The Landlord_July222.indd
Transcription
The Landlord_July222.indd
The LandLord ISSUE 5 JULY 2014 Continuing changes within the Private Rented Sector (PRS) to make it a more ‘mature’ market I n a ‘mature’ lettings market, everyone should be fully aware of their rights and responsibilities and there should be a way of ensuring those responsibilities are met. In essence, that means all rental accommodation being safe and of a decent standard; tenants having and understanding all the information they need; the rights of both tenants and landlords being properly protected and there being means of ensuring landlords and agents are fit to handle the letting of property. Although there has already been much improvement in all these areas, there is still work to do. Last year’s cross-party report on the PRS in England made recommendations that more needed to be done to raise standards of both properties and their management and highlighted a widespread lack of awareness of rights and responsibilities among both tenants and landlords. It raised concerns over the lack of regulation of agents and the level of fees they charged, which resulted in the subsequent reforms requiring agents to publish details of all fees and to sign up to an Ombudsman before the end of 2014. As a landlord, you will be only too aware of how many changes have already been made to PRS legislation over recent years. While much of it has broadly been good news for Image taken from the wall mural in our recently refurbished Reeds Rains Woodseats Branch raising standards, it has resulted in increased costs and administration for both you and us and there has been some concern among agents and landlords over the wisdom and efficacy of new laws. Possibly the biggest issue for us all is that at the same time as proposals for new legislation continue to pour in, existing regulations are subject to further changes and there is little or no enforcement of agents and landlords who don’t meet them. As we are members of ARLA, we work with you to ensure your property is legally and safely let and work with the industry to represent issues of non-compliance from other agents and landlords to local authorities and government. A good example of recent changes is the tenancy deposit protection legislation, which since 2007 has required deposits to be protected from the start of a tenancy and the tenant to be issued with the ‘prescribed information’, i.e. details of the relevant scheme. Tenancies that began before April 2007 were exempt and it was also the assumption that when a fixed-term tenancy became a periodic tenancy at the end of the initial period (running on simply from each rent payment date to the next, usually month to month), it was simply a continuation of the original agreement. However, the rulings in two recent court cases (Superstrike Ltd vs. Rodrigues and Gardner vs. McCusker) decided that when a tenancy becomes periodic, a new tenancy is created. If the deposit had not been protected in the first case and the ‘prescribed information’ had not been re-issued to the tenant in the second, the eviction processes that were underway in each were declared invalid. The implication for landlords and agents is that in order to ensure everything is in place in case eviction becomes necessary, deposits for any tenancy that have become periodic since April 2007, should now be protected and details of the relevant Tenancy Deposit Scheme (TDS) must be re-issued to every tenant at the point their tenancy extends beyond the initial fixed term. Although this requires retrospective administration, the good news is this is exactly the kind of thing we take care of on your behalf – especially if managing your property – so whatever happens legislation wise, we make sure it is implemented on our behalf. Hot on the heels of these rulings follows the recently passed legislation regarding immigration checks. From October this year, landlords and agents will be required to check the lawful immigration status of tenants before letting to them, to prevent those with no legal right to live in the UK from accessing the PRS. This is undoubtedly a good idea, but it does add another layer to the referencing process and time, money and cost to the work we carry out for you. While some agents and landlords may decide to pass this on to the tenants, Reeds Rains has made the decision to absorb the additional cost on your behalf as part of our management service. Yet further legislation currently being considered by DCLG is a ‘retaliatory eviction’ law, which would prevent agents and landlords evicting tenants for complaining about their accommodation. It would block using Section 21 to evict tenants if the property contained health and safety threats. Although it would be yet another piece of legislation, it should not affect any properties we manage on your behalf, as we already adhere to all the health and safety regulations. Hopefully, therefore, this will primarily serve as another ‘stick’ authorities can use to make life harder for rogue landlords. What makes keeping up with legislation particularly difficult is that, in