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Could the Government’s attack on Small-Scale landlords backfire?

Viewpoint:

The Government’s attack on small-scale buy-to-let landlords, through a punitive tax regime and aggressive regulation, predicated on a policy of growing a new alternative rented housing provision through large-scale developers and institutional investors, could itself be under threat.

The “Tescoisation” of what the Government has called the “Cottage Industry” of private renting could falter if, as appears to be the case, the uptake of the build-to-sell and build-to-rent schemes for affordable homes is well below target.

With over 90% of private rented housing being supplied by small-scale landlords; buy-to-letters with less than three properties, and small company landlords with limited portfolios, it would take a huge influx of large scale-development to make a dent in that.

A recent study (Understanding the Next Housing Crisis) carried out by researchers at the University of Reading and presented as a paper at the Royal Economic Society’s annual conference (April 2017) concludes that Britain will never build enough houses to make property affordable for young people, stating: “The increases in housing supply required to improve affordability have to be very large and long-lasting: the step change would need to be much larger than has ever been experienced before on a permanent basis.”

To compound the Government’s problems, it seems that developers have been regularly reneging on promises to build cheaper homes alongside those being sold at full market rates. According to an investigation by campaigners, the Sunday Times reports that: developers are “quietly walking away from promises to build affordable homes.”

Council officials, it would seem, are being “outgunned” by the financial and legal might of the large private developers who were granted permission by local councils for building schemes, on condition that affordable homes were included.

Some councils are said to be “giving-in” to demands to change the developer’s pledges, while in other cases property companies are said to be flouting legal agreements because of lax monitoring.

According to the Sunday Times article, in four developments involving one developer group (a London based Housing Association) council officials believe there has been a deliberate and unlawful scheme ongoing which is systematically selling or renting affordable homes at full market rates, though the housing association in question denies knowledge of any wrongdoing.

One dossier seen by the paper, submitted to the local government ombudsman, has identified 46 developments in London where it is claimed affordable homes may not have been provided as pledged.

The ombudsman ruled last December that there had been a failure in monitoring the delivery of affordable homes, including the rent levels changed. The allegations made in this dossier are the just latest setback in the Government’s provision of more affordable homes. A 2013 study showed that 60% of the biggest housing schemes fell well short of local affordable housing targets including projects in Birmingham, Bristol, Cardiff, Manchester and Sheffield.

Councils are given targets by central...

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Is Gumtree Friend or Foe?

Gumtree, the online classified adverts site, has always been a top choice for landlords looking to rent out their properties. Firstly, it’s free to use and you simply post your property ad on the site for prospective tenants to see. Secondly, adverts on Gumtree generally produce a good response rate: many landlords report a flood of enquiries from potential tenants. But is it all as simple as it sounds? We take a look at the potential problems with advertising your property on Gumtree.

1. Quantity over quality

It’s true that enquiries through Gumtree are plentiful, but are these applicants actually suitable? Many users report that applicants aren’t serious, aren’t right for the property or haven’t even read the details in the advert. When you’re screening lots of applicants personally, hearing ‘how much is the rent again?’ can get very frustrating! You may also find that a lot of applicants with pets will apply to properties on Gumtree, because they get the chance to speak to the landlord directly and explain their situation rather than the blanket ruling of many lettings agents: ‘No pets allowed’. Whilst this isn’t an issue if you are happy to accept a tenant with pets, it could get trying if you don’t.

2. Free for a fee

Gumtree is technically free to use. But when your property is competing with potentially 100’s...

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Fraudsters are targeting landlords and homeowners: are you ready to protect your property?

Your property is probably your most valuable asset, therefore it is a very attractive target for ownership crime. The reported value of rental frauds in 2016 matched a total amount of nearly £2.5 million. This is a growing trend which shows no signs of abating, so how would you protect yourselves and your tenants? What should set the alarm ringing?  Here we look at some of the most common property frauds and tips to safeguard your business.

