Commentary RF

What are the penalties for landlords who break the law?

Over the last ten years, a number of new laws and regulations have been implemented to make letting safer for tenants, and to crack down on landlords that scoff at the law. This includes raising the maximum fee for ‘rogue’ landlords in violation of safety rules from £5,000 to £30,000, with fees collected in this manner designated for use in further enforcement. Councils now also have the ability to ban landlords from letting and place them in a shared database of ‘rogue’ landlords.

Key Takeaways:

- Landlords do not have an easy jobs as some tenants really test their patience.

- If a landlord were to not act in a legal manner, there are many options for a tenant.

- Act in a civil manner and you will not have an issue with your landlord.

“Violating the housing Act 2004, including: failure to comply with an improvement notice, failing to license a HMO, contavention of an overcrowding notice, failing to comply with management regulations for an HMO.”

Almost one in five landlords say they are in the business for the long term

Despite the fact that the UK has had some notable changes in taxation and regulation laws recently, it would appear that landlords across the UK are willing to stay the course. Nearly twenty percent of landlords, according to research enacted by Foundation Home Loans, have expressed their intention to remain landlords. This sentiment holds true for multiple property letters as well, with only a one percent difference showing in the results between those with and without multiple properties. The eastern portion of England cracked the mother lode, with just under a quarter of landlord’s polled indicating no intention of leaving the let market. A mere six percent were inclined to consider doing so within a year or two. The portfolio holders were by and large, however, truly invested, expressing a wish to stay on board for another fifteen years. Meanwhile those invested on a smaller scale were still in it to win it, expressing a desire to stay on for at least a decade. The research garnered also showed that the heavy investors had mainly been in the game already for a fifteen or more year stint, making their predictions weightier than not.

Key Takeaways:

Landlords in the Eastern part of England were the most likely to stay the course as landlords, at nearly 25%.
By and large, portfolio landlords were interested not just in staying the course, but in remaining landlords for another fifteen years.
Non-portfolio landlords were not that far behind, expressing a willingness to stay committed to the let business for another 10 years.

“Unperturbed by recent regulatory and tax changes, 18% of landlords said they would expect to remain a landlord indefinitely and 19% of landlords with four properties or more said the same.”

How to be a property investor people want to do business with

There are ways to be a property investor that others want to work with. Start by not jumping into every deal you see, but rather investigate it for its merits and its style. Decide if you want to be a residential or commercial investor and find the niche that works for you. Assess how much time you can spend on the investment and then make sure you start with a project you can actually manage. Also, taking advice from others can be a good thing.

Key Takeaways:

Learn how to be more perceptive and deliberate about choosing which business opportunities are and aren?t worth pursuing.
Assume responsibility willingly for your own actions, and don?t take on more work than you can realistically handle.
Property Mastery Academy?s mentoring program can be a great way to learn the complexities of the property investment trade.

“Talk to different kinds of people in different fields – from letting agents and land developers to solicitors and accountants. You?ll be surprised at how keen these professionals are to share their experiences and knowledge.”

Can I evict using a section 21 notice if I have used a license agreement for my rented HMO property?

Many landlords assume that they have a license agreement in place just because they have had tenets sign a contract that they have created. These contracts typically would not hold up in court due to them not being legally legitimate. Being able to serve a Section 21 depends on a lot more specific details such as if you have previously accepted a deposit from the tenants that was not considered protected under a legally-binding license agreement.

Key Takeaways:

Just because tenants sign a contract does not mean that it is a legally-binding agreement.
Your ability to subject tenants to a section 21 can depend on whether you received a protected deposit.
The Deregulation Act of 2015 has several rules you must follow when utilizing a section 21.

“In fact, landlords (and agents) need to be VERY careful about giving ?sham licenses? as you can be prosecuted for this.”

5 Common Off-Plan Investment Mistakes

It is easy to gain information in regards to what steps you should take when it comes to off-plan investing, but what about the mistakes that you should avoid? Some of the investment properties that have the most potential end up failing due to the inclusion of common mistakes on the seller’s end. These mistakes can include acting on insecurity, not performing enough research, or not taking your mind into more consideration than impulsive emotions.

Key Takeaways:

When in investing in property know whether your ultimate goal is rental yields or capital growth.
Although property investments can be highly emotional it is important to base your final decision on objective modifiable data.
Understand your cash flow access and the amount that you truly have to work with before you invest.

“The point of reservation for your chosen property can be a nervous but exciting time. Confidence is key. Many would-be investors back out at this point and miss out on what would be a lucrative opportunity, but if you?ve done your homework then you should have no reason to worry about seeing your plan through.”

