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Category: Being A Great Landlord

Why over 40% of landlords want to expand their property portfolios

by Alysha Taylor SmithPosted on

The property market has seen its fair share of challenges in recent times, from rising bills to a constant stream of government regulations. Landlords have had to navigate more economic uncertainties than they are used to. However, despite the challenges, a surprising number of landlords are feeling positive about the future and are even looking to expand their property portfolios.

According to a study conducted by lending service Landbay, over 40% of landlords have expressed their intention to grow their portfolios in the coming year. So, why are landlords considering expanding their property portfolios in 2023? 

Rising Utility Costs

Fluctuating temperatures contribute towards higher utility costs and tenants may rely more on electricity to cool or heat their living spaces, leading to increased utility costs for landlords and tenants alike. Higher temperatures can result in increased water usage, further burdening the electrical grid and city resources, thereby escalating costs. Landlords offering bills included should carefully consider the monthly charge to make sure that it covers expected usage. 

High Tenant Demand:

One of the key driving forces behind landlords’ willingness to expand is the sustained high demand for rental properties. As the number of potential tenants continues to exceed the available properties, occupancy rates remain high. A recent survey by RICS reported a 32% increase in tenant demand in just one month. This surge in demand has also reduced the average void period in England from 23 days to 17 days in February.

Potential Drop in House Prices:

Another reason contributing to landlords’ positive outlook is the possibility of a drop in house prices. Approximately one-third of respondents in the study cited this as a factor influencing their decision to expand their portfolios. Declining house prices may present an opportunity for savvy investors to acquire attractively valued properties, anticipating future price surges.

Opportunity for Higher Rental Yields:

While the property market may have been less lucrative than other investment avenues in recent years, there remains a silver lining for landlords. The opportunity to leverage properties using mortgages can substantially boost returns. As mortgage rates begin to stabilise and inflation eases, landlords can consider tracker mortgages with falling monthly interest repayments, supporting higher rental yields.

Lower market competition:

The private rental sector has witnessed a significant decline in available rental properties, with around 70,000 landlords leaving the market in 2022 alone. However, landlords who have weathered the challenges are presented with better opportunities to differentiate their properties and secure higher rents.

Rising Rents:

Rent prices have been increasing at their fastest rate in seven years, rising by 4% in 2022. This trend is expected to continue in 2023, with forecasts suggesting rents may rise by as much as 12.91% this year. The combination of rising rents and declining house prices may recalibrate rental yields to more attractive levels, encouraging landlords to remain in the market.

Amidst the uncertainties, some landlords see a window of opportunity to capitalise on the market conditions. Faltering house prices, coupled with rising rents, might offer attractive investment opportunities that confident landlords can seize.

While there are positive indications, not all landlords share the same optimism. Approximately 35% of landlords expressed a more neutral stance, citing concerns over government interference, negative stereotypes surrounding landlords, and overall market uncertainty. 

Despite this, a considerable proportion of landlords remain optimistic about the future and are eager to expand their property portfolios. High tenant demand, the potential for declining house prices, and rising rents are among the key factors fueling this positivity. While uncertainties persist, landlords who approach the market with confidence and strategic thinking may find themselves well-positioned for success in the coming years.

Renters’ Reform Bill: Everything you need to know before May

by Asif AliPosted on

Announced in June 2022, the Renter’s Reform Bill outlines the Government’s plans to build a fairer private rental sector in the UK. Over the past year, landlords have been following updates relating to this bill, preparing for its live date. Since we are now getting close to the bill due-date (May 2023), this article will summarise everything you need to know should the bill go ahead. 

The end of Section 21 notices

The most significant and talked about change caused by the bill is the end of Section 21 notices. 

Currently, Section 21 notices allow landlords to evict tenants without providing a reason. Under the proposed new rules, landlords will need to provide a valid reason for evicting tenants, such as rent arrears or anti-social behavior. The changes are designed to provide tenants with greater protection and reduce the number of unjust evictions.

Changes to Section 8 notices

Landlords will still be able to use Section 8 notices to evict tenants for specific reasons. However, the grounds for eviction may be limited, and the process time-consuming. For example, landlords will need to give tenants six months’ notice before they can issue a Section 8 notice for rent arrears.

Eviction reasons for a Section 8 notice must be one of the following: 

  • If a tenant has rent arrears
  • If the tenant damages the property
  • If the tenant is causing a nuisance to the neighbours

Security of tenure

The renter’s reform bill will provide tenants with greater security of tenure. As per the plans outlined in the bill, the minimum notice period for tenants to leave a property will be increased from two months to six months, giving tenants more time to find alternative accommodation. 