addition to new UK-wide legislation, landlords and agents also have to keep up with housing laws affecting their own countries and regions, as well as specific local authority regulations. Scotland has probably made the most changes and has the greatest differences in letting legislation to the rest of the UK. Since April 2006, all private landlords have had to register with their local council and be deemed a ‘fit and proper’ person to rent property. They are not allowed to charge tenants any fees and must supply them with a standard Tenant Information Pack that gives information about the tenancy, the property (including all certificates), the landlord and the rights and responsibilities of both parties. Landlords must also ensure their properties meet the Repairing Standard – a level of condition that must be maintained throughout the tenancy. In addition, the Scottish Government has just received a final report it commissioned from a Review Group, looking into reforming tenancy agreements in the PRS to make them longer as standard and therefore providing more security for both tenants and landlords. Following the introduction of tenancy deposit schemes last year, Northern Ireland also introduced mandatory registration for private landlords in February of this year. And in Wales, the National Assembly is currently considering the introduction of mandatory licensing for landlords and agents. Cardiff Council already operates a voluntary landlord accreditation scheme on behalf of the country’s 22 local authorities; this new legislation would put Wales up there with Scotland and Northern Ireland in terms of clear national regulation of those who are letting properties. While there is no national requirement yet for landlords to be registered or licensed in England, voluntary accreditation has just been given a boost in the capital with the launch of the London Rental Standard in May. The scheme is offered via various organisations, including the Association of Residential Letting Agents, of which we are a member. If we manage your property, rest assured we will complete the course and sign up to the code of practice on your behalf, so all the properties we offer will be able to display the ‘London Badge’ of quality. This is particularly helpful if you are living outside of London yourself but have rental properties there. In terms of other legislation in England, it is certainly landlords of Houses with Multiple Occupancy (HMO) who have the most rules to abide by, as requirements and regulations for licensing and planning permission (for change of use) can vary wildly from council to council. That makes it especially difficult for landlords whose portfolios span a number of areas and is just one of the reasons why we as a nationwide agent can be a helpful resource. Tight regulation is good and necessary for a sector of the lettings market that has, historically, been open to the most abuse by rogue landlords, preying on those who can least afford a decent standard of living. However, most HMO landlords we speak to agree that there needs to be simplification and clarification of the rules if they are to be expected to keep on the right side of the law. Hannah Gretton, Reeds Rains Area Lettings Manager “We understand it is important to make sure there are rules and regulations to protect both tenants and landlords during the lettings property and, as our market matures, these will change. The issues is there is no ‘ formal route’ for legislation changes, so you might see some in the media, others may not be mentioned particularly at a local level. So, as an individual landlord it is difficult to make time and have access to the resources to keep up with all the new rules and regulations. One route though is by working with us because as an ARLA agent, we always ensure we are up to date with anything affecting letting to tenants and the business of lettings. As far as possible, we will absorb small increases in cost, such as immigration checks, and we will always let you know about anything that affects you directly.” RR Let us help you. If you would like to discuss your Buy to Let property with a local Reeds Rains Lettings Manager call 0845 450 5507* or email Landlords@ReedsRains.co.uk Energy-efficiency measures are good news for landlords Image taken from the wall mural in our recently refurbished Reeds Rains Acomb Branch. According to Government research, the PRS has the highest proportion of the least energy-efficient homes, with 5.8% being G rated, compared to 3.4% of those that are owneroccupied. As a measure to tackle this, the Energy Act 2011 provides for minimum EPC ratings legislation to come into effect by April 2018. It allows for all rental properties to achieve a rating of ‘E’ or above in order to be legally let, so if you have not already taken steps to improve the energy efficiency of your portfolio, now is the time to start. The Green Deal is a means by which you could have improvements made to your rental property to make it more energy efficient, without having to pay for any of the work yourself. Providing an assessor is happy that the