A step by step guide to becoming a successful landlord

A step by step guide to becoming a successful landlord

Whether you’re a property mogul with a to-die-for portfolio of houses, or you’re just renting out your wife’s old flat – you’ll need to get your head around the simple steps of being a landlord.

Getting into buy to let can be a great way to boost your income. And if you play your cards right, you may even be able to make a career of it.

Of course, there’s more to it than just buying a property and finding some tenants to pay the rent – you have legal responsibilities to make sure the home is safe and suitable for the tenant.

This handy visual guide from specialist mortgage providers, Commercial Trust, will help point you in the right direction.

guide-to-being-a-landlord-for-web

Commercial Trust guide to being a landlord

 

Three in 10 property purchases fall through

New research from Which? Mortgage Advisers reveals that three in ten (28%) homebuyers have had a house purchase fall through after their offer was accepted, and on average homebuyers were left nearly £3,000 out of pocket as a result.

The survey of 2,000 homebuyers – who bought their home in the previous two years – found that it takes over 4.5 months on average, from starting a property search to having an offer accepted. However, 28% of purchases fell through after that point.

The main reasons for a property purchase falling through were:

  •     The seller decided not to sell their home after all (27%)
  •     The buyer pulled out, as their own property sale had fallen through (21%)
  •     The buyer found somewhere else to buy (21%)
  •     The buyer was ‘gazumped’ (21%)

Of those who had lost money and knew how much they were out of pocket, the average loss was £2,899. This included conveyancing, survey, mortgage valuation or brokerage fees paid and not recovered.

Many homebuyers experience failed transactions due to problems in the ‘property chain’ – the line of buyers and sellers linked together because each is selling and buying a property from another.

For more advice on managing a property chain and keeping things moving, visit Which

Tenant evictions on the rise in England and Wales

The number of households evicted from rental accommodation in England and Wales rose by 5% in the first three months of the year, while the repossession rate for home owners fell to a record low.
Seasonally adjusted figures from the Ministry of Justice show there were 10,732 repossessions of rented homes by bailiffs between January and March 2016, up from 10,253 in the final three months of 2015.
The number of tenants evicted from their homes by bailiffs reached a record high in 2015, according to official figures for England and Wales, which shows that 42,728 households in rented accommodation were forcibly removed.
Housing campaigners blamed welfare cuts and the shortage of affordable homes for the rise in repossessions over the year and more than half the evictions are thought to have been by private landlords.
These figures are echoed by a new report from online letting agent PropertyLetByUs which shows that a quarter of landlords have served an eviction notice to tenants over the last 12 months and 5% have pursued an eviction through the courts. Furthermore, almost half of landlords have also experienced rent arrears over the last 12 months.
‘Landlords are increasingly facing rent arrears, as rent escalation continues to outstrip gross income. They are also facing a financial squeeze due to restrictions on their tax breaks and some may be raising rents to supplement their income. Pushing up rent rises further will put huge pressure on those tenants who are already struggling to pay their rent. We may well see evictions continuing to rise over the next few months,’ said Jane Morris, managing director of PropertyLetByUs.
She pointed out that the statistics highlight the need for landlords to protect their rental income and ensure they carry out thorough references with all new tenants. ‘Times are very tough for many tenants and demand for rental accommodation is soaring in many parts of the UK. Landlords need to extra vigilant when they take on a new tenant. But a few simple checks will help identify if a tenant is in a good financial position or not,’ she added.

Meanwhile, changes to the process of accelerated possession through applying to use High Court Enforcement Officers (HCEOs) to evict a tenant has brought an end the so called seven day eviction which were misleading for landlords as well as increased costs, according to legal experts, Landlord Action.

Source: Property Wire

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Brexit has pros and cons for the property market

The decision to leave the European Union could adversely affect the construction of new homes as many workers are from other countries, it is suggested, but red tape will be reduced.

It seems that overall Brexit has potentially mixed effects for the home building industry. One the one hand many workers are from other EU countries, but on the plus side, builders would be free from red tape regarded as holding up construction.

According to Brian Berry, chief executive of the Federation of Master Builders, the UK construction industry has been heavily reliant on migrant workers from Europe for decades.