Additionally, landlords will need to provide tenants with a minimum of three years’ security of tenure before they can end a tenancy.

Preparing for the changes in May 

To prepare for the upcoming changes, landlords would need to review their policies and procedures to ensure they comply with the new rules. This includes ensuring that all tenancy agreements are up to date and providing tenants with the correct documentation.

Working with a letting agent can help landlords to navigate the new rules with ease and ensure that they are properly prepared for all of the new policies which will be coming out of the bill once it is live in May 2023.

Why Landlords can’t ignore Right To Rent Policies

by Asif AliPosted on

New research from the Home Office has identified that landlords without letting agents are the least likely to understand their legal obligations when onboarding new tenants through the Right to Rent Scheme (RTR).

What is the Right to Rent policy?

The right to rent policy, which has been in place since 2016 requires landlords to check that their tenants have the legal right to rent in the UK before allowing them to move into their property. Failure to comply with the policy can lead to serious consequences, both financial and legal.

When do these checks need to take place?

Right to Rent checks have to be conducted before the tenancy starts. For Tenants who are only allowed to stay in the UK for a limited time, you need to do the check in the 28 days before the start of the tenancy.

How to conduct the check:
Landlords need to check that their tenant’s photograph, name and address match and that the document hasn’t been tampered with. Landlords are responsible for taking copies of these documents and keeping them on file for at least 12 months after the end of the tenancy. 


What are the consequences of not checking your tenants right the rent? 

If a landlord fails to carry out the necessary checks, they may face a civil penalty of up to £3,000 per tenant. This penalty can be imposed on landlords who rent out a property without carrying out the necessary checks, or who knowingly rent to tenants who do not have the legal right to rent in the UK. In severe cases, this can result in a custodial sentence of up to five years.

Whilst the Right to Rent policies may seem difficult to navigate and have potentially severe consequences, working with a letting agent can provide landlords with the peace of mind that they have followed the correct procedure for ensuring that their tenants are legally allowed to stay in their property, and therefore avoiding potentially large penalties.

How landlords can increase rental prices fairly

by Asif AliPosted on

Average rental prices are increasing across the country with rental demand outweighing housing supply, but how can tenants cope with rising rental prices? And what can landlords do to protect their investments? 

Almost two-thirds of UK landlords will be forced to raise rental prices by at least 10% within 2023 if market conditions don’t improve. Increasing rental prices is a necessity for landlords seeking to protect their profits, but this will be at the expense of tenants who are unable to keep up with rising costs teamed with the cost of living crisis. 

Research by Aldermore Bank found that landlords are conflicted about increasing rental prices at this rate during such a challenging financial time for tenants; with 64% of landlords stating that they would be worried about their tenants being able to keep up with increased monthly payments. 

Guidelines on increasing prices for your existing rentals 

For landlords who are in a position where increasing rental prices is necessary, the below guidelines must be followed to ensure fair and legal practice and to minimise negative consequences for either party. 

  • Tenancy agreements should always include how and when rent prices will be reviewed. Landlords are responsible for ensuring they follow-out the agreed pre-agreed process for increasing rent. 
  • Landlords must seek permission if they want to increase rental prices by more than previously agreed. 
  • Rental increases must be fair and realistic in consideration of local rental prices.

If the tenancy agreement does not state the procedure for increasing rental prices, landlords can: 

  • Increase the monthly rent of a property when the lease is renewed. 
  • Agree a rental increase with the tenant where the tenant must provide a signed written agreement of the rental increase. 
  • Use a landlord notice to increase rent after a fixed term has ended. 

Long-term solutions 
Whilst landlords are facing many serious short-term challenges which are driving up rental prices, landlords should continue to think about their investments with a long-term perspective.

Whilst landlords generally seem concerned about rising living costs, Aldermore’s study revealed that 54% of landlords still feel optimistic about the future. Additionally, it continues to be widely accepted that buy-to-let investments are still a stable way to make a good income.

By making intelligent investment plans, avoiding panic-decisions on current rentals and preparing properties for the future (such as improving energy efficiency), there is still a bright future for buy-to-let landlords in the UK.

How to guarantee rental payments as cost of living increases

by Asif AliPosted on

Cost of living prices in the UK have been steadily increasing over recent years, having serious consequences for renters. A study in August 2022 revealed that food prices had risen by 12.5% compared to one year earlier. Additionally, rising gas and electric prices are putting huge strains on renters across the UK trying to keep up with the rising prices without compromising on their quality of living. 

