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Em Morley

Warnings for landlords after gas safety survey

Published On: March 14, 2014 at 9:42 am

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Categories: Property News

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The results of a recent gas safety survey have been branded as, ‘shocking’ by the director of a leading charity organisation.

Findings

1, 387 tenants in the private renting sector were questioned for the investigation, which was carried out by YouGov.

The survey was conducted on behalf of housing charity Shelter Scotland and Scottish Gas revealed an alarmingly high 43% of renters said that their landlord or agent had failed to carry out a gas safety check in the last five years. 7% of tenants said they had experienced a gas leak within in their property during this timeframe.[1]

Shocking

Shelter Scotland director Graeme Brown was disgusted with the results of the survey. Brown said that it was, ‘shocking to think that in thousands of households across Scotland, there are disasters waiting to happen because a simple safety check has not taken place.’ He added that this, ‘is an even bigger concern,’ for households with children and that, ‘renters have a right to know that the property they are living in is safe.’[1]

Mr Brown also said that it is, ‘absolutely vital’ that tenants know they should get a proper gas safety check annually. Just as importantly, Brown said, is that, ‘landlords need to know that gas safety is not optional,’ and that, ‘failing to get a gas safety check can and does put lives at risk.’[1]

 

Checks

Shelter Scotland and Scottish Gas have joined together to try and improve efficiency in housing within the rented sector. Paul Dailly, a Scottish Gas engineer, said that there are measures that tenants can undertake to improve their safety. Dailly said, ‘There are vital checks people can do to keep themselves and their families safe.

“Looking for signs of staining, sooting or discolouration on, or around, your gas boiler, fire or water heater; keeping vents in doors, walls or windows clear; making sure your chimney isn’t blocked and checking pilot lights and other gas flames to ensure they burn blue are all simple tests that can be done to help protect your home and everyone in it.’[1]

[1] http://news.stv.tv/scotland/268072-warnings-for-private-landlords-after-shocking-gas-safety-survey/

 

 

Average Landlord Portfolio is Small

Published On: March 12, 2014 at 9:38 am

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The average size of a landlords portfolio is likely to be small, with only 6% owning more than one rental property, reveal new figures from Countrywide.

The upsurge of the accidental landlord has been highlighted by new research that states that the majority of landlords live within 10 miles of their rental property.

The Countrywide Residential Lettings Index has discovered that it is landlords of London that have the smallest average portfolio size, with just 4% of them possessing more than one rental property.

Average Landlord Portfolio is Small

Average Landlord Portfolio is Small

It is believed that the cost of purchase and size of deposits is a major obstacle in expanding their portfolio size. The largest proportion of landlords living over 100 miles away, with more than 20% of landlords doing so, is also in London, and is almost double the UK average.

Over half (56%) of buy-to-let landlords live within 10 miles of their rental property, with the North East having the highest amount of landlords living within 25 miles of their property (83%). Following this, 81% live near their property in the North West, and 71% in the East Midlands. The number in London was 60%.

In more rural spaces, such as Wales and the East of England, a sparse population has caused a low quantity of landlords to be living within 10 miles of their rental properties. In place of buying in the same town, landlords have chosen to live further away, remaining close enough to check up on their possessions. The number of landlords who live between 10-25 miles of their property in Wales and the East of England is the highest in the country.

The study also indicates that most landlords are positive about growing rents this year, as the average rent standing at £861 per month.

The largest increase yearly has been seen in Scotland, where rents rose by 9.6%, to an average of £626 a month. The next highest rent increase was seen by tenants in central London, who pay £2,630 a month, a rise of 8.5% from last year.

Just two areas, the West Midlands, and Yorkshire and Humberside, saw a drop in rents, with prices falling by 6.2% and 0.7% respectively.

With the UK’s economy improving, landlords over the majority of the country are claiming that arrears are declining, except in Scotland and the East of England, where arrears grew by 2.7% and 0.1% correspondingly.

Nick Dunning, Commercial Director of Countrywide, says that the secret to the success of a rental property is its location, and that landlords are keener to buy in areas that they know for monthly rents and property prices. They also understand local amenities, which attracts tenants.

Dunning explains: “With 94% of landlords in the UK owning only one rental property, many of them opt to take a hands-on approach to its management and favour being close to it.

