Category: Assets manager

How landlords drive up quality in the rented sector

Lesley Davis Leave a comment
Refurbishment is big business in the rental sector – and is helping drive up quality

Despite recent attempts by politicians to colour the PRS as sub-standard and riddled with rogue landlords, in fact the quality of rented accommodation is on an upward trend.

A survey published this week by InterBay Commercial proves the point. According to the specialist buy-to-let lender, the number of rented homes in England deemed ‘non-decent’ by the Office for National Statistics has fallen for the tenth year in a row. The most recent data reveals a decrease to 24.5% in 2018 from 44% in 2008. There is still a way to go but the vast majority of landlords are now providing good quality homes for people to live in. And this is in spite of the rapid expansion of the sector in the last decade, adding 1.5 million new rented homes.

Confirmation that quality is being driven up year-on-year is borne out by the latest English Housing Survey. This shows that the vast majority (84%) of private renters were satisfied with their current accommodation. 

In addition to the professionalisation of the sector due to the advent of buy-to-rent, which is promoting high-quality living space, InterBay claims that landlords’ commitment to upgrading properties has been a key factor in this improvement. 

The lender’s survey of more than 700 property investors shows that 70% of landlords who recently undertook a refurbishment did so to improve the property, either to enhance the presentation or to elevate the quality of the accommodation for tenants. 

As well as ensuring a property is an attractive prospect for potential tenants, refurbishment typically bolsters a rental property’s value and income potential: 74% of those who undertook a refurbishment said it enhanced the property’s value, and 82% saw monthly rents rise. Even after accounting for those who did not see the value of their property rise, the typical refurbishment added £13,000 to a house’s value.

So it may be an easy target for political point-scoring, but the private rented sector has been the success story of the housing market in the last decade. Growth and professionalisation have improved both choice and quality for tenants.

However, faced with a range of potentially damaging future policies and proposals from across the political spectrum, continued investment is not a foregone conclusion. Rather than demonising landlords and driving them out of the market, they should be well-regulated and properly supported. Interbay Commercial thinks that, should the current rate of change in the PRS continue, “it will weigh on landlords’ decisions to spend more on their portfolios, and risks undermining a decade of progress”.

We agree wholeheartedly.  

No slowdown for BTR pipeline in the Northwest

Lesley Davis Leave a comment

Last week, the Northwest Insider event looked at issues around housing supply and demand. Life by Ringley MD Sam Hay was there, so for those of you who are interested, here are a few of the most interesting takeaways. 

When it comes to rental values, build to rent property continues to command a premium. Pounds per square foot does not come into BTR, instead it’s all about quality of product. Rental growth for July was around 1.13% but Andrew Cook from M&G commented that there will be pressures on pricing as more schemes come onto the market.

Low entry costs on BTR flats are making things much easier for renters. Increasingly, people want a transient way of life and easy entry and exit, so they are likely to try different buildings before they settle longer term. Lifestyle choices are changing fast and renting is no longer frowned upon. Renters react positively to being viewed as customers, not tenants; maintenance issues are dealt with fast and longer-term leases are expected to take off. As a result, BTR is a huge growth area with 1.4 billion total investment this year in Manchester alone. Manchester is currently at the hub of BTR and is very much being used as a test case. Manchester City Council thinks there will be an undersupply but at this moment in time, due to Section 106 requirements, consents are slowing down.

One downside of the BTR explosion and the high demand for one-bedroom homes, according to Tim Heatley from Capital and Centric, is that Manchester city centre is not ready for families. Chris Shaw from Urban Splash agrees. He thinks offers in our town centres need to change, and there should also be schemes in rural areas. Maybe with new ways to sell being considered, such as pre-approved mortgages where you turn up and pick your home. At the moment it is easiest to develop BTR schemes in city centres and building an investment case in other locations can be difficult.

Lambert Smith Hampton told the Northwest Insider audience that 54% of all housing investment in the North East is now for ‘alternative’ homes, such as BTR and student accommodation. The success of the latter in Manchester and other university towns has provided a model for new developments in the region. Diversification and a huge undersupply of high quality residential housing are now driving investment in residential portfolios as opposed to the standard commercial property investment model. There is even an argument in favour of BTR as a separate asset class.

