Leading sales and letting agency, Portico, has announced the launch of their new service for landlords. Portico Portfolio will allow landlords to invest smartly in property using a tax–efficient company structure.
Portico will use their lettings expertise to create and manage bespoke, northern-based property portfolios for their clients. These portfolios will be specifically designed to achieve high yields. Accountancy firm Accounts and Legal has partnered with Portico, to handle the tax side of the operation.
Portico Portfolio intends to help landlords or those sitting on savings to invest in up-and-coming locations outside of London, which offer opportunities for lower entry costs and high yields.
Latest Portico data
Portico’s Rental Yield Map shows that long-let rental yields in London range from 1.5% to 6.7%. The lowest rental yield of 1.5% comes from the prestigious Old Bond Street in Mayfair, whereas the highest yields are being recorded near the Sewage Works on Yarnton Way. This is between Abbey Wood and Belvedere in the southeast borough of Bexley.
Looking towards the north, rental yields are certainly much healthier. Research from Portico shows that the average long-let rental yield in Liverpool is 8.3%. The city’s highest rental yield for long-lets is an impressive 13.6%.
In Manchester, the average is 6.5%, with the highest long-let rental yield reaching 7.6%.
Fiona Veitch, Portico’s Marketing and Business Director, commented on the launch of Portico Portfolio:
“With the launch this year of Portico into Liverpool and Manchester, we wanted to create something unique that makes it easy for London landlords to invest in the north west.
“Launching Portico Portfolio allows us to combine our lettings and Portico Host service with our financial services expertise, to generate impressive and tax-efficient yields for property investors.
“We hope Portico Portfolio will allow both seasoned and inexperienced landlords to take advantage of our strategic advice and knowledge of the market to build strong rental portfolios.”
The National Landlord Association (NLA) and Zero Deposit will be working together from now on to provide its members with better financial security.
Zero Deposit today announces that it will be the NLA’s exclusive deposit replacement partner. With over 41,500 landlord members, the NLA is the UK’s largest landlord association.
Made up of private residential landlords from single property owners through to large portfolio landlords, the NLA provides advice, information and guidance to its members and keeps them informed with the fast-changing laws and regulations that impact the property market.
Jon Notley, Co-Founder and CEO of Zero Deposit, commented: “Landlords have had a tough time of late and have found themselves having to navigate through a pretty hostile market, with ever more changes to regulation and the tax regime.
“One area offering some respite is the burgeoning deposit replacement market. Deposit replacement offers landlords the same security as a cash deposit with the added benefits of enhanced cover and shorter void periods.
“Our exclusive partnership with the NLA gives its member landlords peace of mind that by choosing Zero Deposit as their preferred deposit replacement provider, landlords are not only picking the market leader, but also the most secure product in the industry.”
“We are already working with more than 2,100 letting agency offices across the UK and have covered over 11,000 tenancies to date. Adding the NLA to our list of partners is an exciting next step for us as we continue to expand and make Zero Deposit the go-to product in the sector.”
Richard Lambert, CEO of the NLA, said: “We looked very carefully at this market and considered the various products available. Zero Deposit is the best organisation to recommend to our members, because they have thought through and answered all the issues, and gave us the reassurance that both the company and the product were regulated by the FCA.”
Private landlords in England who have experience using the courts to repossess a property are not receiving the service they need, with 79% feeling dissatisfied with the way they work.
The Residential Landlords Association (RLA) found out this information by conducting one of the largest landlord and letting agent surveys ever undertaken. It also reveals that 91% of landlords would support the establishment of a dedicated housing court.
In a letter to the new Justice Secretary, Robert Buckland MP, the RLA has warned that with Ministers pledged to scrap Section 21 repossessions, the courts are simply unable to cope with the increased pressures they will face.
The association highlights that it currently takes an average of over five months from a landlord applying to court for a property to be returned to them.
Similar reforms were made in Scotland, which led to the Government investing new money and providing more staff, after it underestimated the increased pressures brought on the court system.
Tenants have also reported issues with the system. Previous research published by Citizens Advice shows that 54% of tenants have said that the complexity of the process puts them off going to court in the case that their landlord is failing to look after their property. 45% of tenants also said that the time it takes to go through the courts has put them off taking action.
The RLA argues that tinkering with the current system is not good enough. It is calling on the Government to establish a single, dedicated housing court that is properly funded and properly staffed.
At present, landlords have two options for repossession:
Section 21, which enables landlords to do so once a tenancy has ended and requires two months’ notice to be given, but no requirement for a reason to be provided.
Section 8, which allows landlords to repossess a property under a number of set grounds, including rent arrears and anti-social behaviour.
David Smith, Policy Director for the Residential Landlords Association, said:“Ministers are proposing some of the most far reaching changes the private rented sector has ever seen. If the new Government decides it wants to proceed with these it is vital that significant and bold reforms are made to the court system.
“With landlords and tenants failing to secure justice in a timely fashion when things do go wrong, anything other than wholesale changes with proper funding to support it will lead to chaos.”
When a tenancy on a rental or investment property comes to an end, you want to know you can take back the property in the condition in which it was handed over – or at least that you can make appropriate deductions from the deposit to recover any repair and cleaning costs you may incur.
