Written By Em

Em

Em Morley

5 Priorities for Successful Build to Rent Properties

Published On: February 7, 2019 at 11:16 am

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Categories: Property News

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There has been an increase in the number of private tenants in England, with 20% of all households now renting from a private landlord. Subsequently, build to rent properties, designed for long-term occupation, are on the rise.

There are many reasons why more people are renting, and for longer, in the UK, whether it be because of the changing and uncertain housing market, or the struggle to save for a home deposit.

Build to rent properties need to be designed with tenants in mind, and, thus, community and residence experience need to be considered carefully by investors.

To help, broadband and utilities provider Glide has put together its five top priorities to consider when investing in build to rent properties:

1. Understand your customer

With over a third (37%) of build to rent properties being occupied by young professionals, it is important that investors understand what they are looking for. All-inclusive bills are a high priority when choosing a place to live, according to over half (52%) of millennial movers. Any other ways to save time and make things as convenient as possible for your tenant, such as parcel storage or dry cleaning, are also desirable.

As many young professionals commute to work, it is a good idea to consider this when choosing areas in which to invest. According to recent research, two in five (40%) of those without children factor in distance to work when choosing a rental home, while one in five (21%) also prefer to live near public transport links or airports.

2. Sense of community

As experiences are valued highly among young professionals, creating a sense of community is key in build to rent properties. Your professional audience needs to feel part of a well connected, respectful and communal living environment.

A good way of ensuring a positive community atmosphere is a Facebook group for the building. This can be a good way for tenants to interact with other people that they are living with, and create social events, such as barbecues and meet-ups. This is particularly appealing to those who have only recently moved to the area for work and don’t know many people before they move in.

In order to accommodate and promote this social setting, spaces, such as rooftop terraces, communal gardens or lounge areas, are a good idea for tenants to socialise and relax outside of their own homes.

build to rent

3. Not just a place to sleep

Creating space, or the illusion of space, is very important for ensuring that tenants don’t feel too claustrophobic. In-built storage facilities will mean more floor space and open-plan rooms, which are more appealing to millennials.

Lighting is crucial for making rooms appear light and spacious, so natural light is a must-have. However, being able to wind down with more relaxed lighting is also important. Therefore, well-sized windows and dimmer light switches will help to facilitate this. There should also be lots of plug sockets available, so that your tenants can use lamps and other electricals, such as chargers and tablets, to create a personal environment.

4. Stay up to date with technology

Cutting edge technology is vital to enhance the customer experience. Millennials rely heavily on fast and reliable wifi in their lives, from streaming TV shows and movies, to ordering their weekly groceries online. High-speed connectivity is an essential part of renting for 80% of young professionals.

Being able to control all aspects of your home at the tap of a screen is becoming more popular. You should ensure that this is incorporated into your build to rent properties, as well as any other upcoming home technologies.

5. Be future-proof

As tenants are looking to rent long-term, they will be keen to live in a building that is set to last. You should make sure that you invest in solid infrastructure, so that you can ensure that your tenants have what they need for years to come.

Integrating engineering systems allows for high quality space, which means that developers have more floor space to play with.

In order to use less power, consequently providing lower energy bills, you should have a full fibre infrastructure that will stand the test of time. This will also reduce the tenants’ carbon footprints, which is a key and topical issue for millennials.

Are you looking to invest in build to rent properties? Make sure that your investment has the features above.

A Fifth of Millennials Evicted Due to Change in Ownership of Property

Published On: February 7, 2019 at 9:59 am

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Categories: Tenant News

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A fifth (21%) of millennials have been evicted from their rental homes before they were ready to leave, due to a change in ownership of the property.

Many tenants face the uncertainty of potentially having to find a new home when their landlords want to sell their properties empty.

The research from online property marketplace Vesta Property claims that 39% of millennials fail to understand exactly what their rights are as tenants when their landlords sell, while 32% did not know that tenants could be legally served notice to vacate the property, even if they have done nothing wrong.

The study indicates that most private tenants would prefer to stay in the property, regardless of a change in ownership, with 77% of respondents saying that they want the option to stay in their homes, even if their landlord sells to another buy-to-let investor.

Russell Gould, the CEO of Vesta Property, comments on the findings: “The current buying and selling system, where good tenants are evicted for no reason other than to sell a property, makes life harder for everyone. 

“Buyers have to find new tenants, sellers can lose valuable income and renters are forced to disrupt their lives by finding new accommodation.”

