Category: landlord

Why we say tenants need a payment holiday too

Lesley Davis Leave a comment
Pay it forward: landlords are taking mortgage holidays but what about tenants who are facing hardship?

A recent survey by Landlord Action found nearly three-quarters of landlords have been contacted by tenants worried about their rent payments. This highlights the severe impact the lockdown is having on household finances.
 
Mary-Anne Bowring, group managing director at Ringley, thinks renters should have their rents reduced if they can prove they have been unable to access cash through the government’s income support schemes, and their furlough or government money means a reduction in their normal household income. After all, she says, that income is what the affordability of the letting was granted on. In particular, Mary-Anne thinks this should be the case if the landlord is benefiting from a mortgage holiday.  “Otherwise,” she says, “this is a lose-lose situation for the government and the wider economy – which means all of us”.
 
The government has already banned eviction proceedings from happening and is urging landlords to work with their tenants in situations where they are struggling to pay rent. Tenants who are out of work and living on reduced incomes surely have a right to know if their landlord has secured a mortgage repayment or a repayment-and-interest holiday. How can it be right for the landlord to still expect tenants to pay their full rent if they are being propped up by their mortgage lender?  Of course, the government still needs to help renters either not covered by income support schemes or who have not yet received the additional cash.
 
Mary-Anne adds: “The word ‘unprecedented’ has been used a lot in response to the impact Coronavirus is having but statistic after statistic shows a level of damage not even seen during the worst of the Financial Crisis. The government has moved decisively to help protect tenants and landlords, but it is inevitable some households will fall through the gaps as the various income support schemes get up and running and payments are processed.
 
“Transparency is key, and renters have a right to know if their landlord has benefited from a mortgage holiday and, if they are struggling financially, they should be able to request a reduction in rent. Any rent reduction must be conditional on being able to prove financial hardship to prevent abuse of the system and it is important tenants and landlords work together during this uniquely difficult time.”
 

Why landlords should be looking beyond COVID-19

Lesley Davis Leave a comment

Despite the obvious pressure on the rental market resulting from the current health emergency, longer-term, buy-to-let remains an attractive asset class, says Ringley Group MD Mary-Anne Bowring.

Quoted in today’s issue of Landlord Today online, Mary-Anne says: “A subdued for-sale market will likely see demand for rental homes grow over the course of the year, as buyers put off committing to purchasing a new home and sellers hold off owing to a dip in values and the impracticalities of trying to sell when social distancing measures are in place”. Her comments are in response to the latest figures from Zoopla, showing demand for rental homes up by 30% in the first half of this month.

However, as Landlord Today points out, the increase is coming from a very low base with demand falling dramatically by 57% as the country went into lockdown at the end of March. The improvement is likely to be because more people are staying at home, so anyone who is finding their current property unsuitable may find they have more time on their hands to plan for the future and think about moving once the lockdown is lifted.

Putting the figures into context, Mary-Anne says, “The latest BPF figures show strong growth for build-to-rent in key regional cities which is positive news but completed BTR homes still make up only a tiny fraction of the overall rental market. 

“More worrying is the slowdown in activity in London, where demand and need for high quality rental housing is arguably greatest, with investors put off by potentially hostile policies such as rent controls.”

According to Zoopla, the Coronavirus outbreak may be impacting demand but it is having little effect on supply. The total number of homes available to rent remains broadly unchanged. There has been no large-scale withdrawal of homes listed to let since the start of the lockdown and rental listings are down just 3% compared to figures from 1 March.

In contrast, the rate of new rental listings coming to the market has slowed, after a surge in homes to rent before the lockdown, as landlords in some cities moved short-let homes to the long-let market.

And with annual UK rental growth at 2.4%, up from 1.5% in March 2019, Zoopla expects rental growth for the rest of the year to remain moderately positive for landlords.

Read yesterday’s blog for more on the Build to Rent market.

www.planetrent.co.uk

Why not READ our Property Blog: www.ringleypropertyblog.co.uk

Why the future is still bright for build-to-rent

Lesley Davis Leave a comment
Build to rent remains an attractive long-term investment

The build to rent sector is doing well. According to the latest figures from the British Property Federation, there’s been a 12% increase in the number of BTR homes either planned, under construction, or completed in the last 12 months and that will translate into more than 150,000 additional flats coming onto the market. Outside London, the picture is even rosier with a 58% hike in units since this time last year.

