24 landlord investor dec 16:jan 17

DEC 2016 /JAN 2017

W R I T T E N B Y I N D U S T R Y E X P E R T S C O V E R I N G A L L A S P E C T S O F B U Y - T O - L E T

LANDLORD | PROPERTY | INVESTMENT

WHAT A YEAR FOR THE PRIVATE LANDLORD: 2016 PROPERTY ANALYSIS

- Tom Entwistle

ESSENTIAL ADVICE FOR LANDLORDS: RESPONSIBILITIES AND LIABILITIES

- Peter Littlewood

HELPING OTHERS IN PROPERTY: ETHICAL INVESTING

- Simon Zutshi

DESPITE ALL THE CHANGE:

BUY-TO-LET INVESTMENT HAS CONTINUED TO GROW

THE FASTEST GROWING PROPERTY SHOW IN THE U.K

2016 PROVES MOST SUCCESSFUL YEAR YET SINCE OUR LAUNCH IN 2013:

43 EVENTS ORGANISED THROUGHOUT THE U.K 1,910 COMPANIES HAVE EXHIBITED 494 SEMINARS DELIVERED BY EXPERTS 49,400 LANDLORDS & INVESTORS ATTENDED

BE A PART OF OUR 2017 SHOWS MARCH - NORTH LONDON Very informative and wide range of new businesses in the industry.

APRIL - MIDLANDS MAY - SURREY MAY - BERKSHIRE

our stand was busy with a stream of visitors throughout the day and we are delighted to say that new business was won as a result.

JUNE - LONDON SEPTEMBER - EAST LONDON SEPTEMBER - SUSSEX SEPTEMBER - KENT

I recommend anybody interested in property or working in the industry attend, they will benefit a lot.

OCTOBER - MANCHESTER OCTOBER - CARDIFF NOVEMBER - LONDON

TO BOOK YOUR FREE TICKETS AND FOR INFO ON HOW TO EXHIBIT WITH US, VISIT:

LANDLORDINVESTMENTSHOW.CO.UK OR CALL 0208 656 5075

3

WELCOME TO THE DECEMBER ISSUE OF LANDLORD INVESTOR! Editorial Editor

Tracey Hanbury editor@landlordinvestmentshow.co.uk Editorial Contributors Kevin Wright Magna Group Peter Littlewood Simon Zutshi Steve Cox Tom Entwistle Urban.co.uk

Art Dept.

Design Craig Edmonds Advertising Beverley Meliniotis

Contact Telephone: 0208 656 5075 Website: landlordinvestmentshow.co.uk Facebook: /LandlordInvestmentShow Twitter: @LandlordINShow

Tenants History LTD 27 Stafford Road Croydon CR0 4HA Statements and opinions expressed in articles, reviews and other materials herein are those of the authors; the editors and publishers. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. Tenants History Limited and our contributors will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through the promoted links.

Firstly seasons greetings and a happy new year to all our readers and welcome to the December and January issue of Landlord Investor Magazine.

What a year it has been, where do we start... Brexit, the ever changing rules and regulations, swinging tax changes that will eect residential landlords; the list is endless.

CONTENTS Expert Advice New Investor Landlord Insurance Investment Lettings & Management

06 10 16 20 24

With so many questions unanswered we turned to our resident writer Tom Entwistle for a 2016 property analysis. In this analysis Tom explains that despite all of the change, buy-to-let investment and the private rented sector has continued to grow! Go to page 6 for full article.

Peter Littlewood has provided a great guide and essential advice for landlords' responsibilities & liabilities, whilst Simon Zutchi writes about helping others in property and ethical investing.

We hope you have enjoyed the last 12 articles of Landlord Investor. I would like to thank all of our writers, advertisers for your support. We are very much looking forward to 2017.

See you at a show in 2017?

Our National Landlord Investment Show has gone from strength to strength. Since our launch in 2013 we have organised 43 shows and are now the leading buyto-let property exhibition throughout the UK. Take a look at our show website as we are in 11 locations next year, including 5 National Shows located in London, Manchester, Birmingham and Cardi.

To book tickets visit: www.landlordinvestmentshow.co.uk Seasons greetings from all the team at Landlord Investor and National Landlord Investment Show.

Tracey Hanbury | Editor Landlord Investor

Tracey Hanbury

DEC 2016/JAN 2017

LANDLORD INVESTOR

4

MEET THE TEAM

SHOW LOCATIONS WEDNESDAY 1ST MARCH - NORTH LONDON

TRACEY HANBURY EDITOR & SALES DIRECTOR T: 0208 656 5075 M: 07931 308 845

tracey@landlordinvestmentshow.co.uk

STEVE HANBURY DIRECTOR

T: 0208 656 5075 M: 07429 683 046 steve@landlordinvestmentshow.co.uk

LES HANBURY

Emirates Stadium - Arsenal Football Club

WEDNESDAY 19TH APRIL - MIDLANDS Villa Park - Aston Villa Football Club

WEDNESDAY 3RD MAY - SURREY Croydon Park Hotel

WEDNESDAY 24TH MAY - BERKSHIRE Reading Crowne Plaza Hotel

DIRECTOR

THURSDAY 15TH JUNE - LONDON London Olympia

FRAN ROBINS

SALES & EVENTS MANAGER T: 0208 656 5075 M: 07950 284 615 fran@landlordinvestmentshow.co.uk

RYAN DENNINGTON SALES & EVENTS MANAGER

T: 0208 656 5075 M: 07931 308 856 ryan@landlordinvestmentshow.co.uk

BEVERLEY MELINIOTIS ADVERTISING SALES MANAGER

T: 0208 656 5075 beverley@landlordinvestmentshow.co.uk

CRAIG EDMONDS CREATIVE DESIGNER

T: 0208 656 5075 craig@landlordinvestmentshow.co.uk

WEDNESDAY 6TH SEPTEMBER - EAST LONDON Crowne Plaza Hotel - Docklands

WEDNESDAY 13TH SEPTEMBER - SUSSEX Brighton Racecourse

TUESDAY 26TH SEPTEMBER - KENT Kent Showground

THURSDAY 12TH OCTOBER - MANCHESTER Old Trafford - Manchester United Football Club

WEDNESDAY 25TH OCTOBER - CARDIFF Venue - Cardiff City Stadium

TUESDAY 7TH NOVEMBER - LONDON Venue - Olympia Conference Centre

IF YOU WOULD LIKE ANY INFORMATION ABOUT 2015 SHOWS, PLEASE GET IN CONTACT WITH A MEMBER OF THE TEAM OR ALTERNATIVELY, VISIT OUR WEBSITE AT: WWW.LANDLORDINVESTMENTSHOW.CO.UK

DEC 2016/JAN 2017

LANDLORD INVESTOR

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6

EXPERT ADVICE

WHAT A YEAR IT'S BEEN FOR THE PRIVATE LANDLORD!