property qualifies for funding, the Green Deal provider pays for the work (usually wall or roof insulation) to be carried out and then they are repaid over time by whoever is benefiting from the improved energy efficiency, through monthly instalments attached to the fuel bills. As a landlord, therefore, your tenants will be paying back the loan. Good news for you - your property has been improved at no cost to you; good news for your tenants – their bills will be lower, even including the loan repayment. That’s thanks to the ‘Golden Rule’ of the Green Deal, which dictates that the combined cost of the energy bill and the repayment must be lower than the amount that would have been due, had the improvements not been made. As the repayments must be made each month, if the property is untenanted, the responsibility for paying the fuel bill will fall to you. As such, in order to proceed with Green Deal measures, both the landlord and tenant must agree. However, from 2016, under the Energy Act 2011, you as a landlord will not be able to refuse reasonable requests from tenants to install Green Deal measures, so it makes sense for you to look at applying now. Tenants will be more likely to choose an energy-efficient property where their bills will be lower, and with a greater demand, you could be able to raise your rents – more good news! As well as the Green Deal, there is the Energy Companies Obligation (ECO), which is a grant, funded by energy suppliers that may be available to you for cavity or solid wall insulation if you have an older property. And, if you visit energysavingtrust. org.uk, you will be able to see details of other loan schemes and financial incentives available in your region for improvements to insulation and heating systems and for renewable energy measures. Of course, we are always happy to advise you on what measures we believe it would be beneficial for you to consider, so visit your local branch any time, Call 0845 450 0865* or email Landlords@ ReedsRains.co.uk if you’d like some help understanding your options. How the Mortgage Market Review (MMR)may impact buy to let T he MMR was a comprehensive review of the mortgage market, carried out between 2009 and 2012, in response to the devastating consequences of the high-risk borrowing and lending that contributed to the global credit crunch. The review proposed a variety of reforms to ensure those who could afford it still had access to mortgage finance, while poor practices were not allowed to continue. Its new rules came into force at the end of April this year. As the buy to let market is not currently regulated, it does not fall under the Financial Conduct Authority and therefore is currently not directly affected by the outcome of the MMR. However, because of the much tighter checks on affordability for primary residence mortgages that have come into effect, there is some concern that people may instead apply for buy to let mortgages for homes they intend to live in themselves. That risk, together with a feeling from many within the mortgage industry that checks on buy to let loan applications and the requirements for lending – currently that the rental income covers mortgage interest payments by at least 125% - are not tight enough, may put buy to let mortgages next on the list for review. Image taken from the wall mural in our recently refurbished Reeds Rains Haxby Branch. At the same time as this possibility is looming on the horizon, there is also a widespread feeling that the base rate could rise from the current 0.5% to as high as 3%** over the next three years. A steady increase in interest rates is likely to begin sooner rather than later, in order to avoid any sudden hikes, so there will undoubtedly be a rush of people trying to secure good fixed-rate and discounted deals now, while rates are low. And we know with the huge number of enquiries we are receiving, many landlords are looking to expand their portfolios this year. Add all those factors to the additional administration created by the MMR and the result is that mortgage advisors and brokers have a very busy time ahead. RR So, if you are considering refinancing your investment properties, now might be a good time to make enquiries.Contact your local Reeds Rains branch, call 0845 450 0865* or email Landlords@ReedsRains. co.uk and we will be happy to arrange a no-obligation appointment to discuss the mortgage options available to you. **Source: http://www.telegraph.co.uk/finance/ bank-of-england/10691297/Interest-ratescould-rise-sixfold-in-three-years.html. An Administration Fee of £499 will be payable when you sign the Professional Fee Agreement upon mortgage application. YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE Legal News Government introduces new ‘How to rent’ guide I n response to some of the issues raised by last year’s DCLG-commissioned report on the private rented sector, the Government is shortly to launch a new ‘how to rent’ guide for tenants. Laid out in checklist form, it is a very user-friendly, eight page document that goes through each stage in the rental process from the tenant’s perspective. It