LANDLORD INVESTOR
WRITTEN BY INDUSTRY EXPERTS COVERING ALL ASPECTS OF BUY-TO-LET
LANDLORD | PROPERTY | INVESTMENT
53RD EDITION | 2020
LANDLORD SURVIVAL GUIDE SEE PAGE 10 FOR COVID -19 L ANDLORDS’ MANIFESTO
IN THIS ISSUE... COVID-19 mortgage payment holidays
Is now a good time to invest in property?
HMO Advice in today's market
Investing in uncertain times
Entering the unknown for Landlords
Protect & survive
MAGAZINE NOW AVAIL ABLE
A warm welcome to the 53 Edition of Landlord Investor Magazine.
IN THIS ISSUE...
RD
Before I say anything else, and on behalf of the whole LIS team, I’d just like to wish you the very best of health at this deeply unsettling time. From a generation which has seen nothing but peace and unparalleled prosperity, this really is a worrying period in every sense. No more so than financially, with myriad questions about the UK housing market and private rented sector. At Landlord Investor we see it as our duty to bring you the very best advice possible, and have coalesced the key voices from our network, who have rallied to offer their own take on the current state of play – and how to best navigate the potentially tricky waters ahead. The selection of articles in this special edition of LI Magazine aim to shine a light on the key subjects of: taxation, investment, finance and HMO management. As Landlords ourselves, we're keen as you are to hear expert opinion, and have featured the COVID-19 Landlords’ Manifesto written by our sister publication and dedicated news portal, Property Notify. This aims to go straight to the heart of the issues we all face as Landlords. I'll leave it to you to explore the advice and services on offer. I know I speak for all our contributors when I say they would be only too happy to take your call if you're looking for assistance in an area they can help with. On the Landlord Investment show trail, we had to postpone our first show of 2020, but we'll release revised dates as soon as the UK stabilizes from the Coronavirus crisis. We've also created a digital platform for delivering all the superb content we have to share from our seminar speakers and exhibitors. Visit www.landlordinvestmentshow.co.uk/onlineshow to find out more and register your interest. You can also keep up to date with the latest developments via our dedicated news portal www.propertynotify.co.uk. Again I’d like to wish you all the very best at this difficult time, and hope you find the content in this issue of LI Magazine helpful. Stay well. TH
LANDLORD INVESTOR MAGAZINE
Editor Tracey Hanbury
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COVID-19 mortgage payment holidays
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Is now a good time to invest in property?
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HMO Advice in today's market
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Landlords’ Manifesto
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Investing in uncertain times
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Why the entire rental experience needs rethinking
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Entering the unknown for Landlords
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Protect & survive
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Nine essential points to follow when managing your property or tenants
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Reece Mennie
Design
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Contact
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OLLIE HANBURY HEAD OF SECURITY AND ENTERTAINMENTS MANAGER
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LANDLORD INVESTOR 53RD EDITION
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LANDLORD SURVIVAL GUIDE
JENI BROWNE MORTGAGES FOR BUSINESS
COVID-19 mortgage payment holidays
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Over the last few weeks, COVID-19 has increasingly spread throughout the UK, resulting in the Government putting into place a series of social distancing measures to protect the citizens of the UK.
Since these measures have come into place, plus with the increase of people getting sick, one of the critical concerns that most homeowners and landlords alike have shared is how to pay their mortgage.
because of COVID-19. The criteria for holiday payments will vary from lender to lender, so it’s essential to speak to your lender if you are experiencing or reasonably expect to experience difficulties making your payments.
The Government announced a three months payment holiday for both homeowners and landlords who are unable to pay their mortgage because of the coronavirus.
What happens to these payments?
Which lenders are offering payment holidays? All lenders are required to offer payment holidays. Some lenders are offering repayment holidays on mortgages and loans for customers affected by the Coronavirus outbreak. These include Royal Bank of Scotland (to include NatWest and Ulster Bank), Lloyds Banking Group (to include Halifax, Bank of Scotland and MBNA), and TSB. Other lenders, such as Barclays, Virgin (to include Clydesdale and Yorkshire Bank), Metro Bank, Post Office, Co-Operative, First Direct and Santander are not offering currently blanket measures like this. However, they are offering to extend help to those affected on a case by case basis and are encouraging those who are experiencing financial difficulty to contact them. Will I automatically qualify for a mortgage holiday?
