or at the end of contract, you can walk away. To be ethical, I think you need to give the property back to the owner in the same condition, or even better condition than when they first gave the property to you. This means you get cash flow and potential equity growth from a property that you don't own. You might think, "Okay Simon, how do I actually buy that property?" Well, hopefully if the option period has been long enough, the value of the property might have gone up over time. If you have a number of these PLOs, you can sell a few of them on, take the cash profit to use as the deposit for the ones you want to keep. Again you do Joint Ventures or you could do Private Loans, whatever you want, and then because the value's gone up, you buy it, you refinance it, take the money out. These are some of the strategies you can use to buy property using none of your own money and it's about knowing how to help the seller. Not every strategy will work in every circumstance. You have got to get

good at finding sellers who are a bit more flexible on the terms of the sale. You've got to find out what's important to them, ask them lots of questions, listen to what they say and then come up with an ethical win-win solution that's going to work for them but also a solution that works for you. These people are out there but you've got to believe it. If you think no money down property deals are not possible, you're absolutely right, you'll never find or never be able to do any no money down property deals. One of the best ways of building your belief that this is possible is by learning from other people just like you, who've done this kind of deal before. They've done it, so it means you can do it as well. So you have a choice. Either you think no, I don't think it's possible to buy property using none of your own money and that's fine, if that's your belief, or you have an open mind and you look into it. You start learning from people who have actually done these kind of no money down property deals and believe actually, maybe this is possible. It's not possible in every circumstance. You have got to educate yourself and get out there to find some great property deals. But if you're finding great deals, as I explained in this article, there are lots of ways to buy property using none of your own money. I do hope this article has been enlightening and opens your mind. Invest with Knowledge, Invest with skill. Simon Zutshi Author of Property Magic Founder property investors network

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INVESTMENT

PAUL MAHONEY NOVA FINANCIAL GROUP

Best locations for buy-to-let investment return 18

LANDLORD INVESTOR 49TH EDITION

INVESTMENT

This is a fairly common question that we receive at Nova. Returns can mean a number of things, though.

There’s two main types of returns when it comes to property investment, and that’s income and growth. Yield and capital appreciation. The two types of returns work for different people depending on what their goals are. Traditionally, London and the southeast has been good from a growth perspective and the north has been better from a yield perspective. That, arguably, is shifting, in that for example London has had a very good run from a growth perspective and is now without doubt plateauing, in some areas falling. There’s lots of speculation as to why that is, but I think it’s just because it’s had a good run. We’re over 80% above the 2007 peak property prices in London, so a lot of areas have more than doubled in the past 10 years, and that’s a good run. Markets are cyclical. There are other areas in the UK at the moment which are doing really well, in a market where some areas aren’t. Places like the Midlands, specifically Birmingham, and the North West such as Manchester & Liverpool. Each of those cities have really strong positive driving factors at the moment, such as billions of pounds being spent on infrastructure, really strong job growth and population growth. Net migration in the UK is very strong to the north, away from London. That’s likely being driven by affordability. For a young professional in London, it’s almost impossible for them to buy their own home. Especially when they’re first starting out. They might have £300,000 to spend on a property with a mortgage. You can’t buy anything in London for that, really. But you can go

LANDLORD INVESTOR 49TH EDITION

to the city centre in any of the abovementioned cities and buy a penthouse apartment and live for probably three quarters of the living cost. So, for that person it makes sense. That’s not only being reflected in individual preferences, but also a lot of major businesses are moving significant amounts of their workforce to these areas, like HSBC to Birmingham and a range of other major companies. If I had to pick three locations, I would say that the areas with the most positive potential over the next five to ten years are those three cities, Birmingham, Manchester & Liverpool. Property prices are a lot lower when compared with the south and the yields are a lot higher. There’s a lot more room for growth there, within affordability ranges. But don’t just buy anything there. Buy the right properties in the right areas that are under the most demand from a desirable target market. Infrastructure spending is a big driving factor, you’ve got HS2, which goes into Birmingham. That will make a massive difference with just 45 minutes into London from Birmingham when that’s done. That goes all the way through to Crewe, which is only 20 minutes to both Manchester and Liverpool. And then the proposed HS3, which goes through Manchester to Leeds. That will really open up transport links and the ability to do business across all of those cities. But, that’s just one example of the whole northern powerhouse scheme which is aimed at better utilizing the northern cities. What’s interesting about these cities is

