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Landlords, Rent to Own – Savings plan!

We have just been approached by a landlord to find him a good buy to let with the sole intention of finding a Rent to Own. What are the advantages of this?

  • Buy a property at todays value and have a RICS valuation, with a buy to  let mortgage (there are some excellent deals around at the moment for buy to let products).
  • Ask the RICS valuer to estimate the price for say the next 5 or 7 years.
  • Take on a Tenant buyer who then pays the rent for the next say 5 or 7 years
  • Sell on the property in 5 or 7 years at the pre agreed RICS projected valuation at a profit.
  • Collect rent for 5 to 7 years (or however many years you have opted to have the agreement period).
  • Not only do you have capital growth in the property from the date of purchase to the point of sale, you also have a constant rental income for the fixed period with no voids.

Come and talk to us to show you how this can work for you!

Landlords can save money using Agents.

Landlords Can Save Money Using Agents

An insurance company has recently carried out research across the market and claims that on average landlords can save up to £2,000 per year if they contract letting agents, when compared to those who prefer to deal directly with tenants.

The company says that landlords working with a good and reliable letting agent on average save £1,910 per year. The main savings are made by having less void periods and a higher rental income secured by their agent. Apparently landlords who deal with tenants direct save an average of £159 in monthly costs. The significant advantages of using an agent are because of their local knowledge and strength in achieving higher rents for their ‘clients’.

The survey asked landlords who took part the main reasons for using a letting agent and 50% said the biggest benefit was their local expertise, 41% said being able to enjoy the feeling that they did not have to worry about the property as it was in a ‘safe pair of hands’.

Managing director of property specialist, Allison Thompson, said: ‘There is a misconception among some landlords that a successful letting agent will not add value to your investment. This is not true, as the figures show landlords who work with letting agents enjoy a significantly higher return. The marketing power of an established agent gives your property the best chance of being rented by a quality tenant as soon as it goes on the market.”

She continued: “Some DIY landlords understandably struggle to bring a home to the attention of prospective tenants and suffer lengthy and costly voids as a result. However, a good agent will not stop at finding a great tenant for your property. They will also offer support with legal matters, repairs and maintenance, avoiding rent arrears and minimising risks, all of which can help to reduce overall costs and provide you with ultimate peace of mind.”

Extract from PIMMS.co.uk May 11 2017

Energy poor efficient homes.

Landlords warned about looming ban on poor energy efficient homes

Once poor performing buildings are identified, landlords can improve their rating through a few ‘quick win’ energy efficiency measures if not already put in place

Property management specialist, Lee Baron, is advising residential landlords to check the energy efficiency of their property portfolios and take simple measures to boost the efficiency of any poorly performing property, before they become illegal to let.

From the 1st April 2018, it will be illegal to rent a property with a new lease or renewal of an existing lease that falls below a minimum Energy Performance Certificate (EPC) rating of an E. The regulations then apply to all existing leases after April 1st 2020. If the property falls below this EPC rating, it would be deemed ‘substandard’ and illegal to rent.

The impact for landlords of having an illegal property are serious, with enforcement by Trading Standards which can impose a fine up to a maximum of £4,000.

Steven Room, Head of Residential Development at Lee Baron, advises: “Landlords can act now to avoid being slapped with a hefty fine. The first step is to ensure properties have a valid and up-to-date EPCs that take account of any changes and improvements made to a building. Once poor performing buildings are identified, landlords can improve their rating through a few ‘quick win’ energy efficiency measures if not already put in place.

Once landlords have their properties assessed, they can schedule in boosting energy efficiency to coincide with any maintenance and redecoration work at the end of the tenancy. Although there is cost and effort involved, energy efficient properties will have greater appeal to investors and this will reflect in improved values.”

Top tips to boost energy efficiency:

1

Most of a building’s heat is lost through poor sealing of doors and windows and through poor insulation in the roof and walls. Checking and renewing or adding new window and door seals can eliminate drafts, while insulation, if missing in attics can be installed or existing insulation thickened to reduce heat loss from roofs. Cavity wall insulation should also be considered, but this can be disruptive to install.

2

Installing low energy lighting – LED spots and/or compact fluorescent lights, which fit into existing light sockets are quick and easy to install.

3

The installation of modern compact combi boilers which are considerably more energy efficient should also be considered.

4

Consider installing a smart meter. You can see the effect of reducing energy immediately via your smart energy monitor which will help you to make better choices and start saving money. Plus you’ll receive accurate bills without submitting a meter reading as your smart meter will send us regular and accurate readings of your energy usage automatically.