It is too early for the BPF figures to reflect the impact of coronavirus on the build-to-rent sector’s housing pipeline but the BPF’s head of policy, Ian Fletcher, sounded an optimistic note this week,  saying the sector remains attractive to investors. Anecdotal evidence from operators and developers supports their view, so we spoke to Sam Hay, MD of Ringley’s Manchester-based lettings division Life by Ringley, to get her insights into how the sector is faring.

Perhaps surprisingly, with so many people furloughed, rent arrears have not been a major issue to-date. “We have attempted to eradicate rent arrears by staying in contact with residents from day one and keeping them informed of what help is available if needed,” says Sam. “We are also being clear about the information we would require if tenants do feel they need a rent reduction or rent arrears arrangement. It’s important to ensure they understand that there is no rent free period and it will only be a deferral, so it’s better they remain up to date”.

The other potential problem for agents, is how to safely maintain social distance in build to rent blocks, but this is being carefully managed, with communal areas such as gyms, roof gardens and swimming pools currently closed to residents. Visiting contractors also pose a challenge but Sam says those she deals with are still attending blocks weekly to sanitise the communal areas and to attend emergencies – such as a recent sewage leak –  that can’t wait. “We ensure that contractors are not ill and show no symptoms and always communicate with residents in advance so they know a contractor is coming,” says Sam. Life by Ringley is also offering initial virtual viewings for potential tenants and is sending residents a weekly email of suggestions for things to do while in lockdown plus online community chats and quizzes.

Jacqui Daly from Savills residential research, which produces the build to rent figures for the BPF, told Show House magazine this week that once the country is out of lockdown, build-to-rent developers should be confident to progress stalled developments.  “We’d expect high levels of uncertainty to increase demand for rented accommodation as people look to avoid longer term commitments such as mortgages, or if borrowing remains more constrained.  At the same time, we expect to see the leveraged buy-to-let sector remain under pressure, driving demand into build-to-rent”. She said.

www.planetrent.co.uk

Why not READ our Property Blog: www.ringleypropertyblog.co.uk

Landlords, don’t forget the changes to CGT – they apply to you!

Lesley Davis Leave a comment
A number of tax changes that impact landlords are now in force

Although COVID-19 is uppermost in all our minds at the moment, it’s important to remember that all the same legislation still applies to the way you operate your rental property – and so do tax changes. For landlords, this April sees a big change to the rules that govern Capital Gains Tax as well as a new regime for lettings relief.

From 6 April, new legislation is in force that means anyone selling a property eligible for capital gains tax (CGT) must pay what is due within 30 days of completing the sale. Up until now, anyone who paid tax via a self-assessment tax return could report a sale and pay what they owed via their tax return. That gave sellers a period of between 10 and 22 months to find the money. Now, those days have gone and anyone who doesn’t comply with the new rules could find themselves paying hefty charges.

Tax specialists Royds Withy King explained the implications in the press last week, saying: “Where CGT is due, the change could mean that sellers have to get funds in place to cover the CGT liability before the sale is completed…30 days is not very long at all. This could be a particular issue where there are large historic gains.” So it’s important not to get caught out.

Other reforms coming into force this month are:

  • Lettings relief, whereby landlords could claim tax relief on any let property that used to be their main residence, can now only be claimed for the period during which the property is shared with a tenant.
  • Principal private residence tax relief, which applies to landlords selling a property which was previously their main residence, is reduced from 18 to nine months.

Also, the final stage of Section 24 of the Finance (no 2) Act 2015 has now been enacted. This amendment to UK tax law means the amount of income tax relief landlords receive for residential property finance costs is now restricted to the basic rate of tax. The changes have been phased-in since April 2018 and mortgage tax relief for buy-to-let landlords is now replaced by a tax credit of 20%.

This change applies to:

  • Landlords who are UK residents with residential rental properties, regardless of location
  • Non-UK resident landlord with residential rentals based in the UK
  • Partnerships and Trusts with residential rental properties

If these changes apply to you, click here for detailed information on CGT as it affects landlords and an explanation of the new rules

www.planetrent.co.uk

Why not READ our Property Blog: www.ringleypropertyblog.co.uk


Virtual viewings – is this the future for lettings?

Lesley Davis Leave a comment
Will viewing homes remotely become the new normal?

