Why deposit reform is so badly needed

The average deposit costs renters around £1,110. And this sum is often doubled due to delays while tenants try to get their previous deposit back. This leaves a third of renters having to pay a new deposit before they had received their previous one. According to Which? this means almost half of renters having to take out loans to cover the cost of their deposit when moving home. The consumer champion found that 43% of tenants planning to move to a new rental property had to use a credit card, loan, overdraft, or borrow cash from friends and family to pay for the deposit on their new home. The government now accepts that tenancy deposits are a problem and recently published a call for evidence.

More than £4bn of public money is locked up in deposits across England and Wales. So property pundits are now calling on the government to embrace tech solutions to help solve the problem. Ideas for change include:

  • Tax incentives to landlords who opt for alternative deposit solutions 
  • A central clearing system to manage all tenancy agreement transactions
  • An independent adjudicator to settle disputes between landlords and  tenants

 Ringley has been looking after landlords and their tenants for more than 25 years and created a proptech solution – PlanetRent – because of the cumbersome nature of the tenancy process and tenancy compliance.  We know it is hard for tenants to find their deposits and it is equally hard for landlords to ensure their properties don’t suffer damage beyond ‘fair wear and tear’.  PlanetRent offers landlords the option to embrace deposit-free renting so tenants can opt to pay the equivalent of one week’s rent (as a deposit alternative) and the landlord gets eight weeks’ rent cover.  

What we would like to see the government set up, is an easily searchable database of troublesome people, ie those who have LOST previous deposit adjudication.  We support the call for a single independent adjudicator to preside over disputes between landlords and tenants. Letting agents are already burdened with significant legislative compliance including Ombudsman membership and Deposit Scheme membership – so this would really bring private landlords into line with what agents already have to do.   

It would be great for the government to offer tax incentives to landlords who opt for deposit alternatives.  But the challenge here is to satisfy the ‘perfect tenant’ who will be guaranteed to lose one week’s rent buying a deposit alternative, but as a perfect tenant would expect to get their deposit back in full. 

And finally, our view on a single clearing system to manage all tenancy transactions is that this is probably a method to tax any rental income that is undeclared by some landlords!

Fire! Should you stay put or evacuate?

Should I stay or should I go? Make sure you know the evacuation policy in your block

Would you stay put if a fire broke out in your block? As the first phase report of the Grenfell Tower Inquiry is published, the “flawed” stay put policy used on the night of the devastating fire is now under intense scrutiny.

‘Stay put’ is the standard advice given to residents in blocks of flats who are not directly affected when a fire breaks out. They are told to stay in their homes with the windows and doors shut. The expectation is that the construction of the building and fire doors leading onto communal areas will protect people from the spread of fire long enough for the fire service to attend if necessary and put out the fire. At Grenfell Tower, this policy proved utterly inadequate. It is now judged to have led to unnecessary loss of life. As a result, the government is working on a “full and detailed examination” of the stay put/evacuation strategy for fire in high-rise blocks.

Housing Secretary Robert Jenrick told the Housing, Communities and Local Government Select Committee yesterday that, while expert consensus is that stay put is “valid” for most tall blocks, the government is now reviewing the advice.

As a layperson it is hard to understand the thinking behind stay put: surely it makes more sense to get out of the building as quickly as possible? So here’s the explanation. The thinking behind it is twofold:

  • First, the fire service needs unfettered access to hallways and stairs to get up and down to evacuate the building in priority order. This would be hampered by everyone trying to evacuate at the same time – particularly in buildings with only one stairway.
  • Second, opening and closing doors increases air circulation which not only accelerates combustion and the spread of smoke but panicking residents rarely stop to close their door behind them. This leaves other parts of the building exposed to the fire.

A stay put policy is intended to protect residents (who can be safely rescued some other way) from smoke inhalation, as smoke kills long before the heat from a fire.  But the Grenfell Inquiry judge is now calling for evacuation plans to be developed for all high-rise buildings. Ringley Group managing director Maryanne Bowring agrees. She does not believe stay put is the right policy for all high-rise blocks.

Her view is this. “If there is no misting system or sprinklers in your building and you are above the height of a ladder (normally assumed to be six storeys) or if the fire is below your home in a tower, or if the facade of a building is burning, or if the building was not constructed in the last 10 or so years, I would say you must get out.