“The private rental sector will continue to grow because there’s a growing need for good quality accommodation to rent and the property market and economic conditions are encouraging for investors.”1

1 http://www.accommodationforstudents.com/view_landlord_guides.asp?id=2489

Calls for Quick Evictions to Help Landlords and Good Tenants

Published On: March 11, 2014 at 4:50 pm

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Quicker evictions are being requested, after assumption that the Government is proposing measures that will fast track the eviction process for private landlords.

There are worries that demands on the courts are causing lengthy delays.

Landlords and housing charities have been invited to a Government session to consider the plans and possible options to quicken the eviction process for private landlords.

Lots of landlords see eviction proceedings against nightmare tenants leaving them without rent for months.

Claims can sometimes take between six and 12 months to resolve, and at this time, the tenant may not be paying their rent. This leaves landlords with limited, or no, income.

This could affect the landlord’s mortgage repayments if not resolved quickly.

Calls for Quick Evictions to Help Landlords and Good Tenants

Calls for Quick Evictions to Help Landlords and Good Tenants

Managing Director at Landlord Assist, Graham Kinnear, states that changes to the eviction process would be beneficial to landlords who are attempting to remove tenants that do not pay rent or have anti-social behaviour problems.

He also says that good tenants would also profit from the amendments, as they will have a wider range of properties to choose from.

Kinnear also thinks that a faster eviction process may inspire more investors into the market.

He says: “We do not feel that there is a real need to alter the grounds of securing a vacant possession or the methods by which a landlord can gain possession of their property.

“What we would like to see is a swifter possession service which will reunite the landlord with their property in a timelier manner. This will help to minimise the losses incurred by many landlords and may even encourage further landlords to enter the market place, which would help to address the current housing shortage in the UK.

“At the same time, introducing a swifter eviction process will also support decent tenants looking for rented accommodation, as they will be able to replace troublesome tenants much quicker than is currently the case.”1

Commercial Director at Landlord Assist, Stephen Parry, believes that the current housing shortage in the UK has left lots of reliable tenants looking for rental accommodation, who would be pleasant replacements for evicted tenants.

Parry says that landlords should conduct reference checks on tenants before the tenancy begins, to avoid rent arrears.

He advises: “Referencing is a key part of the letting process, and remains a simple and affordable way for landlords to paint a vivid image of their tenant.

“Background checks on tenants are essential and should, as a minimum, include a credit report plus references from previous landlords and employers.

“Only with this type of information can landlords be confident that tenants can afford rental payments and meet their tenancy obligations.”1

1 http://www.landlordexpert.co.uk/2014/03/10/calls-for-quicker-evictions-to-help-landlords-and-good-tenants-2/

 

Calls for Quicker Eviction Process

Published On: March 10, 2014 at 10:30 am

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Rumours are mounting that the Government is poised to announce changes aimed at quickening up the eviction process in the private rental sector. The potential changes have been welcomed by landlords, who believe that unnecessary pressure placed on Britain’s courts are causing hold-ups which are resulting in delays.

Speed up

Calls for Quicker Eviction Process

Calls for Quicker Eviction Process

As part of the proposed reforms, some landlords and housing charities have been approached to be present at a Government meeting, where options to speed up the process will be discussed.

No payment

Pursuing legal proceedings against rogue tenants can lead to landlords going for long periods without receiving any rent. Commonly, possession claims in court can last for anywhere between six to 12 months. In the meantime, landlords will receive no income from their property. Furthermore, this can lead to some slipping behind on their mortgage payments, which in turn will negatively affect their credit rating.

Welcome

Managing Director of Landlord Assist, Graham Kinnear said that any changes to the eviction process would be widely welcomed by landlords in their battle against troublesome tenants. In addition, Kinnear suggests that reliable tenants would be rewarded from any amendments to the process, with more choices of property available after rogue tenants have been removed.

Kinnear outlined his views: “We do not feel that there is a real need to alter the grounds of securing a vacant possession or the methods by which a landlord can gain possession of their property.

“What we would like to see is a swifter possession service which will reunite the landlord with their property in a timelier manner. This will help to minimise the losses incurred by many landlords and may even encourage further landlords to enter the market place, which would help to address the current housing shortage in the UK.

