Month: February 2021

When deciding whether or not to become a landlord there are a number of issues to take into consideration. You need to consider whether you have the time to dedicate. For now, here is everything you need to have in place before making the final decision. 

What to consider or inspect prior to placing the property on the market:

Leaseholder/Mortgage company consent

If you have a leasehold property or a property which is subject to a mortgage you are required to obtain the Freeholders and/or mortgage company’s permission prior to renting out your property. Such consent may be subject to certain conditions including that any tenancy must be for a minimum term and changing your mortgage product to a Buy-To-Let mortgage. 

Furniture and Furnishings

All soft furniture and furnishings provided to a tenant must comply with the Furniture and Furnishings (Fire)(Safety) Regulations 1988. This means that if items such as sofas, mattresses, curtains catch light any fire will promptly go out. To check whether your furniture and furnishings comply you need to check the items labelling. When purchasing from a UK reputable supplier, the furnishings will usually be labelled accurately. Whereas if labels can’t be identified it is best to replace them. 

Smoke and Carbon Monoxide Alarms

Newly built premises from 1992 and HMO properties must have mains operated smoke alarms with battery back ups. Older properties must have a a battery operated smoke alarm on each floor.

Properties that hold a solid fuel burning appliance, like a log fire will also require a working carbon monoxide alarm. 

Appliance manuals

Tenants should be provided with manuals for any gas, electrical or other appliance in the property.

Legionnaires disease

With Covid and the lack of visitors to the UK some properties have unfortunately remained unoccupied for some time. We recommend a legionnaire assessment for those properties least lived in. Legionella bacteria can breed in warm stagnant water and reach a concentration at which they become hazardous to health. If a property obtains a water tank, an appropriate risk assessment should be carried out. The risk assessment may be carried out by a third party unless you believe you are competent to do so.  

Internal blinds

The Blind Cord Safety Regulations 2014 require blinds to be “safe by design”. It also requires to have the appropriate child safety devices installed. All blinds must carry safety warnings and ideally landlords should consider blinds without cords especially in a child’s bedroom. It’s the landlords responsibility to change the previous tenant blinds – to ensure safety.

Insurance

If you have a Leasehold property and/or mortgage, you should have an insurance policy to remain compliant with your obligations. We recommend sorting insurance if you haven’t already. Such insurance is reassuring and can be useful in the event of serious damage such as fire. Furthermore, when your property is occupied by tenants you should also consider third party liability insurance. For example, in an event where a tenant claims that they have sustained a personal injury while in your property. 

Your previous home

If the property you intend to rent out was previously occupied by you then you may want to consider Ground 1, S.8 of the Housing Act 1988. Ground 1 is a mandatory ground for possession so if there is any chance that at any time in the future you may want to move back into the property you will need to ensure that the tenancy agreement refers to it. It is therefore important that you ensure your agent is aware of this so that they can include it in the agreement.

What to consider once marketing commences:

EPC

You must have a valid EPC. The EPC must be renewed every 10 years so if you have one ensure it is in date and you agent will include it within the marketing material. 

Gas

Under The Gas Safety (Installation and Use) Regulations 1998, gas appliances and fixed installations must be in good order and checked annually by a gas safe engineer. The certificate that the engineer provides must be provided to a tenant upon the commencement of the tenancy.  

EICR

Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 came into force in 2020 and from April this year all properties must have a valid EICR. An EICR is a report provided by an electrician who has tested the electrical installation in a property. The EICR must be provided to the tenant before they occupy the property. 

Keys

If you are renting out a property you will need to consider how many sets of keys you need to organise for your tenants, whether you want to retain a set and whether you wish to provide your agent with a set. Further fobs and other entry systems may also need to be organised. 

Utility management

Utilities should be put into the tenants name from the commencement date of the tenancy. Meters should therefore be read and those readings given to the tenant and or the utility company. Meters readings should also be taken at the end of the tenancy and again provided. Some elect to leave the management of the utility to the tenants however, this is a personal decision but one that should be considered. 

