Posts

Today: New Laws for Landlords, All Tenancy agreements upto £100k become ASTs

Landlords and tenants should be aware of significant new changes around tenancy agreements as of October 1, according to The Deposit Protection Service (The DPS).

From Today, shorthold tenancies where the annual rental amount is above £25,000, but not more than £100,000 a year, will become Assured Shorthold Tenancies and this will apply retrospectively.

However, tenancy deposit protection should not apply retrospectively and, therefore, only new deposits and renewals taken on or after October 1 will definitely need to be protected. The advice from The DPS is to protect all deposits now as it is better to be safe than sorry.

Going forward, this closes a loophole that previously left many of the most vulnerable tenants with no protection. Higher rate tenancies were not originally included under tenancy deposit legislation, which only covered ASTs up to £25,000. Tenancies valued higher than this were seen as contractual tenancies and deposits did not need to be protected.

But this situation, according to The DPS, left some groups such as students or large house-shares vulnerable.

The Deposit Protection Service (The DPS) is calling for all landlords, and tenants, to be aware of this change and also to protect themselves until there has been clarity in this policy area.

This does mean extra paper work for Landlords but it is better to be safe than sorry, the procedure of registering and updating details on the DPS website is very easy and straight forward, http://www.depositprotection.com/

Your tenants can also check if they are covered and overall gives a Landlord a much more professional impression. Make sure you are registered and upto date with all the latest legislation. Do not hesitate to email us: info@PropVestment.com if require any advice, its free!

HMO: Huge Money Opportunity?

Although Multiple Occupancy can achieve huge rewards in the form of rents, in particular student lets, Landlords must take the required legal procedures to ensure it is all above board. In our experience it is easy to gain over 50% premium on rental income under HMO. There are now professional agents that can take care of the managements and legalities but here are some basics you must know. Licenses are only £335, so get them and don’t risk fines or prosecution when the outlay is so small.

The returns can significant, raising the ROI above any other residential investment, letting are very easy through university listing or sites such as www.spareroom.com.  Please get the relevant advice and don’t take short cuts in the pursuit of profits.

After reading this nitty gritty we offer a fantastic investment opportunity at the bottom of the article.

Here is the Basics

What is an HMO?

HMO stands for House in Multiple Occupation and generally refers to one of the following:

  • A house split into bedsits
  • A house or flat share where each tenant has their own tenancy agreement
  • Students living in shared accommodation Read more

What the new shorthold tenancy classifications for UK private property landlords means

  • Deposit guarantee scheme for all properties earning upto £100k rental per annum
  • Failure to do so in 14days means no Section 21 (eviction order) can be served
  • Fines up to three times the original deposit
  • Student accommodation and multiple occupancy also affected
  • Advice: Use a reputable and experience lettings agent, email info@propvestment.com for our quote and special offers.
  • New legislation mainly affects high rental properties in particularly in London
  • Extra Red Tape that makes it difficult for honest, reputable Landlords

Read more

Demand > Supply = Residential property rents in the UK expected to keep rising

Residential property rents in the UK are increasing as tenant demand and a shortage of properties dominate a buoyant lettings market,

  • 26% more chartered surveyors reported a rise in demand for property rather than a fall
  • Strongest demand increase in London and the East of England.
  • Large deposits and difficulty securing mortgages leading to higher numbers seeking to rent rather than buy.
  • Low Supply, only 4.1% of Landlords intend to sell at the end of current AST. Supply fallen for fourth consecutive quarter.
  • Rents for houses are expected to marginally outperform flats.
  • However as property prices are still low, many owners may let for some time before selling, thus modestly increasing supply.
  • One in five landlords are experiencing rent arrears and many are concerned about the increase in Capital Gains Tax. Added to the forthcoming cuts to Local Housing Allowance and the possibility of increased interest rates, it is clear any increase in rents will be quickly offset by these additional factors that have to be taken into account.