You are more vulnerable to property fraud if your property is:

• Rented out

• Empty – perhaps the owner may be living abroad or in a care home

• Mortgage-free, so no bank or building society has an interest

• Not registered with the Land Registry

Identity fraud

According to experts at the Land Registry, buy-to-let landlords, owners of mortgage free properties and those living abroad are particularly at risk of a scam involving fraudsters stealing their identity to sell or mortgage...

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What splashback is best for my kitchen?

There are so many reasons to install splashbacks in your kitchen. From a practical perspective, they will protect your walls from splashes, grease marks and stains when you’re cooking food. Aesthetically, kitchen splashbacks present you with the opportunity to make the space much more stylish.

With so many styles to choose from, high-grade splashbacks supplier The Plastic People is on hand to advise on which material you should opt for in your kitchen:

Type of splashback: Acrylic splashbacks

Reasons to select this material:

• It’s easy to keep the material clean — simply wipe clean with some water and soap to relieve any worries about grouting.

• Fitting the splashbacks simply requires screwing or gluing them onto your kitchen wall.

• It’s cheaper to purchase than many other alternatives of splashbacks.

• You can choose from a wide variety of colours.

• It’s exceptionally tough and also virtually impact resistant.

• It’s extremely light in weight, so can be easily fitted to...

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pad


Editorial, April 2017

As the onslaught on the small-scale buy-to-let landlord continues, and it begins to dawn on many more landlords that tough times are ahead, the question on many lips is: is buy-to-let investing worth the candle, can you still make money?

The three pronged attack from government: a new punitive tax regime, stricter regulation with numerous new Acts of Parliament affecting the sector, and now more rigours mortgage application restrictions certainly presents landlords with challenges, but all industries go through good and bad times. In comparison to the buy-to-let boom times, yes it will be tough, but this was an exceptional period.

The stamp duty rise we can cope with, after all, in proportion to long-term gains it’s pretty small beer, but the mortgage interest relief and capital gains tax penalties hard harder to swallow.

Under the Rent Acts (applying to pre 1989 tenancies) tenants enjoyed strong security of tenure and could be evicted only on very limited grounds. The UK rental market was virtually non-existent after these rent controls, and we don’t want to see that again.

The Thatcher administration began to change all that with the introduction of shorthold tenancies in 1980, which really kick-started the rental market. But in 2015 the pendulum began to swing back slightly, in favour of tenants, with new provisions introduced in the Deregulation Act 2015, and in Scotland and Wales the swing could go much further.

The mortgage restrictions centre on lending criteria and affordability. Landlords now have to prove to lenders they can meet mortgage payments in the event of a significant interest rate rise before being granted a buy-to-let mortgage.

So, negativity abounds as we see landlords leaving the sector and others curtailing their investment plans, which is only to be expected when any asset class takes a bit of a dive. But is the buy-to-let investor really the endangered species some commentators would have us believe?

My view is there’s much that can be done to counter the blows that landlords have received, and that longer-term, Government might come to realise how much the housing sector in the UK needs and relies on small-scale landlords.

There is strong evidence to show that the Government’s policy of solving the housing market problem, by encouraging institutional investment into the build-to-rent sector, has not taken off as it was hoped.

A recent study (Understanding the Next Housing Crisis) carried out by researchers at the University of Reading, and presented as a paper at the Royal Economic Society’s annual conference (April 2017), concludes that Britain will never build...

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How Theresa May’s General Election will impact the Investor

It’s been a roller coaster over the last twelve months for Britain. And it may remain one, at least for some parts of country. Investors, however, seem to not mind any of it too much.

In less than one year the UK has managed to reinvent investment property taxation, decide to leave the EU, change head of state, start its departure from the EU and call for a new election.

It might therefore be safe to say there’s a lot going on in Britain at the moment.

For investors, some of these changes bring long-lasting effects with them that may affect their financial strategies significantly for some time to come.