Tom Entwistle - LandlordZONE

WHAT A YEAR 2016 HAS BEEN. Not only have we had the political turmoil of Brexit, and now a major change in direction for the US government, one which will undoubtedly affect the UK, good or bad, we’ve had unprecedented change in UK letting regulation. We’ve had countless rule changes in residential letting in England, and a similar process (in some cases more far reaching) in Scotland, Wales and Northern Ireland. In addition, we’ve had some swinging tax changes which have hit buy-to-let landlords hard.

The fact is, it’s far too early to say what effect the two momentous economic and political events may have, and any subsequent political changes in Europe.

The latter do look likely next year, with continental elections looming. But so far the UK economy appears to be holding up really well, foreign investors are still moving in and many commentators are optimistic about Britain’s future prosperity outside of the EU. As far as the private rented sector regulation is concerned, change really started in October 2015 with the implementation of measures enacted in the Deregulation Act. This brought in considerable

DEC 2016/JAN 2017

LANDLORD INVESTOR

change to the residential letting process in England the first real change to the Assured Shortold Tenancy (AST) and Section 21 eviction process since it was introduced in the Housing Act in 1988, with some minor amendments in 1996.

Following these latest changes, any new Assured Shorthold Tenancy (AST) in England starting on or after the 1st October 2015 requires the landlord to provide the tenant/s (1) with a current copy of the 10 year Energy Performance Certificate (EPC) for the rental property, (2) a current copy of the annual Gas Safety Certificate before the tenant enters the property, and (3) a current copy of the Government guide “How to Rent”, a the checklist for renting in England. This MUST be the latest available version at the time of letting and on a tenancy renewal. Also, as now, (4) the landlord must protect any tenancy deposit taken, plus serve the statutory information (s213 notice) and the scheme’s information leaflet within 30 days of receiving the deposit.

7

One measure that is concerning, but will not really affect those landlords letting well maintained properties, is the measures introduced by the Deregulation Act 2015 which affect what has been termed “revenge” or “retaliatory” evictions. Much has been made of this in the media and by the homelessness charities, claiming that tenants are being evicted using Section 21 for wanting repairs to be done to their rentals.

Now, it will not be possible to carry out an eviction where a tenant has reported a repair and (1) it has not be given an “adequate response” (within 14 days) and (2) the local authority has served an appropriate (improvement) notice on the landlord because of a serious defect (category 1 or 2 hazards). It means that any section 21 notice served will not be effective, and a new notice cannot be served for a period of six months following an improvement notice.

EXPERT ADVICE

In addition, there have been several detailed rule changes to serving dates for a Section 21 notice, including a new single standardised Section 21 (A6) notice, which includes prescribed information for the tenant, and the requirement to meet all of the above rules. If the property has a mandatory, additional or selective licensing requirement, proof of compliance will also be required. Get it wrong and you could be stuck with a bad tenant for a long time, as you won’t be able to use the highly advantageous Section 21 eviction process until you comply.

Some of these requirements were there before these latest changes, so most landlords will be familiar with them, but the difference is there’s a lot more to think about and extra diligence is required to not only get it right, but to have documentary evidence that you did. Checklists are now a must when letting residential property in England. All of these documents and checklists can be found here: landlordzone.co.uk/documents But wait, we haven’t finished here: the tax changes introduced by the previous Chancellor George Osborne in his post-election budget in July 2015, and his subsequent one in spring 2016, constituted something of an unexpected “bombshell” for private residential landlords. Public opinion had been swayed against the private residential landlord with constant media reports of buy-to-let millionaires, and the minority group of “rogue” landlords taking advantage of the ever increasing demand for rental housing and illegal immigrants.

Mr Osborne reacted to this in a politically motivated way by introducing quite swinging and punitive tax changes, (1) to slow down the buy-to-let boom which was worrying the Bank of England, due to its threat to lending banks’ stability, with the sheer amount of loan capital at risk, and (2) to address the question of whether landlords are inflating house prices, which he said were pricing Generation Rent out of home ownership.

The result is a second home Stamp Duty Land Tax (SDLT) premium of 3%, which has knock on effects for anyone buying and selling property; differential rates for Capital Gains Tax (CGT), and CGT payment deadlines penalising property investors. There are changes to wear and tear expenses which landlords can claim, and perhaps must concerning of all, reclassifying mortgage tax relief as a non-claimable expense.

DEC 2016/JAN 2017

LANDLORD INVESTOR

EXPERT ADVICE

8 There was big disappointment in the landlord community when the High Court recently rejected a full judicial review of buy-to-let mortgage interest relief changes. Landlords represented by Cherie Blair QC lost a legal fight to overturn legislation designed to increase the tax landlords pay on their buy-to-let earnings. Campaigning landlords Chris Cooper and Steve Bolton brought together a group of likeminded landlords under the group’s fighting name of “Axe the Tenant Tax”, believing that removing business interest relief for just one group, landlords, was an injustice and needed to be challenged. However, the judge thought otherwise, that the claim was not justified and said: “It would be a miserable spectacle to watch a case that is bound to fail.”

There has been a concerted move by a minority of landlords to use companies to shelter their buy-tolet properties from tax, either by transferring existing properties into a company, or dong this with new purchases. Incorporation has its merits for some, but there are many complications. The pros and cons of every investor’s own situation need careful consideration and expert advice, and many experts feel there is little advantage in doing this, plus there’s always the risk that HMRC will be changing the rules again.

And still we have not finished. In February the measures enacted in the Immigration Acts were introduced which brought in the requirement for every residential landlord in England, including lodger landlords, to carry out “Right-to-Rent” checks on all new tenants and their families. Landlords and agents must now check documents face-to-face to satisfy themselves that new tenants have a right to reside in the UK. Failure to act properly could result in fines up to £3,000 per tenant, and this penalty has recently been strengthened in the Housing and Planning Act 2016, by making it a criminal offence to rent to illegals.