Inventory

Prior to the commencement of the Tenancy an inventory and check in should be carried out. This report will assist you with any claim that you may want to pursue against the tenant in the event of any damage. Without the report it can be very difficult to make deductions from tenants deposits if the matter is referred to a deposit adjudication. 

This is of course a long list and demonstrates the importance of getting things right in order to ensure you comply with the law and ensure your property is safe for a tenant to occupy. It is of course an easy option to hand these matters over to an agent and certainly most agents will be familiar with the process. If fail to consider this guide, there could be serious consequences including civil and criminal penalties so caution is advised. 

Does your rental need to be renovated?

You might think rental renovations are an unnecessary landlord expense. But have you considered how much an unrenovated rental might be costing in lost revenue? If your property is not let for a month, or even longer, consider how much that would cost.

For example, if your property is advertised on the market for £1,245 pcm, every week it stays on the market you are losing £287.30(!!) in potential income.

We all know that every rental need to wash its face financially, of course. However, rentals are also destined to be someone’s home. So, they deserve the best they can afford. Therefore, consideration of your customer is a key part of the rental renovations equation. Here is a list of potential actions for landlords that are considering a rental renovation. This might be the perfect opportunity to bring a fresh property to the rental market in 2021.

1. First look critically at your property when a renter moves out.

How will it look to the next prospective renter? Attractive and inviting or tired and unappealing?

2. Create a list of everything that needs attention.

This might include faulty locks to ill-fitting windows. Then prioritise the repairs. Ideally, a property should be fully functioning, in every sense, for any new tenancy.

3. Understand your target renter.

What are they looking for? Do other properties in the same price bracket within the local area charge similar rent? What amenities do these properties have? Does your property currently fit the bill? What’s missing?

4. If your property lies within a school’s catchment area

And it is a suitable size, then you’re likely to attract families. Is there a bath? Is there sufficient storage? If appropriate, can you make the property more flexible? Will it accommodate the changing needs of families? The aim is to keep good renters from moving on. Happy renters tend to stay longer in a property they like.

5. Next, when you have listed priorities then it’s time to research your property thoroughly.

Therefore, what you are offering should fit the kind of renter that might view. There is little point in offering something inappropriate that will not yield any return. If your rental renovations become too costly they will impact your bottom line

6. Having listed your priorities then prioritise that list further.

Furthermore, undertake work that will make the biggest difference. Can you drop a kerb and provide parking? Will excellent storage be an attractive feature? Will a breakfast bar offer flexible dining? Would building an additional partition wall or even removing one make an exciting transformation for your property?

7. Do remember, during the pandemic, outside space was often seen as a priority.

If you have any outside space making that look low maintenance but super attractive. It can be the difference between renting and not renting.

8. Certainly, be hyper-critical of the main areas of your property.

Certainly, kitchens and bathrooms can make or break a property’s desirability. You can add money to your rental by ensuring kitchens are clean and appliances are modern. Neutral colours in bathrooms, a new shower curtain and storage can really add value to the rental rate and ensure your rental renovations repay your efforts.

9. Flooring that looks stylish and cleans up well can transform hallways and rooms in general.

Of course, neutral tones will allow renters to add their own belongings to create a cosy home. Appealing to the masses will hit the mark rather than appealing to your own personal taste.

10. Above all, set your budget and what the best way is to achieve the most change.

Undertaking DIY projects on a rental can be a way to save money. However, the finish must be first class. A poor job will cost more money in the long term. Do not attempt changes to boilers, gas fires, electrics or plumbing if you are not qualified. A rental property needs to be compliant. As a landlord you have a responsibility for your renters’ safety. More details on your requirements regarding gas safety are available here.