‘It is now the Government’s responsibility to ensure that the free-flowing tap of migrant workers from Europe is not turned off. If ministers want to meet their house building and infrastructure objectives, they have to ensure the new system of immigration is responsive to the needs of industry,’ he said.

He believes at the same time more must be put into training British people in the skills necessary for the construction industry and that should be done by investing in apprenticeship training.

‘We need to train more construction apprentices so we are not overly reliant on migrant workers from Europe or further afield. That’s why it’s so important the Government gets the funding framework right for apprenticeships,’ he explained.

‘When you consider that this whole policy area is currently in flux, and then you add Brexit into the mix, it’s no exaggeration to say that a few wrong moves by the government could result in the skills crisis becoming a skills catastrophe. It’s only through close collaboration between the government and industry that we’ll be able to overcome these challenges,’ he added.

John Elliott, managing director of Millwood Designer Homes, believes that Brexit could be good for the house building industry. ‘I am excited to get on with the New World and see the back of EU laws which have been detrimental to us for over 40 years,’ he said.

‘One of the UK’s biggest assets is our home grown housing market and this will now be much better off out of EU regulation. For many years, the EU Habitats Directive has had an unnecessary impact on house building,’ he explained.

‘The mere hint of great crested newts or slow worms on a site, which unlike in Northern Europe where they are rare and given special protection, are prolific in the South East of England can delay building for months as they have to be translocated and caught and taken somewhere else for release,’ he pointed out.

Jan Crosby, head of housing at KPMG UK, acknowledged that any labour constraints brought in could reduce the availability of foreign workers on construction sites, currently a relatively large source of labour for the industry.

But added; ‘Our exit from the EU will stop the continual flow of red tape and see our housing market grow and flourish without unnecessary constraints placed on building much needed new homes; working towards creating a better future for Britain’.

Source: Property Wire

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Retired renter numbers skyrocket

According to a new poll of private renters, the number of people living in private rented accommodation in retirement has soared by more than 200,000 in the last four years.

Overall, the poll shows that the proportion of retired private renters has grown by 13% since 2012 – approximately 220,000 – as more and more people turn to the private rented sector.

17% of the retired private renting population live in the South East – the area with the highest proportion across the UK. However, just 3% live in London – the area with the smallest proportion area across England and Wales for renting in retirement.

There are almost four times as many retired renters in the North West (15%) compared to the North East (4%), and twice as many retirees rent property in the West Midlands (8%) compared to the East Midlands (4%).

However, the proportion of landlords who let to retired renters has almost halved during the same timeframe, with 9% of landlords saying they currently let to retirees compared to 19% in 2012.

The findings suggest that it could become harder for those approaching retirement to find suitable rented accommodation in the future, especially in high demand areas.

Carolyn Uphill, Chairman of the NLA said: “More and more people are turning to private rented housing at every stage of their lives, including in retirement. Landlords appreciate the stability and assurances often provided by older households, but are finding it increasingly difficult to build businesses around the needs of potentially vulnerable tenants.

 

“Successive cuts to the welfare budget, uncertainty about pension provisions, and the devastating impact of the Government’s tax changes are likely to mean that private landlords will soon be unable provide homes in high cost areas like Central London for anyone without a well-paying job. As the proportion of retired renters continues to grow there’s a real worry that homes won’t be available in the private sector, forcing people to look further afield – leaving communities they have known and contributed to for decades,” said Uphill.

Positive sentiment on future house price growth in UK slips to three year low

Household sentiment on future house price growth in the UK has slipped to a three year low, with 23.7% believing that the value of their home has increased over the last month.
Some 4.4% believe that prices have fallen, according to the latest house price sentiment index from Knight Frank and Markit Economics with the reading falling from 61 to 59.7.
Households in the North East perceived that the value of their home fell in June, the first time that households in any English region perceived house prices had fallen since August 2013.
The future HPSI, which measures what households think will happen to the value of their property over the next year, fell to 67.7 in June from 70.3 in May. This is the lowest reading recorded by the index since August 2013.
The gap between sentiment in the North and South of the UK is now wider than at any time since the inception of the index. But some 6.5% of UK households said they planned to buy a property in the next 12 months, up from 5.4% in May and the highest number since August 2015.
‘The decline in the future household sentiment index to a near three-year low coincides with growing uncertainty over the result of next week’s European Union referendum as the debates over the UK’s future step up a gear,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
‘The proportion of households who expect the value of their home to fall over the next 12 months rose to the highest level in nearly two years, but overall households still expect the value of their property to continue rising in the coming year, despite the uncertainty about the result of the vote,’ she explained.