Making the case for a new housing court

Lesley Davis Leave a comment

In June, we blogged about the idea of setting up a new, dedicated housing court. This has worked well in Scotland, where landlords can take action quickly when faced with rogue tenants. And, according to one of the biggest-ever surveys of landlords and letting agents done by the Residential Landlords Association, it would go down well here too.

The RLA says a massive 79% of private landlords with experience of using the courts to repossess properties are dissatisfied with the way they work. And 91% of landlords support the idea of setting up a new housing court.

Last week we urged you to get behind our campaign to keep Section 21. If it is scrapped, as the government plans, the existing court system will be completely overloaded with repossession cases. It already takes an average of five months to repossess a property – and this will get worse if nothing is done.

And it’s not just landlords who are unhappy with the way the system works – or doesn’t. Separate research from Citizens Advice proves that tenants too are put off taking landlords to court by the existing legal system.

More than half of tenants the consumer body spoke to, said the process is too long and too complicated. This stops people taking action when they are stuck with a bad landlord or a poorly maintained property. A properly funded and staffed housing court could go a long way towards solving the problem.

Everyone living and working in the rental sector is facing the most far-reaching changes we have seen for decades. As the RLA, rightly says, if the new Government decides it wants to go ahead with its proposals, “significant and bold” reforms need to be made to our court system. Anything else will lead to chaos.

Chris Norris from the National Landlords Association is calling for any improvements to the system to be in place, properly funded and fully functional before the government “even contemplates” changes to Section 21.

Even better; improve the court system so that it functions for everyone – and leave Section 21 alone.

How NOT to win friends – or votes!

Lesley Davis Leave a comment

If you want a lesson in shooting yourself in the foot, you don’t have to go much further than yesterday’s ‘right to buy’ announcement from the Labour party. Labour has pledged to introduce a new policy: if it wins the next general election it will give private tenants the right to buy the homes they live in.  

Shadow Chancellor John McDonnell framed the proposal as a response to the problem of “overcrowding” and landlords “who don’t maintain their properties”. This is a hammer to crack a nut. And it has produced the expected response from landlords and their member organisations. This is a badly considered plan and its timing is terrible. As we all hold our breath to see whether or not we will be facing another General Election in a few weeks’ time,  Labour just lost the votes of landlords around the country.

 Most landlords provide a well-maintained home for their tenants – and are right to expect a decent return for their investment. They are not providing social housing. Bad landlords are not the norm and as David Smith from ARLA says: “If there was to be any chance of this becoming law, there would be a mass sell-off of properties in advance”.

It is also doubtful, if the aim is to allow tenants to buy their rented home for below market value, whether or not lenders would be willing to provide mortgages on that basis. The housing market is predicated on market value, not on arbitrary sums set by the government.

Smith thinks Labour’s plans are effectively a kind of compulsory purchase that is entirely unacceptable and ultimately unworkable, reducing the availability of homes to rent and destroying the viability of the PRS. Spot on, we say.

Giving council tenants the right to buy in the 1980s ultimately produced a crisis in social housing, which successive governments have failed to address. The problem has spilled over into the private rental sector which now has to find homes for tenants who would, in the past, have been housed by their local authority. A well-regulated, strong PRS is an asset and responsible buy-to-let landlords are badly needed in a country with too few affordable homes to buy.

“Time to emigrate,” says Ringley & PlanetRent Group CEO Mary-Anne Bowring.  “Personally, I am fed up with out-of-touch politicians stereotyping private landlords.  There are some rogue landlords but these are the minority – by and large, private landlords are hard-working individuals trying to build a nest egg for their children or their retirement.  The Tories have squeezed landlords with mortgage tax changes, reduced their income by banning up-front fees and even expect them to clean up after tenants at the end of the tenancy!  Now Labour wants to dispossess them of their property altogether – I do wonder seriously, who is fit to run the country?”

In our opinion, the Labour party should turn its attention to finding ways to deliver a major housebuilding programme that would provide jobs, as well as homes for people. Attacking landlords and their ability to provide those much-needed homes is an own-goal of momentous proportions.    

Tenant demand – and rent – goes up as fees are dropped

Lesley Davis Leave a comment

According to the latest figures from Rightmove, demand from tenants looking for a new place increased 7% between May and June. This is an uplift seven times bigger than the previous four-year average of just 1% at this time of year. The online home finding specialist thinks this is a direct response to the Tenant Fees Ban that came into force on 1 June and we’re sure they’re right.