The Housing and Planning Act 2016 also contains several measures for tackling rogue landlords, which to be fair most responsible landlords would be in favour of. A database of rogue landlords and agents is to be accompanied by the concept of “banning orders”, and similar in concept to the Proceeds of Crime Act legislation, Rent Repayment Orders will be introduced. A process which landlords can use to recover abandoned premises is to be introduced, but the process is so convoluted that its usefulness is doubtful. It will also be made easier to evict illegal immigrants if it is found they do not have a right to remain in the UK. What else can hit the private landlord? Well, wait for it, the Bank of England has seen fit to introduce much tougher mortgage criteria for buy-to-let loans and it is probable that landlords with several buyto-let investments (4 or more) may find themselves paying a higher rate of interest on renewal. In any case, following the Brexit vote, it is predicted that inflation will reach around 4% sometime next year, with the inevitable result that the Bank Rate and mortgage rates will trend upwards after a long period of decline. Furthermore, it is said that Trump’s policy if massive infrastructure investment will boost inflation even more, so get ready for higher interest rates coming.

Despite all of this change, buy-to-let investment and the private rented sector (PRS) has continued to grow, but this growth rate is slowing following the above changes. However, the latest available data from the government’s English Housing Survey does show that the PRS is still growing and in any case the PRS is now a major industry in the UK. Private rented households in England have breached the 5 million household barrier for the first time in recent history.

In Great Britain as a whole, there are now around 5.6m households in the sector, with an annual growth rate of 8.4%, and representing, 20% of all households, a greater proportion than the social housing sector.

London remains the region where most renting takes place, representing around 20% of the entire nation’s privately rented households, and that with only a 14% share of the overall population. On past trends, approaching half a million new private rentals had been added to the PRS each year in Great Britain in recent years.

DEC 2016/JAN 2017

LANDLORD INVESTOR

9

Given all these changes, apart from a greater focus on tax planning and potentially incorporating investment businesses, landlords and agents find the tenancy management task much more onerous and challenging. We won’t know the full taxation effects for some time as the main tax change – mortgage interest relief – is being phased in over 4 years.

What we do know is that landlords will seek to offset the higher costs of running their buy-to-let businesses, and the obvious option is by increasing rents to their tenants. We’ve seen this trend over the last six months or so as the Budget changes have impacted, especially on those higher rate tax payers, or those with higher gearing.

Tenant demand continues unabated with a longterm problem of a lack of housing supply, pushing up house prices and rents, and making saving for a deposit for first-time buyers, “Generation Rent” a considerable challenge, if not an impossibility for many. This is not a particularly British problem, it spans the Western World where low interest rates and Quantitative Easing have hiked asset prices to record levels.

When the costs involved in running a business increase, landlords have no choice but to increase rents, which means the tax changes will impact directly on tenants. The market will determine the rent level depending on supply and demand in each location. Tenant demand is driven by market fundamentals, in particular high house prices and difficulty of getting a mortgage. These factors are not going to change for the foreseeable future, which makes the previous Chancellor’s changes look counterproductive.

Despite various government schemes with helpto-buy, take-up has been sluggish and small-scale, likely to disappoint, and prove insufficient to match the needs for homeownership in a country with a growing population. House building figures remain stubbornly low and well below government targets.

Additional mortgage regulation designed to prevent another boom and bust has been introduced by the Bank of England. It could be argued that the tighter lending criteria, particularly the measures for affordability assessments, are limiting access to finance for both private buyers and buy-to-let landlords, creating a demand bottleneck. This, along with the stamp duty increase is affecting house sales, but at the same time is underpinning people’s dependence on the PRS.

DEC 2016/JAN 2017

LANDLORD INVESTOR

EXPERT ADVICE

Average rents across the UK, but highly London weighted, have recently been rising at the rate of around 8% annually, with average rents now over £900 per month. At the same time wage inflation (wage rises) has improved, boosting tenant finances, but they still lag far behind rent price inflation.

EXPERT ADVICE

10

Taken in the round, and to recap, the changes outlined above combined with the political factors such as Brexit and the US election result have introduced a degree of uncertainty into an important sector of the UK economy which has been growing inexorably for 20 years, a cash-cow in the case of the majority of buy-to-let investors.

The evidence is already there: the level of buy-tolet borrowing was down 7% between August and September following the introduction of the 3% stamp duty surcharge on second homes, which is continuing to hit landlords hardest, that’s according to the latest seasonally adjusted monthly figures published by the Council of Mortgage Lenders (CML).

Some landlords will choose to sell all, or part of their portfolios depending on individual circumstances, there is no doubt about that. Others will almost certainly step into the void, perhaps picking up some bargains. The Residential Landlords Association (RLA) has recently predicted as high as a 25% selloff by current landlords, stating: “An RLA survey of more than 1,000 landlords showed that a quarter had either sold one of their properties or had one on the market as a result of the Government’s plans to change Mortgage Interest Relief, to tax them on income rather than profit.

The latest CML data shows that the amount of money buy-to-let landlords borrowed fell on an annual basis by 22% year-on-year to around £2.8bn, that the number of loans falling 6% from August to 18,200.

This representings a decline of 26% on September 2015.

All of this combined with the higher initial investment cost – new investors will need more capital – supply of rental property will no doubt be constrained.

However, given the pent-up demand and the lack of any comparable alternative investments giving anything like buy-to-let returns, the PRS in Britain is almost certain to continue to grow, albeit at a slower pace than before. But anything which puts downwards pressure on the supply of rental homes creates demand verses supply imbalance, and this will inevitably hit tenants hard by pushing up rents.

DEC 2016/JAN 2017

LANDLORD INVESTOR

Paul Smee, director general of the CML says: “Six months on since the stamp duty changes on second properties and buy-to-let continues to operate at lower levels than a year ago. But lending for buy-tolet house purchase and re-mortgaging has settled at its current level over the last four months.”

Despite landlords’ hopes of a back-tracking on George Osborne’s swinging tax measures, the new Chancellor Philip Hammond, a property man himself, failed to oblige, in his Autumn Statement. Instead he piled even more pressure on landlords by bringing in a ban on letting agents’ fees for tenants. ⌂ Tom Entwistle is editor of LandlordZONE® and an experienced residential and commercial landlord.