With the election campaign now under way (although, bear in mind only for another seven weeks), one of the biggest questions is how central the UK’s housing market will be in an election that seems to be consumed by old Brexit-grudges and new agenda-enemies.

And whilst experts were quick to speak up and announce that housing needs to be a key point in any discussion about the country’s future, the even stronger indicator for this are probably investors and consumers themselves.

A new research has found that 2.21 million investors across Britain have started 2017 with a bigger appetite for risk. They’re seeking new ways to invest, and they’re aiming to do so in the long-term.

The election itself is forecast to only have very little impact on the single investor and the continued strength of the UK’s property market. This estimate appears bold at first, but becomes more realistic when put into context.

Over recent years, the UK has experienced at least three major political changes that could have impacted the property...

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Irish Landlord fined for Discrimination

Irish Republic warns Landlords on discrimination

Following letting agent fine of €3,000, after discriminating against single mother tenant, the Republic of Ireland government has warned its private landlords and agents against discriminating when selecting new tenants.

The fine was issued when the Irish Workplace Relations Commission (WRC) ordered an estate agent to pay the equivalent of two months’ rent to a  woman after telling her that the landlord was looking for a couple for the property.

Landlords are often “blissfully unaware” of anti-discrimination legislation when it comes to renting property, it has been claimed in the Republic, and there’s no reason to believe that it is any different in the UK.

Discrimination cases between landlord and tenant are pretty rare, but with the advent of Right-to-Rent legislation in England the incidence of such cases could increase.

In the Irish case, a letting agent was ordered to pay a single mother the €3,000 having been found to have discriminated against her lone parent status in the renting of an apartment – this was said to be the equivalent of two months’ rent – after the agent told the woman the landlord was looking for a couple for the property.

According to the Irish Times the single mother claimed she had been discriminated against under the Irish Equal Status Act on the grounds of her being a “single mother and not in a relationship”.

In the Irish Republic...

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Elfin Kitchens


Another Landlord Joins Property Franchise HomeXperts

HomeXperts have recently signed another new landlord franchisee! Nigel Burgan will start his HomeXperts business in Wokingham launching as soon as July with the full franchise package.

Award- winning franchise HomeXperts offers people the chance to set up their own estate and letting agency from as little as £9,995 + VAT. Their personal agents work from home with top earning franchisees collecting over £25,000 in invoiced commissions in a calendar month.

Nigel joins HomeXperts Bury St. Edmunds owner Roy Schram would launched in March following an enquiry in January. Roy has been full of praise for the HomeXperts franchise brand and model: “My first and continued impression of HomeXperts is that of a highly professional estate and letting agency franchise that strives to make a difference in this profession by delivering excellence in everything they do. I feel proud to be part of this organisation and build my franchise business. HomeXperts Bury St Edmunds is fully committed to deliver the best quality of service for my purchasers, landlords, tenants and vendors.”

HomeXperts recently announced a new funding opportunity that could allow you to receive £25,000 without the need for a deposit, thanks to government backed StartupDirect.

If you would like to find out more about HomeXperts, email franchise@homexpertsuk.com with ‘Landlord’ and...

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Landlord Investment Show


Expert Property Panel just announced for the Olympia Show on 15 June

National Landlord Investment Show is returning to London for its third show of the year and 45th show to date on Wednesday 15 June at Olympia.

As part of the seminar programme, the show will now offer an Expert Property Panel to discuss current issues that landlords face, including Brexit, licensing, tax, finance and immigration.

The panel will take place in the Auditorium Theatre and seat over 400 delegates. Speakers include Iain Duncan Smith, Former Secretary of State for Work and Pensions 2010 -2016 and David Smith, Award-winning Economics Editor of The Sunday Times since 1989.

Also speaking as part of the panel are Richard Bowser, Editor of Property Investor News, Marie Parris, Managing Director of George Ellis Property Services and Tony Gimple from Less Tax for Landlords.

