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Em

Em Morley

Landlords and Agents: Deadline for New Section 21 Rules Approaches

Published On: September 25, 2018 at 9:03 am

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Categories: Law News,Lettings News

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Confusion remains ahead of new Section 21 rules being introduced next month. Landlords and letting agents are being reminded about incoming changes to Section 21 notices next month for tenancies set up before October 2015.

Currently, a landlord must provide two months’ notice when issuing a Section 21 eviction notice to any tenant on an assured shorthold tenancy (AST) or periodic tenancy signed after October 1, 2015.

Under the 2015 rules – part of the Deregulation Act 2015 – a landlord cannot serve a Section 21 notice within the first four months of the original AST, if this occurred on or after October 1, 2015.

The Act also says that a Section 21 notice is only valid for six months from the date the notice was given.

After that time has elapsed, a new notice will have to be issued by the landlord.

From October 1 – a week away – older tenancies will be brought in line with the new rules.

Buy-to-let lender Commercial Trust has said it is clear that the rules on two months’ notice and waiting four months before service, as well as the six months validity rule, will apply to older tenancies pre-2015 – but it is unclear if other parts of the legislation will apply to legacy contracts.

It cites a lack of clarity over regulations that a Section 21 notice can only be issued if a tenancy was accompanied by the latest version of the Government’s ‘How to Rent’ guide and if an up to date Energy Performance Certificate (EPC) and Gas Safety Certificate have been provided.

David Smith of solicitors Anthony Gold has also said there are “grey areas”.

He said the obligation to provide a How to Rent guide won’t apply to tenancies that began before 2015.
Addressing requirements to have supplied Gas Safety Certificates and EPCs, Smith said: “The 2015 regulations which specify the prescribed requirements expressly state that they only apply to ASTs granted on or after October 1, 2015, and not to statutory periodic tenancies that came into being on or after October 1, 2015, at the end of an AST granted before that date.

“It therefore seems that until new Regulations are passed to clarify this position, there are no prescribed requirements in existence applicable to old tenancies.

“It is possible that individual judges in county courts will arrive at their own interpretations of the rules. It is certainly an area that requires clarification.”

One Week Until New Mandatory HMO Licensing Comes Into Effect

Published On: September 25, 2018 at 8:12 am

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Categories: Landlord News

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With an extension of the rules bringing a wider range of Houses in Multiple Occupation (HMO) into the mandatory licensing regime coming into effect on 1 October, landlords have just one week to apply for a licence.

This licensing requirement applies to all properties that meet the following criteria:

• is occupied by five or more persons
• is occupied by persons living in two or more separate households
• and meets:
the standard test under section 254(2) of the Act

the self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats, or

the converted building test under section 254(4) of the Act.

Properties that fall into scope of the new definition but are already licensed under a selective or additional scheme, will be passported over to the new scheme at no cost to the landlord.

Richard Lambert, CEO of the National Landlords Association (NLA), commented:
“The Government made the announcement about mandatory HMO licensing in January, but we’re concerned that many landlords may not have applied for their licenses. We encourage all landlords to make sure they do so before 1 October to be compliant.

“It may be that landlords thought there was a six-month grace period, as was originally proposed. This is not the case and we don’t want to see anyone committing an offence through ignorance.”

The NLA is also concerned that local authorities are not prepared for, or are still unaware of, the mandatory licensing for HMOs.
Mr Lambert claims: “We have been contacted by a number of our members who have tried to apply for licenses, but the local authority has purported not to know anything about it or simply didn’t have the systems in place to process the applications.

“This is an unacceptable failing on the part of the Ministry of Housing, Communities and Local Government, which should have ensured all local authorities were up to speed with the changes. It’s disappointing that more consideration hasn’t been made for the significance of this change and the challenges local authorities face in implementing it.

“Our advice to landlords who have encountered this is to apply for an HMO license using the existing process, even if the council hasn’t updated their forms.”
The guidance for local authorities on HMO and residential property reforms is available at gov.co.uk

How Can you Improve Outdoor Space in Your Property to Increase Rental Yield?

Published On: September 24, 2018 at 10:01 am

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A garden is more than just a garden. It’s a place where families and friends come together and quality time is spent, especially in this summer period…

For property investors, garden and outdoor space is a desirable feature to a property. Tenants often place this feature as a necessity when searching for the perfect home, this is an enabler for you to demand a higher rental price and, as a result, increase your rental yield.

If you’re preparing to sell your rental property or are seeking the most effective ways to increase your rental yield, Just Landlords, the specialist landlord insurer, have compiled some top tips for you to follow.