Source: Property Wire

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Research reveals nearly five million renters at risk

Research reveals nearly five million renters at risk

Results from a survey by YouGov, commissioned by Royal London, reveal almost five million renters in the UK have no plans in place to cover their rent if they became too ill to earn for three months or more, even though recent cuts to housing benefits could leave them at risk.

This is despite the fact that over a quarter of renters in paid employment (27%) said they knew someone who had struggled in this situation.

More than one in three renters in paid employment (34%) admit they don’t know how long they could survive, and six in ten people (60%) who had some idea said they could only survive on their savings for three months or less.  Their first port of call would be to apply for state benefits (53%), followed by reducing their household expenses (47%) and then dipping into their savings (39%).

Worryingly, fewer than one in ten (7%) renters in paid employment have ever consulted a financial adviser. The most common place people turn to for financial advice is their family and friends.

Debbie Kennedy, Head of Protection for Royal London Intermediary, said:

“Renters who assume that housing benefit will be there when they need it could find the reality is very different.  A series of cuts to housing benefit means that more people would not get their rent paid in full if their income fell unexpectedly.

“It would be bad enough to be taken ill without the added anxiety of getting behind with the rent and facing possible eviction.  Income protection may be more affordable than people realise and can provide a financial safety net and enable people to focus on getting better.”

Economists predict over the next ten years the UK will experience falling levels of home ownership and rising levels of private renting.  In ten years’ time, 59% of 20-39 year olds will rent privately, up from 45% in 2013. A further 15% are in social housing, renting from housing associations or local authorities.

Source: Royal London

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Do you know your gas safety responsibilities?

The Gas Safe Register has put together a factsheet outlining a landlord’s gas safety responsibilities

This factsheet explains landlords’ gas safety responsibilities and is intended for both landlords and tenants.

Overview

If you live in rented accommodation, your landlord has legal responsibilities when it comes to gas safety.

Landlords have legal duties for gas safety. These are that gas pipework, gas appliances and chimneys’/flues are maintained in a safe condition. Gas appliances owned by your Landlord which are provided for your use must be checked annually by a Gas Safe registered engineer. These responsibilities are laid out in the relevant gas safety legislation, such as the Gas Safety (Installation and Use) Regulations 1998, in Great Britain.

Requirements

There are three specific duties to keep tenants safe.

Annual Gas safety checks

To make sure that any gas appliances and flue provided for tenants are safe for continued use. Landlords must arrange for them to be checked for safety every 12 months by a Gas Safe registered engineer.

Record

A record of this annual gas safety check will include specific information on the results of the tests carried out. A copy of the gas safety record must be provided to an existing tenant within 28 days of the check being completed or to new tenants before they move in. Landlords must keep copies of the record for two years.

Maintenance

Maintenance arrangements should normally involve a series of regular inspections and any necessary repairs. Landlords must ensure that gas pipework is maintained in a safe condition. Gas appliances and flues provided for the tenants use must also be maintained in a safe condition. Gas appliances and flues should be serviced in accordance with manufacturer’s instructions but if these are not available, annual servicing is recommended unless advised otherwise by a Gas Safe registered engineer.

There are no formal requirements for landlords to keep maintenance records. However, landlords will need to be able to show, if asked, that regular maintenance of the flues and appliances and any necessary repairs have been undertaken. Landlords do not have to provide maintenance records for tenants.

These duties do not extend to appliances in wholly non-residential buildings or parts of a building. For example, if you live in a rented flat over commercial premises, landlords’ duties will apply to the gas appliances, pipework and chimneys/flues serving the flat. Landlords duties will not apply to gas appliances, pipework or chimneys/flues used exclusively in the non-residential commercial premises below.

Landlords do not have an obligation to have any checks carried out on gas appliances owned by their tenant(s). Tenants are responsible for the maintenance and safety of their own gas appliances. Gas Safe Register recommends that tenants should have their own gas appliances serviced and checked for safety annually by a Gas Safe registered engineer.

What should I do to make sure my home is safe?

Access

Landlords need to ensure that they take reasonable steps to gain access to their properties in order to meet their legal responsibilities.