Courtesy By Warren Lewis

Would you like to own a barn conversion in rural Devon?
Well this is our first Rent to Own property.
Purchase price £300,000.
Rent £850 pcm under the scheme.

Period to be determined.

Decorate to your own tastes and improve!
Please call the office to discuss.
01548 853555

    

RENT TO OWN! APPLEDORE LETTINGS NEW INITIATIVE!

RENT TO OWN! An initiative to help Tenants buy a Home.

Appledore Lettings are pleased to be introducing an innovative and unique product to its services that helps Tenants to purchase their home.

Rent to Own enables potential homeowners to purchase a property and save for a deposit of around 10% of the agreed sale price and to move into their new home straight away. They pay an agreed fixed monthly rent and a ‘top up’ which builds up an amount that is used towards the mortgage deposit, therefore making it very easy for the tenant buyer to save up whilst living in the property.

Director Andrew Ruffle of Appledore Lettings stated, “We have put a modern twist to the strategy by designing policies that are aimed at being transparent to both Landlords and Tenants. Although we are just commencing the roll out of the service, the feedback has been amazing and re have received a great deal of interest from both Tenant buyers and potential Vendors”. This product has been widely used in other parts of the Country with huge success.

Andrew Ruffle added, “The scheme also assists Landlords who are looking to sell their properties within the next few years, or who want to sell now due to high existing mortgages and the tax changes which will be implemented in Section 24.*

Rent to Own is a great mid to long-term exit strategy suitable for accidental Landlords or Landlords with multiple properties that wish to have a structured disposal strategy and take advantage of annual Capital Gains Tax exemption.

‘It’s a win-win for everyone, the Tenant buyer gets to move into a property and can purchase at a time in the future once they have the deposit, and the Landlord gets to sell the property having had several years of constant rental income with no void periods’.

For further information about Rent to Own, please contact Appledore Lettings on 01548 853555 or email us info@appledorelettings.com

* The amount of Income Tax relief landlords can get on residential property finance costs will be restricted to the basic rate of tax.

The changes will:

  • affect you if you let residential properties as an individual, or in a partnership or trust
  • change how you receive relief for interest and other finance costs
  • be gradually introduced over 4 years from April 2017

Finance costs won’t be taken into account to work out taxable property profits. Instead, once the Income Tax on property profits and any other income sources have been assessed, your Income Tax liability will be reduced by a basic rate ‘tax reduction’. For most landlords, this will be the basic rate value of the finance costs.

Could renting to pet owners be the best option?

Could renting to pet owners be the best option?

 

Cats

When it comes to pets, a lot of landlords don’t want to consider the hassle of renting to tenants who have them. Many letting agents will also advise landlords not to accept pets due to the possibility of more repairs or issues with the property when the tenant comes to leave.

However, renting to tenants who own pets may not be as bad as many people think. While there may be an increased risk of damage to a property, there are also a number of benefits to opening properties to potential tenants who have animals.

Here are five reasons it could be a good idea to discuss the possibility of renting to pet owners with more landlords:

More demand

Finding a property that allows pets or at least will consider them on a case-by-case basis is not an easy task. There are so few properties on the market that advertise as pet-friendly that demand is significantly increased.

Not only does this mean there is a greater pool of prospective tenants to choose from, it also results in properties not being vacant for very long. Pet owners who are looking to rent know they need to move quickly once they have found a place that suits them so they’ll snap a property up as quickly as they can.

This is why it is a good idea to make it clear in listings that pets are allowed or can be considered.

Tenants stay longer

Most pet owners look for places with long-term leases because they know what a struggle it is to find a suitable property. This means they are likely to stay for longer, which reduces management costs and means you won’t be advertising the property again in six months’ time.

So long as the landlord is happy for the tenants to stay on, pet owners are more likely to put roots down and remain in a single property for years.

Responsible tenants

Because pet owners want to stay in properties for longer periods of time and avoid having to search for somewhere else that allows animals, they don’t want to do anything that could jeopardise their lease. They are often some of the most responsible tenants as they don’t want to cause problems that could mean they need to move out.

Similarly, if their pet does cause damage, there is a greater chance that they will address it themselves compared to those without pets in order not to be seen as problematic tenants.

Blanket bans are classed as unfair

The Office of Fair Trading considers complete pet bans in rental properties as unfair due to the Unfair Terms and Consumer Contracts Regulations 1999. This means that landlords shouldn’t have a ‘no pets’ clause in their tenancy agreements or risk discrimination complaints.

Instead, they should always consider pets when looking for a new tenant or existing tenants should, by contract, ask for consent before bringing a pet into the property. However, unreasonably withholding consent can also cause problems.

