Written By Em

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Em Morley

Should landlords pay for tenant damage?

Published On: October 22, 2015 at 11:34 am

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Categories: Landlord News

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A new report shows that the majority of tenants strongly believe that their landlords should foot the bill for damages they have caused at the end of a tenancy agreement.

The survey from PropertyLetByUs.com found that 80% of tenants believed that this should be considered normal practice.

Damage limitation

90% of tenants said that they have tried to hide damage from their landlord, with 10% owning up to causing in excess of £500 worth of damage to their rented property. 72% of tenants said that they ended up disputing damage with the property owner.[1]

Findings from the investigation show the most common cause of damage by tenants is staining floors and carpets from food, wine and paint (69%). This was followed by pat damage (51%), cigarette burns (47%), damage to kitchen cabinets (33%), scratches on skirting boards and door-frames (28%) and marks on the kitchen surface (19%).[1]

Tenants should pay for property damage

Tenants should pay for property damage

Struggles

Jane Morris, Managing Director of PropertyLetByUs noted, ‘landlords face an uphill struggle with tenant damage.’ She said that, ‘many tenants have little or no care for the property they are renting and because they don’t own it, they feel no sense of responsibility. There is a common view among tenants that it is someone else’s problem. So it is not surprising so many tenants think landlords should pay for any repairs to damage they have caused.’[1]

‘It is so important for landlords to make regular checks on the property during the tenancy so that they can see the condition of the property and speak with the tenants about any damage. If many tenants are left unchecked, they can cause costly damage to the property with often exceeds any deposit held,’ she continued.[1]

Concluding, Morris stated that, ‘it is also vital that landlords have a full, independent and professional inventory, with a check-in and check-out, attended by the landlord and the tenant. Finally, all tenants should be thoroughly referenced to ensure that landlords illuminate potential bad tenants.’[1]

[1] http://www.propertyreporter.co.uk/landlords/80-of-tenants-think-landlords-should-pay-for-damage.html?utm_content=buffer7d9e1&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

 

New Buy-to-Let Deals on the Market

Published On: October 22, 2015 at 10:59 am

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The end of the year, usually a quiet time for the property market, could experience heightened activity in the buy-to-let sector, as mortgage lenders compete to introduce new products.

Aldermore Bank, Coventry Building Society and 3mc have all revealed new mortgage rates for buy-to-let investors.

New Buy-to-Let Deals on the Market

New Buy-to-Let Deals on the Market

Aldermore has launched a new limited edition remortgage deal, including its lowest ever five-year buy-to-let fixed rate.

The range includes five-year fixed rates from 3.99% up to 80% loan-to-value (LTV), with the rental calculation based on the product pay rate.

It has also cut its reversion fees by 1% and introduced free legal fees on its standard range.

This deal is available on all new business applications across Aldermore’s standard and specialist buy-to-let ranges and includes a 1.5% completion fee.

Group Managing Director at Aldermore, Charles Haresnape, says: “There has never been a better time to take advantage of historic low interest rates and our new limited edition offering is available on a first come, first served basis.”1 

The Coventry Building Society has improved its five-year buy-to-let range, including a deal at a 3.35% rate up to 65% LTV.

This mortgage is booking fee free and includes a valuation of up to £700. It has early repayment charges of 5% until 31st January 2017, 3% to 31st January 2019 and 1% until 31st January 2021.

National packager and mortgage club 3mc, based in Cheshire, is now trialling Foundation Home Loans’ (FHL) new limited company buy-to-let product before its formal launch in November.

The product includes six fixed rate deals over two, three and five years, starting at 4.19% for two years up to 65% LTV.

Clients are able to purchase an existing property in a company name using a director’s loan.

Managing Director of 3mc, Doug Hall, explains why a limited company buy-to-let may be a viable option for landlords: “The effect of the Chancellor’s move to restrict tax relief will accelerate the need for more established landlords to look carefully at how they best manage their portfolios in a way that continues to maximise rental yields and minimise costs.

“These products from FHL will provide new options for brokers with landlord clients.”1

1 https://www.landlordtoday.co.uk/breaking-news/2015/10/lenders-unleash-series-of-buy-to-let-deals

Agents missing out on referral charge income

Published On: October 22, 2015 at 10:29 am

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Estate agents are missing out on potentially substantial incomes by failing to charge for referrals of their clients to financial advisors, lawyers and other groups, according to a research from the FBA.

An investigation involving 166 estate agencies indicates a culture of free referrals leads to 62% of agents not receiving a single penny for the referrals that they make. 18% said that they had not attempted to raise income in this manner.