Lawns

Having a large lawn can be an attractive feature of a property. It can be particularly appealing to families with small children, as they are free to play and run around. In addition, any playing apparatus like swings, slides etc can be used in the garden due to this space being provided.

However, this may not be as appealing if you are an owner of a smaller property. Instead, this type of property will most likely attract young professionals or young couples without children. Despite this, you may want to contemplate keeping some of the lawn and perhaps implementing some decking or a smart patio, perfect for hosting dinner parties or other gatherings. This provides the potential tenant with some optionality and could therefore potentially contribute value to both the sale and rental price.

First impressions

During the viewing process, it is important to wow your potential tenants to increase the chances of them wanting to invest. This is why it is paramount for you to invest in the appearance of your garden, ensuring that the basic cleanliness and tidiness of the space is regularly maintained. This also involves making sure that old plants are replaced with new ones to retain a fresh and inviting atmosphere.

Killing weeds is also important, as you do not want to give potential tenants the impression that your property is unkempt. Additionally, they may feel put off by this because they might have to do a lot of work to keep weeds from growing. One of the most unpleasant weeds is Japanese Knotweed, which can grow to 7ft. For an informative guide on how to get rid of Japanese Knotweed, Landlord News, a company in association with Just Landlords, has written up a thorough guide which you can access here

If you wanted to go the extra mile, you may consider purchasing some exotic plants or some nice garden furniture to really show the potential of the property.

Front garden

Although most tenants are interested in the appearance, space and condition of the back garden, when utilised effectively and presented in a pleasant way, the front garden can add considerable value to your rental property.

Going Solar

Another popular suggestion is to go solar with your garden lights. Though this could be slightly on the pricey side, it would definitely increase your chances of an attractive rental yield, as you would be able to up your rental price.

Throw in some extras

If you are determined to increase your rental yield, then perhaps consider going to extra mile for potential tenants and providing things like a dishwasher or perhaps other desirable appliances. This way, you can up your rental price and improve your rental yield.
So, if you’re determined to improve your rental yield and show potential tenants what your property offers, get busy!

London’s Supply of Rental Properties Begins to Plummet

Published On: September 24, 2018 at 9:27 am

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Categories: Lettings News

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According to recent figures provided by Home.co.uk. London is currently experiencing a shortage of rental properties, particularly in Greater London.

This is unfortunate news for tenants, who are now confronted with increased rents and stiff competition to secure the best homes. Rents have already risen by 4.0% in the Greater London area over the last 12 months.

The number of available homes to rent in Greater London that have been on the market for 20 weeks or less plummeted by 24% over the last year, from 52,388 in August 2017 to 39,746 in August this year.

In fact, the current number of properties available to let is at its lowest level since March 2015.

An average yield of just 3.7% in August in the capital, compared to 4.7% across mainland UK, looks to be a key factor in landlords leaving the rental market in London.

Across mainland UK, the supply of all available homes to rent, including hard to rent properties that have been on the market for more than 20 weeks, has fallen by more than 10,000 since July 2017, from 233,453 to 223,115.

Aside from London, another particularly badly hit area is the South East, where supply of all available rental properties fell from 30,066 in August 2017 to 27,728 in the same month this year.

The lack of rental property in the capital is likely a direct result of a number of costly new legislation and taxation measures imposed on the sector. Consequently, landlords are throwing in the towel.

From April, individual buy-to-let investors will be unable to offset all their mortgage interest against their profits and, within the next three years, none of this interest will be tax deductible.

Another intervention has been increased red tape for landlords due to additional licensing for Homes of Multiple Occupancy (HMOs), whereby councils can impose their own licensing on HMOs.

Vendor landlords have done their maths and they know that if they continue to let the property, even with a modest rent hike, they will now be losing money overall. Their conclusion is simple – it is time to sell.

Doug Shephard, Director of Home.co.uk commented: “The main driver for rent hikes going forward is an alarming lack of homes to rent, especially in Greater London, 24% is a huge drop and much of it can be ascribed to the BTL exodus.

“Basic economics tells us that when supply falls prices must rise. In the case of London, it looks like rents will increase quickly – and they need to.

“For too long, rents have lagged behind house price inflation, to the point where yields have sunk too low. Rental returns fundamentally underpin property values and London prices desperately need a fillip to prevent the slide into negative equity.
“Watch the rents. It’s catch-up time.”

How Much Are You Paying for Your Furnished Flat?… Could it be 21% More Than an Unfurnished Property?