Courtesy Gary Whittaker for Rentman

Landlords! Did you know?

There is NO exemption for EPC’s for Listed Buildings. All Listed buildings must have an EPC. This MUST be given to Tenants at the start of the Tenancy. If you have not provided an EPC and you serve a Section 21 notice it will fail. Deregulation Act 2015.
Furthermore, the Tenant must acknowledge receipt of the EPC.
As from 2018, all Landlords who rent Listed Buildings will need to register on a data base if they are unable to bring the Listed Building EPC up to an E. Grounds for this may included that the works required will materially alter the Listed Building.

Electrical Safety Regulations.

The 2016 Electrical Equipment (Safety) regulations 2016 require a Landlord to provide the instruction manual for all electronic equipment including integrated appliances that were purchased after December 2016. The instructions MUST be left either with the Agent or at the property in perpetuity until the appliance is removed.(copies must be made for the Agent) in case of loss. The Tenants must also acknowledge receipt of these documents. The penalty for failure to provide this can be a custodial sentence and a fine.

For more information about the above please call Appledore Lettings office on 01548 853555.

Landlords, changes in EPC legislation. Will it affect you?

MINIMUM ENERGY EFFICIENCY STANDARDS
IMPORTANT NOTE

The effective ending of the Green Deal means that changes need to be made to the Regulations imposing minimum energy efficiency standards in the PRS. The Government has indicated what these changes could be and they are noted in the appropriate sections below. We would, however, stress that no final decision has been made and the Regulations themselves have not yet been amended.

Research has also identified that energy performance certificates (EPCs) understate the thermal efficiency of solid walls. Many PRS properties have solid walls. Usually they were built pre-1918 but can be later. Again the Government are proposing to recalibrate EPCs to give a truer reading. This could mean that some solid wall properties currently rated F under an EPC will no longer require any work and less work may be required in the case of a G rated property. The Government has yet to bring forward the relevant regulations to implement these changes. Landlords of F and G rated solid wall properties are therefore strongly advised to await developments. Should changes be made then a new EPC will be required. Existing EPCs cannot be adjusted. Once EPCs are recalibrated, in these cases, obtaining a new EPC may mean that you no longer need to comply with the Regulations or less work may be required.

Overview
As from the 1st April 2018 there will be a requirement for any properties rented out in the private rented sector to normally have a minimum energy performance rating of E on an Energy Performance Certificate (EPC). The regulations will come into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020. It will be unlawful to rent a property which breaches the requirement for a minimum E rating, unless there is an applicable exemption. A civil penalty of up to £4,000 will be imposed for breaches. This guidance summarises the regulations. There are separate regulations effective from 1st April 2016 under which a tenant can apply for consent to carry out energy efficiency improvements in privately rented properties.

Scope
The Regulations apply to domestic private rented sector properties in England and Wales. This means –

Properties let under an assured tenancy or a shorthold.
A tenancy which is a regulated tenancy for the purposes of the Rent Acts.
Properties let
(a) On a tenancy which is an assured agricultural occupancy
(b) On a protected tenancy under the Rent Act 1976
(c) On a statutory tenancy under that Act.

Need for an EPC
Properties within scope will include any domestic privately rented property which: has an EPC, and is either (i) required to have an EPC; or (ii) is within a larger unit which itself is required to have an EPC, either at point of sale, or point of let. No changes are made to existing regulations regarding the provision of EPCs.
Flats and houses are subject to the regulations. In the case of flats this means self-contained unit. Non self-contained units such as bedsits do not require an individual EPC.
If a property does not have an EPC then the regulations do not apply.
The EPC must be the current EPC if there is one and this must be no more than 10 years old.

Properties within scope
Properties within scope will include any domestic privately rented property which: has an EPC, and is either (i) required to have an EPC; or (ii) is within a larger unit which itself is required to have an EPC, either at point of sale, or point of let. No changes are made to existing regulations regarding the provision of EPCs.

Flats and bedsits
Flats and houses are subject to the regulations. In the case of flats this means self-contained unit. Non self-contained units such as bedsits do not require an individual EPC.
If a bedsit is within a property that does have an EPC, then the Regulations will need to be complied with before the bedsit can be rented out. Although as such bedsits do not need an EPC if the house containing the bedsit has been sold for example it will have an EPC in which case the Regulations will apply.