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NEW INVESTOR

ESSENTIAL ADVICE FOR NEW LANDLORDS Peter Littlewood Southern Landlords Association So far we have looked at what you need to do to get the property ready to let and your requirements for the property under Housing Health and Safety Rating System (HHSRS).

THIS TIME WE WILL LOOK AT YOUR RESPONSIBILITIES AND LIABILITIES AS A LANDLORD. DECENT HOME STANDARD The criteria for the property standard are as follows:

1.

it must meet the current statutory minimum standard for housing – currently the HHSRS;

2.

it must be in a reasonable state of repair;

3.

it must have reasonably modern facilities and services;

4.

it must provide a reasonable degree of thermal comfort.

DEC 2016/JAN 2017

LANDLORD INVESTOR

The obvious problem with a lot of the above is the use of vague terms, especially reasonably. This is where local authorities and landlords have to resort to courts. The main criteria is would you be able and willing to love in your properties? You might not want to, but does it meet all the above criteria to satisfy your needs if you were forced to live there?

GAS CERTIFICATES Legal requirement brought in 1998, all rented property MUST HAVE a valid gas safely certificate BEFORE tenants move in. All gas appliances must thereafter be checked annually and a copy of the certificate (CP12) must be left at the property. This can only be done by a Gas Safe qualified contractor (Gas Safe Register replaced the CORGI gas register on 1 April 2009). Check www.gassaferegister.co.uk - to ensure gas engineer is registered.

13 The gas inspection certificate is mandatory and the landlord must also keep a copy of each record for at least two years.

Briefly, Legionella is water borne and thrives in the following conditions: water is stored or re-circulated as part of your system;

•

the water temperature in all or some part of the system may be between 20–45 °C;

•

there are deposits that can support bacterial growth, such as rust, sludge, scale and organic matter;

•

it is possible for water droplets to be produced and, if so, if they can be dispersed – typically via a shower.

ELECTRICAL CERTIFICATES Landlords have a duty of care to ensure all the electrical facilities and installations are fit for purpose, and are required to carry out a visual inspection between tenancies to ensure that all electric outlets are fit for the purpose, fixed in placed and do not present a danger. If electric goods are supplied they must be inspected, preferably PAT (Portable Appliance Testing) tested every year.

With the introduction of part P of the building regs on 1st January 2005 it is now a requirement to have new electrical work certified by a suitably qualified person. Check www.electricalcompetentperson.co.uk - to find a competent electrician. Currently it is only mandatory to have a 5 year electrical certificate if the property is to be licensed. The Housing Act 2016 allows for electrical certificates to become mandatory for all rental property. The Government are currently consulting on this.

So the principal things to do are: •

if possible keep the water storage to a minimum. If you are thinking of installing a combi boiler thus doing away with the cold water tank, now is the time to do it;

•

if you do have a cold water tank insulate it to minimise the risk of it getting too warm in the summer when it might be left unused for a period of time. This will also alleviate it freezing during the winter. Ensure there is no insulation under the tank to allow home heating to stop it freezing;

•

ensure the water tank is clean inside, and has a well-fitting lid;

•

get rid of any dead-legs; those bits of pipes that used to supply something, now removed. These are a real source for Legionella;

•

ensure the shower heads are clean; many landlords fit new heads at tenant changeover;

•

at handover, run sufficient water to completely empty the system to refill with fresh water – don’t forget any outside taps.

LEGIONNAIRES DISEASE As with electrical fittings, landlords have a duty of care to ensure that the property has minimal risk from the danger of exposure to the Legionella bacteria. Note that whilst this is a legal duty, there is no such thing as a testing certificate; in fact the Housing and Safety Executive (HSE), the body responsible for enforcing this, states on its web site ‘There is a legal duty for landlords to assess and control the risk of exposure to legionella bacteria, but Health and Safety law does not require landlords to produce or obtain, nor does HSE recognise, a ‘Legionnaires testing certificate'.

The properties that are at greatest risk are student lets, because they are unused for a long period of time during the summer. As long as the above is carried out the risk will be kept to a minimum.

Check www.hse.gov.uk/legionnaires for HSE Legionella guides.

DEC 2016/JAN 2017

LANDLORD INVESTOR

NEW INVESTOR

•

14

NEW INVESTOR

FURNITURE CHECK ON ALL SOFT FURNISHINGS This law came into effect 1988 and was amended 1993. The regulation applies to all soft furnishings but not to carpets or curtains. Compliant furniture is identified by labels attached by the manufacturers.

A book produced by the DTI called ‘A Guide to the furniture and Furnishings (Fire) (Safety) regulations’ is very useful and can be obtained on line, or from your local trading standards office.

SMOKE AND CARBON MONOXIDE ALARMS From OCT 2015 all rental properties will have to have smoke alarms, and Carbon Monoxide (CO) alarms fitted. Failure to do so can result in a £5,000 civil penalty.

Smoke alarms have to be fitted on every residential floor, and CO in every room having solid fuel heating – wood burning; coal, etc. There is currently no legal requirement to fit a CO alarm in a room with gas heating, but the Government ‘strongly’ recommends it. Not sure why they didn’t make it mandatory at the same time.

Landlords/agents will be responsible for testing them on tenancy changeover. It remains the tenant’s responsibility to test them on a regular basis.

ENERGY PERFORMANCE CERTIFICATES (EPC'S) It has been a legal requirement to have a valid EPC since October 2008. As they last 10 years if you have ever had one it will still be valid; however note that however they changed in January 2013 with more information on them – so you might choose to get a new one done.

Any marketing material must show the rainbow chart from the certificate, and the full EPC must be available to show any prospective tenant, and a copy given to a new tenant. Note that it is a requirement of the new Section 21 that a valid EPC was available to the tenant at the commencement of the tenancy.

The EPC assessor will check: • • • • • • •

age and efficiency of boiler; TRV ‘s; insulation; type of lighting; double glazing; draught proofing; solar panels.

Currently, under a piece of legislation known as the Minimum Energy Efficiency Standard (MEES) it will not be legal to make a new let on any property having a rating below E (F or G); and after 2020 it will not be legal to let any property with this rating. Additionally under HHSRS (see previous article) an F or G rating will probably be a category 1 hazard.

DEC 2016/JAN 2017

LANDLORD INVESTOR

15

NEXT TIME The continuance of this set of articles will look at Houses of Multiple Occupancy.