In the current climate, if you have an empty or soon-to-be-empty property you may well be worried about finding a new tenant and wondering what your letting agent is doing about it?

At Life By Ringley we’ve got the solution to this problem. In the last few weeks, we have adapted quickly to virtual viewings and they are now on offer to all our clients.

In fact, we’re no strangers to the concept.  As we’re located in Manchester city centre, we often work with potential tenants who are not from the UK, and to whom we show properties via video link before they travel to the country. So when the lockdown was announced we were a little ahead of the game as we had already made videos of most of our properties.

However, like everyone else, we’re on a steep learning curve. The way in which we conduct today’s viewings compared to just three weeks ago is on another level! Our videos are now more like 3D virtual tours and that means we’re able to let properties in a traditional manner, but much more quickly. The virtual process means that we have eliminated the need to travel to and from the property and decisions can be made in an instant. This, in turn, moves along the applications and the move-in process much more swiftly.

All our viewings are conducted via video chat so that a relationship is still created between the potential tenant and the team member. Their questions can be answered there and then without having to allow clients time to watch a video link and then call them back to find out if they are interested in the property.  The technology is flexible and easy to use and we are able to show multiple properties within minutes. The time saved at our end is astronomical and the viewer saves time too – which is what we all want.

Despite the current health emergency, having mastered the basics of video viewings means we can continue with our day to day business. Our next challenge is to make videos of the outside of the buildings we let so we can show our customers the exteriors as well as the common areas. That way they get to see the whole of the building. In the future we also plan to include shots of local restaurants, bars and other amenities close by, so that once those businesses are up and running again we can show the lifestyle that the residents could enjoy by living there.

So if you do have an empty property to let, maybe think about obtaining your own video and using social media to push it out to the local community. Facebook ads are currently extremely affordable and are what is working best for us at the moment.

We truly believe that virtual viewings are the way forward for renters. This technology is something that we will be taking very seriously in the future and investing both time and money to perfect.

Gas safety checks must still go ahead

Lesley Davis Leave a comment
COVID-19 is no excuse to ignore gas safety, says HSE

Yesterday we blogged about EPCs. Today we’re updating you on the need for those all-important gas safety checks during the COVID-19 outbreak.

The HSE is under pressure to extend gas safety certificates from 12-18 months to reduce the number of engineers visiting people’s homes and prevent further spread of Coronavirus.  But despite lobbying from the gas industry the Government is yet to grant an extension and this week the HSE reiterated that gas safety checks must still be carried out in order to protect tenants’ safety. This is felt to be particularly important at a time when most people are spending all their time at home.

Previous guidance from the HSE said that landlords must show they have taken “reasonable steps” to attempt to gain access to a property where they have been denied access due to tenants self-isolating. Now, the HSE, via the Gas Safe Register, has published guidance to show what those “reasonable steps” would look like across a range of different scenarios.

  • Tenant and family are socially distancing – they have no symptoms but deny access. Landlords must show they have taken reasonable steps including leaving the tenant a notice explaining that an attempt was made and write to the tenant explaining that it is a legal requirement. A record of all communication must be kept.
  • Tenant’s household is in isolation or has a vulnerable or shielded person but has contacted regarding a gas emergency. Landlords should ask what the emergency is and tell them to switch off appliances until an engineers has attended. When visiting the property, the engineer must adhere to government guidance on working in people’s homes.
  • A gas safety check is due but landlords are unable to secure an engineer due to staff shortages. If the usual gas engineer will not carry out the gas safety checks, the organisation should contact an alternative registered gas engineer businesses to secure their services.
  • Your landlord gas safety check expires in two months and there may be difficulties engaging a gas engineer or dealing with tenants in self-isolation. Landlords are encouraged to arrange gas safety checks as early as possible, the two-month period to carry out annual gas safety checks should provide adequate resilience in most situations.

There is more advice for landlords on the Gas Safety Register website here.

The HSE says that each property should be considered on a case-by-case basis and when gas engineers are unavailable landlords must take reasonable steps to obtain alternative services. Where this is not possible, landlords must prioritise based on age of appliances, previous work carried out, breakdown history, presence of carbon monoxide alarms, and whether the tenant is considered vulnerable.

Our PlanetRent app reminds landlords when gas safety and other statutory checks are due. PlanetRent is lettings automated – you can track compliance effortlessly and keep all your records easily accessible and all in one place. Why not take a look today. Sign up now – it’s free!