She adds: “You can have as many fire risk assessments as you like, you can have as much fire detection equipment as you like, but there should now be an acceptance that any fire policy is made up of component parts, one of which can fail, even if serviced or checked yesterday – so visual and common sense judgements must be made”.

We all feel for those in the fire and call centres that night, who were under orders to keep telling residents to stay put, when they could watch the fire at Grenfell Tower on mobile phones or in person and see that the building was engulfed by flames.

Dame Judith Hackitt, who carried out a review of fire safety and building regulations for the government post-Grenfell, will now advise ministers on the format of a new building safety regulator. The aim is for a fundamental shift in the design, construction and management of tall buildings with the focus firmly on safety. This is badly needed for the long-term wellbeing of residents and we await the outcome with interest.

Five reasons to love co-living

The Collective is one of the UK’s first co-living providers with schemes in Canary Wharf and West London

Co-living schemes are popular in the US, China and Scandinavia. Renters live in small bedrooms but they have access to communal kitchens and living space as well as other shared amenities. The concept might sound like a glorified HMO. But the size and quality of accommodation and additional facilities such as gyms, co-working spaces, cinemas, cafés, kitchens and laundries – and the fact that residents are encouraged to come up with ideas to enhance the community lifestyle – means that co-living is increasingly being considered as a use class of its own. 

The concept is still in its infancy in the UK. But the idea is catching on as Build-to-Rent providers spot its potential. There are a number of clear benefits for renters. Here are five reasons to take a closer look.

Communal living – co-living provides affordable, community-focused housing in serviced, fully-furnished accommodation with an all-in-one charge. This appeals not only to young professionals but also to older people who would like to be part of a community. Law firm Collyer Bristow spoke to 424 18-44-year olds living in London and the South East about co-living last year. The company’s Ownership Attitudes and Aspirations Report found that while only a very small percentage of renters now live in this kind of development, 74% would consider it. Lifestyle was a key selling point. Loneliness is an issue for all ages and co-living schemes provide a ready-made community with operators often providing a full programme of events and activities.

Single payments – a single monthly payment with no hidden costs is the feature of co-living schemes that holds the most appeal for renters, according to the same survey.

Scale – unlike living with two or three other people in a shared property, co-living provides renters with a whole community to interact with. That means far less chance of falling out over fridge space or who does the washing up! If you don’t want to be friends with your neighbour you don’t have to be – there are plenty of other people to spend time and share activities with.

Institutional backing – In contrast with traditional HMOs, co-living providers are major players in the property market backed by large-scale investors. This is a major plus point. Renters have the peace of mind of knowing that maintenance will be carried out on a regular basis, insurance cover is in place, and health and safety legislation will be complied with.  

Effective management – co-living operators typically maintain not just the fabric of the building, but manage the communal areas too.  If a development includes communal kitchens, it will be their responsibility to replace white goods and other shared items.  And co-living schemes are more likely than traditional blocks to have a concierge and maintenance team on site.

A report published in February by the Social Market Foundation, promotes co-living as an answer to the housing crisis. It suggests that these developments should be available to buy rather than operators simply sticking with the current rental model. This would make owning a property more affordable, particularly in cities.

However, planning specialists at Savills sound a word of warning. They say the planning system is taking time to adapt to co-living and there is currently a lack of clear policy on potential schemes. But despite this, the number of schemes that have planning permission, or are in the pipeline, is on the rise in London and co-living is beginning to emerge in other cities too.

American-style renting lands in Sheffield

US-style homes at Brook Place – but will renters spot the difference?

We’ve all heard the phrase “American-style renting” but what exactly does it mean? Renters in Sheffield are about to find out. Last week, build-to-rent operator Grainger launched Brook Place, a brand-new residential development 10 minutes from Sheffield city centre comprising 237 “American-style professional private rental homes”. It is the first scheme in the city built and designed specifically for renters.

So what’s on offer at Brook Place? Fully-furnished studios and one- and two-bedroom apartments are available, with all utilities ready to go from day one, a selection of furnishing options and fully integrated appliances. Residents also get super-fast Wi-Fi and they can easily work from home in the co-working space. There’s also a choice of a residents’ lounge and a games corner with table football plus three roof terraces and a podium garden to chill out and unwind.

So far so standard – none of this sounds particularly new. The ‘stay as long as you want’ contract at Brook Place, with tenancies of up to three years is becoming the norm for build-to-rent developments. As is the 24-hour gym, onsite management, concierge desk and bicycle storage. But there are some notable features that may give the scheme an edge.