Any deferred payments will need to be caught up in the future. Guidance from the FCA says that they should ensure that taking a payment holiday should not have an impact on your credit rating. You will still be charged interest during the payment holiday unless you are told otherwise by your lender. How long will the payment holiday be? The Government has currently announced that payment holidays
should be for up to three months, but this may change. Some lenders may offer more than this depending on your circumstances. If you can start repaying your mortgage before the end of your payment holiday, you should speak to your lender to arrange for your repayments to start. How do I contact my lender? Lenders are currently experiencing a significant volume of calls, so be prepared that it may take a bit longer than normal to get through to them. For a comprehensive list of lender contact details, visit the MFB website here: https://www. mortgagesforbusiness.co.uk/newsinsight/2020/march/lenders-covid-19resources/
The criteria for holiday payments will vary from lender to lender, so it’s essential to speak to your lender if you are experiencing or reasonably expect to experience difficulties making your payments.
Not all landlords will automatically get a payment holiday; your lender will require proof that you or your tenants have suffered financial hardship
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LANDLORD SURVIVAL GUIDE
PAUL MAHONEY MANAGING DIRECTOR NOVA FINANCIAL GROUP
Is now a good time to invest in property?
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LANDLORD INVESTOR 53RD EDITION
LANDLORD SURVIVAL GUIDE
The elephant in the room at the moment is what impact will COVID-19 have on the economy and the property market.
That is the question all property investors, and those thinking of investing, have on their mind at the moment. What is important to keep in mind is that there has been zero impact on property values so far, and it is simply speculation as to what the impact might be. In our view, property investment is about time in the market, rather than timing the market. One reason for this is that the latter is very difficult to predict. Aside from that property is a long-term investment. If you are buying desirable property in good locations, where there is strong demand and significant reasons for people to want or need to live there, then there will continue to be demand for your properties, regardless of the economic cycle. The worst possible thing you can do is to listen to the media. For example, think back to 2007, when just before the last major financial crisis the media and the masses were saying that it was the best possible time to buy, and the property market was never going to go down in value, or ever stop it's significant run. If you had listened to that you would have bought at the worst possible time. Then two years later, in 2009, when the market started to turn positive, everybody was depressed, it was the worst possible time to buy, "you'll never make money from Property”, but that was actually the best possible time to buy.
Christmas. The moral to the story here is that property investment is always daunting. It's a large amount of money and you want to invest with as much confidence as you possibly can, but there is strong evidence to suggest that it is not about trying to time the market, and certainly not about following the masses, or the media. The fundamentals of the UK economy and the UK property market are strong, nothing has changed in that regard. If you are buying desirable property, in good locations, they will rent well, and if you can retain them long-term, they will grow in value. We meet with far too many people later in their lives, who have earned respectable salaries, but have a waited
for the ‘perfect’ time to invest, which surprise surprise does not exist. Therefore, these people either sat on their money, or put it in the bank at a low return; and in most cases found it very difficult to meet their retirement goals. In the words of Warren Buffett; ‘be fearful when others are greedy and be greedy only when others are fearful’. If you Have any questions about how best to proceed with investing in property to achieve financial goals considering the current market, then please get in touch. 02038000600 Info@nova.financial www.nova.financilal
The fundamentals of the UK economy and the UK property market are strong, nothing has changed in that regard.
So, completely ignore the media and invest based upon long-term fundamentals, opposed to short-term uncertainties. There will always be reasons not to invest, we had Brexit, then we had the election, and then we had Easter, and then we had
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LANDLORD SURVIVAL GUIDE
PETER LICOURINOS FOUNDER HMO ON STEROIDS / HMO PREMIER – MAXIMISING PROPERTY INVESTMENT
HMO Advice in today's market 8
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First and foremost, the most important thing at the moment is to keep calm and not make rash and emotional decisions; I realise that is easier said than done in the current climate, but it is essential that we all make a concerted effort.
For those of you with occupied houses, communication with your tenants is key. They are feeling as uncertain as the owners are, so do offer guidance but make sure it comes from credible sources. Direct them to websites and don't rewrite any guidance to avoid getting the blame in the future for providing misinformation. In term of advice with tenants and rent, make sure you follow government guidelines and understand what is on offer and how to claim. Speak direct with mortgage lenders for the payment holidays available and use the internet rather than being on hold for hours and clogging up the phones. Communicate with your tenants. We manage all our rooms on WhatsApp groups so we can be transparent and work with everyone together to answer questions, give advice, understand their position and help them understand the benefits. My advice to landlords with empty rooms is to stay patient. We will recover and your houses and rooms will be filled. Things will start up again and before you know it, we will be back to business as usual. To ensure your welfare and that of your tenants, do everything you can to work remotely. Check-ins, check-outs and viewings are all possible remotely now so there is no need to take any risks by being in the houses too much.
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All properties with vacant rooms have had pre-recorded videos taken and these are being offered as a tour of the house in place of a viewing. So far, every person enquiring has been understanding of the current situation and have welcomed the receipt of these videos. We are continuing to receive leads and will follow these up in due course, as we would normally do. We are offering a 10% discount on rooms and providing key workers and NHS staff with a 50% discount in rent
for needed accommodation, especially close to hospitals. More information and regular updates regarding the impact of COVID-19 on the UK property market can be found here www.propertynotify.co.uk/ featured/coronavirus/ Further guidance can also be sought via the Gov.uk website: www.gov.uk/ housing-local-and-community/rentedhousing-sector Peter Licourinos
My advice to landlords with empty rooms is to stay patient. We will recover and your houses and rooms will be filled. Things will start up again and before you know it, we will be back to business as usual.