that it probably isn’t much of a surprise to most property investors today that they are a good place to invest however 4 to 5 years ago when we first starting investing in these areas, most told us we were mad as London was still doing well. It’s nice to see these cities really flourishing and our client’s investments coming to fruition. 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

Traditionally, London and the southeast has been good from a growth perspective and the north has been better from a yield perspective.

PRS UPDATE

TRACEY HANBURY

Market sentiment overview Are landlords still confident about the market?

LANDLORD INVESTOR 49TH EDITION

PRS UPDATE

As we approach the final few months of the year, how confident are landlords in the prospects of the buy-to-let market?

A cocktail of Brexit, economic uncertainty and increased regulation has made things difficult for many landlords operating across the country.

According to the BVA BDRC Landlords Panel, confidence in the rental sector dipped by 6% from 21% in 2018 to 15% this year.

Despite this, demand for private rental homes remains strong and landlords can still make good returns with the right strategies in the right areas.

Meanwhile, landlords' confidence in capital gains dropped from 32% to 23% between Q2 2018 and the same period this year. Meanwhile, across the same period, landlords' confidence in rental yields dropped from 49% to 39%.

But how do landlords feel about the buyto-let market at the moment? Will they continue to invest, are they looking to sell up and do they still have confidence in the rental sector? We answer these questions and more by looking at some of the most recent industry research. Majority of landlords happy with their portfolios Some 84% of landlords are looking to maintain or expand their portfolio over the next 12 months, according to research by The Mortgage Lender. The survey of investors found that only 16% of landlords are looking to reduce the number of properties they let over the same period. However, half of those surveyed said they think a raft of tax changes has led to a reduction in the number of landlords, with only 1% suggesting the changes have encouraged improved rental property standards. The landlord panel - 45% of whom have between two and four properties - were also asked about their biggest concerns, with property maintenance, care of property and tenant behaviour listed as the top three most common. Landlord confidence takes a battering Despite a high proportion of landlords being happy to maintain or expand their portfolios over the coming months, the confidence of many has been shaken by unsettled political and market conditions. During Q2, just 29% of landlords said they had positive expectations for their letting business for the three months ahead, down from 44% at the same time last year.

LANDLORD INVESTOR 49TH EDITION

Just 11% of investors taking part in the panel said they had confidence in the UK financial market, down from 15% a year ago. Are landlords willing to invest in the market? Half of landlords surveyed by Foundation Home Loans said they would choose not to make a first investment decision at the moment - predominantly down to various tax and regulation changes. Other landlords said that remaining in the EU would give them the boost they needed to invest, while some said a smooth Brexit process would encourage them into action. "We now have a sector which is much more in line with professional and portfolio landlords; utilising limited company vehicles to ensure they retain their tax relief, and where appropriate, adding to their portfolios via these structures," said Jeff Knight, director of marketing at Foundation Home Loans. "The move towards greater levels of limited company business is likely to continue for many landlords, as I expect a U-turn is very unlikely despite fiscal loosening likely to be a strategy adopted in the very near future to stimulate a weakening economy." "There is a continued appetite to be active in this sector and a recognition of the strong demand for quality properties from tenants. That being the case, and with a perhaps more sympathetic government ear, we might anticipate that demand for mortgage advice and buy-to-let mortgages will continue to grow, although many are clearly worried about the current economic uncertainty and what might happen in a post-Brexit world," said Knight.

