Landlord newsletter autumn:winter 2010

LANDLORD NEWSLETTER - AUTUMN/WINTER 2010 It has been an intriguing summer in the world of Lettings here in Central London and Lurot Brand, as always, has been on the frontline.

Since I last wrote to you in the late spring, we have seen a continued shortage of properties to rent with an increasing demand from Tenants (both individual and company). In many ways this has maintained the high rents but in others has left people in a state of what can only be described as ‘limbo’. This is a lot to do with the fact that supply of three bedroom plus properties, suited to the family market in Kensington & Chelsea and Westminster, is fairly healthy but demand is lower whereas demand for one and two bedroom flats and houses is exceptionally high with little choice.

Of course, this will always fluctuate, even in a stable market but is particularly acute right now.

So, why is supply so short?

Thanks to the state of the economy

generally, our Sales department has seen a dramatic improvement in stock levels and their buyers have deep pockets which is gratifying and indeed an increasing number of Landlords are choosing to move back into their previously let properties. This is good news for our existing and prospective Landlords as this should sustain high rents achieved.

The Lettings market is always competitive and now more than ever, we need to maintain visibility and high levels of service to provide the best possible exposure for your properties to achieve the highest levels of rent from the individual and corporate Tenants. We are constantly reviewing our marketing to reach out, in an over-crowded marketplace of estate agents. With this in mind, as we grow the Lettings Team, we are training the negotiators for their technical awards and ensuring that you are

kept abreast of new legislation. For example, this year you will all be aware of the changes to the Assured Shorthold tenancies. Additionally from a marketing perspective, Lurot Brand has created a mobile phone application for iphone 3GS or iphone 4 or android smart phone that is following the trend for ‘augmented reality’. This means that prospective Tenants (and indeed buyers) will be able to see at a glance what houses and flats are available in any given area that they are interested in on their phone without the necessity of boards attached to your property which is often perceived as unsightly – if not falling foul of conservation laws!

Augmented reality could totally change the way we all work.

As always do tell your friends about Lurot Brand – we are here to help!

Lajla Turner, Lettings Manager

CAN’T BE BOTHERED COSTS I often dream of ending my calls to new Tenants with the phrase, “It’s nothing personal but I hope never to hear from you again!” But, of course, that is just wishful thinking - the perfect house that never has a problem. So how do I get closer to this dream?

The answer is to sort out as much as possible before the Tenancy starts. This starts with speaking to new clients who are somewhat taken aback by the plethora of questions and requests we make even before the Tenant moves in! If I had a videophone I might see a look of shock on their faces.

DID YOU KNOW? Instruction manuals. Tenants are expected to familiarise themselves with the operation of boilers, washing machines as part of occupying the property in a ‘Tenant like manner’.

If you do not supply Tenants with instruction books or manual then you will not be able to claim against them if they cause damage that could have been avoided by reading the manual.

Here is an example - dishwasher salt.

Supermarket shelves are full of ‘all-inone’ tablets so the message is no need to add salt to your machine. Some Tenants do not know that salt is needed.

The small print on the packaging advises to check if you live in a hard water area and use salt as necessary.

Do people bother to read this? Who knows what is considered ‘hard’?

Thames Water’s website confirms that all of central London has hard water.

The cost of a replacement motor for a mid-price dishwasher is in the region of £300. What a potential waste for the sake of a manual.

Alarms. What conditions does your insurance policy place on you? Be careful. You will need to ensure that your Tenant knows these conditions.

If not, any claim you may make on your policy could be invalid and, you may not be able to sue the Tenant if

they were not informed. If the Tenant is required to use the alarm then you must set up a maintenance contract.

If remote monitoring is required then you will need to rent a telephone line for this. But if you or your insurance policy does not require the use of an alarm then I believe it would be for the Tenant to pay for the maintenance contract and any telephone line.

Invoices and receipts. You need to keep them for the Inland Revenue but often when dealing with a deposit return, Landlords cannot locate them.

This makes our lives very difficult.

Many corporate tenancies will want evidence of the original value of an item that is missing or damaged so they can check that the Landlord is not claiming more than he/she may be considered to be entitled to. It helps speed up the processing of the claim and easier to locate the right fitting.

Photographic evidence. In our opinion this is essential and these days the Courts etc. might not consider a case without photographic evidence. The argument is put forward that the photos offer only very general shots.

But I disagree; it is down to the quality of the images. For example, a photograph can evidence that a stain that a Tenant claims was already on the carpet at the start of their Tenancy or there are additional stains.

Photos can also serve as a reference when drafting a claim against the Tenant’s deposit especially when replacing missing items (just check the variety of choice and price of toilet brushes!!). They help establish the quality of the item and thus the value, which we cannot prove if the invoice is not available.

References. Do you know how many paint colours there are? I don’t know but we waste so much time trying to identify colours to match walls, carpets, fabric or find light fittings, taps etc. Just have a reference box or a

document on your computer to log all these details. It is also useful to keep details of key numbers or copies of keys for security grilles, terrace doors, garage fobs, window etc. It is also useful to take a photo of them.

Betterment. As a Landlord you are not legally entitled to ‘betterment’. i.e. you cannot end up financially or materially in a better position than you were at the start of the Tenancy. Therefore (and is an established legal tenet) as a Landlord you are not entitled to charge Tenants the full cost for having any part of your property, or any fixture or fitting returned to you in the condition it was at the start of the Tenancy.

This would constitute betterment. A number of points have to be taken into consideration along with an allowance for fair wear and tear. These are: • The original age, quality and condition of any item at commencement of the Tenancy • The average useful lifespan to value ratio (depreciation) of the item • The reasonable expected usage of such an item • The number and type of occupants in the property (adults only, family along with the age of the children.