In the meantime hope you all have a successful and prosperous New Year, and look forward to see you at one of the Investment Shows next year. ⌂ (You can see our full 2017 show listings on page 4)

USEFUL CHECKLISTS An extremely useful set of checklists to be found at www.homesafetyguidance.co.uk/ downloads Well worth downloading.

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There are exemptions to all this. The Government are due to release an exemptions database for MEES, but the details of this are currently not known.

Due to anomaly in the law an HMO let on individual room lets since October 2008 does not need one.

Successive Governments have said they will plug this loophole, but none has. Additionally any listed building does not require an EPC – actually the law states that if the recommendations of an EPC are impossible to carry out because of its listed status then one is not needed – i.e. you need to get an EPC to establish if you need one or not!

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18

PROTECT UNOCCUPIED PROPERTIES THIS WINTER Steve Cox - Alan Boswell Group If your buy-to-let property is unoccupied you’ll need to make special considerations, especially at this time of year, says Alan Boswell Group’s Steve Cox

IS YOUR UNLET PROPERTY INSURED? The winter, especially the period around Christmas and New Year, can be a quiet time for landlords, with reduced interest in vacant properties. While this has obvious implications for your rental income, it could also have a negative impact on your landlord insurance.

There are estimated to be more than 600,000 empty homes in the UK, with the rental sector making a significant contribution to that number. Unfortunately many of their owners are unaware that they are effectively uninsured while their properties lie vacant, leaving them open to large repair bills if the worst happens.

If you want to avoid this situation, you should make sure cover includes empty-property provision when shopping for landlord insurance. For instance, Alan Boswell Group’s standard landlord insurance policies will keep your investment covered for up to 90 days between lets, so long as you take some simple precautions (which we will come on to in a moment).

The best thing to do if you think a period of unoccupancy is approaching is check your landlord insurance policy documents. You’ll need to find out if your cover is suitable when the property is empty and call your insurer to see what can be done if it’s not.

DEC 2016/JAN 2017

LANDLORD INVESTOR

It’s also essential to determine whether all elements of your landlord insurance stand during the empty period. Even if your property has only been unoccupied for a matter of days, you could find that water-related damage is not covered during that time.

You’ll want that protection when the risk of frozen – and subsequently burst – pipes is at its highest.

If you don’t have cover for unoccupied periods, you can get vacant property insurance to give you extra peace of mind. While this specialist policy does not offer many of the benefits of standard landlords insurance, it will mean that incidences of vandalism, flooding and theft, among other notable vacancy-related risks, are covered.

19

THINGS TO DO THIS SEASON

•

While it sounds obvious, it’s worth checking that water pipes throughout the property are insulated. This will cut the chances of them freezing, bursting and then thawing, which causes flooding.

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You can further reduce the risk of burst water mains by keeping the heating on low.

By keeping the property warm there’s less chance of water freezing and expanding in the pipes.

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If you know the property is going to be empty for a while, drain the pipes and boiler to remove the risk of water escape.

Guttering and downpipes should also be cleared of leaves or debris, which could cause them to overflow or leak against the building. This may lead damp and damage to decor.

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It’s not just water you need to think about, but security. Make sure all windows and doors are well maintained, especially those made of wood, so they don’t deteriorate in bad weather. Not only will it prevent leaks, but it reduces the chance of your property becoming an easy target for thieves.

At Alan Boswell Group, our personal service means that a landlord insurance specialist is on-hand to answer any questions you may have about your policy and to ensure that you have an appropriate level of cover, whether your property is rented or not.

Call us on 01603 216399 to get market-leading landlord insurance at an unbeatable price.

Landlord insurance you can trust, at a price you can’t beat.

Five-star rated products Award-winning service Dedicated claims support

01603 216399 www.alanboswell.com

DEC 2016/JAN 2017

LANDLORD INVESTOR

LANDLORD INSURANCE

You can take steps to reduce the risk of damage to your vacant property over winter – and the chances that you’ll have to make a claim. These are my top tips:

•

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INVESTING IN PEOPLE

INVESTMENT

Kevin Wright - Ninja Networking Blitz

PROPERTY INVESTORS EXPECT A GOOD RETURN ON THEIR INVESTMENT, THAT MEANS FINDING GOOD OPPORTUNITIES THAT CAN BE LEVERAGED TO GROW YOUR PORTFOLIO SUCCESSFULLY. But some people not only can’t get on the property ladder, but can’t even afford to rent a home of their own and are classified as homeless – how do they get off the pavement and into a property where they’re warm and dry? Who gives them that opportunity?

The answer is that there are lots of really good charities that aim to help those people who – for a whole variety of reasons – have fallen on bad times.

The charities have many ways to give them that all important opportunity.

I think we are lucky – most of us have a nice home and an income. We wouldn’t know how to survive if circumstances meant we literally had nowhere to go home to. With that in mind I wanted to give property investors the opportunity to be philanthropic – and still get a return on their investment. That’s what the Ninja Networking Blitz is all about.

I ran four events in April 2016 and they were so successful that we gave over £2K to four local charities for the homeless. Now I’m doing it again – with some refinements – and there are now eight events in January and February 2017.

HOW DOES THIS WORK? The networking event – with a 90 minute learning opportunity – costs £20 per person. I’m donating ALL of that £20 to a local homeless charity operating in each of the 8 cities.

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LANDLORD INVESTOR

In addition, I’m offering an afternoon Q&A brainstorm session where property investors can quiz me on their property finance issues. This was enormously successful in April – but it is limited to seven people only.

Plus, I’ve added a new opportunity for serious investors to work on their mind-set over lunch – but just a very small group of five people.

The afternoon two-hour Q&A brainstorm sessions have 7 VIP tickets available for £67 (including your £20 donation) and for each Elite success mind-set lunch there are just 5 tickets at £147.

The events are in Manchester, London, Newcastle, Leeds, Bristol, Basingstoke, Cambridge and Birmingham. If I could get 50 investors along to each of the networking events each charity will receive £1,000.

Homelessness has no place in a civilised society, yet every night in the towns and cities of the UK, people are sleeping rough, in all weathers. Can you help me to reach that target of 50 people at the event closest to you?

As well as contributing that £1000 donation you’ll network with other property investors; you know these meetings are an oasis of positivity in a desert of negativity, where you can talk openly about property with others who ‘get it’. Plus you get to hear how to leverage the Recycle Your Cash concept so you can buy multiple properties, faster, with less cash AND help those who are homeless in your area. That is really stacking up the ‘wins’.