Buy-to-let sector fundamentals remain solid Despite reports of low confidence and a diminished appetite for investing, the BVA BDRC Landlords Panel - which spoke to over 700 investors - also revealed that the fundamentals of the buy-to-let sector remain strong. For example, the proportion of landlords making a profit dropped by just 1% between Q1 and Q2 2019. Meanwhile, a third of those taking part are able to make a full-time living off their lettings portfolio and 53% are able to supplement their day job with rental income. Overall, those taking part reported a quarterly rise in tenant demand, up to 23% from 20%, with families being the most common tenant types. The best-performing regions - with over a third of landlords reporting a rise in tenant demand - were Wales, the East of England, Yorkshire and the Humber, the West Midlands, East Midlands and the South West. Demand in London was not performing as strongly, however, with the Prime Central London market particularly continuing to struggle. Tracey Hanbury

Some 84% of landlords are looking to maintain or expand their portfolio over the next 12 months, according to research by The Mortgage Lender.

ADVERTORIAL FEATURE

NICK CHRISTOFOROU FOUNDER, ZEUS

LANDLORD INVESTOR 49TH EDITION

ADVERTORIAL FEATURE

Fast, FREE, accurate property valuations for sales and rentals. Founder Nick Christoforou explains the benefits of the ZEUS app.

What is ZEUS?

So what is in it for the agents?

ZEUS helps property owners obtain multiple, FREE, fast and accurate property valuations, from local and online agents. All via a simple mobile app. It works for both sales and rental property.

ZEUS is a great lead generator for agents. Whilst some users are ‘just curious’ as to the value of their property, many users are genuinely seeking to instruct an agent to either sell or let their property.

Who uses ZEUS?

Every month the amount of official agency instructions occurring via the app is increasing dramatically. Agents of course pay a fee for access to ZEUS. For the property owners, it is completely free.

Our users are typically landlords seeking a rental valuation for their expiring AST or their new buy to let, as well as homeowners looking to sell. The average user receives 5 independent valuations within just 8 hours. A truly unique valuation experience for property owners.

Where do we operate? ZEUS launched in London in 2019. The plan is to expand further across

the capital and then the UK. ZEUS will soon facilitate commercial sale and rental valuations as well. Contact Nick Christoforou is a chartered surveyor and the founder of ZEUS. He would welcome your questions or comments, you can reach Nick at nick@thezeusapp.com. Please feel free to visit the website and watch the explainer video or download the app directly from here: thezeusapp.com Follow the ZEUS journey on Facebook and Instagram: @thezeusapp

Our valuation accuracy is proving to be the best in the industry versus other valuation tools. How does it work? Users enter their property information via the app within three simple sections; basics, photos and additional. This information then gets submitted to local and online agents. The agents are alerted and they then review the information provided by the user, and they respond with their opinion on value and their proposed fees. All achieved with no calls, no emails and no time wasting. Users are able to compare and contrast each agents valuation visually on screen. The app also generates an average valuation from all that have been provided. Users stay anonymous so they retain control from the agents. However, they are able to release their contact details to whichever agent(s) they wish, at any time. Alternatively, they may wish to call a couple of the agents individually, directly from the app, and arrange a meeting.

LANDLORD INVESTOR 49TH EDITION

Valuation; it is fundamentally the most important thing in real estate. Nick Christoforou

Testimonials ‘I love this app. I got all three of my buy-to-lets revalued before my tenants renewed and therefore justified a little increase in my rents’ Ashley, landlord

‘Amazing! I received 6 valuations from local agents in just a single day’ Jacob, homeowner

