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Em Morley

Landlords, Which Renovation Projects are Most Profitable?

Published On: July 26, 2017 at 8:07 am

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When it comes to renovation projects, sometimes it takes money to make money – that’s the finding of the latest research by Towergate Insurance.

Landlords are often looking at ways that they can increase the value of their properties, either to command a higher monthly rent and therefore earn stronger rental yields, or sell the asset for a better price, which will improve capital gains.

Towergate has analysed some common renovation projects to find out which will add the most value to your property, without breaking the bank in the first place.

However, its research has indicated that sometimes it is worth putting a larger sum behind a renovation project to reap the rewards.

We used the current average house price of £220,700 (taken from the latest Office for National Statistics/Land Registry index) to calculate how much some popular renovation projects would cost on this property, how much they would increase the value of the home and the estimated profit on each.

If you would like to put in the value of your own properties, simply use the tool here: https://www.towergateinsurance.co.uk/landlord-insurance/most-profitable-home-renovations

Landlords, Which Renovation Projects are Most Profitable?

Landlords, Which Renovation Projects are Most Profitable?

On the typical UK property, the cheapest renovation project is to transform a space into open plan living, which costs an average of £2,100. However, if you’re looking to opt for this feature (something that may appeal to many modern tenants), you’ll be pleased to know that it’s not bottom of the list for profit and increase in value.

It’s actually decking that will deliver the lowest increase in value to your property, at just 2% (or £4,414 on an average home). In addition, the profit on this renovation project is just £2,239, following a £2,175 initial outlay.

The most expensive project on the list is a single storey extension, which would cost a huge £20,000 on the average home. But is this worth it? It appears not, as you’ll only receive a £4,277 profit from this job.

So, what is the most lucrative investment? It turns out that adding a garage will deliver the highest estimated increase in value – a solid 20% (or £44,140)-  and the greatest estimated profit – an impressive £28,690.

Other ideas on the list include outside décor, a conservatory and a loft – find out which will be the most profitable on your property and happy renovating!

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Housing market demand rebounded in June

Published On: July 25, 2017 at 11:49 am

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Demand for properties in Britain rose in June, but the supply of accommodation fell, according to the most recent housing report from the National Association of Estate Agents (NAEA).

The number of sales agreed per member branch increased from 10 in May to 11 in June. In addition, the proportion of sales made to first-time buyers was up by 30% – the highest rate since January.

Property Hunters

Furthermore, data from the report indicates that the number of house hunters registered per estate agent branch rose by 10% in the last month. During May, there were 350 per branch, in comparison to 384 in June.

This represented a 16% increase from June 2016, when 330 potential buyers were registered per branch.

It appears that the gap between supply and demand is also rising, with the number of properties available per branch falling from 40 in May to 37 in June.

Buyers are also apparently driving a hard bargain, with only 2% of properties sold for over the asking price in June. This was a decrease of 1% month-on-month, with the overall number of homes sold for under the asking price rising to 79%.

searching and buying a house concept illustration with coloful small houses

Housing market demand rebounded in June

Bouncing Back

Mark Hayward, NAEA Chief Executive, noted: ‘In May we saw a period of political uncertainty, with new buyers stalling their house search until after the election. In June however, it seems the market has bounced back, with the number of house hunters rising.’

‘Although we have seen a decrease in the number of houses available per branch, we have seen a rise in the number of sales which is typical of this time of year as buyers and sellers push through their property transactions ahead of the quieter summer months,’ [1]he added.

[1] http://www.propertywire.com/news/uk/uk-housing-market-demand-bounced-back-june-latest-estate-agent-data-shows/

Leaseholds on new builds could be banned under new proposals

Published On: July 25, 2017 at 11:08 am

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So-called unfair charges levied on purchasers of new-build houses could be banned in England, under a new crackdown proposed by the Government.

Leaseholds on new build properties would be prevented, while ground rents could also be dramatically reduced, under plans set for public consultation.

Fees

Some new-build property owners have found that they were permitted to pay large amounts of money for features that could be considered as ordinary. These included putting up a conservatory, changing floor materials or simply painting their garden fence!

In addition, spiralling ground rents, which can double over the course of a decade, are also leaving many out of pocket.

Government figures suggest that 1.2million leasehold houses are present in England, with this number rapidly increasing. The Government has acknowledged that the terms of some of these leases are becoming more-and-more onerous to those purchasing leasehold properties. Many are left needing to find thousands of pounds to pay their freeholder in order to carry out these often simple improvements.

As such, the Government has outlined plans to cap leasehold fees and crackdown on properties that qualify for the Help to Buy scheme. Some developers have voluntarily stopped the practice of selling on their leasehold to private companies but others have not.