He insists: “The sector needs to move with the times, and mould the system into something that works for both landlords and tenants alike. Specifically, the practice of advising a landlord to evict tenants in order to sell a property is outdated.”

Landlords, have you evicted a tenant due to a change in ownership of your property?

Worryingly, a separate study claims that landlords are wrongly using Section 21 notices, instead of Section 8 notices, to evict tenants in certain situations. We advise all landlords to understand the correct processes for evicting a tenant – this useful guide should help: https://www.landlordnews.co.uk/guides/a-landlords-guide-to-the-eviction-process/

The Average Tenancy Deposit in 2018 Hit £1,110

Published On: February 7, 2019 at 9:03 am

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The average tenancy deposit across the UK in 2018 was £1,110, following an increase across all locations, according to the latest Statistical Briefing report from the Tenancy Deposit Scheme (TDS).

The report highlights the increasing value of tenancy deposits and number of deposits protected in England, Wales, Scotland and Northern Ireland, but there are regional differences in the average tenancy deposit.

The average tenancy deposit value in England and Wales is almost double the level in Northern Ireland, although the TDS points out that significantly higher deposits in London distort the overall picture.

According to the TDS, the average tenancy deposit in England and Wales last year was £1,110. In Northern Ireland, it was £587, while the Scottish average sat in the middle, at £675.

Across the UK, the average tenancy deposit increased in value between 2017-18, by 2% in England and Wales, 1.5% in Scotland, and by 1.4% in Northern Ireland.

Alongside the average tenancy deposit value increasing, the number of deposits protected has also risen year-on-year in the UK.

In England and Wales, 3,748,725 deposits were protected, which is up by almost 1.6% from 3,691,242 a year earlier. In Scotland, an additional 9,441 deposits were protected between 2017-18 – an increase of nearly 4.7% annually.

Northern Ireland experienced the greatest growth in the amount of tenancy deposits protected year-on-year, at 8.97%, from 49,102 to 53,510.

Steve Harriott, the Chief Executive Officer at the TDS, says: “While the report highlights broad differences between the constituent countries of the UK, it hides more local disparities. For example, the average deposit value in England and Wales does not reflect the difference between central London and areas with lower average deposits.

“The report does, however, demonstrate that the private rented sector is continuing to grow, with an increase in the number of deposits protected and their value across the UK.”

He adds: “There are, of course, a number of reasons behind the growth, but, as the sector expands, we continue to see the numbers of deposits protected increasing.”

Landlords and letting agents must be aware that security deposits will be capped at five weeks’ rent under the upcoming Tenant Fees Bill.

Small Changes are the Secret to Innovation Success

Published On: February 6, 2019 at 11:01 am

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Categories: Finance News

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By Matthew Tooth, the Chief Commercial Officer of LendInvest

For those hoping to see the property industry embrace innovation, 2018 turned out to be something of a mixed year.

For example, it has been a particularly rough 12 months for those firms looking to introduce greater use of technology into the estate agency business. Online agent Emoov has gone into administration, with the likely loss of more than 100 jobs, while leaving 5,000 vendors in limbo, while Connells has ditched its online venture Hatched, admitting that the internet-only or hybrid estate agent business is “fundamentally flawed”.

On the face of it, estate agency would seem an area that is particularly ripe for a fresh approach. Yet these attempts have hit significant difficulties, in my view because they have tried to make changes too quickly.

The problems come from the big model changes; for the businesses that promise to do things in a completely new way, there are many more low profile failures than high profile successes.

Instead it’s the small, incremental changes that stick, so long as stakeholders can see the immediate benefits. That’s an approach that we have adopted at LendInvest, and it seems to be paying off, landing us the Innovative Lender of the Year award at the National Association of Commercial Finance Brokers (NACFB) awards.

Online lender portals are a good example here. Not that long ago, they were something of a rarity, but, today, they have become almost standard across the industry, covering both mainstream lenders, and those who handle more niche and specialist areas of property finance.

Lenders are also responding to the different ways that brokers access and use those portals. The KPMG/Iress intermediary mortgage survey from this year found that more than two thirds (69%) of lenders are optimising their portals for use on mobile devices, while the ability to scan and upload documents is becoming widespread, with almost nine out of every ten portals including this functionality.

These portals aren’t about revolutionising the way that brokers and lenders communicate, but rather identifying a way that we can incorporate technology to speed up that communication, and provide intermediaries with the tools and information they need in a format that suits them.