According to the report:

  • In London, there was a 13% increase in demand from May to June, compared to a four-year average of 4%
  • Agents are reporting an increase in enquiries from tenants looking to move now that the majority of tenant fees have been removed

Nationally (excluding London) asking rents are at a record high of £817 per month, and running at 2.7% up on a year ago, as the cost of renting continues to rise year-on-year.

According to new PRS data from ARLA, the number of tenants experiencing rent rises increased to the highest figure on record in July. A whopping 63% of agents witnessed at least some of their landlord clients increasing rents during July. And ARLA says this is a 15% increase from June -which already showed a record hike.

To put this in perspective, back in July 2018 the proportion of agents seeing rent rises was just 31%.

So as soon as the Tenant Fees Act came into force in June, rents started to rise faster and across the board. No surprises here for anyone working in the PRS. As ARLA spokesman David Smith said this week, the fees agents have been banned from charging are still being paid for by tenants – but it’s now through their rent, rather than in upfront costs. If the government’s aim here was really to help tenants, its backfired already.

Do we need an energy theft amnesty?

Lesley Davis Leave a comment
Don’t meddle with the meter.

Here’s an idea to ponder. According to Ofgem, tampered energy meters add £20 to every household bill each year. They also pose a life-threatening danger to personal and public safety. So the regulator is suggesting an energy theft amnesty. This would mean giving the public – including property professionals, landlords and tenants – the chance to own up (risk free) to breaking the law by stealing energy through a tampered meter. The meter would be made safe and no backdated charges applied.

Energy theft is a serious crime and it’s one which frequently goes under the radar. It is often committed by rogue landlords or tenants and injures or kills at least one person every fortnight in the UK.

During Ofgem’s proposed amnesty, energy thieves would neither be prosecuted, fined nor back-billed and would simply “get away with it.” The sentence is usually five years in prison.

Ofgem is so serious about this idea that it has done a survey to see what 1000 people round the country think. Over half would be in favour. So what are the pros and cons? Here’s what Ofgem has to say:

Benefits

  • Tampered meters are highly dangerous. They can cause fires, electric shocks and large gas explosions that can injure or even end lives. By making meters safe, an amnesty would help to make communities a safer place.
  • In the UK we all pay an extra £20 per year on our energy bills to pay for energy theft. Correcting tampered meters could help reduce the amount that everyone has to pay to fund stolen energy.

Drawbacks

  • An amnesty means that people who have previously broken the law by tampering with their energy meter will get away with it and won’t have to pay back what they have stolen. This could devalue the crime and make more people think they can get away with it – or other offences – in future.
  • If lots of people come forward, energy companies will need to visit thousands of homes to make their meter safe. This will be costly and does not guarantee these customers will not re-offend.

The research, which was carried out by UK-wide energy theft investigation companies, Echo Managed Services and Grosvenor Services Group doesn’t think the dangers of energy theft are well enough known.  The energy sector needs to work harder to educate people on the potentially-fatal risks that meter tampering can present, they say.

Ofgem will be weighing up the pros and cons of a possible amnesty in the coming months – so it will be interesting to see what happens. In the meantime, anyone thinking of tampering with an energy meter in a property they manage, let out or rent from a landlord should think again. It’s against the law and it’s dangerous.

Image courtesy of Caroline Ford [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0/)]

New advice on Right to Rent

Lesley Davis Leave a comment

After months of uncertainty for landlords, the Home Office has now released updated guidance on Right to Rent, to help anyone letting property in England ensure they are compliant with the law.

The new guidance provides advice for landlords with tenants from Australia, Canada, Hong Kong, Japan, Singapore, South Korea and the United States (B5JSSK nationals), who are in the UK for up to six months.

Since May B5JSSK nationals have been able to use electronic gates at UK airports, so they don’t have their passports stamped on arrival. This has caused difficulties for landlords because their passports didn’t visually prove their right to be in the UK.

Now, the latest Home Office advice confirms that landlords can use the following as acceptable evidence of entry to the UK:

  • An original or copy (hardcopy or an electronic copy) of a boarding pass or electronic boarding pass for air, rail or sea travel to the UK, establishing the date of arrival in the UK in the last six months
  • An original or copy of an airline, rail or boat ticket or e-ticket establishing the date of arrival in the UK in the last six months
  • Any type of booking confirmation (original or copy) for air, rail or sea travel to the UK establishing the date of arrival in the UK in the last six months
  • Any other documentary evidence which establishes the date of arrival in the UK in the last six months.