“At the same time introducing a swifter eviction process will also support decent tenants looking for rented accommodation as they will be able to replace troublesome tenants much quicker than is currently the case.”[1]

Replacement

Stephen Parry, Commercial Property Director at Landlord Assist, believes that the current housing problem in the UK could be partially solved with the introduction of new changes. Parry emphasises Kinnear’s views, saying that there are a number of fit and proper tenants waiting to replace nuisance renters.

Parry also believes: “Referencing is a key part of the letting process and remains a simple and affordable way for landlords to paint a vivid image of their tenant.”

He continued: “Background checks on tenants are essential and should, as a minimum, include a credit report, plus references from previous landlord and employers. Only with this type of information can landlords be confident that tenants can afford rental payments and meet their tenancy obligations.”[1]

[1] http://www.landlordexpert.co.uk/2014/03/10/calls-for-quicker-evictions-to-help-landlords-and-good-tenants-2/

 

 

 

Pros and cons of buy to let property

Published On: March 4, 2014 at 12:55 pm

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With buy-to-let mortgages available at record low rates, more people than ever before are investing in property. As a result of some interest rates being fixed as low as 2.4% and a continuation in demand from tenants, this comes as little surprise.

Also coming as no shock were recent figures suggesting that the majority of private landlords plan to add to their existing portfolios in the near future.

A good time

Around 10 million people now live in privately rented accommodation; almost double the number in the year 2000. The current climate makes the thought of becoming a buy-to-let landlord an attractive proposition. However, prospective landlords are being urged to do their research before concluding any deals.

Conveyancing manager at law firm Bowcock and Pursaill, Graham Elliott, is one person appealing for caution. Noting the profitable market, Elliott said ‘now is a good time to get into the buy-to-let market before property prices escalate,’ with a good chance of achieving a, ‘regular income stream at the best possible rate of return.’[1]

Elliot believes that the current market can offer substantial returns. He says that,’ with interest rates on bank and building society deposits remaining very low, an income of six to seven percent can be achieved.’[1] He warns however that, to make a profit, ‘it is essential to keep your expenditure at a reasonable rate, which means choosing a property which is in a good state of repair.’[1]

Close to home

Elliott also suggests that investing in a property close to home is another good way of keeping costs down. He says that it is, ‘advisable to buy property within a reasonable distance of your home, so you are aware of any problem with the tenant before the situation escalates.’[1]

More advice from Elliott concerns, ‘taking out maintenance contracts for heating boilers and kitchen appliances,’ as without, a landlord can, ‘spend a great deal of time trying to find tradesman to undertake work at short notice.’[1]

He also says that, ‘it goes without saying that you should do your homework before buying to check there is a demand for rental property in that area.’[1]

 

Pros

There are a number of pros and cons that must be considered before entering the buy-to-let market. Elliott says that common pros of owning a property in the rental sector can include

  • More profitable investment than from bank or building society deposit
  • Steady long-term income stream in comparison to the more volatile stocks and shares market
  • The chance to build income as property value increases

Cons

Elliott went on to suggest that common cons to consider could be

  • Possible increase in mortgage interest rates, reducing overall rent income
  • Capital value of property falling in times of recession or market slump
  • Time managing the property

Common failures

There are a number of common mistakes that first time landlords can make in their infancy of renting property. These include failing to conduct thorough checks on prospective tenants, failing to manage mortgage and insurance costs and inexperience of the pitfalls of void periods.

[1] http://www.landlordexpert.co.uk/2014/03/04/pros-and-cons-of-buy-to-let-property/

 

 

Landlords Hit with Hidden Fees and Commissions

Published On: February 26, 2014 at 3:03 pm

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Categories: Landlord News

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Letting agents are taking large amounts for organising work through contractors, and not revealing it to landlords.

Landlords are suffering hidden charges and inflated prices by letting agents that arrange maintenance work and servicing through contractors.

Buy-to-let investors that use a letting agent to manage their property portfolios general pay a monthly cost of about 15% of their rental earnings. This will provide a service of finding tenants, preparing tenancy agreements, and maintaining the property.

Despite this, letting agents are adding charges to this price, of up to 20% of contractors’ bills and requiring a take of up to 60% from contractors for the work they carry out.1 These costs are not properly disclosed to landlords, who will eventually take the bill.