Many renters are now facing difficulties being able to pay their monthly rent, due to no fault of their own. Long-term renters chose rental properties which fitted their budgets given the average cost of living prices at the time of entering their rental contract. However, renters who have been in their property for 2+ years are now finding their financial circumstances drastically changed, despite having stayed in the same property. 

Whilst a lot of renters have developed plans to cope with the rising costs, the significant increase in cost of living is inevitably causing serious problems for some renters, with knock-on consequences for landlords as tenants struggle to pay rent each month. 

What can landlords do to guarantee rental payments? 

When entering into new rental contracts, landlords should now pay more attention than ever to the average cost-of-living in the local area, and account for this when bringing in new tenants. Ensuring that your potential new tenants can provide proof of yearly income 30 times the rental cost will create a safety-net which should guarantee timely rental payments each month, whilst leaving space for cost of living prices to increase further throughout the next year. 

In addition to this, the most effective way to ensure timely rental payments is to enter into a “Rent Guarantee Scheme”. For a small monthly payment, this insurance will guarantee rental payments when a tenant does not pay their rent within 10 days of it being due – meaning that landlords will receive the rental payments each month even when their tenant is unable to pay. 

In summary, the cost of living crisis in the UK continues to cause serious challenges for both tenants and landlords. However, by developing an informed plan, landlords can limit the impact these challenges have on their monthly profits and gain more security with their investments.

Landlord guide to avoiding winter mould damage

by Asif AliPosted on

During the colder winter months, the risk of property damage such as mould increases. Property mould is one of the most disputed types of property damage between tenants and landlords, with both building structure and tenant lifestyle contributing to these damages.

Property mould can cause structural issues, dry rot and leaks, which can all escalate into more significant damage. Additionally, the presence of mould can have a big impact on tenant health, with mould causing colds, allergies and worsening existing health issues such as asthma.

Can mould damage be prevented?

Both structural building issues and tenant lifestyle can contribute to property mould. We’ve put together some guidance below to help landlords better communicate with tenants during winter to prevent damage to properties.

1. Don’t let the property temperature drop too much

Rising energy prices are contributing to colder properties as tenants strive to save money. But unfortunately these cut-backs can cause mould build-up, which affects both tenants and landlords. Tenants should be properly informed of the ways they can be cost-efficient in their energy usage, whilst maintaining an acceptable temperature in the property.

Some preventative actions tenants can take include having the heating on for just one hour a day, making use of off-peak energy times to reduce costs, or maintaining a consistent minimum temperature in the household which can be more cost-efficient than an off-on approach.

2. Remove mould immediately

Early-stage mould is easily wiped away. Tenants should be encouraged to keep look-out for property mould and remove the mould immediately with mould remover spray to prevent spreading.

3. Ventilate when drying clothes inside the property

When tenants use drying racks inside properties to dry their laundry, they release large amounts of moisture into the air. Inside a cold apartment, this moisture builds up on walls and surfaces and can quickly turn into mould.

Tenants should be advised to always dry their clothes in a well-ventilated space (or preferably outdoors where possible). Having the heating on whilst clothes dry will speed up the drying process and reduce the risk of damp and mould.

4. Make sure ventilation is not covered

If property vents are covered by furniture, or extraction fans are not used in damp rooms, the restricted air flow will increase the likelihood of damp.

Tenants should be encouraged to open windows in bathrooms for a short period to avoid a build up of moisture and to avoid blocking air vents.

5. Reduce condensation when cooking

Boiling pans, frying and using ovens, can all contribute to additional condensation and moisture build-up. Tenants should be advised to keep windows open whilst cooking to increase ventilation and help to regulate the temperature. Where there are no windows in the kitchen, using the extraction hood when cooking will help to reduce condensation.

6. Avoid gutter blockages

At this time of year gutters can easily get clogged with falling leaves and debris from trees as well as moss from the roof. Overflowing gutters can damage walls and create damp issues inside the property. Landlords and tenants should ensure that gutters are cleaned before the worst of the winter months to avoid blockages.

Summary

It is important not to ignore mould, condensation and damp issues within a property. They often start off small but can grow quickly and cause lasting damage when ignored.

Many modern properties are so well insulated that it is difficult to stop condensation from building up so it is important that tenants are aware of the need to ventilate the property even when it is cold outside.

Be vigilant when carrying out property inspections and act quickly when tenants report damp, condensation or mould in the property and where necessary ensure repairs are made.

Abolishing Section 21 – Could it be good news for landlords?

by Asif AliPosted on

The section 21 notice allows landlords to regain possession from assured shorthold tenancies without establishing fault on behalf of the tenant, usually referred to as a ‘no fault eviction’.