Buildings excluded from scope of requirements
The following domestic buildings are excluded from the scope of the requirements:

Buildings and monuments officially protected as part of a designated environment or because of their special architectural historical merit insofar as requirements with certain energy efficiency requirements would unacceptably alter their character or appearance. This includes listed buildings.
Temporary buildings with a planned timed use of 2 years or less.
Residential buildings which are intended to be used less than 4 months of the year.
Stand alone buildings with a total usable floor area of less than 50 square meters.
Listed buildings etc
The extent of the exclusion of listed buildings from the scope of the requirements is unclear. Likewise, in the case of dwellings located within conservation areas. The Regulations state that this exemption is “insofar as compliance with certain minimum energy efficiency requirements which would unacceptably alter their character or appearance”. This exemption is based on a similarly worded exemption from the need to obtain an EPC. Clearly, if a listed building or dwelling within a conservation area does not have an EPC then the Regulations do not apply because only the existence of an EPC triggers the need to comply with the minimum standards. There is a widely held view that all listed buildings are exempt from the need to obtain an EPC, even if they are sold or let out, but, again, the exact scope of this exemption is not clear. The RLA has prepared a more detailed note on this complex subject.

Improvements which can be required
Improvement work which can be required is any energy efficiency improvement work which qualified for Green Deal and the installation of gas for an off gas property so long as the mains are within 23 metres from the property. A list of eligible improvements appears below.

So long as the minimum E rating is obtained, it is left to the landlord to choose which works need to be carried out. Obviously there is nothing to stop a higher rating being achieved.

Prohibition on letting
A domestic private rented sector property is substandard if the EPC rating is F or G, unless an exemption applies. The legislation prohibits a landlord from letting out a substandard property. If there is an EPC in place which shows that the property is an F or G then it must not be let; otherwise the landlord is liable to penalties. This is subject to any available exemptions. Energy efficiency improvements must be carried out to bring the property up to an E rating at the minimum, unless one of the exemptions is applicable. In particular, if the work cannot be carried out so as to meet the Green Deal Golden Rule then there is potentially an exemption. Under the Golden Rule there should be no upfront costs (or any net cost to the landlord) because savings resulting from the works should repay their cost over the expected lifetime of the works.

If a landlord lets and continues to let the property in breach of the regulations, however, the breach does not affect the validity or legality of the tenancy itself, so the rent still continues to be payable.

Exemptions, restrictions on making improvements
Only appropriate, permissible and cost-effective improvements are required under the regulations. Landlords will be eligible for an exemption from reaching the minimum standard where they can provide evidence that one of the following applies:

They have undertaken those improvements that are cost-effective but remain below an E EPC rating. Cost-effective measures are those improvements that are capable of being installed within the Green Deal’s Golden Rule. This ensures that landlords will not face upfront or net costs for the improvement works.
They are unable to install those improvements that are cost-effective without upfront costs because the funding entails Green Deal Finance, and they or their tenant fail the relevant credit checks.
The landlord is required by a contractual or legislative obligation to obtain a third party’s consent or permission to undertake relevant improvements relating to the minimum standard, and such consent was denied, or was provided with unreasonable conditions.
The landlord requires consent, and the occupying tenant withholds that consent.
Measures required to improve the property are evidenced by a suitably qualified independent surveyor, for example from the Royal Institution of Chartered Surveyors (RICS), as expected to cause a capital devaluation of the property of more than 5%. Only those measures that are expected to cause such devaluation would be exempt from installation.
There will be no requirement to install wall insulation under the regulations where the landlord has obtained a written opinion, from a suitably qualified person or from the independent installer engaged to install the measure, advising that it is not an appropriate improvement due to its potential negative impact on the fabric or structure of the property (or the building of which it is part).
Registration of exemptions
All exemptions will be required to be notified to the PRS Exemptions Register which will be operated by the Government. It is planned that this will open from 1st October 2017. It will be essentially a database of exemptions and will be open to public inspection. Failure to register any exemption will render the exemption ineffective, and will amount to non-compliance with the regulations. The Enforcement Authority will be entitled to require landlords to furnish them with evidence supporting a claim for an exemption. Landlords will also be in breach of the regulations if they claim an exemption to which they are not properly entitled.

Duration of exemption
Exemptions will only endure for 5 years. They will then need to be reviewed to see if they are still effective. If not the work will have to be carried out.