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COVID-19
Landlords’ Manifesto
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Property Notify has been watching the Government’s response to the COVID-19 pandemic. With our audience’s interests in mind, we now present a Landlords’ Manifesto to the Government.
Our audience have highlighted a number of concerns and grievances to us relating to Government policy. These cover matters that were apparent before the emergence of COVID-19, and new issues specifically relating to the pandemic response. As thousands of landlords across the UK seek reassurance that their vital interests continue to be recognised and their rights protected, we are urging policymakers to consider the points raised below in their evolving response to the current crisis gripping the country. Enforce sensible eviction rules In April 2019, many landlords voiced concern about proposals to scrap Section 21 of the Housing Act 1988. It has remained a contentious issue, and the proposals now await being brought before MPs at an undisclosed time, as part of the Renters’ Reform Bill. The matter needs to be considered in the context of the disruption that COVID-19 has created. We can completely understand why the Government needs to make moves to reduce this disruption and protect people from being evicted at a time when they need to implement selfisolation or at the very least, social distancing. It is unpleasant to imagine the impact that evictions would have during this time, leaving people to scramble for a new home in the midst of this pandemic. We welcome the temporary ban on evictions, for a period of three months in this current climate.
and detail to their response, with consideration for exceptions in the most extreme cases. Some individuals renting properties in the UK may be live-in landlords, occupying properties with anti-social tenants. It’s one thing to be able to self-isolate in one’s own home, but landlords shouldn’t be trapped in living arrangements with abusive tenants with nowhere else to turn to. We need to see sensible eviction rules brought in at this time that take into consideration the position of many thousands of people on both sides of the landlord/tenant debate. People are living in precarious situations and any new eviction policies need to help alleviate concern, not add to it. Limit spread of COVID-19 wherever possible One of the issues that landlords will face is the fact that properties will require essential work to be carried out during the lockdown period. This poses an obvious challenge during a time when people need to
limit unnecessary contact, especially in vulnerable households. Inspections and tradespeople having to enter homes risk furthering the spread of COVID-19 if they fail to consider the health and safety of landlords and tenants. We are urging the Government to give reliable and consistent advice to landlords on how to go about requesting much-needed repair work to properties for the duration of the pandemic. In line with ARLA Propertymark and others in the property sector, Property Notify are calling on the Government to do all it can to ensure that in-person visits to properties are limited to the bare minimum to comply with advice on social distancing and self-isolation. In situations where visits are an absolute necessity, there should be reassurance for both landlords and their tenants that the risk of infection is mitigated. If people can’t even self-isolate in the safety of their own homes, it will become significantly harder to halt the spread of COVID-19 otherwise.
One of the issues that landlords will face is the fact that properties will require essential work to be carried out during the lockdown period.
What we would like to see from the Government is the necessary nuance
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The UK has been a hub of creativity and a fertile place for people to invest for decades. Our property market is diverse and there are incredible opportunities to be had. We’re confident that any freeze on activity in the present will be followed by an eventual thaw and a strong recovery over the long-term.
Assurances required about mortgages In the current climate, the Government has introduced mortgage holidays, meaning homeowners facing financial difficulties have the necessary breathing space of up to three months. We commend the Government for being responsive enough to introduce the measure. We were particularly pleased to see that the mortgage holiday also applies to buy-to-let mortgages. This is the exact kind of connected thinking that we need to see more of in the national response to the crisis. Many landlords already find themselves presiding over properties in which their renters are unable to make rent payments, due to job losses or dwindling incomes. The mortgage holiday measure is welcomed as a temporary fix. The alternative, of spiking defaults and selling off properties to clear debts, has hopefully been averted as a result of the Government’s quick thinking. If the situation warrants it, we strongly urge the Government to consider an extension here to ensure that no landlord finds themselves defaulting on a mortgage through no fault of their own. On Thursday 26th March, we learned that the Government plans to effectively freeze the housing market,
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urging people to delay moving homes and limit the number of viewings. We understand that banks have agreed that mortgage offers can be extended, in situations where completions faced some delay. For landlords, it looks unlikely that finance will be available to grow portfolios anytime soon. The focus from banks, the Government and landlords themselves now needs to be on protecting the stability of existing portfolios and rental properties. This is the only way to ensure the continued availability of high-quality accessible housing in the UK. Streamline the Universal Credit process From one contentious matter to the next, Universal Credit must be made more accessible. Both the National Landlords Association (NLA) and the Residential Landlords Association (RLA) have suggested that the five-week wait for first payment of Universal Credit should be eliminated or reduced as much as possible. Following correspondence with these associations to clarify their stances on the matter, we firmly support their position. As the economic impact of the COVID-19 pandemic becomes apparent, we’re seeing just how many people will be left without a steady
income or a secure job. Many tenants will rely on Universal Credit to pay their rent, if their incomes are simply not able to cover costs. With thousands of people navigating the long and potentially arduous process of applying for Universal Credit for the first time, it’s essential that access is quick and easy. Unless Universal Credit is supplied efficiently to the right people, issues could arise. For this reason, we also call on the Government to make rent payments direct to the landlord when they are covered by Universal Credit. Consider a review of housing policies The proposed scrappage of Section 21 of the Housing Act 1988 has been controversial, ever since it was first unveiled in April 2019. In addition, the implementation of Section 24, which phases in the removal of mortgage interest relief, has been criticised by many landlords for some time. Stamp Duty Land Tax (SDLT) has also been a pertinent issue for landlords, filling Government coffers to the tune of roughly £12 billion on an annual basis. One reader wrote in to Property Notify directly in March 2020, urging the Government to consider scrapping the SDLT surcharge on UK-based landlords, as well as scrapping Section 24 and reversing plans to scrap Section 21.