11. Do your best to renovate the rental property so it is fuel efficient.

Ensure pipes are lagged and loft spaces are insulated. Check windows and doors for draughts. But do ensure there is suitable ventilation. If you upgrade your property’s green credentials it will pay off in the long term. Homes that are expensive to heat will retain less value moving forward. Updating your EPC is also a positive consideration for new renters. Details of how to do this and its importance are available here.

12. Don’t over complicate the renovation of your property.

Remember the more complex the lighting or heating system the more capacity you are building in for repair.

13. Also, aim for quality where practical in your rental renovation.

A slightly more expensive click flooring or vinyl covering will last longer than a bargain basement finish. This will save you time, effort and hassle

14. Most importantly, work out the project management time required for your rental renovations.

It might cost less for you to undertake the work in terms of money. Yet a contractor might be far quicker enabling you to re-list your property much quicker.

15. Clean a flat or house thoroughly.

You need to set the standard, so a renter knows you take care of your property. It may well nudge any resident to reciprocate.

16. Finally, when your property is renovated to your liking then ensure that the quality of your photographs reflects its new style.

In addition, marketing your property is extremely important. The more effort you put into making the rental welcoming and practical the quicker a new renter will want to move in. Then they start paying rent.

Howsy, understands the importance of finding the ideal match for your property. Schedule a call with one of our team today. We can discuss how we can help match your perfectly renovated property, with a renter who will love it as much as you do!

Schedule your call here today.

The past year has prompted many businesses to think about how they work and what could be different moving towards the future. Lockdown and general distancing between people have seen a rethink in the management of assets, especially within the property sector.

It has been a time of reappraisal. Landlords that run businesses from a spreadsheet may well be thinking now is the time to do something different. Technology adoption has accelerated in every sector and property will not and should not be left out.

If you want to grow a portfolio nationally what are the issues?  

There are estate agents that have a branch network but don’t cover the whole of the UK. Some management companies are massive and put the management out to tender or to other branches. A few tech options undertake tenant find or management but not both or were London centric. In addition to solving those specific issues, by using different hubs it often means that working practices differ. Which often leads to a period of adjustment and even confusion.

Tenants’ expectations are higher than ever

If a landlord is developing a nationwide portfolio it can be a challenge to find a nationwide provider that knows the properties and the local area inside out. Tenants are very savvy, and they expect detailed and thoughtful inventories and meter readings alongside information. For example, are appliances integrated? Is their installation recent? Is there a video? Can tenants get a real feel for the property both inside and outside and even local information? All of these attentions to smaller details really offers tenants and landlords the kind of service they expect and deserve. 

Other challenges might also include excellent check in and check out facilities to avoid late fee charges on fuel bills. When things are measured, they are managed and can make a massive difference to all parties involved in a rental.

Landlords are keen to maintain their asset value. 

This can be quite complex but a pertinent consideration especially around the topic of sustainability. In the long term there is a shift towards green finance where low interest rates will be available to energy efficient assets. It’s likely that in future, assets will be less valuable if they do not align to government regulations.

Properties are not inanimate objects but living, breathing assets

Also, one of the best ways to maintain asset value is to consider them as living assets. Your properties should be redesigned and enhanced over time. They are not inanimate objects that do not change. People’s expectations and lifestyle are always shifting, and your property can increase in value when it keeps up with some trends. This is where it is important to use intelligent property and asset management. By thinking carefully about what tenants want then inevitably your property will speak their language and be easier to let and also more marketable.

Consider an individual property’s potential not just the area it sits in

Therefore, we suggest that a landlord should look at the property potential rather than just looking at the value of its location. If a property is attractive people will often forgive other locational factors if this is the property they’ve always wanted. You can add value by knocking living spaces into one or replacing a dated bathroom with a top-quality shower as two examples. It is important to think carefully about the market and about trends and even regulations. If you are on top of your game, then you are rarely in a position when change is forced upon you.