Find out more here: www.ninjanetworkingblitz.co.uk ⌂

PROPERTY NETWORKING, BUT NOT AS YOU KNOW IT! Have you experienced the Ninja Networking Blitz yet?

This is nothing like any other property networking event you’ll have attended before.

It offers so much more – AND you will be helping a local homeless charity without doing anything other than buying your ticket!

You can choose from three ticket options:

January and February 2017 Ninja Networking Blitz events GET YOUR TICKET NOW FOR:

JANUARY 2017 10th: Manchester 12th: London 18th: Newcastle 19th: Leeds 24th: Bristol 31st: Basingstoke FEBRUARY 2017 2nd: Cambridge 9th: Birmingham

1 ELITE LUNCH with Kevin Wright Mind-set equals results; find out how to upgrade both (Only 5 tickets available per event)

Note: Elite tickets give you access to all other activities during the day.

2 VIP Q&A

3 NINJA NETWORKING

Two-hour brainstorming session with Kevin Wright To turn your property finance problems into profit.

From 3-5pm (Only 7 tickets available per event)

Note: VIP tickets give you access to the Ninja Networking session.

Discover how to Recycle your Cash more effectively, shrink your deposits and buy multiple properties, faster with less money.

From 6.30pm

Book on www.ninjanetworkingblitz.co.uk now to ensure you get your place. £20 from every ticket is donated to a homeless charity in each locality. See the website for more details.

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INVESTMENT

PAY IT FORWARD! Simon Zutshi property investors network As we enter December, the month of giving, we thought we would invite Simon Zutshi to explain how and why he teaches people to be ethical investors and how it is possible for you to help other people whilst building your personal wealth in property.

I BELIEVE THAT PROPERTY INVESTING IS NOT JUST ALL ABOUT MAKING MONEY. Yes, you can make really good money from property, and you absolutely should make lots of money, but we can also help other people in the process.

That’s what I call ethical property investing. There are 3 fundamental ways in which you can help other people through your property investing.

1. LIVING A MORE PURPOSEFUL LIFE For me, one of the main benefits of investing in property is to generate enough profit each month to replace your current monthly income from your employment or your business. Once you have replaced your income, you can choose how to spend your time instead of having to trade your time for money. You might want to go travelling, spend more time with your family, start a business, set up a charity or give back to your local community.

DEC 2016/JAN 2017

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Some people struggle with the concept of making money because they may have a deep belief that money is evil, it’s wrong to make money or that they should be helping the poor. Whilst I understand the desire to help other people, this should not be at your expense. There is a great saying by one of my mentors Bob Proctor “If you want to help the poor, make sure you are not one of them”. What do they say during the safety briefing on airplanes? “In the event of an emergency, yellow oxygen masks will drop from the ceiling and you should fit yours first before helping other people” Once you have replaced your own personal income and more, you are in a much better position to be able to help other people using your surplus resources of time and money.

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Thanks to my personal property portfolio, I don’t have to work any more, however I gain huge satisfaction from helping other people on their property journey.

That is what I am passionate about. In 2017, I am launching a charitable foundation with the purpose of teaching kids in schools about money and business, something I wish I was taught in school. My aim is to transform a generation and help Britian once again to become Great. You will be hearing more about this next year.

2. BUY ETHICALLY The second way we can help other people, is the way in which we purchase our investment properties.

When you purchase a property, ideally you want to make money from day one by buying below market value from a motivated seller. A motivated seller is someone who needs to sell quickly and so the speed and certainty of sale is usually more important than the amount of money they receive from the sale. It is important to say here that although we want to make money from our property investing, it does not need to be at the expense of someone else. Many investors struggle with this concept because they fail to comprehend why someone would sell their house for less than it is worth. They don’t understand how this is not taking advantage of the seller. You need to put yourself in the shoes of the seller. They have a problem that they need to solve and selling their home to us quickly, might be the best solution for them. When they give you a big hug for buying their property and send you Christmas cards years after the sale, then you know you must be doing something right.

This is all about finding the motivated seller, understanding what their true problem is, and seeing if you can come up with an ethical win/win solution that works for everyone. If you can find someone who has a problem, and give them what they want, you are far more likely to get what you want in return.

If you don’t’ believe there are motivated sellers in your area, then you are absolutely right, because you won’t find any. The reality is that there are motivated sellers everywhere, no matter what the market conditions. You just have to know how to find them, speak to them and come up with an ethical win/win solution.

3. BE AN ETHICAL LANDLORD And finally you can make a difference and have a positive impact on the lives of other people by the way you rent out your property. You can make money whilst helping other people. Providing quality accommodation, at a fair market rent, looking after your tenants and your property, is a much needed and valid service in itself. But you can do much more than that. The best way to illustrate this is through case studies and so I thought I would share two examples with you of what some of my Property Mastermind Graduates have done: Our first case study is from Carly Houston and Kirstin Adam, Sisters originally from Scotland who live and invest in Brighton. Here are the details of one of their projects.

DEC 2016/JAN 2017

LANDLORD INVESTOR

INVESTMENT

This also comes back to understanding your reason why you want to invest. Many people say it is to replace their income which is great, but then what?

Once you have all the money you need, you realise that there is more to life than just money. What do you want your life to be all about? Once they have replaced their income, many of our Property Mastermind Graduates go on to set up charities or help communities here in the UK and overseas.

Having a reason why, bigger than yourself, can often motivate you to consistently take the action you need to achieve your property goals. People will usually do more for others than they will for themselves. More on this in next month’s Landlord Investor’s article.

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INVESTMENT

We work with cash investors and JV Partners on the majority of our projects and we met our JV partner on this project at a local pin meeting. This was the first project we did together and have done several more since.

We added a lot of value to the property through the refurb and were able to pull out all of the cash invested upon refinancing it.

Brighton property upon purchase

We found this deal through an estate agent we had built a good relationship with. A sale had just fallen through on the property and the owner was very motivated as the property was empty and he was paying for a BTL mortgage on it.

It was on the market for £245k and we secured it for £225k, so not massively BMV but that’s fairly unheard of in Brighton.

The property was a standard 3 bed, 2 reception room Victorian Terrace but by reconfiguring the layout and adding an extension and loft conversion, we were able to convert it to a 6 bed House of Multiple Occupation (HMO), all with ensuites.