@thezeusapp

INDUSTRY MARKET UPDATE UPDATE

PETER LITTLEWOOD iHowz

Market update Everyone should participate in the Section 21 consultation The (previous) Government announced their intention of scrapping the Section 21 (S21), and to substantially improve the Section 8 (S8). Whilst I wouldn’t say that new (Johnson) Government has a different view on this, they appear to have a softer view. Prior to the re-shuffle Theresa Villiers MP (DEFRA Secretary) speaking during BEIS oral questions on 30th April 2019: “What discussions has the Minister had with landlords running small businesses about the proposed abolition of section 21 notices? We all want to help renters, but we need to take care that we do not pass new laws that might actually make it harder for vulnerable people to get rented accommodation.” Also, on 3rd May 2016, speaking during a debate initiated by Maria Caulfield MP on letting agent fees and deposits, the new HCLG Secretary, Robert Jenrick MP, said: “Does she appreciate...that estate agents are making around 40% of their income from lettings fees, so if we abolish or cap them, those costs will only be passed on to the tenant in a different way, principally through higher rents from the landlord? There are perhaps two answers. She has already alighted on one, which is to try to encourage—not mandate, but encourage—longer tenancies. Secondly, this House should be much more cautious in future about increasing the regulatory burden on landlords, so that letting agents do not have so many items to check off before they can get

tenants into properties; I am thinking, for example, of the right to rent changes brought in recently, which put extra costs and burdens on landlords and letting agents.” Finally, on 11th June 2014 the new PM used Mayor’s Question Time in London to say of the PRS: “I do not want to get into the business of trying to over-regulate a market that needs to develop. We need to expand the supply of private rented accommodation in London and we need to encourage investors to help us build hundreds of thousands more homes in London, many of them for private rent as well as for affordable rent.” The obvious question is will this view prevail? We urge you to participate in the consultation before it closes on October 12th. Google ‘A new deal for renting’. This tends to concentrate on improving the Section 8, and you need to make time available to complete it. iHowz have concentrated on the difficulty of evicting Anti-Social tenants without the S21 procedure, additionally many landlords will be hesitant about taking on a tenant unless they are very secure – the end result will be that the socially disadvantaged tenants will find it very difficult to find tenancies in the future. As many of the recent legislation aimed at bad landlords, it is the tenant who suffers. It will help if you write to your MP with any concerns about the potential loss of the Section 21. Note however that The Conservative Party has prepared a

standard response for its MPs to send to landlords contacting them about the Section 21 proposals:•

It notes that they (MPs): “very much appreciate the vital role that landlords play in the housing market by providing homes for 4.5 million households in the private rented sector”.

•

That said, notes that they: “believe it is right to acknowledge the concerns of renters” and as such are: “encouraged that the Government will consult on new legislation to abolish Section 21 evictions.” It goes on to say that: “Section 21 evictions are one of the largest causes of family homelessness and its abolition would provide greater certainty for tenants by establishing a practice of open-ended tenancies.”

•

The reply concludes: “I recognise that landlords have concerns about the effectiveness of the Section 8 process for evictions. The Government has expressed plans to amend Section 8 to ensure that landlords may end tenancies with confidence where there are legitimate grounds for doing so. Court processes will also be expedited to ensure that disputes are resolved quickly and smoothly. I would also note that only 6.6 per cent of tenancies ended in 2018 were due to a tenant eviction, and that over half of all landlords responding to the Government's consultation reported no difficulties repossessing a property through the courts.”

LANDLORD INVESTOR 49TH EDITION

MARKET UPDATE

The UK PRS is now larger than the GDP of some countries It is worth remembering that the Private Rented Sector (PRS) is now very large. Research commissioned by PropTech firm Bunk - which markets a rental app handling advertising, tenant referencing and management of properties to let estimates that there are now just over 5.2m private tenants in the UK.

This latest case has now been granted time for an appeal on the basis that so long as the gas safety certificate is provided before the Section 21 notice is served, then it is valid. It argues that the case could breach a landlord’s rights under the European Convention on Human Rights on the basis that it deprives them of their possession. The landlord has launched a crowd funding appeal to allow this case to go ahead. If you want to make a contribution you can see the appeal at www.crowdjustice.com/case/ protectingsection21rights note that you have until September 20th to make a contribution.

When multiplying the number of tenants in each county of the UK by the average annual rental cost, the estimated annual value of rental payments in the private sector is a huge £51.9 billion.

Leasehold and commonhold reform

Tenants’ financial contribution to the UK economy is larger than the GDP of Myanmar (£51.8 billion) and even affluent Luxembourg (£48.1 billion) as well as countries as varied as Panama, Uruguay, Costa Rica, Bulgaria and Croatia.