Leaseholds

Generally, the term leasehold applies to flats with shared space. However, developers, particularly in the North West of England, have been selling houses on these terms, before selling the leases on.

Now, Communities Secretary Sajid Javid is pledging to try and solve these issues. Under the proposals, there will be a ban on new builds being sold as leaseholds, alongside ground rents being restricted to as low as zero.

Mr Javid noted that some buyers have faced, ‘unreasonable and long term financial abuse’

Leaseholds on new builds could be banned under new proposals

Leaseholds on new builds could be banned under new proposals

‘It’s clear that far too many new houses are being built and sold as leaseholds, exploiting home buyers with unfair agreements and spiralling ground rents. Enough is enough. These practices are unjust, unnecessary and need to stop. Our proposed changes will help make sure leasehold works in the best interests of home buyers now and in the future,’ he explained.[1]

The eight-week consultation process with new legislation is expected by the beginning of 2018.

Delighted

Beth Rudolf, Director of Delivery at The Conveyancing Association, observed: ‘We are delighted to see the Government responding to such a significant weight of evidence from leaseholders and stakeholders in the property industry, and producing proposals intended to prevent additional homeowners getting caught by escalating ground rents and unreasonable consent fees.’

‘We look forward to hearing more details on these proposals and hope they will deal with the single biggest loophole, the Commonhold and Leasehold Reform Act, which currently excludes leasehold homeowners from having any protection from unreasonable fees and unreasonable delays when buying, selling or simply improving their property,’ she added.[2]

[1] http://www.propertywire.com/news/uk/leaseholds-new-houses-england-banned/

 

Calls for Unregulated Eviction Firms to Join a Redress Scheme

Published On: July 25, 2017 at 9:31 am

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Landlords simply cannot afford to restart the eviction process after an unregulated firm has failed to offer the correct service, insists Landlord Action, which is calling for unregulated eviction firms to join a redress scheme.

Over the years, Landlord Action has been instructed to take on several cases following the malpractice of another firm. With repossessions for landlords now taking an average of 43 weeks, Landlord Action insists that landlords simply cannot afford to restart the process due to compliance errors.

Calls for Unregulated Eviction Firms to Join a Redress Scheme

Calls for Unregulated Eviction Firms to Join a Redress Scheme

It is calling for unregulated eviction firms to become part of a redress scheme to help clean up the industry and protect landlords and letting agents from further unnecessary expense.

As the private rental sector has grown, so too has the eviction industry and, with it, the number of unregulated eviction firms cutting corners and not using legally qualified personnel to facilitate the process correctly.

One landlord, Ms. Romeena Hadwal – who, like many people, turned to the internet for advice when her tenant fell into rent arrears – found herself battling the very company she had instructed to help her.

She explains: “I found a company on the internet which was offering what appeared to be a very good deal – £99 to get started and a money-back guarantee. I spoke to them on the phone; they seemed perfectly legitimate, explained the process to me, took payment and filed notice, which my tenant received.

“However, problems started when it transpired they had put the wrong address on the court forms, which delayed the entire process. Under the impression it had been resolved, the case went to court, but, four weeks after the hearing, I was told I was unable to apply for the N325 Request for Warrant of Possession because the address was still incorrect. I wish I had gone to a regulated law firm.”

Communication between Hadwal and her eviction company became increasing hostile, until the firm stopped responding altogether. Six months on, she was still no closer to getting her property back and had paid a total of £855 to a company that had not helped her to evict her tenant.

Commenting on unregulated eviction firms, David Smith, a Partner and Head of Operations at Anthony Gold Solicitors, says: “Unregulated providers of advice to landlords look like a good deal at first blush. However, they can provide advice which is misleading or plain wrong, and the lack of insurance or a complaints process leaves landlords with nowhere to turn when things go wrong. A robust complaints mechanism is a key component of giving landlords confidence in the reliability of such services.”

With nowhere to take her complaint and mounting rent arrears, Hadwal was desperate to get her property back. Her only choice was to instruct another eviction company. She contacted Landlord Action, which took the case over, and Hadwal now has an eviction date set for 1st August 2017.

Paul Shamplina, the Founder of Landlord Action, comments on the success of his firm: “When we set up as the UK’s original three-step fixed-fee eviction company, the aim was to provide simplicity to a previously costly and complicated burden for landlords and letting agents. As other operators have entered the marketplace, we’ve found ourselves working with more and more landlords who have not only been let down by their tenant or letting agent, but subsequently their unregulated eviction firm.

“To improve standards and provide a better service, we acquired status as an Alternative Business Structure (ABS) in landlord and tenant law, authorised and regulated by the Solicitors Regulation Authority (SRA). This means if a landlord has a complaint, they can report it. But not all companies are regulated, so landlords have nowhere to turn if they have a complaint, and this needs to change. Belonging to a redress scheme would be the first step to making improvements and ensuring consumer confidence.”

