PROPERTY | SPECIAL
PROPERTY MAINTENANCE … … OR NOT, AS THE CASE MAY BE. RUPERT SMITH OF COMPLETE RPI ON THE POTENTIAL PERILS OF NOT BEING FULLY PREPARED WHEN LETTING OUT YOUR UK PROPERTY.
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elcome to my fifth article discussing the hot topic of residential property investment, search and acquisition, letting, management and sale in the UK. Please take a look at the HK Golfer website to access all previous articles. My name is Rupert Smith and I am the founding director of Complete Residential Property Investments Ltd (hereinafter CRPI). We are a specialist property investment company offering a unique and results-orientated commercial approach to UK property Investment. Established in April 2001 I have built up the business based upon a commercial approach to the ownership of UK residential investment property … a far cry from your traditional estate agent I am pleased to confirm. Following in from last month’s article I wish to cover in this edition property maintenance and contractors / tradesmen, amongst other topical issues.
CONTRACTORS
“Don’t worry I can fix it” … famous last words as the water leak creates a mini Niagara Falls through the ceiling below! This is a topic which is close to my heart only because I have been on the wrong end of a very expensive bill, bankrupt “dodgy tradesmen” and loss of income. When employing the services of your UK management agent one would assume that the tradesmen they use are bona fide and have the correct qualifications to carry out the works. Well you know what they say about assumptions! Please make sure that your agent has terms with all contractors they use and double check that all insurances are in place, such as public liability, indemnity, and indeed the correct accreditation for gas, electrical and plumbing. You like I will be amazed just how many so-called professional outfits utilise the services of tradesmen without these in place; it is all too easy for your managing agent to pick up the phone to get the job done quickly at a cheaper price which allows them a larger margin. At CRPI we as a matter of course make all tradesmen sign our terms of business and we check annually accreditation and insurance. There are an increasing amount of rouge tradesmen in the UK who are here today and gone tomorrow, at the cost of the landlord. The agent has a duty of care to protect you as well they should. CRPI will always obtain a minimum of three quotations for all works and, just as importantly, check the quality of works once complete. Does your appointed agent? Generally we would hold a float on account for all properties of roughly £300 and our clients give the approval for works to be carried out up to this level without authorisation. However all associated quotations and Invoices are produced monthly and can be viewed online through our bespoke property portal. Check the small print! Most management agents will charge a commission for 68
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Check the small print! Most management agents will charge a commission for cost of works which is not always made obvious. It is always worth asking the question to your agent. cost of works which is not always made obvious. It is always worth asking the question to your agent: do you add any margin for any maintenance works? Forgive me but I had assumed that part and parcel of paying an agent to manage my property would be to deal with maintenance issues at no extra cost! In fairness, when an agent takes on a maintenance programme over a certain value then it is normal to charge a project management fee and this would be declared from the outset. We at CRPI charge 12.5% on works over £2,500. As they say, “the devil is in the detail”, so it is worth asking the question and checking the small print. It is also worthy of note that a contractor who may well have the correct insurances and accreditations can also sub-contract his work to a third party as invariably he will have bitten off more than he can chew. In order to avoid this, double check that your agent has catered for this eventuality in his terms as this can often be missed. I don’t mean to be a scare monger but it is worth being “belt and braces” in this regard.
INVENTORY & PROPERTY INSPECTIONS
To document or not to document, that is the question? There is a terrible misconception in the letting industry that you do not have to
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document a schedule of condition if your rented property is unfurnished. The reality is that whether the property is furnished or unfurnished it is imperative to create a document that provides a detailed schedule of condition. Most letting and managing agents will offer this service “in house”, however there is a terrible conflict of interest in the event of dispute. In the UK disputes are very common and in the event that the document has not been created in the correct format and indeed ideally by a professional recognised third party then problems will occur. At CRPI we as part of our management s e r v i ce w i l l o n l y u s e a cc r e d i te d A I I C (Association Of Independent Inventory Clerks) to prepare documents and periodically inspect all of our properties. The AIIC are dedicated to promoting the highest possible standards of accuracy and reliability and have been endorsing high levels of professionalism in the inventory business since 1996. They are committed to excellence and professionalism in the property inventory process and work hard to ensure that all landlords, tenants and letting agents understand the importance and benefits of professionally completed property inventories. You will appreciate the value of instructing an expert AIIC independent inventory clerk to avoid unnecessary costs and legal disputes and make every party aware of its responsibilities. You will also have confidence that government regulations are being adhered to and have a professional partner with specialist knowledge. Many a Judge has sadly had to throw a case out court owing to a poorly prepared document. Take heed: this will invariably be a costly and expensive exercise for a minimal outlay. You are well within your rights to stipulate that an independent inventory clerk be used rather than line the pockets of an agent with an “in-house” service. Independence is key! It is vital to document from the outset not only condition but also keys, parking fobs, meter readings, etc, to avoid expensive duplication costs, lock changes and utility bills. It is advisable at the commencement of every new tenancy to create a new “working document” which is acknowledged by the occupant at the point of what is referred to as “check in” and “check out” and as a rule of thumb the landlord will pay for the production of this document and the “check in”. Charges are normally based upon number of rooms, gardens, and furniture. Take a look at www.theaiic.co.uk for some pointers. HKGOLFER.COM
STRATEGIC ADVICE
Complete RPI has alliances with many professional organisations in order to offer our clients unrivalled and bespoke property advice. In September’s publication we shall be discussing the topic of gearing and portfolio management. We work hand in hand with other professional organisations as there can be a considerable overlap in terms of services that are offered to clients. For example, we work with The Henley Group Limited, part of FTSE100 company St James's Place Wealth Management Group, who are a private client financial planning and wealth management company with offices in Hong Kong, Singapore, Shanghai and the UK. The Henley Group believes in the concept of holistic financial planning, which involves reviewing and planning an individual’s financial affairs as a whole, taking into consideration how they interconnect with their short, medium and long term goals. Part of this broad approach to financial planning would involve a higher level assessment of a client`s property position in respect of overall exposure to the asset class, level of gearing and exit strategy.
YOUR PROPERTY, OUR PRIORITY Let Complete RPI overview your UK property free of charge and answer the following questions: - Is your property under-let? We increased our rental income for client's by 7% last year, did your agent? - Have you contracted with the most up to date tenancy agreement? Changes in legislation occur daily. - We only charge monthly fees, are you paying up front? We charge a monthly Letting & Management Fee and no up-front fees, does your agent do the same? - We offer free rental guarantee insurance, does your agent? - Is your property inspected every three months by an independent inventory clerk? If not it should be and we pay the cost. Does your agent? - Do you have 24 hr access to your very own bespoke online property platform which allows you to view all aspects of your property including management statements, invoices, interim inspection reports, values, gearing ratios, etc ... at Complete RPI this is standard. The answers to these questions and many more could both save you money and increase the return on your capital invested. Please call us on +852-9307-0337 or write to info@completerpi.com Why not visit us at www.completerpi.com ... “Your Property, Our Priority."
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