Need an EPC? Here’s the latest advice

Lesley Davis Leave a comment
If moving or selling is unavoidable, you will still need an EPC

Last week, the Government published the latest advice on meeting the regulatory requirement to secure a valid Energy Performance Certificate on marketing a property during the Coronavirus (COVID-19) outbreak. An EPC is a legal requirement when a property is built, sold or let and must be completed by an accredited assessor. This obligation on the part of housebuilders and homeowners remains in place.

Buying and selling homes have effectively been put on hold but there will still be cases where this is unavoidable and there will be circumstances in which renters need to move. Where possible, the parties involved have been asked to agree that the transaction can be delayed, so that an EPC assessment can proceed when stay-at-home measures to fight coronavirus (COVID-19) are no longer in place.

But if moving is unavoidable and the parties are unable to reach an agreement to delay, and a valid EPC is not available from the register, an assessment may need to be conducted. In these circumstances, government guidelines on staying away from others to minimise the spread of the virus must be followed alongside the guidance for carrying out work in people’s homes.

EPC assessments can continue in cases where a property for sale or rent is vacant.

No assessments should take place if any person in the property is showing symptoms, self-isolating or being shielded. So if securing an EPC is critical you should seek to reschedule your appointment when it is safe to do so in accordance with Government guidelines on staying away from others.

www.ringley.co.uk

Four tips for dealing with tenants on Universal Credit

Lesley Davis Leave a comment
Landlords may have to get used to letting to tenants that are claiming benefits

Many landlords actively opt not to let their property to anyone who is receiving state benefit for fear they may end up in rent arrears. It is not strictly illegal for landlords to state they do not wish to let to tenants claiming Universal Credit – although it may be found to be discriminatory should a tenant decide to pursue their case in court – and many do exactly that. But those days may now be over.

Almost one million people have applied for Universal Credit since the government closed non-essential businesses around the country and urged people to stay at home. This means that most landlords, who have never previously let their property to a tenant who is claiming benefits, now will. 

So what should landlords who find themselves in this situation do?

Caridon Landlord Solutions which specialises in providing advice to private landlords, letting agencies and housing associations on Universal Credit and Housing Benefit, offered this advice in Landlord Today and it may be helpful to take note of it.

  • Communicate with your tenant and support them as much as you possibly can.  If they are having to apply for Universal Credit, it is most likely because they have lost their job or had a significant drop in income. They will be concerned they could also lose their home. 
  • Where possible, consider a rent reduction to meet the housing element of Universal Credit. Some rent to help cover a mortgage is better than nothing, or if at all possible, offer a rent holiday.
  • If your tenant has had to apply for Universal Credit because of COVID-19, they will require a letter from you verifying the rental amount, the address of the property they reside, and when the tenancy commenced. This will help them to qualify for the housing element of Universal Credit which will go towards covering their rent.
  • Work with your tenant to establish key dates, such as the tenant’s Benefit Assessment Period (the date their entitlement begins) so that you can see how it falls in line with the Tenancy Agreement.

Many tenants prefer to have the housing element of Universal Credit paid directly to the landlord so they can manage the rest of their finances themselves. This is called an Alternative Payment Arrangement. Landlords should discuss this with their tenants and if in agreement, fill out a UC-47 form to apply for this.  If the tenant is already in arrears, the landlord can also apply for Third-party Deductions to reduce them. This means an additional amount is taken monthly from the claimant’s personal allowance

 To clarify the rules on this, earlier this month the Department for Work and Pensions (DWP) published updated guidance for landlords with tenants in receipt of Universal Credit. The guide explains what landlords can do to help tenants prepare for their move to the single Universal Credit benefit payment and make rental payments directly to their landlord themselves. It also explains what support is available for tenants who may need help moving to the new system. Click here to read the guide and find out more.

Sherrelle Collman, managing director of Caridon Landlord Solutions, says thousands of landlords who have no previous experience of the benefits system, will now have tenants on Universal Credit and many will be anxious because of the criticism it has received since its introduction. However, she adds: “The good news is that more resources have been deployed to local authorities to help claimants, and measures such as immediate access to Advance Payments, increases to Universal Credit and raising the Local Housing Allowance rate from April, are being put in place”.