Research

The FBA is a company that operates a platform for fee-based referrals between agents, lawyers and others. Results from the research show that the culture of a good deed for a god deed may have worked previously, but is now holding the sector back.

A spokesman for the company stated, ‘the lack of trust is particularly concerning in a world where transparency and fairness are all-important. Estate agents who believe that they should only refer cases to people they know and trust, or those that rely on reciprocal agreements, may not be doing their clients any favours. The referral networks that some estate agents and property professionals have formed over the years may not give clients access to the best professional advice.’

Continuing, the spokesman said, ‘ the rapid growth in popularity of consumer websites for property buyers and sellers is creating an unprecedented level of competition in the sector and is causing significant disruption to estate agencies. The lack of awareness around alternative ways of working is adding to the problem and is indicative of a knowledge gap that is preventing estate agents from increasing their revenue through new money-making techniques.’

Agents missing out on referral charge income

Agents missing out on referral charge income

Fees

Agents have a range of potential fee-generating referral systems open to them, according to the FBA. These include:

  • Reward-based referrals-This could involve receiving a cash reward or commission for client work that is referred to anther advisor
  • Referral agreements-Some estate agents have signed deals with specialist providers in order to secure additional advice to meet consumer demand
  • Using online open market platforms-This could allow agents and advisors to upload details of work to entice other registered members to bid for the lead.

 

Build to Rent to include affordable homes

Published On: October 21, 2015 at 4:10 pm

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Build to Rent development in the capital currently runs at over double that in the rest of the UK. A new manifesto is now calling for more affordable properties to be included in similar schemes.

Construction

At present, there are 14,276 units in planning, construction or completion phases across London, in comparison to 7,112 in the rest of the country, according to data taken from a report by the British Property Federation.

Results also show that there are at least 3,404 completed units in London, compared to just 240 in the rest of Britain.

As a result, the organisation has released a new manifesto for the Build to Rent Sector, in which it calls on the Government to follow the lead of the Greater London Authority, by changing national planning policy. The BPF feel that the appropriate affordable housing on new Build to Rent developments should be discounted market rent.

The British Property Federation has long supported the role Build to Rent has to play in improving housing delivery, attracting long term investment that can potentially boost housing supply.

Build to Rent to include affordable homes

Build to Rent to include affordable homes

Deliverance

Research indicates that Build to Rent can deliver homes at 2.5 times the speed of developments for sale and there is £10bn of firm commitments. In addition, there is as much as £30bn that the sector has ready to invest during the length of this Parliament. Experts suggest that the £10bn of investment identified for Build to Rent would create around £28bn of wider financial and economic benefit.[1]

Melanie Leech, chief executive of the British Property Federation, said, ‘it has felt for a long time that Build to Rent has been on the cusp of becoming a sector in its own right. Today, we are proud to show that the sector has really taken off, and it is great to see how many fantastic projects are either underway or completed and that residents have quality rented homes.’[1]

This said, she believes that, ‘there is more that can be done to encourage the sector to grow. The GLA has paved the way for Build to Rent, introducing both ambitious targets and supplementary planning guidance and the map launched today shows that this has really paid off.’[1]

‘The Government has everything to gain from encouraging this sector, which will attract significant institutional investment into UK housing supply, deliver new homes quickly and drive up standards in the private rented sector and we hope to see it continue to support it,’ Leech concluded.[1]

Reality

Andrew Stanford, residential fund manager at La Salle Investment Manager and chairman of the BPF’s Build to Rent Committee, noted that momentum behind Build to Rent continues and its moving from theory to reality.

Stanford noted, ‘with continued support from both national and local government this progress can continue. The growing number of long-term institutional investors in the sector will then find a suitable home for their capital, ensuring that housing supply and tenant choice can increase.’[1]

[1] http://www.propertywire.com/news/europe/uk-build-rent-sector-2015102111117.html

 

 

Right to Rent Pilot Scheme Evaluation

Published On: October 21, 2015 at 4:05 pm

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An evaluation of the Right to Rent pilot scheme found that in the first six months, 109 illegal immigrants were discovered.

By mid-September, only nine had been taken out of the UK, with a further five awaiting removal. Another nine were ordered to report to Immigration Enforcement, but failed to do so.

Yesterday (20th October 2015), the Home Office published an evaluation of the pilot scheme that was conducted in the West Midlands.

At the same time, it announced that a national rollout of the Right to Rent scheme will come into force on 1st February 2016. Read our guide on the checks here: /right-to-rent-checks-in-force-from-february/

The report, which covers the first six months of the pilot, from 1st December 2014-31st May 2015, reveals that very few landlords or letting agents were penalised, with just five civil penalty notices served. Also,

Right to Rent Pilot Scheme Evaluation

Right to Rent Pilot Scheme Evaluation

13 referral notices were issued.