Where to move for… affordable rents

UK residents are continuously searching for areas to reside in that will not set them back too much financially. This is quite a hard feat seeing as how citizens of the UK spend 89% of their income on housing alone. New research is emerging that shows that areas such as the Western Isles and West Lothian are just a couple of the most affordable areas to live within the United Kingdom that also have safe communities.

Key Takeaways:

Various research suggests that Londoners use anywhere from nearly fifty to ninety percent of their earnings to cover rent.
Fortunately, there are much cheaper boroughs to live in, including Barking & Dagenham and Bexley.
Despite the predicament for London renters, the actual percentage spent on rents in the UK has decreased overall since 2007.

“I think we can all agree where not to move. Analysis last month by property firm CBRE claimed London residential rents were the highest in the world.”

Demand for ‘lock up and leave’ homes boosting London’s Built to…

If you are a frequent traveler, you may find yourself nervous upon leaving your home and wonder about how it lacks in security. London is now gaining more ‘lock up and leave’ homes which are managed by third-parties in order to ensure ultimate safety. Having your home watched over by another party while you are gone will ensure that your home and assets are as safe as possible whether you are traveling for business or leisure.

Key Takeaways:

London airports, with their wide destination service, means that there are many airport crew-members and travelers living in the area.
This specific population has enhanced security needs for their homes, since they are often away and overseas.
Build to rent option take these security needs seriously, besides offering amenities such as dry cleaning services and pet friendly homes.

“New purposely-designed Build to Rent developments have features such as gated entrances and an on-site concierge and management team.”

Debt Financing – The Cost of Using a Bridging Loan

The key to obtaining a reputable bridge loan is making sure that you can get a reasonable rate while avoiding any potential penalty fees. Most bridging loans have initial fees resting at 1%, but this can vary from company to company. If you are using these loans for development finance, there may be an exit fee if you choose to leave the loan early for any given reason. Broker fees are also likely to be involved.

Key Takeaways:

Most bridging loans have fees that are about 1% on average.
You can expect to pay an exit fee if you are utilizing a bridging loan that is developmental.
Another fee that you will have to take into consideration is the fee for the broker.

“Today Rory and Amy discuss the cost of debt financing and try to pin down exactly what an average bridging loan would cost a property developer to make use of.”

Case Study: HMO in four weeks with Clair McArdle

Ex-water company executive and current property investor Clair Mcardle used her sense of style and some elbow grease to turn a three story house with a great layout and location but tired interior decoration into a House in Multiple Occupation (HMO) in just four weeks. She had feature walls painted white, installed new tiling to replace the busy peach ceramic of the previous owners, and installed a breakfast bar. She also replaced dated boiler systems, doors, fire alarms and lighting. Mcardle bought the house for £190,000, and after an investment of less than £25,000 is making a 27.5 percent return on investment.

Key Takeaways:

With four weeks and about £25,000 worth of improvements and other costs, ex-water executive Clair Mcardle turned a three story home into a profitable HMO.
Clair replaced an outdated boiler and water heater system, as well as old doors, the fire alarm and parts of the lighting system.
Clair installed white feature wallls and a breakfast bar, and replaced the busy peach-hued ceramic tiles with new tiling.

“The house ticked all of Clair?s boxes. It was in an area she liked, close to local amenities and provided a variety of sources from which to pick potential tenants. ?The layout was fantastic for a HMO already: large bedrooms, one with an en-suite, and two large modern bathrooms to give me the right bathroom to tenant ratio,? she says.”

Tax bombshell may curb Airbnb-style short lets

The government is considering a major change to the 1992 Rent A Room tax exemption, which lets homeowners with extra space earn up to £7,500 a year tax free by renting it out. The potential changes would, if implemented, restrict the tax break only to owners who rent out only part of their property, and not the whole thing, because the Treasury deems owners who rent their whole properties as being similar to commercial landlords. Such a change could force Airbnb hosts to pay significantly more in taxes.

Key Takeaways:

UK authorities launched the Rent A Room Relief incentive program in 1992 as a way to up the quantity and quality of low-cost housing available.
Home-owners can earn up to seven-thousand five-hundred tax-free pounds annually, when they rent a room, or a property.
The current system may be slated to shift, as it seems the government is now only interested in reimbursing renters that offer a portion of their property.

“The government has suggested that it is at least considering changing the terms of its Rent A Room system which could mean ?hosts? letting via Airbnb and similar platforms could end up paying more tax than they do now – if they pay any at all.”