The House of Commons Library published a briefing paper considering trends in leasehold ownership and on-going problems associated with the sector. The Government has committed to legislate in this area "as soon as Parliamentary time allows".

The UK rental sector’s contribution to the national economy also surpasses the commercial might of a number of FTSE 100 companies.

See the briefing paper at researchbriefings.parliament.uk/ ResearchBriefing/Summary/CBP-8047

So hopefully this should remind ministers they are dealing with a very important part of the economy. Gas Certificate (CP12) You may be aware that an appeal case last year (Caridon Property Ltd v Monty Schooltz) held that the landlords’ failure to provide the gas safety certificate before the tenant occupied the property was a breach that could not be rectified later. It meant that the section 21 procedure was not available to the landlord at all. There has now been a new case (Trecarrell House Limited v Rouncefield (B5/2019/0499) which is slightly more complicated that the landlord contested they did not need to serve a CP12 as there was 'there was no gas appliance in the demised property'. The original Judge (Deputy District Judge Rutherford) granted the eviction order 'provided the gas safety certificate was given to the tenant before service of the section 21 notice then the notice was valid. The judge took the view that the relevant legislation and regulations did not prevent a landlord from remedying a breach before serving a valid notice.' The tenant appealed citing the above ruling

LANDLORD INVESTOR 49TH EDITION

Labour reveals five point plan to organise tenants against landlords Party leader Jeremy Corbyn recently tweeted about "five ways to take on rogue landlords" - and the video he links to pulls no punches about what he and Labour appear to think about those who operate the private rental sector. The video then outlines Labour’s five steps to tackling rogue buy to let operators. 1.

Build Relationships - it encourages tenants to knock on the doors of other tenants to see if they have similar problems.; Tell Stories - one male figure in the video says that by telling personal stories it “gets people emotionally involved”; Know Your Rights - this talks of finding sympathetic lawyers or the local Citizens Advice Bureau or others who can be “mobilised” to help tenants; Find Your Labour Party Community Organisers - one of these is quoted that people have come together “to fight for their futures”; Escalate Your Actions - this section talks of meetings, social media activity and petitions to “win this campaign”.

National landlord registration scheme for England The CIEH is demanding a national landlord registration scheme for England. Tamara Sandoul, Housing Policy Spokesperson at CIEH, said:

“This new national landlord register is absolutely necessary if we are going to properly get a grip on poor housing conditions in the private rented sector. CIEH has been analysing the schemes already operating in Scotland, Wales, and Northern Ireland, and believe the time is right for England to follow suit. Not only would a register give local authorities a much stronger picture of housing in their areas, but it will leave rogue landlords with nowhere to hide; all while empowering renters to make informed choices about their housing options. The Government’s own commissioned review into selective licensing schemes, published last month, included a recommendation for a new register, and cited widespread support across local authorities and tenant groups. We want to see all UK-wide political parties commit to implementing this register and shining a light on poor housing in England.” The Chartered Institute of Housing (CIH) is supporting CIEH’s new campaign. Tenants are happy with their current homes The recent English House survey has concluded most of private renting tenants are more than happy with their current 'homes'. In summary: • 84% of tenants stated that they were satisfied with their accommodation. • The majority of renters (71%) stated that they found it very easy, or easy, to pay their rent. • Private tenants on average spent 33% of their total income, which in some cases includes housing benefit, on rent, whereas the average for social renters was 28% with owner occupiers' average of 17% of household income. • London's renters average spend of household income was unsurprisingly the highest at 42%, with the rest of the country averaging 30%. • It shows that renters are spending less of their income on housing, at 33%, down from 34% the previous year and 36% in 2014/15, and are staying in their homes for over four years on average.