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LANDLORD SURVIVAL GUIDE
Statement from Property Notify COVID-19 is unlike anything we have experienced as a country, and Property Notify appreciates the unprecedented measures the Government is taking, to support millions of people across the UK. We also appreciate the things people are doing to limit the spread of the virus in their daily lives.
Once the COVID-19 pandemic is no longer a pressing concern, and emergency measures are lifted at last, we urge the Government to take stock of existing and future housing policies and conduct a comprehensive review, in co-operation with landlordassociated groups. This review must assess how to deliver a fairer system, and what can be done to support landlords, some of whom have felt like they are being forced out of the property market altogether. We don’t yet know what the world will look like in six months’ time, let alone next year. But we can say with certainty that the ramifications of the pandemic response will be felt for years to come. With a careful policy review and the right support, landlords will be in a better position to continue providing the rental stock required by a growing UK population. Post-COVID-19, the economy will recover. But in order to do so, the housing market will need to be strong and balanced. As things stand, Government policies are perceived to be empowering one group at the expense of another; a policy review will be critical to support landlords in standing on an even footing. Without this, the UK could find itself facing a serious shortage of accessible properties at a time when the country is supposed to be gearing up for a period of economic recovery.
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Maintaining good hygiene, following the Government guidelines and using measures such as social distancing and self-isolation remain the best tools we have against COVID-19, until a proper vaccine is made available. Our homes are currently a place of sanctuary, protecting many of us from a virus which is still yet to be fully-understood. We are encouraged by the measures taken to protect the most vulnerable in society during this difficult time – including the millions of pounds that are available to local authorities, to support rough sleepers in finding a roof over their heads. Last week, councils were given a 48-hour period to put emergency accommodation in place for rough sleepers, as well as being given an urgent request to house all people living in homelessness by Sunday 29th March. The requests are welcomed for being so bold and urgent, but there is reportedly a lack of clarity about funding. The Government must put all the necessary resources in place for councils, to make sure no one falls through the cracks. Property Notify urges people to do all they can to help flatten the curve, protect the NHS
and ultimately save lives. It is a testament to the work of those in our health service that over half a million people volunteered to offer support at a time of great need. The UK has been a hub of creativity and a fertile place for people to invest for decades. Our property market is diverse and there are incredible opportunities to be had. We’re confident that any freeze on activity in the present will be followed by an eventual thaw and a strong recovery over the long-term. We believe the fundamentals of the housing market are strong, so a recovery is assured. In effect, it’s all just a matter of timing. How long this pandemic takes to dissipate depends on how quickly we can all flatten that curve. The ideas we have presented in this Manifesto are informed by landlords’ viewpoints and direct input from those whose livelihoods depend directly on the success of the market. We believe that this Manifesto will help support the housing market during this difficult time, with a clear roadmap of ideas for the Government to act on, not just to sustain it in the here and now, but to help the British economy recover, when the time comes to get back to business.
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REECE MENNIE HUNTER JONES
Investing in uncertain times
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The important decisions people make next will define their financial outlook for the next 10-15 years.