If you are a tenant you should allow the Gas Safe registered engineer appointed by your landlord access to your property to carry out maintenance or safety checks on appliances and/or chimneys/flues that the landlord provides for your use. Remember to ask to see the engineer’s Gas Safe register ID card to confirm they are registered and qualified to carry out the necessary work.

Tenants own appliances

You are responsible for the maintenance and safety of your own gas appliances. The landlord is still responsible for the maintenance of the gas pipework. However, if your Gas Safe registered engineer advises you of an issue with the chimney/flues in the property under other legal duties.

Remember whenever having any gas work carried out, always use a Gas Safe registered engineer holding the relevant qualifications for working on your gas appliance. To find or check a Gas Safe registered engineer go to GasSafeRegister.co.uk or call our free helpline on 0800 408 5500 or 01256 341514.

For more information click here

Surge in investors buying student property

New data has found that the first quarter of 2016 has seen a surge in investors acquiring student property, to beat the new stamp duty legislation, which comes into force in April 2016.

Research, conducted by The Mistoria Group – student property investment specialists, reveals investors have been flocking to complete their student property purchase by the end of this month, to avoid the 3% stamp duty surcharge coming in for second homes.

The research shows that sales of student property in the North West have leapt by over 30% between January-March 2016, compared with the first quarter of 2015.  More than 50% of student property investors are from the South, while a third are overseas investors.  The remaining 20% of investors are from the Midlands and the North.

Over the last few years, student housing has undergone a significant amount of change, with rising rents and a higher level of expectation from the occupying students, many of whom are looking for high-spec accommodation with luxuries like plasma TVs, Wi-Fi and built-in white goods.  The removal of the cap on student numbers have also triggered many universities to anticipate an increase in enrolment over the coming years, which is driving demand for more high quality, affordable student accommodation.

Mish Liyanage, managing director of The Mistoria Group comments: “We have seen a rush of investors wanting to purchase student property over the last quarter and we anticipate that demand for student property will continue to grow significantly in 2016 and beyond.

Since the birth of the buy-to-let mortgage 18 years ago, student accommodation has outperformed all other traditional property assets and has been the strongest growing investment property market in the UK.

Over the last five years, student properties in the North West have generated yields in excess of 13% and geared yield in excess of 35% in Salford and Liverpool.  Our research shows that the North West provides greater returns than any other city in the UK. This is fuelled by the massive regeneration taking place in Manchester, with the proposed High Speed 2 (HS2) high-speed railway between London Euston and the North West to be completed in the next 15-20 years.

A HMO (House in Multiple Occupation) property can provide an 8% minimum cash rental yield and a typical 13% total cash yield, including 5% capital appreciation.  The average gross cash rental yields for the student property sector in the North West of England were 8.1% for the 2015.”

Help with housing costs isn’t aligning with rent for private tenants, says CIH

New research from Chartered Institute of Housing (CIH) reveals tenants face an increasingly widening gap between the Local Housing Allowance (LHA) they receive to help with their housing costs and the actual rent they pay.

Analysis conducted by CIH looked at LHA rates since 2012 and found that in some parts of the UK, people are only able to afford to rent in the bottom five or 10% of the private rented sector (PRS) market. However, the LHA rates were originally intended to ensure that people could access 30% of the market. The situation is set to worsen as LHA rates freeze for four years from April 2016.

The cash shortfall affects tenants across the UK, the study has found. In Aberdeen, Scotland, there are very severe cash shortfalls in every LHA category, and in Northern Ireland, 80% of LHA rates have already fallen below the bottom 30% of the market – second only to England. In Newport, South Wales, the LHA shared accommodation rate would need to be set at £29 per week more for people under 35 to be able to afford the whole of the lowest 30% of the market. In England, the LHA rate for Chesterfield’s broad rental market area is even lower than the lowest rent that the rent officer could find in their market evidence data – in other words, there’s no shared accommodation available at the LHA rate.

CIH chief executive Terrie Alafat CBE said: “We are becoming more and more concerned by the lack of correlation between LHA rates and rents, and our research shows that people are going to find it difficult to continue renting in the PRS.”

She added: “CIH is calling on the government to review LHA rates for all categories of accommodation, to make sure everyone is able to access a safe, affordable home.

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