The requirement is waived for holiday lettings of less than three months.

If a potential tenant is unable to present any of the above evidence, a landlord can use the Landlord Checking Service to confirm Right to Rent eligibility. It’s important that landlords keep evidence of Right to Rent checks on file throughout the tenancy, and for 12 months after the tenancy ends, after which time data should be securely disposed of.

For more information and to read the new guidance in full, click here.

Looking forward to the flat of the future

Lesley Davis Leave a comment

Ever wondered what the flat of the future will look like? Laura Geode from American Proptech company Homebase has some interesting ideas. Most of them revolve around IoT or the internet of things. This means greater connectivity between the devices and appliances in our homes; something we will soon all take for granted.

First, says Laura, our homes will talk to us. Many of us already have AI assistants in the form of Alexa or a Google hub but this technology is evolving fast. For flat owners and renters, a digital concierge will soon be there to turn on your lights, rent a car from the block’s car-sharing service or find a film for you to watch.

The internet of things will transform the way we live

And what about fixtures and fittings? Laura predicts that from windows to appliances and light bulbs to locks, there will be dozens of IoT devices in each unit making them more user-friendly and energy efficient. Picture this: your refrigerator door features a screen showing a digital image of all the food inside of it. You click on the chicken breasts and a list of recipes appears, all based on the food you have in stock. Missing an ingredient? There’s a one-click option to buy and have it delivered to you in time for tea!

Developers are keen to take up this technology but Laura says it’s important to approach it correctly. Most properties that try to be “smart” start with installing IoT devices like thermostats and locks, she says. Instead, developers should start with property-wide wi-fi, Bluetooth, and sensors. This network infrastructure allows devices to work seamlessly together.

In America apartment blocks feature air conditioning as standard. In the UK this may be essential in future as global warming takes hold. So in order for a block air conditioning system to be as energy efficient as possible it needs to communicate directly with the lights, thermostats and windows in the building. That’s not possible without network infrastructure in place.

Above this, says Laura, will sit the building operating system. This means residents will be able to control all of their devices from a single app and property managers can collect building-wide data too. This data makes it possible to find ways to run blocks more efficiently and create a better resident experience. And if all this sounds a bit far-fetched, don’t forget that the 5G technology we need to make all this possible, is already here.

Finally, Laura urges block owners and managers – especially in the rented sector –  to constantly ask themselves “How can we provide more things ‘as a service’?” From dog walking to wifi, residents want to live somewhere that makes their life easier. Hospitality and block management are coming together. And that won’t stop anytime soon. 

Fire safety – do you know the drill?

Lesley Davis Leave a comment

A devastating fire wrecked a block of flats in Barking at the beginning of June. No one died but the fire spread so fast that it could easily have led to loss of life, particularly as the residents reported that no alarms had sounded. Fire safety systems should always be regularly inspected and tested and – unless a stay put policy is in place – residents should evacuate the building immediately they hear the alarm.

Unfortunately, as fire risk specialists Lawrence Webster Forrest says in a recent blog, although the need for immediate evacuation may seem to be something of a ‘no-brainer’, studies have shown that people are reluctant to evacuate and are inclined to assume the fire alarm is a test or a false alarm. Clearly this is dangerous, so fire training in residential blocks is a must – and should be taken as seriously as regular inspections of fire safety equipment.

Thankfully most of us have no experience of fire developing inside a building. But what this means, according to LWF, is that they are likely to base their idea of how fire spreads on their experience of bonfires or other outdoor fires. But fire inside a building represents an imminent threat to life. So in an emergency situation, evacuation must be completed as quickly as possible.

It is the responsibility of property managers to make sure that, in an emergency, residents know what to do and when to do it. This means helping them to:

  • familiarise themselves with escape routes, which may not be used on a daily basis.
  • Understand how to use exit devices on fire doors. These should be demonstrated and residents given the opportunity to operate one themselves.

It is important that residents know not to use lifts when the fire alarm has sounded. Also, everyone should be familiar with plans to evacuate neighbours with disabilities or who are particularly vulnerable. Knowing who is responsible for helping particular fellow residents could mean the difference between someone evacuating the block safely or being trapped in their flat.

So if you’re a property manager, make sure this is at the top of your list for your next residents meeting. And if you’re a leaseholder or tenant and don’t know what the evacuation procedure is in your block – ask. Don’t take the risk.