This has been criticised for affecting the wellbeing of private tenants, creating a sense of insecurity and lack of clarity. Abolishing this process and implementing more predictable systems is intended to provide more security for tenants and landlords across the country.

As part of the renters reform bill, the abolition of the section 21 ruling is part of a Government white paper which promises to create fairer standards of living for renters across the country.

What is changing?

The Renters Reform Bill sets out plans to abolish section 21 eviction notices. The abolition would supposedly put an end to ‘no fault evictions’, granting tenants more clarity in regards to the length of their tenancies.

After section 21 is abolished, landlords will need to provide a suitable reason for ending tenancies, for example, a breach of contract or selling the property.

Whilst bringing significant change to the buy-to-let market, landlords will be relieved to learn that the changes to section 21 do not affect their ability to take back properties from anti-social tenants or for necessary reasons (such as wanting to sell the property or move back in.)

In fact, this process may become easier when it is for a suitable reason. With the new changes, Court processing is intended to be reformed to be quicker. Evictions currently can take 6 to 12 months.

We can expect that this new system brings both a sense of security for tenants as well as an easier process for landlords who need to reclaim their properties for necessary reasons. However, we would advise that landlords work with a suitable managing agent such as Howsy, who can help them navigate the changes in legislation as well as the eviction process.

Preventing winter property damage

by Asif AliPosted on

As the weather gets colder and winds become stronger, seasonal changes can lead to both minor and major property damages. This change in climate increases the need for repairs, emergency call outs, and can trigger the start of lasting damages such as leaks, cracks and mould.

The good news is that there’s some simple actions that can be taken to protect your properties from building damage.

So what can you do? Here’s our list of high-priority maintenance checks in November:

1. Conduct a roof inspection

It is recommended to check your property roofs at least once a year as a preventative measure against leaks and further damage. You can hire a roofer to conduct the inspection for around £100-£200, or you can take a close look at your roof yourself using a ladder.

A roof inspection should check for missing or damaged tiles, signs of algae, and moss or leaf build up.

Cracked roofs or missing tiles can start leaks, which in the beginning may be unnoticeable, however can quickly lead to household damp, mould, and create larger openings.

2. Emptying gutters and trimming large trees

Falling leaves can escalate the risk of blockages in your gutters and drainpipes. This causes water to flood back into gutters, potentially triggering property leaks. Emptying gutters at the beginning of winter creates more space and reduces the likelihood of blockages and leaks.

3. Protect your pipes

The cost of fixing a burst pipe can rise to around £7,500 during freezing weather. The best way to protect pipes from bursting in freezing weather is to make sure that the pipes are well insulated prior to the cold winter months. As an additional measure, keeping your hot water on for at least one hour a day through the colder months will protect your pipes from the worst of the freezing weather.

4. Boiler checks

There’s nothing more frustrating for tenants than a broken boiler in the middle of winter. Conducting maintenance checks on boilers in the lead up to winter can prevent emergency call outs or costly repairs later on. It is recommended to service your boiler every 12 months, especially if you have boiler insurance as this is likely invalidated without a regular service.

Protecting you home for winter

Approaching winter months can be daunting for landlords with the increased likelihood of property damage. However, working with a fully managed letting and property agent can provide you with reassurance moving into these colder months. Popular Howsy plans come with home emergency and repair cover to provide you with the peace of mind you need managing your properties over this challenging season.

Mental Health Breathing Space Explained | The Debt Respite Scheme

by Aaron CostelloPosted on

In Part 1 of the Debt Respite Scheme, Debt Breathing Space legislation article, we discussed the implications for landlords and in Part 2 we delve into the mental health crisis breathing space. Do note however that;

‘this is only available to someone who is receiving mental health crisis treatment and it has some stronger protections. It lasts as long as the person’s mental health crisis treatment, plus 30 days (no matter how long the crisis treatment lasts). 

Excerpt from UK government publications

This aspect of the legislation is probably the one that has caused much confusion and we felt it was worth quoting the government website again as a starting point.

‘The government committed to develop an alternative route to access the protections for people receiving mental health crisis treatment, so that they do not have to access debt advice first. If an Approved Mental Health Professional (AMHP) certifies that a person is receiving mental health crisis treatment, the AMHP’s evidence can be used by a debt adviser to start a mental health crisis breathing space.