When we started our property journey we really wanted to offer accommodation to more vulnerable groups. To date we have created over 50 units (with another 20 in the pipeline) for people facing homelessness, many of whom have mental health problems.

DEAL DETAILS: 6 BED HMO BRIGHTON • • • • • • •

Purchase Price - £225,000 Refurb & Purchase Costs - £120,000 Total Cash Invested - £175,000 Post Refurb Valuation - £475,000 Gross Annual Income - £ 50,800 Net Annual Profit after all costs - £24,000 ROI – Infinite…NMLI (no money left in)

In our second case study I would like to tell you about three of our graduates Dave Morris, Dan Norman and Gregg Reed, who towards the end of 2014 came together to create New Leaf Living LLP that specialises in creating HMOs to a high standard for a very needy sector of the property market. They initially started with their own funds but as the venture grew they used private investors, bridging loans and commercial mortgages so they have experienced all aspects of funding in a market and client base that creates additional barriers to lending.

On this project we worked with a local housing charity who referred the tenants to us and provided support in setting up all the tenancies. These tenants would be turned away by letting agents and most landlords would not consider renting to them. But we have found by having the right support and treating the tenants with compassion and respect we have very few issues.

We get direct payments from the council and have never had problems with the rent coming in. The tenants all view this as their long-term home and have settled in well. As we have provided enhanced facilities they are able to claim a higher rate of housing benefit so it’s very affordable for them and also provides us and our investors with great financial returns.

DEC 2016/JAN 2017

LANDLORD INVESTOR

Brighton property after refurb

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The largest project that New Leaf Living has done to date is the conversion of an iconic former public house in the Digbeth district of Birmingham. The former pub had been the scene of bare knuckle fighting at the turn of the 20th century, some ‘lively’ evenings in recent years and was renowned for its afterhours drinking sessions. It was a violent incident at one of these sessions that led to the forced closure of the pub which then appeared in an auction in June 2015.

At the auction the team were successful in securing the lot for £355,000 with just one issue - they had approximately £45,000 of available funds and just 28 days to complete the purchase in line with auction conditions. Undaunted, they approached investors who they knew were interested in supporting just such a venture as well as a bridging company for the balance of funds. In just four weeks they had not only raised the balance of the purchase money but also the £200,000 needed for the conversion.

The first and second floors were converted into three separate HMOs totalling 14 ensuite bedrooms together with three living areas and three fully equipped kitchens. The previous public bars and kitchen are in the final stages of being renovated to create a work and training environment in conjunction with a charity to enable young people to gain experience in the hospitality and food preparation industries.

This is a great example of how successful investors have joined forces to give back to their local community and support people in a less fortunate position. They have gone on to create nearly 100 units of accommodation specifically to support people who were homeless or were facing the prospect of becoming homeless.

• • • • • • • • •

Purchase Price - £355,000 Refurb & Purchase Costs - £206,250 Total Cash Invested - £561,250 Post Refurb Valuation - £980,000 Commercial refinance for - £490,000 Funds left in the deal - £71,250 Gross Annual Income - £76,860 Net Annual Profit after all costs - £26,560 ROI – 37%

LANDLORD INVESTOR'S READERS OFFER Why not give yourself a flying start to 2017 and book in to attend your local pin meeting in January where the topic is all about ‘How to make 2017 your best property year yet”. There are 50 pin meetings all over the UK so there is bound to be a pin meeting close to where you live. Entry to pin is just £20 and as a special bonus everyone who attends in January will also receive access to Simon Zutshi’s brand new Property Strategy Profile test which will be sold for £49 but you can get for free. More details will be in the January edition of Landlord Investor.

Book into your local www.pinmeeting.co.uk

pin

meeting

DEC 2016/JAN 2017

now

at ⌂

LANDLORD INVESTOR

INVESTMENT

The three shared common values including quality and integrity which has ensured each unit of accommodation is developed in line with all regulations and requirements of the Care Quality Commission, a level higher than most councils HMO regulations. It also means that New Leaf Living will only work with providers of care and support services who have a keen eye on delivering outcomes of independent living for the tenants.

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- Magna Group

Magna Group delivers NEW HOMES and NEW INVESTMENT OPPORTUNITIES in 2017 Magna Group, one of the UK’s most dynamic and forward thinking home-builders, continues to support both the First Time Buyer market and aspirational investors alike, as we move into the New Year 2017.

Magna is proud to be officially opening their first residential site Magna West in Surrey in January 2017, with an official ‘ribbon cutting’, in the presence of local VIPs and dignitaries alike.

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g di

For keen investors, Magna has just launched the Magna Private Capital (MPC) investment vehicle.

MPC is offering a one percent monthly return on capital invested into specific projects that Magna is developing.

This procedure is based on the investor having to join the Magna Private Capital Club, leveraging a monthly yield of one percent, as well as capped profit share, whilst the deal is chosen and approved.

Magna Group is committed to building long-term relationships with both investors and homebuyers alike. For more information relating to the Magna Group portfolio as well as associated investment opportunities, please visit www.magnagroup.co.uk ⌂

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From a buyer’s perspective, Magna homes are extremely attractive particularly for First Time Buyers, as Help To Buy options are in place. The Magna

offering is also more than competitive, with lead-in prices for a luxury one-bedroom apartment starting at just £160,000, including a wide selection of quality interior fixtures and fittings.

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HAPPY NEW YEAR HAPPY NEW HOME!

advertising • branding • brochures • design for print flyers • leaflets • pop-up stands • roller banners stationery • web design for all enquiries about design work, print or digital email craig@landlordinvestmentshow.co.uk

DEC 2016/JAN 2017

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IS A PROUD MEMBER OF

Quality of service | Transparent Customer Feedback | Reputation Matters Checkaprofessional.com (sister company to checkatrade) is a service whereby you can rate a business on its professionalism, quality of service, customer service and more.

The National Landlord Investment Show is an organisation that prides itself on its “quality of service” and delivers what a client requires. We feel Transparency is the key in business and there is no better way to promote our business than on Checkaprofessional.com.

We have created fantastic business opportunities using checkaprofessional.com but more importantly gained great feedback regarding shows and always looking how we can improve.