Another example of a small, but important, innovation to the home loan process is the Land Registry’s digital mortgage deed service, which launched this year.

It allows borrowers to sign their deed online, proving their identity with the use of the gov.uk Verify system. No longer will borrowers have to find witnesses when they sign a physical deed, and then rely on the postal service to get those forms delivered.

Small Changes are the Secret to Innovation Success

Now, it can all be done online – a simple technological innovation that speeds up an existing service and delivers an experience that many will prefer.

There’s still plenty of room for improvement, of course. Lenders have much work to do on their portals, as the KPMG/Iress study highlights that more than a third of advisers want lender portals to be more intuitive and easier to use. Intermediaries were also found to be keen on more frequent updates to online systems, such as the inclusion of real-time tracking and milestone updates.

Brokers have evidently seen not only how portals in their current form can help, but also flagged up where the future innovation needs to come in order to deliver what they really need. It’s those small, incremental developments that are the key.

That’s why it’s crucial that lenders maintain regular dialogue with intermediaries, so that, as an industry, we are clear about how we can do more to help advisers. Brokers play such an integral role in the mortgage lending process, accounting for at least two thirds of home loan applications (https://assets.kpmg.com/content/dam/kpmg/uk/pdf/2018/04/transforming-the-mortgage-broker-experience.pdf).

As such, it’s incumbent on lenders to take that feedback on board and look closely at how their methods can be tweaked – the small technological changes they can make, which will make a material difference to the workloads of the brokers they rely on.

The mortgage market has unquestionably been slower than other segments of financial services when it comes to embracing technology, but there are reasons for that, and this market will evolve on a gradual basis, with the best technology businesses eventually coming out on top. Those who try to introduce wholesale changes risk moving too quickly for the market.

Nonetheless, we can’t afford to standstill. Innovation will come, it just won’t be overnight.

The Future of Housing for an Ageing Population

Published On: February 6, 2019 at 10:28 am

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A new whitepaper, Neighbourhoods of the Future 2 from The Agile Ageing Alliance and Tata Steel, was launched at the House of Lords in Westminster on 21st January 2019, offering a new vision for the housing market, as the UK finds itself in a crisis.

The whitepaper advocates a fundamental shift in the way that housing is considered. Rather than a series of rungs that the homeowner must climb, from starter home upwards and then back down again in later life, properties must be capable of adaptation, the report insists – of morphing to support a growing family, and then adjusting to accommodate an ageing one.

Gillian Girling, the Chief Executive of Girlings Retirement Rentals welcomes the whitepaper, particularly its focus on an ageing population, and the need to develop homes and neighbourhoods with older people in mind.

She says: “We are an ageing nation, but housing has not kept pace with the changing needs of the population. House builders and Government have, in the past, focused more on the younger generation, but we are facing a housing crisis that can only be solved by looking at the needs of all generations. The lack of affordable housing for young people, as well as the lack of desirable retirement housing, needs to be addressed.”

In the report, leading experts have shared their views on how neighbourhoods and housing could be developed in the future, in a collection of articles on key areas: housing, design, health and care, technology, finance, and ageing societies.

The whitepaper highlights that ageing populations are a global phenomenon. Towards the end of 2019, there will be more people worldwide aged over 65 than under the age of five. And, by 2050, in the UK, 30% of the population will be over 60-years-old.

The question is: Where and in what type of homes will these older adults live, and to what extent can technology support healthy ageing and independent living?

One of the major challenges, summarised by Judith Torrington, the author of Future of Ageing: Adapting Homes and Neighbourhoodsin Neighbourhoods of the Future 2017, is that people age differently, but physical decline is inevitable.

She highlights that the key features of accessibility – level access, flush thresholds, wide doors and circulation space, and entrance level toilets – are only found in 5% of English homes. Also, older people may have difficulty getting in and out of baths, walking upstairs, bending down, and reaching up.

Some of these needs can be met by adapting existing homes, but studies suggest that 16% of properties would need major structural alterations to become fully accessible, while alteration would not be feasible in 28% of homes.

The Future of Housing for an Ageing Population

The whitepaper considers several housing options, such as retrofitting existing homes to better suit people as they get older, multigenerational living (which is on the rise in the USA), and mixed communities, with housing built to suit different ages.

There is also some consideration given to renting, especially when it comes to community-based housing associations. Jim Ripley, the CEO of Phoenix Community Housing, pointed out that, by 2028, around one third of the residents who live in Phoenix homes will be 75-years-old or over. Today, just 12% of its tenants and 5% of its leaseholders are in this age range.