Don’t forget the MEES Regulations are now in force

Lesley Davis Leave a comment
Make sure your energy rating is up to standard

It’s important to remember that, despite living through a health emergency, anyone renting out property must still meet their legal obligations. So don’t forget about the MEES Regulations. With effect from 1 April, landlords can’t let private rental properties with an EPC rating lower than E. From now on, F or G ratings are not acceptable and these properties are considered “sub-standard” under the regulations

Some properties are exempted if the landlord can prove that undertaking the relevant energy efficiency improvements would reduce the market value of the property by more than 5%, or that the cost of buying and installing the cheapest recommended improvement is more than £3,500. Also, in specified circumstances, new landlords buying a sub-standard property with a sitting tenant may be exempt for a certain period of time.

Exemptions are available if a landlord needs the consent of a third party to carry out relevant improvement works, but can’t get that consent. Also, if one of the recommended wall insulation systems cannot or should not be installed in a property even though the cost does not exceed £3,500.

If a landlord thinks one of these exemptions applies, it must be registered on the Private Rented Sector Exemptions Register, together with supporting evidence.

Luckily for renters, their tenancy will still be valid even if the property they are renting is now classed as sub-standard under the new rules.  They will not need to move out but their landlord is obliged to bring the property up to standard. In the current climate, this could take time as the need for social distancing will make some enhancements difficult to carry out.

The MEES regulations are not such good news for landlords. They could find themselves facing enforcement action by their local authority and fines if their rental property is found not to comply but there will likely be some leeway given during the Coronavirus outbreak. If in doubt, check with your local authority.

Click here to read the regulations in full.

To ensure your rental property is compliant with these and all other legal requirements that impact landlords, why not sign up for our free lettings app PlanetRent today. It’s quick and easy and takes the pain out of compliance.

What happens when renters leave before their tenancy agreement ends?

Lesley Davis Leave a comment
What can you do if your tenants decide to leave before the end of their contract?

In the current climate, the last thing on many tenant’s minds will be moving. However, there are all kinds of reasons why people decide they are not happy where they are living and seek to leave – sometimes in the middle of their tenancy agreement. So here are some insights into what landlords can do if this happens to you.

In principle, tenancy contracts are binding upon both parties and hence can be enforced in a court of law. But in practice, negotiation is generally more effective and less costly than litigation. So good communication – if possible – will help.

When tenants give notice, try to determine their reasons and see if you can address them.
There are basically two reasons why tenants exit contracts early. The first is that circumstances have changed (either their own or something related to the property) and the second is that they are dissatisfied with the service they are receiving as customers.

In either case, there may be situations where your tenants feel that they have been let down by you (or your representatives) and are therefore perfectly entitled not just to break their contract but to get their deposit back. In fact, you may discover that they are absolutely right.

If the tenant’s circumstances allow, see if you can claim some form of compensation.
If the tenant’s circumstances are changing for the better (or at least are no worse), then the most pragmatic approach may be to split the difference with your tenant and see if you can come to some form of settlement.

When considering this option, remember that your claim against your tenant (if any) would be civil, not criminal. This has several implications and one of them is that a court would expect you to take reasonable steps to mitigate your loss and hence your tenant’s exposure to any claim for damages.

Given the demand for rental property in the UK, it’s probably fair to say that most landlords should be able to have new tenants in place within two to three months of their old ones leaving.

That being so, you could request either that your existing tenants find a new tenant who is acceptable to you or that they pay a break fee equivalent to two to three month’s rent to allow you to find someone else.

The advantage to you is that you (at least) cover the costs of changing over the tenancy without the hassle of having to pursue civil action. The advantage to the tenant is that they can move out without the concern of being pursued for costs and/or of having their credit records negatively impacted.

If the tenant’s circumstances have taken a turn for the worst, it’s usually best just to accept it.

If your tenants genuinely can’t pay then you are not going to get your rent. There is no point in pursuing the matter through the courts. Even if you get a judgment in your favour, you still have to collect the money and if they don’t have it, then you can’t get it. You can damage their credit record, but that won’t do you any good. If they go bankrupt, then your CCJ will be erased but your costs will not.

If your tenants can pay, you can, in theory, force them either to stay put or to pay you compensation to leave, but you could end up wishing you hadn’t done either. Disgruntled tenants can do a lot to sabotage the re-letting of a property and the internet has increased their power. In short, you could be trading a small, short-term upside for a lot of long-term downsides.