clearly states what tenants should expect from landlords, agents and properties and prompts them to ask the right questions at the right time. This is a great guide, which covers not only the property search and the initial process for signing up to a tenancy, but also informs tenants of the key steps to take if they want to extend or terminate the agreement. Importantly, it also gives clear pointers for where to turn if things go wrong. Essentially, once a tenant has a copy of the guide, it should greatly minimise the risk of them falling prey to industry rogues by clearly stating what they should expect, it will help them to recognise unsafe and illegally let properties and give them a point of reference if any landlord or agent tries to mislead them. This is great news for you, and for agents like us that do abide by the legal rules and regulations, as it means these better-informed tenants will appreciate how much safer they are renting through us and this is Image taken from the wall mural in our recently refurbished Reeds Rains Wallsend Branch. recognised by the government in this document as they highlight the benefits of using an agent such as ourselves who is self-regulated through ARLA. It would be worthwhile for you as a landlord to also have a copy of this guide, so that you know what your tenants are being told. Naturally, if we manage your let, you can rest assured we already have processes and documentation in place to ensure tenants are clear on their rights and responsibilities, and we always strive to have a good line of open communication between us and them. Once launched, the guide will be available to download from the GOV. UK website (link: https://www.gov.uk/ government/publications/how-to-rent) RR If you would like to discuss the guide with one of our Lettings Managers simply pop into your local branch, call 0845 450 0865* or email Landlords@ReedsRains.co.uk Regional Review Across the UK, the rules and regulations governing letting a property vary regionally. When changes are reported, it is not always clear exactly which region(s) they relate to. Whether you have properties in one area or a portfolio spread across different regions, understanding what rules apply directly to you and your property can be confusing. To keep you up to date with pending and newly implemented changes, here are the latest ones from aroud the UK. England What is happening to rents and yields in England Rents in England range from £515 per month in Yorkshire and Humber through to £1,117 in London. So far this year, the highest year on year increase for rents is in the South West, which are up just over 4% year on year, while in the North East rents actually fell by 3%. As well as rent levels varying from area to area, so do yields. Latest statistics suggest the North East offers around 7% yield while the South West offers just under 4%. On average, yields are falling just now year on year (for newly invested properties) but this is mainly due to the fact that property prices are rising, which is delivering a great return to investors. The LSL buy to let index suggests the average landlord in England and Wales has seen a return of £16,887 in the last twelve months, with rental income of £8,057 and capital gain of £8,830. Wales Latest on rents and prices in Wales In the first two years of its four-year administration, the Government, working closely with Community Housing Cymru, has already completed 4,500 affordable homes – 60% of the original target. By raising its delivery pledge, the Housing and Regeneration Minister, Carl Sargeant, has clearly stated his commitment to relieve pressure on housing. John Keegan, the chair of Community Housing Cymru, said that in addition to providing much-needed homes, the pact would also create employment and training opportunities within local communities. Image taken from the wall mural in our recently refurbished Reeds Rains Deal Branch. *Calls may be recorded and/or monitored for training and/or data protection purposes Reeds Rains. Reeds Rains is a trading name of: Reeds Rains Limited whose regulated number is 02568254 and registered office is Ground Floor, Buildmark House, George Cayley Drive, Clifton Moor, York, YO30 4XE. Reeds Rains Limited is an appointed representative of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 435779) for mortgage and noninvestment insurance advice. 14/1057 Helen Addison Regional Operations Director for Reeds Rains comments:“From our perspective as a landlords and letting agent, it is good to see more supply coming onto the market, although we don’t expect this to impact much on the private rental sector as the good quality properties we let on your behalf are still and will continue to be in short supply, while being much in demand.” Northern Ireland Latest on rents and prices in Northern Ireland We have seen a 26% rise in the number of homes sold during the first quarter of 2014 compared to the same quarter last year. This is good news for landlord’s as it means more stock is coming onto the market and for those that do invest in their portfolio, lettings is also up by 22%.