In addition to the debtor, the following people can apply to a debt adviser on behalf of a debtor for a mental health crisis breathing space:

  • any debtor receiving mental health crisis treatment
  • the debtor’s carer
  • Approved Mental Health Professionals
  • care co-ordinators appointed for the debtor
  • mental health nurses
  • social workers
  • independent mental health advocates or mental capacity advocates appointed for the debtor
  • a debtor’s representative’

It is important to understand this aspect of the legislation carefully

Many people have missed its point. The Mental Health Breathing Space can only be issued by a registered mental health professional. No one can go to their GP and ask for one, for example.

The Mental Health Breathing Space is only available to someone who is receiving mental health crisis treatment

That is, being locked up against their will because their mental health is a danger to themselves or their community. This also applies to someone who has voluntarily gone into hospital before the section was implemented. The third group of people will be those dealt with by an emergency mental health team. This means they were thinking about sectioning but decided not to as they thought the person could be cared for at home. This pertains to very serious mental health conditions. 

We are not talking about someone who is depressed or sad and lonely. These are people who regularly and routinely are at very high risk. They are experiencing a crisis and need very specific help. 

Basically, this solution can be applied to a very limited group of situations and people with very serious conditions. It is not a ‘get out of jail free’ card on any level.

The Mental Health Breathing Space legislation differs from a standard breathing space 

This is available to anyone experiencing problem debt. It gives people legal protections from creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors. It also freezes most interest and charges on their debts. The time for this is limited to 60 days. Under the Mental Health Breathing Space, the freeze lasts for the length of the mental intervention, however long that might be, plus 30 days. It is not time limited

It may sound like a long period but do bear in mind that most people committed to hospital in this way for more than 60 days will probably want to give up their property anyway. We suggest this number is probably 99.9%. They will not be residing in the property so there are other grounds to terminate the tenancy potentially.

However, we want to emphasise that this is a limited category of people we are talking about that need to be cared for, not evicted.

What about Property guarantors? Are they liable?

As a landlord thinking about property guarantors or joint liable tenancies where one person might be granted breathing space but there is another tenant that owes an equal amount but doesn’t have that. What happens?

A Breathing Space applies to all joint tenants that are part of the same tenancy. But they wouldn’t apply to people on single room lets, these are unconnected. If they are on a joint tenancy it applies but doesn’t apply to guarantors. They are not jointly liable, and their liability is separate and is for different reasons anyway. However, in a joint tenancy you could potentially chase the guarantor.

All of this discussion underlines the importance of the landlord regarding undertaking thorough affordability checks and references. There is a responsibility to ensure that tenants can afford the rent responsibility to pay the rent and also to compare income and expenses etc. during the onboarding stage.

Planning for wastage and possible loss is part of good business planning

There is a wider point that if you are running a sensible business then there should be plans in place to meet objectives and even if your tenants can’t pay for a period of time you should be able to manage this having factored in such a scenario. Basically, a business owner is not running a good business if they can’t weather such a storm. Any decent business has to plan for some possibility of wastage and loss.

Of course, single asset business’ are tougher to factor in non-payment especially through Covid and will possibly change the landlord landscape going forward. Some landlords are walking away while others are increasing their portfolios. In these situations portfolio landlords can typically ride the wave more effectively.

However walking away is not the only solution. Landlord protection is available and is something Howsy offers as part of our Protect plan, which includes rent guarantee to protect your income when your renters can’t pay on time. Find out more.

Can you refuse to rent to someone with known mental health issues?

This is unlawful discrimination and actually asking the mental health question contravenes data protection issues. In fact, asking that question will put you in trouble with the Information Commissioner plus the Equality and human Rights Commissioner. This is definitely not a strategy to pursue. In fact, asking the question won’t give you enough value after all there is not an obvious bright line between past and future health conditions. 70-80 % of the general population have low level health issues. As a percentage these numbers are very high, especially at the moment. Therefore, it cannot be considered as a useful decision point.

If you have questions of your own, get in touch via hello@howsy.com and we will do our utmost to help.

Summary from David Smith

We will have to see how this pans out. However, I do not think this will affect too many people. As we slowly unlock courts and potentially a significant number of tenants saying that they have a Breathing Space move into employment with luck they will enter into a debt solution. In theory everyone gets upset at new legislation but ultimately nothing really changes very much.

Growing rent debt and long notice periods and moratoria will stay in property because of debt solutions. If it doesn’t work out not much will change. After all, landlords need to experience 6 months of rent arrears to start proceedings now.

If you are looking for help in managing your properties, to stay on top of growing legislation, and have access to a legal property expert on speed dial, Howsy can help. Find out more about our property management plans here or book a call with one of our team to find out more.