For starters, residents have the choice of two themed interior styles. Most renters don’t get to choose their décor but Grainger are offering colour palettes in either blue and grey or copper and red hues, inspired by the nearby Peak District. And those who opt for a longer tenancy will be able to paint and decorate their apartments, giving them the chance to personalise their new home; something which is often not possible in traditional renting.

Another feature that is being imported from the US is the emphasis on ‘lifestyle’ events to bring residents together, such as cooking classes that will be hosted in the ‘experience kitchen’, which features professional kitchen equipment including a pizza oven.

Food for thought for other BTR providers? Our Manchester office LifebyRingley will be keeping a close eye on the success of Brook Place. Some of these ideas could become a model for others to follow.

Where are the best – and worst – BTL buys right now?

Buy-to-let: where’s the best place to invest?

Credit experts TotallyMoney revealed the best and worst UK postcodes for residential investment property this week. The most profitable areas are in Scotland (as we revealed in this blog last week ) and the North West.

The results reveal:

  • Despite issues around regulation and tax, the UK buy-to-let market is still strong, with many of the best performing postcodes turning a 7% to 8% yield.
  • Liverpool’s L1 postcode returns a 10% yield — the highest in the UK.
  • Two Scottish postcodes make the top three and a total of nine Scottish areas feature in the top 25 of the best yields
  • The North East also has some top performers. TS1 and TS3 in Cleveland rank fifth and 12th respectively, while Sunderland features twice (SR8 and SR5), and Gateshead’s NE8 has a 7.27% yield —putting it in 18th position.
  • All postcodes in the top 25 have property asking prices under the current UK national average of £232,710.

So despite continuing changes in tax relief and greater landlord responsibilities, TotallyMoney’s research shows a good number of UK postcodes returning healthy profits for property investors. Take a look at their map here https://www.totallymoney.com/buy-to-let-yield-map/

On the flipside, some of the country’s best-known commuter belt areas have the lowest yields. At the very bottom is AL5 in St Albans. The average buying price for a property here is £800,000 and asking rent is £1,300 per month. Total yield: just 1.95%.

This puts it below London’s W8 postcode (Kensington) which still manages to squeeze out a 2.05% return for landlords even though average property prices are a hefty £1,962,500.

Other commuter spots in the bottom ten include RG10 in Reading (2.26%), GU10 in Guilford (2.22%) and KT7 in Kingston upon Thames (2.20%).

So the verdict is that buy-to-let is still worth it but landlords need to do their homework. Research before buying – and stay flexible about where you spend your money. Get it right and there are still good returns to be made.

PlanetRent takes the hassle out of deposit payments

planetrent logo

According to a story in the press this week, more than 2,000 tenants in Scotland appear to have forgotten to claim back their deposits at the end of their tenancies. SafeDeposits Scotland thinks this could add up to more than £500,000. 

Understandably, most landlords take a deposit from a tenant at the beginning of a new tenancy, so that if the tenant causes any damage to the property or doesn’t pay the rent, deductions can be made. But how easy is it for tenants to get their deposits back when they move out of a property?

Pundits believe there could be as much as £4bn sitting in accounts waiting to be claimed.  Like them, we suspect these unclaimed rental deposits are just the tip of the iceberg. So what’s the answer?

Ringley has a quick and simple solution that makes it really easy to move and track deposits so that no one ever need lose sight of where their money is held. Our PlanetRent app harnesses the latest technology to take all the hassle out of deposits for landlords and tenants in a few easy steps. Here’s how it works.

If there is a traditional Deposit – where tenants choose to pay a deposit, the landlord or letting agent must register it. PlanetRent is connected via an API to the Tenancy Deposit Service (TDS) and will automatically register deposits for TDS users.  The deposit repayment process is non-adversarial as both tenants and landlords can see proposed deductions and supporting invoices and either accept or dispute them item by item to narrow issues and help get tenants moving on.  PlanetRent also sends out a ‘how to get your deposit back’ guide, to help tenants know what they need to do and when.