The Head of Redress at the Property Redress Scheme, Sean Hooker, adds: “Eviction is a highly technical skill that should be conducted professionally and sensitively. It is also an area where practitioners should be very aware of the service they provide to their customers. This is where access to redress comes in, allowing landlords and their agents to have their service complaints determined by an independent and impartial third party and things to be put right. The introduction of such a provision will raise standards in the eviction world, provide customers peace of mind and confidence in the sector, and increase the reputation and standing of those specialists that provide a necessary and valuable service.”

Landlords, remember that Rent Guarantee Insurance is the best way to protect your rental income against tenant rent default. The policy from Just Landlords will also cover your legal expenses incurred when evicting a tenant: https://www.justlandlords.co.uk/rentguaranteeinsurance

Always remember to use a regulated eviction firm to avoid costly mistakes!

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Homebuyers are Pushing Through with Summer Transactions, Reports NAEA

Published On: July 25, 2017 at 9:06 am

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Homebuyers are pushing through with summer transactions, as property sales rose in June, according go the latest Housing Report from NAEA Propertymark (the National Association of Estate Agents).

Homebuyers are Pushing Through with Summer Transactions, Reports NAEA

Homebuyers are Pushing Through with Summer Transactions, Reports NAEA

Property sales 

The average number of property sales agreed per estate agency branch was up from ten in May to 11 in June, the report shows.

It’s good news for first time buyers, as the proportion of sales made to this category rose to 30% in June – the highest amount since January.

Housing demand 

The number of house hunters registered per estate agency branch increased by 10% last month. In May, there were 350 per branch, compared to 384 in June. This is also a 16% rise on June 2016, when 330 potential buyers were registered.

Property supply

Indicating that the gap between supply and demand is increasing, the average number of properties available per member branch dropped in June, from 40 in May to just 37.

Sale prices

Just 2% of properties sold for more than their asking prices in June – down by one percentage point on May.

The number of homes that sold for less than their asking prices rose, however, to 79% in June – up by 2% on May’s figure.

The Chief Executive of NAEA Propertymark, Mark Hayward, comments on the latest report: “In May, we saw a period of political uncertainty, with new buyers stalling their house search until after the election. In June, however, it seems the market has bounced back, with the number of house hunters rising.

“Although we have seen a decrease in the number of houses available per branch, we have seen a rise in the number of sales, which is typical of this time of year, as buyers and sellers push through their property transactions ahead of the quieter summer months.”

Details of the previous month’s Housing Report can be accessed here: /3-properties-sold-may-asking-price/

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Councillor believes licensed homes reduce risk of anti-social behaviour

Published On: July 25, 2017 at 8:51 am

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A councillor based in London has indicated that there is a direct relationship between licensed rental accommodation and a reduction in anti-social behaviour.

Harbi Farah, cabinet member for housing and welfare at Brent Council, also believes that selective licensing schemes also assist in improving safety levels, leading to sustainable tenancies.

Prosecutions

101 criminal prosecutions have been brought against landlords since Brent Council started its crackdown. Mr Farah feels this reflects the council’s no nonsense policy towards rogue investors.

Farah observed: ‘We hope that more than 100 prosecutions against rogue landlords in Brent send a clear message that rented properties in the borough need the correct licence.’

‘There is a link between licensed properties and a reduction in anti-social behaviour as well as a rise in sustainable tenancies and an increase in safety.’[1]

The latest prosecution from the council involved a fraudulent letting of a HMO.

Councillor believes licensed homes reduce risk of anti-social behaviour

Councillor believes licensed homes reduce risk of anti-social behaviour

HMOs

Mr Arthur Zurvskij was found guilty of subletting a property to seven tenants. Instead of obtaining a HMO licence, Mr Zurvskij rented out the property through Ludlow Thompson letting agency.

The owner of the property lived in the United States and legally gave control of the dwelling to the letting agency – believing it was to be rented out by a single family.

In the trial, the court heard that Mr Zurvskij had not got written consent from the landlord to rent out the property to more than one household. As a result, he was handed a £2,250 fine, while his company received a fine of £8,000.

An enforcement officer for Brent council said: ‘Breaching the law on HMO is very serious. If found guilty, the landlord or person in charge of the property is left with a criminal record. The potential fines are now unlimited’.

“This case should send out a warning to all landlords or companies subletting properties without the correct licence. If you are renting out a property to three or more people who are not all related, you need a HMO licence. It doesn’t matter if the property is in good condition, you still need a licence.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/7/licensed-homes-reduces-anti-social-behaviour-claims-councillor