Find out more and register for your complimentary tickets at landlordinvestmentshow.co.uk/olympia

The panel is free to attend for visitors and on a first-come, first-served basis, complementing the 20+ free seminars on all aspects of buy to let.

The exhibition also offers local landlords and property investors 100+ leading suppliers of property investment, tax, legal, insurance and mortgage services.

‘It’s going to be a very stimulating day, with many features, suppliers and seminars for property professionals, explains Tracey...

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Client Money Protection Scheme to Become Mandatory for Letting Agents

Rent and other monies paid to letting agents in England and Wales will soon have to be placed in an independent bank account to protect the funds from rogue agents or those who go bankrupt.

MPs are working on plans to legally mandate the measure for estate and letting agents into the Housing and Planning Act 2016, following a consultation period of almost a year and pressure from activists working to protect tenants’ rights.

The move will mean all estate and letting agents in England and Wales will be legally obliged to sign up to the Client Money Protection scheme – or face fines or even be shut down.

According to research by the housing charity Shelter, people hand over around £600 on average in deposits when renting a house or flat. If, subsequently, the agent ceases trading, that money may not be recoverable and the tenant will suffer the loss.

It is the same story for landlords who use the services of letting agents and pay them sums for future maintenance and other costs associated with rentals. If they are unknowingly dealing with an unscrupulous letting agent, they may not even get all the rent they are due from tenants.

Speaking in the House of Lords as the government agreed to amend the Housing and Planning Act to better protect landlords and tenants...

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Landlord Law Conference

Latest News

  • 27 Apr 17 - Making Tax Digital put on-hold… -

    Breaking News – Tax: Government plans to introduce quarterly tax returns and payments have been put on-hold in the run-up to the June election, after fears of its effect on businesses. The proposed...

  • 25 Apr 17 - Scottish Landlords urged to meet repair regulations... -

    Diy Electrical Repairs: Scotland’s largest landlord association has started a campaign to encourage landlords to meet required standards on repairs. Scottish Association of Landlords (SAL is urging...

  • 21 Apr 17 - Landlords falling foul of immigration checks -

    Right-to-Rent: Following the introduction of Right-to-Rent checks in England just over 12 months ago (1st February 2016) the fines are beginning to stack-up against landlords who failed to follow the...

  • 20 Apr 17 - Countrywide - 20% of homes let by Ltd Company -

    One in five rental homes are owned by a company landlord, that’s according to the latest Countrywide plc Monthly Lettings Index published 18 April 2017. “In Q1 2017 the proportion of homes let...

  • 19 Apr 17 - Landlord tax top of RLA's election agenda -

    Theresa May’s announcement yesterday that she is calling a June 8th election, subject to an MP’s vote today, which is expected to go through, has prompted responses across the industry. Following...

  • 18 Apr 17 - New UK Housing Research Centre -

    Housing Research: A new national housing research centre is being formed and funded by the Economic & Social Research Council (ESRC), the Arts and Humanities Research Council (AHRC), and the Joseph...

Forum - Latest Posts


The future of rentals comes from maximising your margin with low time and cost commitment

Our friends at Pad believe that the future of rentals comes from maximising your margin with low time and cost commitment, while ensuring long-term protection via insurance.

According to this tech savvy bunch, you’ll no longer have to take risk or get your hands dirty in order to make a reasonable margin. They also believe that due to quicker and more detailed verification, finding the best tenants (who pay well and have zero risk) is now easy and cost effective. The future seems to be digital, transparent and secure.

Pad is the UK's first fully mobile lettings agent. We’ve checked out their market comparison and it would seem they are the lowest cost lettings service in market and that their dynamic tech could make you the highest return.

We are moving into an age where all of the grey areas in the rental exchange are removed by innovative products which look to solve conflict and pain points for everyone involved. The removal of grey areas has been achieved by Pad, primarily through their clever insurance policy which they’ve created in collaboration with A rated RSA. Insurance means that if issues arise then this is paid for by the underwriter and so damage can be fixed, rent can continue to be paid and key maintenance can be carried our quickly, without anyone loosing out. After all, Insurers like to deal with the risk we don’t like to.