ADVERTORIAL FEATURE

SCOTT MARSHALL ROMA FINANCE

Finance options for property investors Scott Marshall, Managing Director of bridging, development and BTL lender, Roma Finance, discusses new products for landlords to exit a bridging loan or purchase investment property. Lenders are continuing to extend the reach of competitively priced mortgages and bridging products to more types of investment property for purchase, refinancing or to exit current loans. Giving landlords other routes to financing their income-generating property is vital in a dynamic market. For example, Roma Finance has recently launched a 5-year Buy-To-Let mortgage to allow property investors to purchase or refinance investment property or to exit a bridging loan. Roma have institutional funding for this medium term mortgage product that landlords can use to acquire buy to let and HMO property or exit a bridging loan, even if they aren’t existing Roma customers. The mortgage has a variable rate from 4.24%pa plus bank base rate, can be offered on an interest only or repayment basis for loans up to £500,000 with a maximum LTV of 75%. At the time of taking out the mortgage, the property does not need to be fully let, as the borrower’s other income will be taken into account.

LANDLORD INVESTOR 49TH EDITION

Any increase in value of a recently completed property allows investors to take equity out of the property which could, for example, be used to help fund their next refurbishment or renovation project, which Roma Finance could then bridge and convert onto another BTL once it’s incomeproducing. For existing Roma customers, the scheme mitigates valuation risk by using the same surveyor who valued the property for the bridging loan before the works commenced, it provides a suitable exit from the bridge and also offers its customers dual representation for the refinance, meaning the process of moving from bridge to term should only take a few days. In the current uncertain political and economic climate, how lenders are funded should be a crucial factor for landlords to consider, particularly since we have already seen some firms cease lending in recent months. At Roma we now have eight different funding lines from a variety of sources including well-known banks and building societies. This should be reassuring for customers as it because not only

is there plenty of money available now and into the future but perhaps more importantly, our business has been, and is continuously, under the microscope to ensure we’re doing things properly. Roma Finance continues to develop exciting new products for the market and expect their new products to be very popular with property professionals.

For existing Roma customers, the scheme mitigates valuation risk by using the same surveyor who valued the property for the bridging loan before the works commenced.

PRS UPDATE

TRACEY HANBURY

Evicting tenants How much does it cost landlords?

LANDLORD INVESTOR 49TH EDITION

PRS UPDATE

Tenant evictions have been in the news a lot this year, following the government's controversial announcement in April that it intends to scrap Section 21 of the Housing Act 1988. The process of regaining possession of a property is often criticised for costing too much and taking too long due to a slow court system. Evicting a tenant may become more difficult in the coming years if the government goes ahead and abolishes Section 21, but how much does it cost at the moment? Eviction costs breakdown Regaining possession of a property from a rogue tenant could cost the average landlord £40,298, equivalent to 18% of the average property price, according to research by Benham and Reeves. The agency breaks down the eviction process into a series of costs. The first is lost rent. It is calculated that it typically takes nine months to evict a tenant – this, multiplied by the national average rent of £679 per month could see the average landlord lose £6,111 in rent. Another potential cost for landlords evicting tenants is property damage. Benham and Reeves estimates that if a landlord has to refit their kitchen, it will cost £8,000, while refitting the bathroom and redecorating the property will cost £4,875 and £2,900 respectively. According to the study, many landlords also have to replace windows when evicting rogue tenants, which costs around £7,000 on average. Therefore, in the worst-case scenario, this leaves the average landlord with damage costs of £22,775 when evicting a tenant. The research also takes into account the cost of legal fees which can average up to £3,000 and the average buy-to-let mortgage cost of £935 per month, which means landlords could be paying up to £8,412 in mortgage costs out of their own pocket while trying to evict a tenant. These costs together add up to an overall eviction cost of £40,298 in the worst-case scenario. How much does it cost to evict a tenant across the country? Landlords operating in the cities of Glasgow, Belfast and Swansea stand to