With so many aspects of the property market available for potential investment, the biggest question asked is: Where is the best place to put my money? Understanding your needs as an investor is the best place to start. For so many, unfortunately, it will not be investing for additional income to cater for a more relaxed retirement or extra family holidays anymore. It will be recovering from this unprecedented time we are currently facing and weighing up the risk and reward because any more financial loss for some just isn't an option. Others might find themselves unhealthily looking to gamble to recover their losses which is not a position anyone should put themselves in. So, what is a gamble in the foreseeable market? Where are the risks? Where are the safe bets? Nothing in life is risk-free and if you didn't believe that before 2008 you most likely do now. After seeing a strain of flu crashing all global markets and causing another global recession, I’m sure we all believe anything is possible. What we have now is experience, knowledge and the 'T-shirt' in bouncing back. Myself, my business and my business partners all share the same proven strategies and confidence required to build and withhold a successful profitable property business through even then bleakest of financial times. We are now in a fortunate position to help and guide investors through what seems like one of the riskiest times to invest in the markets LANDLORD INVESTOR 53RD EDITION
and how one wrong decision can give unthinkable results.
I truly believe there is no better place to build your financial security.
The positive for investors is that the strategies are already in place and our UK property market is one of the strongest in the world. Using experience and knowledge to understand what is required is fundamental to understanding how to maximise the benefits and mitigate risk.
Our strategies are not a secret, we share our knowledge and help thousands of investors understand how they can improve their financial position every year. Get in contact with me and my team to find out more. Reece Mennie
The positive for investors is that the strategies are already in place and our UK property market is one of the strongest in the world.
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PRS SPOTLIGHT
TOM ALLASON CEO & FOUNDER, RESIDENTLY
Why the entire rental experience needs rethinking Residently founder Tom Allason shares his response to the everchanging face of the rental market.
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PRS SPOTLIGHT
The idea for Residently came about when I was looking for a home to rent in London. It had been a decade since I last rented and I was quite looking forward to renting again... but I was surprised how the rental industry had failed to move with the times.
Needless to say, I was surprised at how the rental industry had failed to move with the times. We are used to booking a taxi, takeaway or trip away in seconds – so why shouldn’t we expect the same kind of responsiveness from what we spend the most on: our fundamental need of shelter? Homeownership is becoming less compatible with today’s consumer, who expects to be in a job for four years, not 40. Ownership and the transactional costs associated with buying/selling act as a barrier to taking a job on the other side of the city, let alone the world. Rising property prices used to ameliorate these costs, but how much more capital appreciation lies ahead? How much more income can future buyers spend on a mortgage even with interest rates at record lows? Would a deposit be better invested in public equities? These are the questions that today’s would-be homeowners are asking themselves. A major reason why people still buy isn’t speculation or the desire to become an accidental landlord, but that renting is still a frustrating and inflexible experience. For me, that’s the opportunity. What if renting was effortless and provided the freedom to enjoy the things that matter most? We believe we will become the world’s leading rental brand by making the process of renting a property seamless, and then providing convenient services which enable the tenant to thrive in their home.
LANDLORD INVESTOR 53RD EDITION
For landlords more revenue, lower costs, better tenants In creating a really great experience for the renter we also improve the economics for property owners. By removing friction from the process of renting a property, we let properties 5x quicker than the industry average, so reducing void periods. Furthermore, as a technology platform, we don’t have the overheads of a traditional letting agent, while we also benefit from an additional revenue stream in the optional home services we provide to tenants.
In London, this allows us to charge landlords nothing for their first three months then 7.5% commission thereafter. This includes finding tenants and managing the property, and there are no hidden fees, even at renewal. I am a firm believer that expectations only move in one direction. As consumers get a better experience across other sectors of their lives, they won’t go back to accepting mediocre. Our strategy is quite simple; we understand and respond to what our customers want and work to exceed those expectations. It isn’t rocket science – it’s our mission to provide an effortless way for renters to find and thrive in their home.
We are used to booking a taxi, takeaway or trip away in seconds – so why shouldn’t we expect the same kind of responsiveness from what we spend the most on: our fundamental need of shelter?
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BEST SEMINAR SPEAKER
PAUL SHAMPLINA FOUNDER OF LANDLORD ACTION BRAND AMBASSADOR OF HAMILTON FRASER STAR OF CHANNEL 5
Entering the unknown for Landlords
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Where do I start? Every industry is affected by Covid-19 and the complete shutdown of business. We are in unchartered waters and all just trying our best to adapt to this new, hopefully temporary, ‘norm’.