The Happy Tenant Company says that agents regularly add extra to contractors’ bills before invoicing landlords. A mystery shopper exercise recently found that agents are charging landlords six times the price of basic services, for example, gas safety checks, tenant referencing, and deposit protection.1

Lawyer and Chief Executive of The Happy Tenant Company, Jonathan Monjack says that the more serious issue is that agents also take “secret commission” from the contractor.1

Monjack also says that some agents are fixated on finding contractors who agree to high commissions, sometimes up to 60%, in exchange for high volumes of work.1

He states: “We have seen cases where a contractor provided a service for £100 and the agent billed the landlord for £120 and took a 60% cut from the contractor. Essentially the agent received £80 for arranging a job that cost £100. This type of practice drives up contractors’ prices, and landlords are forced to foot the bill.”1

Will Davies runs property maintenance and renovation company aspect.co.uk. He says that this practise is ordinary in the industry, but thinks that some agents are particularly forceful when requesting commissions on maintenance work that they booked for landlords.

Davies says: “We stopped working with one very well known letting agency when the wanted to increase their commission from 15% to 20%.

“Landlords pay their monthly fee and they expect their agent to find contractors with their best interests in mind. In reality, agents are not concerned about quality; they will sign up the contractor who will pay the best commission.”1

Monjack believes that the way agents do not inform landlords of their commissions is “questionably fraudulent.”1 He thinks that agents should work to the best interest of their landlords.

Estate agency in southwest London, Featherstone Leigh, has addressed hidden commissions.

Landlords Hit with Hidden Fees and Commissions

Landlords Hit with Hidden Fees and Commissions

A director at the company, Joanna Hamilton, says that it is prime time for the costs to be wiped out.1

The Trading Standards Institute stated that they are aware of the accusations, however, they have not seen any “hard, written evidence”1 that agents are taking commission from contractors. A spokesperson for the Institute said that they do not know of any convictions or prosecutions within trading standards.

However, landlords who suspect their letting agent of taking commissions should complain to the Property Ombudsman.

It is important to only use an agency registered with a professional organisation, such as the UK Association of Letting Agents or the Association of Residential Letting Agents (ARLA).

These associations provide a code of conduct for their members to follow, however, this does not guarantee that they will not charge additional costs.

Before handing over a property for management to an agency, request a full list of fees and a detailed explanation of these. Also ask if the agent takes any fees or commissions from contractors.

Demand to see original invoices from contractors when work is completed. The typical cost of standard maintenance work, for example gas safety checks, is available online.

You can also insist that the agent uses a tradesperson of your choice if you have a preferred company.

If you believe that you have been overcharged, then you can complain to the agency and request an explanation of all charges. If it is not resolved at this stage, you can go on to complain to the Property Ombudsman.

Christopher Hamer, the Property Ombudsman, says: “While there’s nothing illegal about a letting agent receiving a commission or referral fee for arranging contractor work at a property, you have to ask if it is fair for an agent to charge the landlord a premium on top of the actual cost for contractor work when the landlord is already paying a management fee to the agent.

“The Property Ombudsman’s Lettings Code of Practice clearly states that there must be complete transparency when it comes to fees so we would advise landlords to always ask agents to provide a full breakdown of contractor costs, including any commission arrangement.

“If an agent wants to charge a commission or referral fee to the contractor for introducing the work, this kind of practice is not illegal and quite common in other sectors but the financial arrangement must be disclosed to the landlord so they are fully informed about any financial gain the agent will make.”1

Landlords face various charges when using a letting agent. These depend on the type of property they are letting, and the type of tenant who lives there.

The National Landlords Association (NLA) put together a typical list of costs landlords will pay to an agent. They are based on a £175,000 house, with a monthly rental income of £750.

The NLA state that landlords will pay around 10% of their rental earnings on maintenance, so should budget this into the extra costs.1

There are two types of letting agent fees. The let only service costs around 10% of rental income, and includes the agent finding and vetting the tenant. Full management costs around 15% of annual rent, and this involves the agent taking complete control of communication and organisation with the tenant.

Further costs include: credit checking, £20; referencing, up to £150; deposit protection, £24; Gas Safety Certificate, £50; and landlord insurance, £200 per year.1

It is also worth pointing out that some agents charge a renewal fee when an existing tenant renews their contract.

1 http://www.landlordexpert.co.uk/2014/02/24/landlords-hit-with-hidden-fees-and-commissions/