Don’t ignore your properties because things appear to be going well

When a let is going well, and managers are doing an excellent job then the temptation is to stop visiting the property at change of lease because no news is good news. This is probably a mistake. Only you can walk the property and get a feel for the atmosphere, the décor and the current facilities. In addition, it is worth keeping in communication with agents and property managers and the other teams that help manage your properties. When you pick up damage or design issues quickly then they are usually much quicker, cheaper and easier to fix. Think carefully about your relationship with tenants. Some people suggest treating tenants as business partners. If you develop positive relationships with tenants on every level you will probably find the property is looked after more carefully, especially if they know repairs will be attended to quickly and efficiently.

Look for a seamless approach to property management

With technology making life easier for almost everyone Howsy has continued to develop its own software with more exciting innovations to follow Our aim has been to remove unnecessary hassle from the landlord experience. Why have multiple agencies managing properties nationally when you can have one? We pride ourselves on offering a seamless approach which takes away management difficulties.

On 23rd February 2021, Calum, CEO of Howsy, sat down virtually with David Smith, Legal Counsel at the NRLA and Partner at JMW Solicitors, to discuss the key elements of the Debt Respite Scheme or ‘Breathing Space’ legislation. – Access the recording here

The webinar was broadly split into three sections, to help clear up some of the confusion around the new legislation:

• What is the ‘Debt Respite Scheme?
• The types of ‘Breathing Space’
• What does this mean for landlords?

David Smith outlined the ‘excitement’ around the implications of the new scheme and said that it was easy to become confused. Basically, the Debt Respite Scheme consisted of two different things that are not closely connected, despite what people might imagine. This legislation is the government’s answer to some of the spiralling debt issues regarding Covid’s impact. In addition, this now includes rental debt, as initially there was no provision for this.

One of the problems with the scenario regarding Covid debt means that governments needed to deal with this pressing issue. 

Government has been considering solutions.

1. The first is statutory changes. For example, should they make a law that writes off all the debt in its entirety? What would that do to the economy? Also its impact would be significant for landlords, mortgage providers and others.
   
2. Secondly, the Welsh and Scottish governments have offered loans on advantageous terms to tenants and landlords. The Welsh governments have focused on tenants while the Scottish government have put their emphasis on landlords. The problem is the issues are not equal across the whole of the UK. For example, there is more rental property in North Yorkshire and Humber alone than the whole of Scotland. Also, there is more rental in London than in Birmingham, for all types of property in that city. Therefore, different places require different solutions.
   
3. The aim has been to try and find a mechanism for people to pay down debts in a graceful way instead of speeding towards bankruptcy. Also, it is important not to ruin people’s credit history while spacing out affordable payments. These regulations are attempting to achieve this.

As an aside, there needs to be some breathing space for a government that’s also under significant scrutiny and intense pressure. With the optimism revolving around the vaccine program and the hope that being the first country to be well advanced with this the UK may leverage an advantage. This may well help, alongside Brexit to stimulate the economy, create more jobs and opportunities for people to pay down their debt.

Is the Breathing Space Legislation the same across the UK?

However, as suggested earlier, this legislation does NOT apply to the whole of the UK. It covers England and Wales that are a single jurisdiction. In Scotland and Northern Ireland there is a more substantial devolved package and they will develop their own way.

What is the impact of a debt breathing space?

If a debt breathing space is instituted during this period it is not possible to chase debts. As part of that breathing space cordon, as a landlord you can’t approach a tenant, levy fees or interest.

Some period after, a debt solution or agreed deal where defaulters pay debts off over time might be implemented. Call it debt rescheduling and this legislation puts some of this on a statutory footing. Therefore, Breathing Space is just that, a temporary lockout period where no one can pursue for accrued debt until the person gets themselves in order. Then they return to the fray and the debt still remains. However, with luck, debt advice, time and a little less worry, their situation will have improved.

Will people take advantage of Breathing Space, so landlords lose out?