The Right to Rent scheme was introduced in the Immigration Act 2014, with the West Midlands pilot using civil penalties.

However, under the new Immigration Act 2015, the penalties will become criminal sanctions.

The Home Office reports that out of 44 letting agents in the region, 36 felt they were informed about the scheme, alongside 70 out of 114 landlords.

It also states that agents voiced concerns over rogue landlords and agents not complying with the scheme.

Compliant agents were worried that immigrants unable to provide documentation could be exploited by the private rental sector.

In addition to online surveys, the Home Office analysed interviews and focus groups, and conducted a mystery shopper experiment.

The report found that the Landlords Checking Service made 109 decisions over prospective tenants’ right to rent in the UK, resulting in 95 yes decisions and 15 no decisions.

As a result of referrals through the scheme, there were 37 enforcement visits in the region.

In total, 109 people were identified as living in the UK illegally, of whom 63 were previously unknown to the Home Office.

The mystery shopper exercise revealed that a higher proportion of black and minority ethnic renters were asked to provide more information when enquiring about a property.

However, the report notes that they were “more likely to be offered properties”1, compared to white British tenants.

Prior to the scheme, 53 out of 64 letting agents always required photographic ID. This increased to 60 out of 64 when the scheme began.

Overall, letting agents believe that the scheme does not have an obvious impact on the market.

A higher proportion of landlords – 27 out of 35 – said the scheme increased their workload, compared with 26 out of 56 agents.

Of these 26 agents, various reasons were given as to why their workload was raised, including: explaining the scheme to tenants and landlords; monitoring when follow-up checks are due; and dealing with unfamiliar paperwork.

Three pulse check surveys were conducted at various points during the evaluation.

During the first pulse check, agents were asked how they planned to carry out the checks. Out of 41 respondents, 20 said they would conduct the checks in-house, 16 would use a tenancy referencing service and five did not know.

Have you thought about how you will conduct the checks?

1 https://www.gov.uk/government/publications/evaluation-of-the-right-to-rent-scheme

 

One in Five Tenants Struggle to Pay the Rent

Published On: October 21, 2015 at 1:07 pm

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New research has revealed that millions of workers are struggling to cope with living costs due to spiralling rent prices.

According to the study by the New Policy Institute, one in five Britons live below the poverty line once housing costs are taken into account.

The issue is affecting Londoners the most, with one in four tenants in the capital hit by sky-high rents.

One in Five Tenants Struggle to Pay the Rent

One in Five Tenants Struggle to Pay the Rent

This includes 1.2m who live in working households, a huge rise over the last ten years.

One renter finding life in the capital too difficult is primary school teacher Anna Evans. The 25-year-old pays £720 per month for a house in Balham, south London, which she shares with five other tenants.

A graduate of law from the University of Birmingham, Anna says she may have to move out of London, as living costs are so high.

“I pay more than half my salary in rent,” she explains. “I just don’t have a chance to save any money.”1

Her flatmate, Joanne Wheildon is also 25 and a trainee trader. She adds: “I won’t be able to buy a house until someone I’m related to dies.”1

Rents around the UK have risen by 11% in the last five years, reaching an average of £770 a month, found the study funded by anti-poverty charity Trust For London.

Over the same period, wages have only increased by 4%. In the last decade, this has caused a 30% rise in the amount of working-age people in poverty.

In London, the average rent price has grown by 19% in the last five years, hitting £1,600 a month.

Around 860,000 private tenants in the capital are believed to be living in poverty, including 260,000 children – twice the number recorded ten years ago.

The amount of low-paid jobs has increased for the fifth consecutive year, with one in five members of staff earning less than the London living wage of £9.15 an hour.

Another worker hit by high rents is Marianna Long, an executive assistant earning £21,000 per year.

The 23-year-old pays £500 a month for a room she shares with her boyfriend in Brixton, south London.

She comments: “The rent means I absolutely cannot save. Everything goes on living expenses and paying off an overdraft from being at university in London.”1 

Chelsea Wood, a forensic scientist, also earns £21,000. She pays £700 in rent for a flatshare in Clapham, southwest London.

The 24-year-old says: “I spend so much on rent that I feel as if I am living in poverty. A lot of my friends feel the same.”1

The researchers define poverty as having a household income that is under 60% of the national median.

1 Radnedge, A. (2015) ‘Workers caught in poverty trap by soaring rent’, Metro, 21 October, p.1-6