Renting Deposit Free – PlanetRent brings this option to both Landlords and Agents.  PlanetRent is connected to Reposit which is FCA Regulated. With Reposit, so long as tenants pass referencing (which Reposit offers for free) the tenants can pay a non-refundable charge, equal to just one week’s rent. If there is a damages dispute Reposit will try to recover end of tenancy claims directly from the tenant. If this is unsuccessful, insurance (underwritten by Canopius) covers the landlord for up to six weeks of damages, or rent arrears.

PlanetRent is set up for Reposit and the TDS service and automatically sends tenants all the required advice booklets. So why not download PlanetRent today and make renting your property an easier and more efficient process for you and your tenants.

No deal would mean no change to Right to Rent until 2020

No change to Right to Rent – yet.

The Government announced last week that there will be no changes to the right to rent for EU, EEA and Swiss citizens and their family members living in the UK until 31 December 2020 if the UK leaves the EU without a deal.

Landlords should continue to follow current Home Office guidance on how to check a tenant’s right to rent.

Tenants will be able to prove their right to rent using:

  • their passport or national identity card if they are an EU, EEA or Swiss citizen
  • their residence card issued by the Home Office if they’re a non-EU, EEA or Swiss citizen family member

You have a duty not to discriminate against tenants on the grounds of their race or nationality. You cannot require EU, EEA or Swiss citizens to show you that they have status under the EU Settlement Scheme or European temporary leave to remain when entering into new tenancy agreements until 1 January 2021.

Irish citizens will continue to prove their right to rent in the UK as they do now.

You should continue to conduct right to rent checks on all prospective tenants to comply with the code of practice on illegal immigrants and private rented accommodation and the code of practice for landlords: avoiding unlawful discrimination.

A new immigration system will apply to people arriving on or after 1 January 2021. You will not be required to undertake retrospective checks on existing EU, EEA or Swiss tenants when the new system is introduced.

Landlords should not be expected to act as immigration officers. It is stressful and can lead to bias in favour of tenants who do not require the additional hassle of carrying out checks. But until any new system is introduced this has become a fact of life for anyone renting property. So download the guidance, follow the rules and if you have any problems, contact the Landlords’ Helpline on 0300 069 9799.

Would you buy a BTL property now?

Have you ever considered buying at auction? If so, do your homework first.

Are you brave enough to consider investing in a new buy-to-let property in the current market? Tough new regulations and tax changes plus the spectre of Brexit uncertainty aren’t doing much for the popularity of the sector with investors.  So we’re now seeing a major sell-off, with small landlords quitting the market to the tune of an estimated 4000 properties a month. But if you are a cash buyer – and you can hold your nerve –  now may be a good time to buy. And if you don’t have ready money, the Bank of England base rate is at a historic low, so this could be a good time to take out a loan.

There is plenty of demand out there for rental property and house prices are holding up well in most parts of the country. So if you’re willing to buy into the sector for the long term, capital growth still looks strong. So where to start looking? New research looking at the best places to invest in buy-to-let property based on rental yields, shows that Scotland is currently leading the field with rental returns in Glasgow at 7.5%.  The next best three places with good returns are in Midlothian (6.8%), East Ayshire (6.8%) and West Dunbartonshire (6.7%).  

If you are thinking of taking the plunge, it always pays to do your homework. The days of landlords needing to be close to their rentals are over, with the advent of PropTech such as our PlanetRent app making it easy to manage your properties remotely; we have connected with partners nationwide to help them manage their properties across the country.

This technology frees up investors to search the market for the best returns but once you’ve crunched the numbers don’t forget there are other factors that impact local rental markets. These include any major developments that are planned or new infrastructure in the pipeline, as well as the renter’s profile in that area. If you are looking in an area with a high student population, investing in a house split into flats close to a university will likely offer better returns than a large family home in a high end location.

Whether or not your property will hold its value long-term is another question and one that may be tricky to second-guess. That’s why it pays to get professional advice from a qualified and reputable property agent. You should also look for a good mortgage broker – if you need one – and a reliable accountant to ensure your BTL income is as tax efficient as possible.

Finally, there are often genuine BTL bargains to be found at auction – but again, research the market – and make sure you fully understand the way this sector operates. Purchasers buying rental property at auction can avoid the long-drawn-out conveyancing process, as properties are sold immediately the hammer falls. But buyers must do their own due diligence. They also need to make financial arrangements in advance. A 10% deposit must be ready for payment when the contracts are signed and they must have access to the remaining 90% within 28 days.

Don’t forget, there is more to buying property this way than simply turning up and making a bid.