Ripley comments: “We knew that lots of older people were struggling to maintain their homes. Many struggled with heating bills, and with the garden and the cleaning. And we knew that, presented with the right offer, many would be keen to downsize to properties that better met their needs.”

Renting in retirement is on the rise. The Centre for Ageing Better predicts that, by 2040, a third of people over 60-years-old could be living in rental accommodation.

Research agency Boomer found that 27% of those between 55-85-years-old said that they would choose to rent instead of buy, citing a lack of stress, being able to live in a place that they couldn’t afford to buy, avoiding Stamp Duty, and the ability to release equity.

Girling says: “Renting is increasingly a key consideration for people when they downsize. Many of our tenants have chosen to downsize and rent in a retirement development, rather than buy, because our apartments are adapted to meet the needs of older people. They also offer some support services, such as a 24-hour care line and have a manager on site. Renting can make financial sense, too, as people no longer have to contend with maintenance costs or service charges, and, if they have sold a property, they can use the capital to invest or spend and enjoy their retirement.”

“As pointed out in the paper, the pursuit of age-friendly housing is important, because very few variables have as much power to support or derail healthy, productive ageing and the related quality of life,” adds Girling.

On a more eco-conscious level, a recent study highlighted the homes of the future that homeowners and tenants are interested in – do the requirements align with the whitepaper?

Landlords Using Section 21 Instead of Section 8, Survey Shows

Published On: February 6, 2019 at 9:59 am

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Landlords are using Section 21 notices, instead of Section 8, due to a lack of confidence in the court system, according to a new survey by eviction firm Landlord Action.

A Government consultation into which major reforms to make to private tenancies has now ended, and the industry awaits the result. Critics are calling for Section 21 notices to be banned, arguing that they tilt the balance of power towards landlords.

However, the Landlord Action study has revealed some interesting facts when it comes to the reasons that landlords may leave the sector, for fear that they have no power over their own properties.

Of the landlords that responded to the survey, 73% said that they have had to serve a Section 21 notice, with more than half (56%) using it because their tenant was in rent arrears. There were no other common specified reasons for landlords to use it, with 22% of respondents simply stating ‘other’.

Paul Shamplina, the Founder of Landlord Action, believes that many of these unspecified reasons, along with rent arrears, could be pursued under Section 8, but landlords are forced to rely on Section 21, even when there is a breach of tenancy, as they have very little faith in the court system.

He says: “Not only is using Section 8 already more time-consuming, tenants can delay the process further for landlords by counter-claiming. In addition, discretionary grounds of Section 8, such as anti-social behaviour, can be extremely difficult for landlords to prove, meaning it has a lower success rate. It’s clear from the survey that landlords need to be able to get their properties back as soon as possible, and are willing to forfeit arrears by using Section 21.”

Landlords Using Section 21 Instead of Section 8, Survey Shows

Other specified reasons for using a Section 21 notice included tenants requesting their landlord obtain a possession order (10%), landlords needing to refurbish the property (5%) or sell it (4.5%). Just 2% wanted to move back in themselves, while only 0.6% said that it was because the tenant had complained about disrepair (a so-called revenge eviction).

Interestingly, 43% of landlords said that their tenants vacated the property when served with a Section 21 notice, but 42% had to go to court to obtain possession.

The Government has put forward a consultation on a proposed specialist housing court. It believes that this would provide greater access to justice for both landlords and tenants, and give landlords confidence to offer longer, more secure tenancies, by making it easier for responsible investors to regain possession of their properties, should they need to.

However, as part of this, Shamplina predicts that the use of Section 21 would be heavily diluted, and is concerned that, without major reform to the Section 8 notice, some landlords will exit the market.

He explains his standpoint: “Section 21 gives landlords and mortgage providers the reassurance and flexibility to recover their asset, if they need to. To abolish it, or even dilute its current use, as has been suggested, will require significant reform to Section 8, which offers reassurances to landlords that, if they had to use the Section 8 route under grounds for rent arrears, moving back into the property or selling it, there would not be significant delays in the court process.  With this, we are likely to see a further cut to supply of rental properties, as landlords will consider buy-to-let too great a risk.”

In addition, the recent announcement that the tenant fees ban will come into force from 1st June 2019 could also affect the use of Section 21, Shamplina believes.

After this date, if a landlord (or letting agent) makes a charge that relates to a banned fee, they must return this within 28 days, or it will render a Section 21 ineffective.