LANDLORD INVESTOR 49TH EDITION

lose the highest proportion (29%) of their average property price when evicting a tenant. This is due to the relatively low property prices compared to the typically high costs of eviction. The lowest average proportion of a property's value landlords could lose when evicting a tenant is in Cambridge (12%), equivalent to £53,576. This is due to a high average house price of £430,282 and the opportunity to generate a solid rental income. In London, landlords could see the highest average cost for evicting a tenant (£58,091), equivalent to 13% of the typical property price in the capital. The higher potential cost for landlords is down to a larger lost rent figure and higher monthly mortgage payments. Meanwhile, it could cost the average Liverpool landlord £34,903 to evict a tenant - the lowest figure recorded across the country and equivalent to 28% of the average property price. The study also looked at all London boroughs and found that evicting a tenant could cost landlords operating in Kensington and Chelsea an average of £100,512 in a worst-case scenario. This is because landlords face the potential of losing a huge amount of rent during the eviction process while still paying significant monthly mortgage repayments. Having the right processes in place is crucial Rogue tenants are a landlord's worst nightmare, according to Marc von Grundherr, director of Benham and Reeves. He says the financial impact of having to evict a rogue tenant can be 'crippling'.

criminal tenants as they know they are the costliest to replace. He adds that considering the damage and financial burden allowing the wrong tenants in your property could have, it's so crucial to carry out stringent checks before granting a tenancy. He estimates that failing to do so could cost landlords thousands, if not hundreds of thousands, of pounds to put things right. Following the introduction of the Tenant Fees Act – which means security deposits are capped and renters no longer have to pay upfront fees – carrying out comprehensive tenant referencing is now more important than ever. As we move towards the government’s final announcement on its plans to abolish Section 21, it’s likely that the evictions process will be the topic of plenty of debate to come. For landlords, it’s therefore especially important to keep up to date with what’s going on and take the relevant legal advice when carrying out an eviction. Tracey Hanbury

It is calculated that it typically takes nine months to evict a tenant.

"We’re talking about serious criminal organisations that know the letter of the law and every trick in the book to prevent you from getting rid of them, including how to stall the court date for weeks on end and how to deter the bailiff when they finally do call," he says. Von Grundherr says that kitchens, bathrooms and windows are often the main features that get targeted by

PRS UPDATE

TRACEY HANBURY

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Landlord remortgaging trend continues

LANDLORD INVESTOR 49TH EDITION

PRS UPDATE

With recent research finding that remortgaging activity is set to increase in the next year, we take a closer look at why it’s a rising trend.

A third of buy-to-let landlords plan to remortgage in the next 12 months, according to recent research, with those seeking to add to their portfolio now more likely to do so via a limited company vehicle. The study, carried out by BDRC on behalf of Foundation Home Loans, revealed that 53% of landlords plan to remortgage as an individual, while 19% plan to do so within a limited company. A further 17% said it would depend on their circumstances at the time. The survey also uncovered that landlords with 11-plus properties are much more likely to remortgage within a limited company structure, with just over a quarter (26%) saying they would do so within the next year. What’s more, the study found that only 14% of landlords are currently planning to purchase property over the next year, with 55% of these planning to do so via a limited company. Brexit uncertainty, tax and regulatory pressures and ongoing political upheaval appears to be putting landlords off expanding their portfolios for the time being, at least until some clarity and stability returns. “Understandably when it comes to remortgaging there is a continued shift towards the use of limited company vehicles particularly as we see the growth in portfolio and professional landlords who understand the advantages of holding their properties within such corporate structures,” Jeff Knight, director of marketing at Foundation Home Loans, said “The ability to secure full mortgage interest tax relief, which is not available when holding properties as an individual, is a clear incentive for the move towards limited company borrowing.” What are the current costs of buy-tolet mortgage rates? The majority of fixed-rate buy to let mortgage rates are still falling, according to the latest tracker report from Property Master.