Article is a summary of information from www.propertywire.com

Demand > Supply = Residential property rents in the UK expected to keep rising

Residential property rents in the UK are increasing as tenant demand and a shortage of properties dominate a buoyant lettings market,

  • 26% more chartered surveyors reported a rise in demand for property rather than a fall
  • Strongest demand increase in London and the East of England.
  • Large deposits and difficulty securing mortgages leading to higher numbers seeking to rent rather than buy.
  • Low Supply, only 4.1% of Landlords intend to sell at the end of current AST. Supply fallen for fourth consecutive quarter.
  • Rents for houses are expected to marginally outperform flats.
  • However as property prices are still low, many owners may let for some time before selling, thus modestly increasing supply.
  • One in five landlords are experiencing rent arrears and many are concerned about the increase in Capital Gains Tax. Added to the forthcoming cuts to Local Housing Allowance and the possibility of increased interest rates, it is clear any increase in rents will be quickly offset by these additional factors that have to be taken into account.

Article is a summary of information from www.propertywire.com

Landlords: Ways to be Green and Save Money

For all Landlords, in particular when lets are to students, all inclusive ASTs, or Flat Shares it is very important to try keep the costs down for pure profiteering reasons as well as doing our bit to be green. Being environmentally friendly in the long run really pays off financially and you can use being green as a marketing tool also. Being green can be expensive but there are a few cheap alternatives that can really have a big impact.

Here are our Top Tips… Read more

Risks and Rewards: Renting to Students?

On the day of A-Level results, the day when a school kid becomes a legal student. This opens out a whole new influx on potential tenants as they make the transition from “living with parents” to “renting.”

There has been a rise in Student Lets; the latest “accommodationforstudents.com” research shows increase of 4.3% on last year.

The average weekly student rent now stands at £65.30, 4.3% higher than last year (£62.61). The previous two years’ increases were just 1.6% and 1.7%. Since 2004, when the average rent was £52.44, rents have risen 25%.

Rents are highest in the South East, which hosts 8 out of the 10 most expensive student locations. London leads the way with an average rent of over £100 per week, with Guildford, Uxbridge, Cambridge, Middlesex, Egham and Brighton all weighing in with rents of over £80 per week. The stats are based on nearly 60,000 properties in 83 cities across the UK.

Some traditional English redbrick universities: Liverpool (£55.49), Birmingham (£57.30), Manchester (£60.12), and Sheffield (£60.14) are still below the average UK weekly student rent of £65.30.

Best value locations in terms of student rental accommodation are Middlesbrough, Stoke-on-Trent and Stockton with average weekly rents of £41.47, £42.65 and £44.71 respectively.

So as a Landlord, the most promising locations are in the South East, in particular London, with its wide choice of universities and colleges. Also London attracts many foreign students, they our paying huge international rates for tuition fee so it’s a safe assumption to say they are willing to pay higher prices and come from well off backgrounds.

Example

One of our clients has a 3 bedroom flat it SE1, which has now been converted into a 4 bed. We have been able to achieve £599 per room per month, leaving the client with over £800 per month cash surplus after paying the buy-to-let mortgage.

We source the tenants from post graduate universities and colleges, what we have found is that many students like to pay 3 months in advance due to budgeting reasons and they pay it like they do their tuition on a term to term basis. This further aid the Landlord’s cash flow. What other private let in our economy is in a position to pay 3 month advances on rent.

There are of course risks involved like any other AST (Assured Short hold tenancy). Primarily rent payment, but if your contracts take references, take on parental guarantees and if possible insurance, your risk is dramatically reduced. In our case study, we have never had any students default on payments.

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Landlord’s bewared; specify who is responsible for council tax, TV license and bills. Council tax is another source of advantage, Students are exempt. As a Landlord make sure the council is informed of the occupants of your property and advise the students on the simple procedure.

Provide your property with broadband, its only around £100 a year and that dramatically increases the rentablity of your property for students.

Older students are always more reliable, however there are many freshman available, those who have to go through Clearing, have little or no chance to get University Halls and have to look in the private market.

Don’t worry if there is not immediate responses from adverts, as it gets closer to the start of courses the interest grow exponentially, and desperation grows and properties are taken of the market.

Renting to students is cheap and cheerful, provide good quality basics, desks, chairs, a lamp and majority are happy and you won’t find any complains, they are always too busy partying or working to care for minor niggles.

Overall the returns out weigh the risks, managed well and reducing the risks, can create huge cash flow surpluses.

Email me for more info on our service info@propvestment.com

Sources include personal experience, Landlordzone.co.uk and accomodationforstudents.com