As we all know, risk...

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Be aware of energy efficiency regulation changes set for April 2018

Buy-to-let landlords have certainly faced a challenging few months. Consider the 3% additional Stamp Duty surcharge on buy-to-let properties, changes to mortgage interest tax relief and the Right to Rent scheme as a few examples.

Add to these the proposed ban on letting agent fees and the ongoing uncertainty regarding the potential impact of Brexit and it is definitely not an easy time to be a property investor.

As if these measures weren’t enough, there is now less than one year until yet more regulation comes into force.

New Minimum Energy Efficient Standards set for April 1st 2018 are set to see many landlords unable to offer a new tenancy unless they make changes to their property.

If you are a buy-to-let investor, how will these changes affect you?...

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What Business Tenants need to consider

When Leasing a Commercial Property business tenants need to be aware of some important issues, and it is usually in a landlord’s interest to ensure that everything has been considered.

Being at the stage where a business needs to upscale by leasing a commercial property is exciting.  A business has usually either grown to the point where it needs to expand, or where its existing operations need to come together under one roof.

For most tenants, finding the right property is understandably what they are most concerned with and of course, as part of doing this, they will have a budget for rent.  However, if they haven’t budgeted for everything else that they will need to pay before moving in and once they have moved in, then the business could find it has trouble paying you the agreed amount of rent.

It’s worthwhile for landlords to be aware of the things that their tenants will need to budget for in case a tenant has not taken this into consideration.  What may not be your problem to begin with could easily become your problem quite quickly, and by checking...

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Rent review: words versus numbers

An informed rent review surveyor and an experienced lawyer working as a team on the drafting and approval of the lease documentation is arguably the only way that the client’s interest can reasonably be described as properly served. Instead, what landlords or tenants often get is the lethal combination of a ‘half-hearted’ approach by agency-oriented surveyors and inexperienced lawyers.

A ‘half-hearted’ approach could be defined as enthusiasm for procuring a tenant for a new letting and/or negotiating outline terms for renewal of an existing lease, coupled with preparing and circulating ‘heads of terms’. Typically, what is stated to be ‘heads of terms’ would be better described as a ‘rough draft’ consisting of the parties’ contact details and a minimal synopsis of the terms. The information, which ought to go into detail so that the parties are clear from the onset what they are letting themselves in for, normally occupies no more than a couple of pages from which the parties’ lawyers are expected to expand a brief summary into a lengthy contract. Even where surveyors are not involved, the landlord dealing direct with the tenant, those parties handing over the matter to their respective lawyers for the documentation, a same casualness arises. Ultimately, the parties’ lawyers draft and approve the documentation.

Leases nowadays are rarely drafted from scratch. Instead, what the practitioner does is base the drafting of the terms and conditions for each transaction on a combination of any previous lease and the practitioner's in-house standard form of lease, the template itself a product of research into the Encyclopaedia of Forms and Precedents, some 100+ volumes, a tome priced at around £12,000 excluding updates; that and the Model...

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LandlordZONE Documents


Streets ahead!

Maximise your investment with these six simple steps from the experts at Belvoir

With basic bedsits a thing of the past and today’s tenants wanting more from a rental property than ever before, it’s vital to make sure yours stays streets ahead of the competition. Here’s how...

1. Competition comparisons

In order to evaluate the appeal of your property it’s first necessary to assess what else is on offer.

“Thoroughly research the local rental market, paying particular attention to properties that are similar in size and specification to your own,” advises owner of Belvoir Swansea and Belvoir Mumbles Ben Davies.

“Look at the major property portals, online reviews and social networking websites. Ask your local letting agent too.

“During your research ask yourself: What are other landlords doing well? What aren’t they? What upgrades could they make? What improvements could I make? And, importantly, how can I differentiate my property from others like it?

“Take inspiration from what you see, making a ticklist of areas of...

Read more...


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