Published On: September 24, 2018 at 8:56 am

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Research provided by property website OnTheMarket.com has revealed that renting a two-bedroom furnished flat can cost up to 21% more per month than renting an unfurnished property of the same size in the same location.

The data gathered calculates average monthly rental prices based on two-bedroom flats across nine major UK cities, to determine the average difference in cost between renting a furnished or an unfurnished property.

The results revealed that the cost of furnishing a two-bedroom flat can be around £1,800 including a sofa, coffee table, bookcase, TV, table and chairs, two double bed frames, two mattresses, a desk and an office chair. This amount is calculated based on furniture from IKEA and a TV from Curry’s.

With prices for furnished flats commanding up to 21% more than unfurnished, it is a decision for the tenant to decide whether or not to save a lump sum to buy basic furniture.

According to the results, renting a two-bedroom furnished property in the city of Sheffield costs tenants an average of £726 in comparison to £598 for an unfurnished property of the same size – a 21 per cent increase in price.

In Newcastle upon Tyne the difference is £85 more – a 14% difference, Birmingham (£127 more – a 20% difference), Sheffield (£128 more – a 21% difference), Manchester (£101 more – a 15% difference), London (£128 more – a 9% difference), Leeds (£128 more – a 19% difference), Glasgow (£86 more – 13% more), Coventry (£102 more – 15% more) and Cardiff (£50 more – 7%).

Commercial Director at OnTheMarket.com, Helen Whitely commented: “Ultimately this research suggests it’s worth calculating the cost of furniture to decide whether the initial financial outlay can be off-set overtime during the rental period.

“Spread throughout a 12-month tenancy, these costs become around £150 per month meaning it is worth prospective tenants giving serious consideration to whether or not they are embarking on a long term let. That said, there are clear benefits and a level of convenience of walking into a ready-to-live-in property when weighed against the alternative of buying everything yourself.”
Denise Brown, Property Management Manager at Andrew Craig in Newcastle, said: “Newcastle has a strong hold on student accommodation that requires fully furnished because tenants travel to this area for university and do not have many goods of their own.

“Gateshead has more long-term tenants and mostly family homes, it is not normally their first rental and the tenants have collected goods along the way.

“Since the Government abolished tax relief for landlords on furnishing properties, we have noticed a significant drop and over three-quarters of our management/let-only business is now unfurnished.

“Landlords are more likely to buy rent guarantee insurance, which protects the landlord against the tenants not paying the rent, than furnish properties.”

New HMO Rules to Cost Landlords an Extra £79m

Published On: September 24, 2018 at 8:01 am

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According to recent research, changes to mandatory Houses in Occupation (HMO) licensing being enforced in England on the 1st October 2018 will collectively cost by-to-landlords in the region of £79m.

The study undertaken by the Centre of Economics and Business Research (Cebr) on behalf of Currys PC World Business, has revealed that licence fees alone will hit landlords in England with an average bill of £1,027 each – £495 per property.

Under the new rules, mandatory HMO licensing is being extended to almost all HMOs that are occupied by five or more people where there is some sharing of facilities, and that is expected to affect more than 160,000 properties, with 77,194 landlords being expected to apply for the new licence.

The licensing scheme was previously restricted to properties that were three or more storeys in height.

As of 1 October 2018, a property will be considered a HMO if it is occupied by more than four people and these people form two or more separate households. The requirement for it to cover three or more stories of a property has now been removed and it is estimated that this change will mean that some 177,000 rental properties will now be classed as HMOs.

Tenants may be considered to belong to separate households even if they have a joint tenancy agreement. For example, if a property was let to five students then it would probably be classed as a HMO even if the students took out a joint tenancy agreement. It is not always straightforward to determine whether or not a particular tenancy situation would require HMO licensing so landlords may want to involve a lawyer (or get a HMO licence to be on the safe side if the costs are affordable).

The move will mean councils can take further action to crack down on the small minority of landlords renting out substandard and overcrowded homes.

The Cebr estimates that local authorities stand to receive around £243,070 on average from the new license fees.

It also believes that landlords will have to spend about three hours per property applying for licences, familiarising themselves with legislation and taking time out to facilitate property inspections.

New rules will also come into force setting minimum size requirements for bedrooms in HMOs to prevent overcrowding, while landlords will also be required to adhere to council refuse schemes to reduce problems with rubbish.

The Government predicts that 87,000 HMOs will be impacted by additional rules around waste disposal, which the Cebr projects will collectively cost landlords an extra £95m.