(December 2016) we have received 130 To date (November 113 feedback reports with a score average of 9.6 out of 10

Average Scores - Based on 113 feedback reports Professionalism

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Below are some testimonials “We exhibited at The National Landlord Investment Show and had a fantastic day. Organisers were really helpful and great to chat with. We had excellent responses from other businesses at the show as well as attendees for our stand...”

“Very professionally organised event...”

For more information and to view more of our feedback and ratings please visit:

WWW.LANDLORDINVESTMENTSHOW.CO.UK

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LETTINGS & MANAGEMENT

AN INTERVIEW WITH URBAN.CO.UK Adam Male Co-Founder, Urban.co.uk

HOW ARE YOU DIFFERENT FROM THE OTHER ONLINE LETTING AGENTS? We find it very frustrating when online agents are branded ‘call centres’ – all of our agents are ARLA registered and we believe that the services we offer truly marks us out against our competitors.

We have a dedicated team within the organisation whose role is to ensure that the entire team is fully up to speed with all the new legislation that comes into force in the industry, so we are always ready to provide our landlords with up-to-date information and help them with any issues that they have – whether the customer has engaged us to simply find them a tenant or taken on a full management package, we’re always on the other end of the phone to help with any issue, no matter how big or small.

We’re passionate about maintaining this level of customer service, and dedicate a huge amount of time and effort into ensuring that every phone call or email that comes into our office is dealt with in the same speedy and efficient manner, seven days a week.

DEC 2016/JAN 2017

LANDLORD INVESTOR

The Urban Tenant Check Pledge is another way we stand out from our competitors. We are dedicated to not just finding our landlords ANY tenant, but we want to find the RIGHT tenant. Our bespoke filtering system, coupled with our rigorous referencing checks means that if we pass your tenants and they stop paying rent in the first twelve months of an agreement, we’ll evict them for free.

HOW LONG HAVE YOU BEEN ON THE SCENE, AND WHERE ARE YOU BASED? We’ve been going strong since 2008 – although most people have really started noticing us since we said ‘hello to yellow’ earlier this year. We decided to rebrand and following a series of consultations with our customers decided that a vibrant black and yellow theme was the perfect reflection of our fresh and zingy team! It’s caused quite a stir at the exhibitions we’ve attended, and the Urban.co.uk yellow bags are becoming somewhat of an institution.

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At the recent Landlord Investment Show at London’s Olympia it seemed like every landlord in the UK came over to say hello, and left the show with a bulging yellow bag, it certainly brightened up a grey day in the capital!

Our head office is based in the lovely town of Tunbridge Wells in Kent, although our services cover the entire UK. Some members of the team have been clocking up the miles taking Urban ‘on the road’, heading out to roadshows and exhibitions, but there is always a core team in the office ready to handle any enquiries or concerns that our landlords or tenants may have.

The new year will be a time of great development for the Landlord University, as we are working hard to build relationships with hundreds of organisations within the industry in order to ensure that we can work together when our landlords need advice from a professional within a specific field- we want to make sure that if a piece of legislation crops up relating to Section 21 for example, we need to be able to pick up the phone and have a reliable solicitor available who can offer impartial advice on the subject!

We’ll also be introducing vlogs and webinars into the mix as well, as feedback from our current users has suggested that this is where they would like to see us dip our toe next – we’re more than happy to oblige!

WHAT'S THE PLAN FOR 2017 Other than turning the UK yellow through the method of pens, bags and coffee cups…? We have recently launched our Landlord University, an online forum with the Urban.co.uk website, and it continues to be a big item on the list for 2017.

The concept of the Landlord University came about following the introduction of Right to Rent in February. We were contacted by the Daily Telegraph who asked us to carry out some research into agent understanding of the scheme, and we were horrified to discover just how little was known within the industry about vital legislation.

DEC 2016/JAN 2017

LANDLORD INVESTOR

LETTINGS & MANAGEMENT

With so many landlords confused following bad advice from other agents, we wanted to provide a platform that wasn’t designed to sell products, instead was an impartial and non-profit making forum which offered honest, up-to-date information, on the important information that landlords need to know.

The Landlord University covers a huge variety of subjects, from immigration to the legal requirement of a tumble dryer! We encourage landlords to interact with the Landlord University, and use it as a tool to ask questions of legal bodies or professional organisations that they want to know the answer to, and they feel their peers would benefit from.

LETTINGS & MANAGEMENT

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In order to make sure the information is seen by as many landlords as possible, the Urban.co.uk weekly newsletter cherry picks the most clicked articles from the Landlord University and delivers them directly into the inbox of over 75,000 landlords across the UK – hopefully we’re doing enough to spread the word and get the news and information that people care about out there!

HOW IS THE NEW-LOOK WEBSITE FARING? We’re certainly having fun with plenty of new gadgets and technology options – there’s so much new technology on the market we’ll certainly be looking to keep growing well into 2017.

The new website was developed following extensive research into our customer feedback and we hope that it delivers the customer experience that we hope for. It’s rare that such a big project goes without a hitch but - touch wood – we seem to have managed the cross over period fairly seamlessly and we are now fully integrated. Our existing customers have all reacted well to the new look, and new customers are really positive about all of the newly developed features – you can’t ask for much more!

There’s an ongoing debate in the office about alert sound that the chat function should have, but in the grand scheme of things, it’s a disagreement I think we can cope with!

TENANT FEE CHANGES ARE A HOT TOPIC, WHAT'S YOUR TAKE ON IT? It is a contentious issue, and I would imagine it’s going to dominate the headlines well into 2017! As an agency owner and a landlord myself, I should be irritated, however as someone who has rented property in the past, and been subject to ludicrous tenant fees I understand it completely – there’s plenty of agencies out there who hugely overinflate tenants fees and it’s no surprise that the government has acted to deal with this.

DEC 2016/JAN 2017

LANDLORD INVESTOR

The only fee that Urban.co.uk charge tenants is a discretionary reference fee, which can be paid by the landlord if they prefer. When the changes were announced, we decided that until we know more about the timescales involved we would hold fire on changing our packages, however there won’t be much impact on our landlords. As it is a reasonable cost, we find that many landlords choose to pay the fee themselves anyway, so I don’t envisage much changing for us, however I do believe it could signal a sea change for some agencies who rely heavily on tenant fees.

However, until we know more there is little point in speculating. If 2016 has taught us here at Urban. co.uk anything it’s never to assume – if 2017 is anything like this year there’s likely to be plenty of surprises in store! ⌂

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