I have been inundated with phone calls from landlords worried that their tenants may not be able to pay the rent because of possible job losses, and my sympathy goes out to every tenant and landlord facing such uncertainty. What I cannot stress is enough is we are all in this together and therefore must work together to come through the other side. So, what do we know? The government has brought in lots of new legislation and fiscal measures to try and help ease the burden of this virus, from the job retention scheme and nonrepayable grants to increasing Universal Credit and deferring income tax and VAT payments. But we know for many, it is still going to be a real struggle to stretch finances over the next few months, so it is understandable that both tenants and landlords are concerned. Notice period extended: Until September 2020, landlords must give tenants three months clear notice for all Section 8 and Form 6a (Section 21) notices. This law may possibly be extended. Evictions banned: The Ministry of Housing, Communities and Local Government (MHCLG) has also halted all ongoing housing possession claims. Therefore, no new claims can be issued, any hearings will be adjourned and also bailiff appointments will be vacated for this three-month period. This suspension of housing possessions action will initially last for 90 days, but this can be extended if needed. The government has made it clear no tenant should face eviction during this pandemic. Tenants’ still liable: However, guidance also states that tenants are still liable for their rent and should continue payment as usual, with support available to those who find themselves in financial hardship. Mortgage holiday available: The Government has also introduced a ‘mortgage holiday’ of up to three months for landlords whose rental income is affected. Landlords apply to their lender for this and must be able to prove that
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their tenants have been affected by Covid-19. What now? First of all, communication is key, now more than ever. I am urging landlords to work with their tenants. Pick up the phone, drop an email, send a text, reach out to see how they are affected by this crisis and similarly explain how it is affecting you. Letting agents’ branches have had to close, although some do have skeleton staff answering the phones remotely. If you have your property managed, you may want to contact the letting agent to see if they have spoken to the tenant, otherwise get in contact with the tenant yourself. No viewings, check outs, inspections or inventories will be taking place. The Government has advised against move-ins, but if there are contractual obligations, then the guidance of maintaining a safe distance must be adhered to. Landlords remain legally obligated to ensure properties meet the required standards therefore landlords still need to deal with urgent essential health and safety repairs, especially for elderly and vulnerable tenants. Nonessential work can be delayed but I would advise landlords to keep a record of communication explaining to tenants why certain maintenance requests have not been carried out. Support your tenant Many landlords choose to evict tenants when they fall into arrears, but as we all know, these are unprecedented times, and landlords will find that previously punctual tenants may struggle to pay rent on time. That is why it is in the best interest of all tenants and landlords to work together, understand each other’s limitations and establish a reasonable payment and review plan when the time is right. The government is also looking to strengthen the “pre-action protocol” on possession proceedings to include
private renters – meaning that private landlords looking to begin possession proceedings will have to engage with their tenants more extensively first. This will help landlords and tenants to agree reasonable repayment plans where rent arrears may have arisen as a result of the crisis. If your tenants have been forced to reduce their earnings, what capacity do you have to mirror this in their rent? If you are struggling to keep up with mortgage payments, contact your lender as soon as possible to see if you can take a mortgage holiday. Ultimately, landlords want to retain good tenants and tenants want to remain in their homes, so my plea to you all is to take a long-term view and support each other. As a leader in this industry and a landlord's advocate/friend, I promise to help you as much as I can. If you have any questions or need some advice feel free to write to me. Paul@ landlordaction.co.uk or reach out to me on LinkedIn or Twitter.
Communication is key, now more than ever. I am urging landlords to work with their tenants. Pick up the phone, drop an email, send a text, reach out to see how they are affected by this crisis and similarly explain how it is affecting you.
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LANDLORD SURVIVAL GUIDE
CHRIS BAILEY GROUP DIRECTOR LESS TAX 4 LANDLORDS
Protect & survive As landlords feel the financial impact of the Covid-19 crisis.
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LANDLORD SURVIVAL GUIDE
From a purely financial perspective, the government has ruled out rent holidays during the Covid-19 epidemic. At the same time, landlords are being called upon not to evict tenants for at least a three-month period.
Rent should still be paid, but the reality is landlords are already missing rent cheques, and just like other businesses – landlords need to batten down the hatches too.
Section 24 Impact on Tax Payments on Account 40000 35000
With all of this going on, sorting out your taxes may seem like an afterthought. If you make no money – you pay no tax. At least that’s how it used to be before Section 24.
July Payments
30000
Jan Payments
25000 20000 15000
Fortunately, the government are allowing all landlords who made a tax Payment on Account in January 2020 to kick the can down the road, with the option for an interest free deferral for your second 19/20 tax year payment. The payment due by July 31st 2020 can be pushed back until January 31st 2021. This is an especially welcomed move by the government whilst cashflow is tight, but it does mean landlords may need to plan further into the future than they might normally do. There have also been calls - although so far these have fallen on deaf ears - for the chancellor to delay the final stage of Section 24 which comes into force from April 6th. Such news would be welcome but has not yet been forthcoming and does not seem likely. Those that currently have a Section 24 issue then will still see this compounded in their January 2021 tax bills as the payment on account taxescalator effect continues to build. As an example, let’s look at a landlord taking advantage of the payment deferral, with £160,000 Gross Rental Income, £30,000 Expenses and £70,000 in disallowed Finance Payments and no other income. This landlord will need to find £27,070 in January 2021, and £12,250 in July 2021. A total of £39,320 which is almost double the £19,200 paid in 2019 (see chart).