LANDLORD INVESTOR 49TH EDITION

The data from its August report found that the biggest fall in monthly cost was for five year fixed-rate buy-to-let mortgage offers for 50% loan to value (LTV). The report, which tracks the cost of mortgages from 18 of the biggest buyto-let lenders, revealed that the monthly cost of this type of mortgage dropped by £13 per month between July and August, while five-year fixed rates for 65% LTV fell month-on-month by £5. By contrast, a five year fixed-rate buy-tolet mortgage at 75% LTV was one of only two types tracked to rise in cost, up by £29 per month. This, the report said, may reflect the appeal of five year fixed-rate products to landlords struggling to meet new affordability regulations. “There have been a slew of rate cuts amongst lenders along with new offers being launched that are looking very attractive to landlords wanting to expand their portfolios or needing to remortgage,” Angus Stewart, Property Master’s chief executive, said. “Good news on rates may well entice some landlords back into the market by helping them offset the many recent regulatory and tax costs they have been struggling to absorb.” “If Brexit goes smoothly and some kind of deal is reached then we are more likely to see rates rise in line with the plans to normalise interest rates that the Governor of the Bank of England outlined some time ago,” he added. However, he advised that landlords needing to remortgage despite this rather complicated outlook for interest rates still need to plan at least six months in advance.

sector of the lending market, according to the most recent figures from trade body UK Finance. The data found that there were 32,760 new first-time buyer mortgages completed in June 2019, down 1.5% on the same month in 2018, while there were 31,000 home-mover mortgages, down 3.6% year-on-year. Meanwhile, there were 5,300 new buy-tolet home purchase mortgages completed, down 3.6% on the same month last year, and there were 12,500 remortgages in the buy-to-let sector, down 0.8%. Remortgaging tends to be popular in uncertain political and economic climes, with borrowers adopting a wait-andsee approach to buying and selling, so it’s no surprise that it’s having a spike in popularity at present. Separate research from chartered surveyors e.surv also found that remortgages were the main area of activity in the mortgage market in July 2019, with low rates ensuring that activity in the remortgage market has remained buoyant despite slowdowns in the wider market.

The data found that there were 32,760 new first-time buyer mortgages completed in June 2019.

That’s because a remortgage is in effect a request for a new loan and if landlords need to move to a new lender for a better deal they will need to gather all the paperwork they need in plenty of time. What are the current stats on remortgaging? The UK saw an increase of 8.3% in remortgaging in June 2019, with some 16,880 new mortgages completed in this

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Pass the Keys City Relay

Bunk Mashroom Ltd Howsy LettingaProperty.com

Best Property Investment Provider Nova Financial Group Lakeview Property Group X1

Goodlord Flatfair PlanRadar Limited Specialist Finance Provider of the Year Barclays Kuflink Together Market Financial Solutions

If you'd like to attend – and find out who the category winners are – please visit the LIS Awards website: www.national-lis-awards.co.uk 34

LANDLORD INVESTOR 49TH EDITION

N AT I O N A L L I S AWA R D S 2 0 1 9 T H U R S DAY 2 1 S T N OV E M B E R G rosve n o r H o u se H otel , Pa rk L a n e, Lo n d o n W 1 K 7 TN

C E L E B R AT I N G EXCELLENCE

2019 SHORTLIST

I N T H E P R I VAT E

ANNOUNCED

RENTED SECTOR

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 LIS Awards website: www.national-lis-awards.co.uk

The property people you can count on... Residential Property Buying or selling your home   Remortgaging  Equity release  Transfer of ownership  Buy to Let  Buying at auction  Residential leases  Landlord and tenant  Property dispute resolution

Commercial Property Acquisitions and disposals   Commercial leases  Landlord and tenant  Secured lending specialists  Property development  Planning and environmental issues  Section 106 agreements  Estate management  Commercial dispute resolution

“From buying or selling your home to a complex commercial land transaction, we have a wealth of knowledge and expertise from decades of experience, to ensure the right solution for you.”

www.abacus-law.co.uk

count on us...

Abacus Solicitors LLP Reedham House 31-33 King Street West Manchester M3 2PN T: 0161 833 0044 F: 0161 833 4004 E: info@abacus-law.co.uk Authorised and Regulated by the Solicitors Regulation Authority SRA #546507 Abacus Solicitors LLP is a limited liability partnership registered in England & Wales. Registered No OC350514 Vat No 101604573

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