Landlords will be notified if one of their tenants has been granted Breathing Space. These spaces are only given by debt advice officers with an FCA licence to offer debt advice. This is important to bear in mind. The person who comes to them for help and is accepted on to the Breathing Space scheme will be required to notify the adviser of everyone who is owed money…then the debt adviser will contact those on the list.

If you are concerned about tenants ‘pulling a fast one’ please be aware that there is a computer system run by the insolvency service on their website. You can also find the government contract tender for the company that runs the system. It is an online portal and it is searchable. People have to be registered officially to appear there. So, if someone says they have a Breathing Space you can check if it’s true.

Are there any benefits for landlords of the Breathing Space legislation?

The first part of this is a positive one. Becoming registered means that at least renters are seeking professional advice. They are not burying their heads in the sand. The government is not encouraging non-payment of rent. They are actually providing professional support to help people manage more efficiently. Bear in mind also that generally, tenant rent is not pursued, and it is eventually written off. That’s not a good thing for landlords and bad for the people who lent the money. It also affects the tenant‘s credit rating. Therefore, it does not benefit anyone. It is also damaging to the economy when debts are unenforced.

Landlords and tenants need a change of behaviours and thought processes

Some may still be of a mind that a section of renters may well use it to pull the wool over people’s eyes. Yes, perhaps some might well put off the day when they are eventually going to be evicted. However, the professionals issuing the Breathing Spaces will be regulated and are not just anybody. Tenants cannot make a decision to award themselves this space.

The other thing to consider is that when tenants go into arrears it is like a one-way street and they often stop paying all together. If they manage to save any money that goes towards the next property and the spiral continues.

In practical terms, it may be that this scheme will encourage people to seek advice and achieve some debt respite. This may well allow them to stay in the property. The logic is that some people just need time and eventually the debts will be paid.

Better relationships and longer tenancies

This also fits in with the government’s initiative to encourage longer-term tenancies. They would also like to see landlords supporting tenants through life experiences and long term there should be more chance for tenants to recoup income and a greater chance for landlords to get back the money that is owed.

End of the ‘easy come easy go’ mindset

This may well appear to be an alien approach to some landlords, and it may well be the time to change habitual thinking of ‘easy come, easy go.’ Of course, there are landlords that take this philosophy to extremes and don’t do repairs. They then serve a Section 21, throw out the tenant and get a new one instead of doing anything more. The logic is that another tenant may not moan so much about the living conditions.

This really is a poor tenant and landlord relationship and one that should be stopped. This has probably contributed significantly to the abolition of Section 21. You can see the trajectory starting towards a slightly different relationship between landlords and tenants. This is quite probably inevitable and has been coming for some time.

Section 8

To conclude this section please bear in mind that if you have a debt Breathing Space with respect to rent arrears a landlord cannot serve a section 8 notice with respect to those rent arrears because they are part of the Breathing Space. This also applies to possession proceedings with respect to rent arrears. In addition, you cannot get a court order progressed and cannot enforce it or get a warrant etc. These are only in relation to debt, however.

If you issue a Section 8 based on anti-social behaviour, you are entitled to serve a notice and repossession proceedings and finally secure possession.

There is a change coming across the sector

At present landlords can serve a section 8 for a number of reasons including rent arrears or a section 21 where they simply wish to recover possession. But the reality of abolishing Section 21 is that some landlords and their advisers specifically, will have to rethink their strategy of only serving a Section 21 because right now it is difficult to defend and is used predominantly by landlord eviction specialists.

Many advisers don’t possess the skill set to prove another case so they may well have to rethink this strategy moving forward. Section 21 is not going to be available in some cases. Rent arrears will also not be an available claim because of Breathing Space therefore landlords and landlord eviction specialists will have to think about other routes towards possession. These will have to be authorised by the law and then consider how they are going to be able to prove those cases.

This is a significant change in this sector’s construction and also a change for agents in finding the evidence to prove these cases.

Find out more about the mental health breathing space here.