In order to do this in an era of tenancy deposit schemes, it is essential to be able to provide indisputable evidence such as that produced using an independent inventory or an unbiased check-out report.
Here, independent inventory service skribes.co.uk explains why these types of reports are more important than ever.
The cost of becoming a landlord
The number and scale of additional expenses involved with becoming a landlord take many people by surprise when they first start investing in rental property.
Because of this, it can be tempting to save a little on admin fees by choosing not to have an independent inventory or check-out report produced.
However, this can be a false economy – and while inventories are in principle optional, in practice they are an essential part of protecting yourself against false claims from tenants, or damage that you cannot prove is the fault of a departing tenant.
The extra confidence this creates can help to establish a more positive and trusting relationship between landlord and tenant, often encouraging tenants to pay their rent on time, take better care of the property, and be honest about any accidental damage that occurs.
Choosing an independent inventory clerk
A good independent inventory clerk will be able to produce accurate documentation of the fixtures and fittings in each of your properties, supported by clear, high-quality, well lit photographs with verifiable time stamps.
In a survey of more than 2,500 tenants who had part of their deposit retained, it was clear that all manner of accidental but costly damage can occur, even with ‘good’ tenants.
Examples include:
Broken furniture (29%)
Marks on the walls (24%)
Carpet stains (21%)
Redecorations (12%)
Mould (9%)
Inventories and check-out reports don’t just document the damage done; crucially, they also help to prove which party was at fault, allowing you to justify deductions from tenants’ deposits.
Research published in June 2019 by Citizens Advice showed that as many as 60% of tenants in the UK claim to be living in a property that has suffered disrepair in the past two years that was not their fault, and that is their landlord’s responsibility to fix.
Protecting your income as a landlord
The first half of 2019 was a challenging time for landlords’ incomes. The Fitness for Human Habitation Act Bill became an Act of Parliament on December 20th 2018 and came into force on March 20th 2019.
On May 30th 2019 it was followed by the Tenant Fees Act, which restricts security deposits on most properties to the equivalent of five weeks’ rent – still one week more than Citizens Advice originally called for – and also prevents landlords from charging tenants a check-out fee.
However, this should not be taken to mean that a check-out report is not still an important part of protecting your income as a landlord, especially at a time when more and more protection and control is being handed to renters.
Citizens Advice chief executive Gillian Guy said in May: “We look forward to working with the government to further strengthen the hand of renters in a market where they have little bargaining power.”
What should an independent inventory contain?
An accurate, unbiased and independent inventory and check-out report helps to remove the risk of having to pay for damages or losses that are the fault of your tenant.
It can also demonstrate that you have met your legal obligations in certain aspects of tenant safety, for example fitting and testing carbon monoxide detectors and smoke alarms.
Some of the main areas that should be covered in a landlord inventory and check-out report include:
Furniture, fixtures and fittings – listed with a description of their condition supported by written and time-stamped photographic evidence.
Alarms and detectors – mains-powered, tested and in good working order, as well as anything that needs maintenance or replacing in line with health and safety obligations.
Fuse boxes – these should be located and logged when new tenants move in.
Fire label regulations – checking and documenting compliance with furniture labelling.
Meter readings – recording all relevant utilities information and time-stamped meter readings when tenants move out or new tenants move in.
Any other details considered relevant or required for an accurate report, with a view to preventing disputes and protecting security deposits for the landlord.
Inventories and check-out reports are more than just a formality or an admin burden; they are your due diligence, ensuring that the value of your investment in your rental property is catalogued and detailed in case of any future disputes.
But ideally they go further even than that, as simply having a comprehensive inventory in place at the start of a tenancy can go a long way to preventing any disputes from arising, as tenants know you have the evidence needed to prove if damage was caused by them.
Using an independent inventory report and check-out report to recover costs
In circumstances where a departing tenant has left damage to the property, an inventory can be a crucial piece of evidence in recovering those costs from the security deposit.
With deposits now held in a third-party deposit protection scheme, you need to have this evidence if you want a good chance of succeeding with any claim to the tenant’s deposited funds.
Government guidelines published in 2019 describe an inventory as “a written record of the condition the property was in at the start of the tenancy, including details of anything that was already damaged or worn”.
While you might be reluctant to record pre-existing damage, this can be a further way to show that you are taking your own responsibilities seriously in terms of admitting your own liability – and that any damage that is caused by the tenant will be treated as their liability.
This can also be instrumental in getting the tenant to agree to the inventory, and you should always make sure that their agreement is recorded before they move in.
You are still liable for the burden of proof, and using an independent, unbiased inventory clerk for your check-in and check-out reports helps to ensure that the evidence you supply is objective and persuasive in any claim you make.
In doing so, you have a much stronger claim when one of your properties is left in an unfit condition by a tenant – and claiming against their security deposit can help to cover the cost of repair and ensure the property continues to yield a good rental income for the future too.
Buy-to-let landlords have been defrauded out of a total of £16,500 by a rogue managing agent.