LANDLORD INVESTOR 53RD EDITION
10000 5000 0 2018
2019
2020*
2021*
2022
2023
*July 2020 Payment on Account deferred until January 2021
A reduction in rent receipts will mean less tax due of course, but mortgage payments still represent ‘profit’ without income. Some BTL lenders are offering 3-month payment holidays, and landlords should investigate all possibilities as the knock-on effects could see a reduction in the tax bill due January 2021. Businesses across the world right now are being painfully reminded that cashflow is king, and of course taxes are a critical part of your finances. For many landlords, accounting for tax on property profits in personal names is no longer an option and putting off a decision on restructuring your business for too long could prove costly in the long term.
Portfolio landlords in particular should still seek advice. Becoming tax-efficient now could lead to a significant reduction in payments due in January. Such advice should also be tax deductible. In a black swan event like this, the government are rightly backing British business. Unfortunately, much of this support does not apply to landlords, although there are options something we can look at in more detail in another article as this develops. Chris Bailey, Less Tax 4 Landlords For more information please visit lesstaxforlandlords.co.uk
Businesses across the world right now are being painfully reminded that cashflow is king, and of course taxes are a critical part of your finances.
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LANDLORD SURVIVAL GUIDE
MARIE PARRIS GEORGE ELLIS PROPERTY SERVICES
Nine essential points to follow when managing your property or tenants during covid-19
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Practical tips for any self managed landlord to implement from an experienced managing agent.
As a managing agent (and landlord) for over 20 years, representing a cross section of clients and tenants the current situation meant that we had to adapt some of our usual procedures in order to implement the current crisis of covid-19. My mantra of being consistent, fair, transparent and professional is what should layer your procedures at all times. 1) Let tenants know you care This really should have been actioned way before our government enforced restrictions, but if you have not already done so, then send tenants some general information about what they should do if they experience any symptoms, state some of the main points, remembering to point out if they lived in a shared household. Include safe distancing for repairs, where there are no symptoms certain trades are still attending emergency appointments. Provide tenants with a separate clean safe schedule for them to implement. I ensured for all of my tenants that I delivered bags and bags of cleaning products to get them through this period, even loo roll. 2) Know your critical figure Work out this figure, what bills could be delayed or reduced. Not every landlord is entitled to a mortgage holiday – they may have a commercial loan or be in arrears. When you know what this critical figure is, you will have some idea on whether you can weather this. Is there some money you can pull in from your savings or personal income? Will you benefit from the recent Bank of England rate cuts – that those savings could be reassigned for the end of April 2020 and beyond. Ensure you contact all of your creditors and get something in writing from them in order to finalise that critical figure, no assumptions please. 3) Employment log Make an employment log of all your tenants, this information you should be able to get from your referencing and
LANDLORD INVESTOR 53RD EDITION
or application forms. The employment log should include occupation, employer (if applicable), status, and their salary. At a glance you may be able to see who will be more exposed. The tenant who is on housing benefit is likely to be in a more favourable position than the tenant who works in an office of a fashion company. This is why it is always good to have a mixed tenant base to cover risk if the portfolio allows. 4) Applied knowledge is key At George Ellis, one of the things we did immediately was to gather on one document (and we are constantly updating) all of the government support available. We named it “support advice” - not only does it educate you, but allows you to assist your tenants. We have sent this information to any tenants who have contacted us stating that they believe that they will experience some difficulty with paying the rent during this period. However, you can send this information to every tenant, that is up to you. The information allows the tenant to find their situation (and yes, it is comprehensive) and contact the relevant authority. Whilst I appreciate this is a global unprecedented crisis, time is crucial as there are long waits. Tenants need to appreciate that clear & concise communication with landlords is more vital than ever and a “see what I can do” response from any tenant, especially when there is so much help from the government is simply not acceptable in my opinion. Landlords and tenants must work together and this can be achieved. 5) How to make a decision to offer a rent payment holiday Some of the other factors to take into consideration, could include, date of tenancy, is it fixed or in periodic, any history of late payments or arrears and if so, did tenants notify you beforehand? Is there a guarantor, how much is the deposit, is there any savings the tenant(s) may have, amongst other things? Once you have
sent the support advice form it is time for you to telephone your tenants. Everything you say verbally should always be followed up in writing. How is your tenant going to pay you back the rent once we get through this? Is the vital question every landlord needs to ask themselves. It has to be said that I have spoken to some tenants who think a rent payment holiday means they never have to repay the landlord. Perhaps the term needs to be changed to deferred rent payment. You also have to sort out who is genuine and who is just taking advantage of the situation. Speaking to a set of tenants when I explained to them that the temporary reduced rent will need to be repaid, they told me that they did not want to and that they would be looking for a cheaper property to move to – good luck! Suffice to say, a letter was sent to them saying that they wanted to decline on the rent payment plan offered to them but also making it clear that no member of the George Ellis Property team would be facilitating a check out during government restrictions and it clearly states in our tenancy agreements that to end the tenancy this formal process must be conducted by a member of our team. For those who are genuine, negotiate what you can, listen thoroughly to what tenants are saying, demonstrate compassion. However, when it comes to a plan there has to be a clear way to pay it back, over a set period. Remembering this is likely to go on for longer than any of us can imagine. If your tenant has a rent of £1200pcm and can only pay £700.00 are you happy to defer £1500 over the next three months? If they are in a fixed term with say only five months left will they be able to pay £1200 plus an additional £750 for the remainder of the fixed term? And whilst I am NOT recommending that any landlord should give a new fixed term to any tenant during this pandemic. You have to weigh up your own risk. How many months are you prepared to give tenants to pay the deferred rent.