• The length of the Tenancy.

Claim for dilapidations against the Tenant’s deposit. All the points raised in this article, are designed to show you how the process of making a claim for dilapidations against the Tenant’s deposit is much simpler, smoother and faster if all this information is in place at the start of the Tenancy.

Do you know where the stopcock is in your property? If the Tenant knows the mains water can be turned off to avoid major damage to your property in the event of a leak.

Can’t be bothered costs. A mantra for both the Landlord and for the Tenant.

Anne Roche – Property Management

LEGAL

Of necessity an article such as this must be new, relevant and of value, (if not interesting) to landlords. And yet every time I am asked to prepare an article I have to ask myself if it will still be valid by the time we go to print.

Over the recent decades we have gone through periods of stable legislation followed by a series of rapid changes because someone who thinks we should behave in a different way can’t resist meddling. We seem to have a lot of meddling at the moment.

We have seen recent legislation meddling with the HMO (Houses in Multiple Occupation) rules and even using the Planning Law to force a change in the conduct of shared dwellings. We have seen a change in the treatment of residential tenancies where the rent is between £25,000 and £99,999 per annum. Landlord licensing has come and gone. We have seen a change in the operation of the gas safety rules (to what end I can’t imagine), the Money Laundering Regulations and the application of the Proceeds of Crime Act, HIPS have come and gone and we now need EPC’s and so on and so on. It seems ages since the scheme for the protection of tenants deposits was introduced and so much new regulation and meddling has happened since – but it was only three and a half years ago.

Owning property is a long term commitment and to plan for financial stability landlords need to know that whatever the rules are on entry, they will remain roughly the same for years to come. The only generally accepted exception is the fluctuation in interest rate - and even then there are some who

think it won’t change. Every landlord I have met has done his “back of the envelope calculation” of rent versus outgoing (including the mortgage if he has one) and expects to be able to rely on it for some years to come. So, does the government think of the landlord when messing around with the regulations – well the answer is yes – but it seems they only think of the bad landlord forgetting the adverse impact they have on the vast majority of decent landlords.

Take for example, the regulations for dealing with tenants’ deposits which became effective from 1st April 2007.

(These regulations were introduced by the Housing Act 2004). This is a real sledgehammer to crack a walnut. To protect tenants against the very small number of unscrupulous landlords and agents against the theft of the deposit, a new regime was introduced now extended to all tenancies with a rent under £100,000 p.a. The cost is considerable. Each tenancy now takes a lot longer to process, not only at inception but at every renewal. We have extra layers of internal control to ensure we don’t miss tight deadlines.

And then to add insult to injury we have to register ourselves as well as each individual deposit – and then pay for the privilege. And this adds nothing to our business or yours. Then multiply this by the number of additional pieces of legislation and you will begin to see the problem.

Then there is the uncertainty.

Frankly, some of the new legislation is badly thought out and badly drafted.

Consider a tenancy that started on 1st April and ending on 31st October with a rent equivalent to £30,000. On October 1st it becomes an Assured Shorthold Tenancy. To protect the landlord’s right of repossession at the end of an Assured Shorthold Tenancy we issue what is known as a Section 21 Notice. (referring to Section 21 of the Housing Act 1988).

This notice must be issued not less than two months before the end of the tenancy to be effective. But two months before the end of the tenancy it is not an AST – so is the Notice valid? Unfortunately the

law makers can’t make up their minds – but the consequences for landlords are quite severe. Worse still the DCLG (Department for Communities and Local Government) has issued a statement that appears to contradict or at least modify the Housing Act – and we will have to wait until some unlucky landlord or his agent falls victim before knowing how the courts interpret what can only be described as awful legal drafting.

Now we arrive at the dilemma facing all letting agents and particularly those in high value areas like central London. We set out to provide you with the very best service. Across London lettings agents are spending fortunes on training staff and then paying those staff to address and to discharge what are primarily landlords’ obligations.

We have to respond to layer upon layer of new complex legislation. So the long standing relationship between our fee income and our expenditure is challenged through no fault of ours (or yours). Excluding the time spent finding the tenant, the time taken to handle a new tenancy has roughly trebled, and the risk of getting something wrong has risen exponentially. While Government says it will lessen the burden of red tape on businesses it seems to be piling it on to the landlord. So I leave you to consider the impact this will have over the next few years on prices charged by agents – and for what?

To end on a lighter note let me invite you to list all the pieces of legislation that a landlord must consider when first letting a property (excluding tax legislation). The landlord submitting the longest (accurate) list will WIN A BOTTLE OF BOLLINGER. The closing date is 31st December 2010 and the managing director’s decision is final.

Enter the competition by email: mel@lurotbrand.co.uk or post: Lurot Brand, attention of Melissa Holdron, 37-41 Sussex Place, London W2 2TH. Maurice Patry, Managing Director

Lurot Brand has launched the ultimate Augmented Reality mobile application* that actually helps you find mews and other properties for sale or to rent with Lurot Brand all around you an as you move!

The application offers real answers to the property Augmented Reality experience by accurately showing properties currently on the market with us around you. This has been done by using cutting edge technology combined with GPS, touch screen technology and by using detailed longitude and latitude coordinates giving pinpoint accuracy. The Lurot Brand application does not present a gimmicky usage of Augmented Reality but delivers the truly amazing potential of this technology.

For a new property search experience download our application which is available for iPhone 3GS & 4 and Android mobile phones. *Powered by PropertyCompass www.propertycompass.mobi PLEASE NOTE Accuracy and performance of the application will depend on the GPS & Compass functions ability of the mobile phone used and on mobile provider connection.

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