Over an 18-month period, agent Saleem Kassim invented maintenance work at rental properties, to then pocket the funds provided to pay for it all, Liverpool Crown Court heard.
This 35-year-old specialist residential managing agent worked at Leaders on Sankey Street in Warrington. The rogue managing agent managed a flat in Padgate, Warrington, along with two other properties in Liverpool.
During an 18-month period between 2016 and 2018, he told the owners of these properties on seven occasions that work needed to be done on their central heating. However, it was later found out that this work was not necessary and was not even carried out.
Defence barrister Philip Tully told the court: “It is no excuse for his [Kassim’s] behaviour, but the simple reason my client found himself committing this offence was that he found himself in debt – he acted in a foolish and out of character way.
“Mr Kassim clearly is ashamed about his conduct and left his employment because he knew he couldn’t cope with that fact it would be discovered.
“He is genuinely remorseful for his actions – he’s so ashamed that he hasn’t been able to share these matters with his family. He’s a family man who accepts what he’s done wrong. I ask your honour to give him a chance.”
Kassim now faces a Proceeds of Crime Act hearing at Liverpool Crown Court later this year, at which he will hopefully be ordered to pay back the money.
During an earlier hearing at Warrington Magistrates Court, he admitted undertaking fraudulent activity. The rogue managing agent was given a 12-month prison sentence, but this was suspended for a year. Kassim was also subjected to a rehabilitation activity requirement of up to 15 days and ordered to carry out 70 hours of unpaid work.
He was sentenced by Judge Stuart Driver, who said: “You’ve said if you don’t go to prison today that you intend to repay the money, but I don’t believe you.
“You defrauded customers of yours out of £16,500 over one and a half years when you were in a position of trust.
“But you are a hard-working family man with three young children, and this is a case in which there is a realistic prospect of rehabilitation.
“This is your one and only chance – if I see you again you’re going to prison.”
Automated rental payment provider PayProp has spoken out about Government plans to abolish Section 21 of the Housing Act 1988.
It believes that scrapping this act will further increase the need for professional letting agencies to guide landlords through the lettings process.
Guidance from agents would, in such a case, be crucial to help landlords to legally regain possession of their properties, says PayProp.
It was in April that the Ministry of Housing, Communities and Local Government (MHCLG) announced its intention to abolish Section 21 evictions. It stated that such a move would be ‘the biggest change to the private rental sector in a generation’.
In replace of Section 21, the Ministry has proposed a new system under which landlords would be required to serve a Section 8 notice, providing a ‘concrete, evidenced reason already specified in law’ in order to regain possession of their property.
As it stands, Section 21 allows landlords to regain possession of their property without providing a reason. However, Section 8 can only be used when a tenant has fallen into rent arrears, been involved in criminal or anti-social behaviour or broken the terms of their tenancy agreement.
The Government has made a pledge to amend Section 8, so that it allows landlords to use it if they wish to sell their property or move back in themselves, and ‘expedite’ the court process to make the system more effective.
However, many in the lettings industry worry that the new system might make it more difficult for landlords to regain possession and discourage future investment in the PRS.
A huge overhaul for landlords?
PayProp has pointed out that the scrapping of Section 21 would be the latest in a long line of changes to the evictions process. The last significant updates were made to the legislation in 2015 and 2018. This increased workload for landlords could have an impact on the buy-to-let market.
In a recent study by Landlord Action, 33% of landlords said they would leave the market if the Government removed Section 21 without providing a clear alternative, while 38% said that they would consider selling properties.
Neil Cobbold, Chief Operating Officer of PayProp UK, says: “It’s no surprise that many landlords would consider their options if Section 21 was scrapped, as it would mean yet another change in lettings legislation after so many others in recent years.
“If introduced, the changes would represent a huge overhaul in processes for landlords. Therefore, it’s important for letting agents to raise awareness of the situation among landlords now, so they have time to prepare.”
Complexities of the evictions process
Cobbold has also explained why the expertise of professional letting agents would be crucial if the evictions process is to be reformed.
“Requiring the use of Section 8 to regain possession of their properties will mean landlords need to understand a new set of rules, steps and documents,” he says.
“Evicting tenants can be a legally complex and long-winded process, and if a new system is introduced, letting agencies will need to help landlords to follow the right steps and issue updated documentation,” Cobbold explains.
“If the evictions process is not followed properly it can cause complications for landlords. It’s also important to remember that landlords’ investments and tenants’ homes are at stake,” he says.
Need for professional agents continues to grow
Cobbold believes that further changes to legislation and a more complex and time-consuming lettings process could mean fewer landlords will self-manage their properties in the future.
Meanwhile, figures supplied by the Government show the number of small-scale and accidental landlords has fallen, with the proportion of landlords letting one property falling from 78% to 45% between 2010 and 2018.
“This market shift means demand for professional letting agencies will rise – agents should see the potential for increased business and ensure they are prepared to meet landlords’ expectations,” adds Cobbold.
“They can do this by offering an unrivalled landlord proposition which is fully compliant, transparent and efficient.”
The MHCLG is currently consulting on the proposed removal of Section 21 from the Housing Act 1988 and improving Section 8 eviction grounds.