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Our government have not really done anything to assist landlords to ensure we will be paid our rent that is due on all tenancies during this time – still just ignoring our contribution to society. What will happen if tenants decide not to pay you back and just move? The courts were already inundated, can you imagine once this has passed? What provisions do you have in place if that becomes your reality? The disproportion of confirmation of tenancy requests we receive, to tenants giving their notice is vast. So, landlords are you taking in tenants without covering this procedure and more (but there is a time for everything and perhaps this is not the time). Needless to say, there are a minority of tenants who will not have integrity, but those stories will unfold within time. 6) The agreement Once an agreement has been made, put it in WRITING for the tenant(s) to sign. Ensure the agreement has the word temporary and it is on the proviso to certain conditions. Some of the main ones being; noting payments to be paid on or before the agreed date, that it must be repaid in any event before the end of the tenancy/tenant vacate, enabling landlords to deduct from deposit, signing the agreement (all tenants) and initial multiple pages if applicable. 7) Monitor and log everything Online banking is invaluable to all of us and for those landlords who do not have access to your bank accounts online. I have no suggestions. It will take you hours to get anyone to answer at the banks. You have to check daily, be in contact with your tenants if their promised rent has not arrived, but start the conversation with “how are you feeling” or something similar. Even if you are not expecting rent, just check so you can see if any suspicious activity. Log all conversations with date AND times. Those of you that attend my seminars know the importance of this. 8) Repairs, Maintenace And Compliance Make use of your time to ensure your documents are up to date. Are your tenancy agreements comprehensive? Is your GDPR statement compliant? All deposits registered correctly? What about the tenants that took occupancy just before the lockdown? Do your CP12 (did you have to look that up – it is your gas safe certificate) two months ahead of the expiry. Communicate any access
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into the property but observe what I have said in Point 1. Ensure all other regulatory documents are up to date. 9) Do not take on the negative pressures of others This does not just apply to landlords but one of my favourite top 20 songs is by an artist called Delroy Wilson, who has a song named “We’re all in this thing together” never has a song been so apt right now! So, let me share the outline of a story of what happen to us. A guarantor of one of our tenants who expressed he could not pay anything as he was made redundant, was contacted by way of letter to just put him in the picture. We thought it was best to be proactive and try and get something resolved. Remember he was not forced to sign the personal guarantee 16 months ago. The tenant had a calm and civilised conversation with the agency prior to the letter being sent to the guarantor, the tenant was given our support advice document and just chose to ignore it after he agreed to a rent payment plan. The abuse the guarantor left on our voicemail was not only shocking, but damn right threatening and insulting. In short among other things recorded, he stated he would start a damaging social media campaign against the company. A more detailed letter was sent to him (I was not even going to try and attempt to reason with a person like this verbally). A telephone conversation did
happen, the result being, the guarantor recognised his obligations. Rent that was initially promised by our tenant was paid to us. Safe to say there is a signed rent payment plan in place. I tell you this story, so you do not allow your headspace to get filled with negativity, - because you can control that. I also appreciate, that whilst we are ALL in this together and the threats and the uncertainty are very real and scary. Do not allow the financial negative pressures of others to impact on your mindset or behaviour. One day, when this is all over, and we will get through this, whatever the financial consequences may be, the most important thing is to stay safe and alive, knowing that you did not take your negative spirit to try and impact others, who were merely trying to find a win-win situation for all involved.
Marie Parris is CEO & founder of George Ellis Property Services, the company operates across seven disciplines to include lettings & management across London, block management, an independent tenant referencing service, inventories and sales. Marie provides structured personal landlord tuition courses than will give you CPD points – see website for more details. George Ellis Property Services 020 8778 9686 info@georgeellis.london www.georgeellis.london
© Copyright April 2020 Marie Parris at George Ellis Property Services
Our government have not really done anything to assist landlords to ensure we will be paid our rent that is due on all tenancies during this time – still just ignoring our contribution to society.
LANDLORD INVESTOR 53RD EDITION
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