Implementation
From 1 April 2018, the regulations will apply on the granting of:
A new tenancy to a new tenant, and
A new tenancy to an existing tenant, i.e. any extension or renewal to an existing tenant. This includes a statutory periodic tenancy which comes into existence at the end of the fixed term shorthold.
From 1 April 2020, the regulations will apply to all privately rented property in scope of the regulations.
Where a lease is granted involuntarily by a landlord, for instance due to operation of law, they may be provided with six months to comply after the tenancy is agreed. Similarly, where a non-compliant property occupied by a tenant is sold, or is transferred to a lender in the event of landlord’s default (e.g. if a receiver is appointed), the new landlord will have six months to improve the property, or seek to demonstrate an exemption applies.
Note: the Regulations actually come into force on 1st October 2016. This is purely for the purpose of allowing landlords to claim exemptions early so that they had their exemption claim in place prior to implementation on 1st April 2018.

Enforcement
Local authorities will enforce compliance with the regulations.
Where a landlord considers an exemption applies allowing them to let their property below the minimum energy efficiency standard, the landlord will need to provide such evidence to a centralised register, the “PRS Exemptions Register”. Landlords may be required to submit relevant evidence and details of their exemption to the Register. The Government may use this information to assist local authorities in targeting their enforcement activity.
Compliance Notices and Penalties
Where a local authority suspects that a landlord with a property in scope of the regulations is not compliant, or has not sufficiently proved an exemption, the local authority can serve a compliance notice on the landlord requesting further information it considers necessary to confirm compliance. If it is not provided, or is provided and is not sufficient to provide compliance, the local authority may proceed to issuing a penalty notice.

Penalties for a single offence may be cumulative, up to a maximum of £5,000. Further penalties may be awarded for non-compliance with the original penalty notice where a landlord continues to rent out a non-compliant property; however, penalties would be cumulative up to a maximum of £5,000. The landlord can be awarded a further penalty when one of the following events occurs:

The tenant changes
The regulatory backstop comes into effect
The penalty regime for non compliance with the regulations will be as follows:

Infringement Penalty
Providing false or misleading information to the PRS Exemptions Register £1,000 Publication of non compliance
Failure to comply with a compliance notice from a local authority £2,000 Publication of non compliance
Renting out a non-compliant property Less than 3 months non compliance
£2,000 fixed penalty
Publication of non-compliance 3 months or more of non compliance
£4,000 fixed penalty
Publication of non-compliance
NB: The penalty amounts are fixed and do not vary according to the severity of the contravention.

Reviews
Upon receiving a penalty notice from a local authority, a landlord may request a review of the local authority’s decision to serve the notice. If a landlord requests a review, the local authority must consider any representations made by the landlord and all other circumstances of the case, decide on whether to confirm the penalty charge notice, and give notice of their decision to the landlord. If the local authority is not satisfied that the landlord committed the breach specified in the notice, or given the circumstances of the case it was not appropriate for a penalty charge notice to be served, they must withdraw the penalty notice. If the local authority is still satisfied that the landlord committed the breach, but the landlord still believes the penalty notice is incorrect, the landlord may proceed to the appeals process.

Appeals
Landlords may appeal any penalty notice on the basis that the penalty notice was issued in error (error of law or fact), the penalty does not comply with the Regulations, or that it was inappropriate in the circumstances for the penalty notice to have been served. The appeal would be heard at the First Tier Tribunal (General Regulatory Chamber).

Improvements which can be required
The following improvements are those which a landlord can carry out and which are eligible to qualify so as to comply with the Minimum Energy Efficiency Standards.

– Air source heat pumps
– Thermostat boilers
– Thermostat room heaters
– Cavity wall insulation
– Solid wall insulation (internal or external)
– Cylinder thermostats
– Draught proofing
– Duct insulation
– Hot water showers/systems (efficient)
– Hot water taps (efficient)
– External wall insulation systems
– Fan assisted replacement storage heaters
– Flue gas recovery devices
– Ground source heat pumps
– Heating controls (for wet central heating systems and warm air systems)
– Heating ventilation and air conditioning controls
– High performance external doors
– Hot water controls (including timers and temperature control)
– Hot water cylinder insulation
– Internal wall insulation (or external walls)
– Lighting systems fittings and controls (including roof lights, lamps and luminaires)
– Loft or rafter insulation (including loft hatch insulation)
– Mechanical ventilation with heat recovery
– Micro combined heating power
– Micro wind generation
– Pipework insulation
– Photovoltaics
– Chillers
– Gas fired condensing boilers
– Replacement glazing
– Oil fired condensing boilers
– Warm air units
– Radiant heating
– Roof insulation
– Warming roof insulation
– Ceiling improvements (including duct ceiling)
– Secondary glazing
– Solar water heating
– Solar blind, shutters and shading devices
– Transpired solar collectors
– Under floor heating
– Under floor insulation
– Variable speed driers for fans and pumps
– Waste water heat recovery devices attached to showers
– Water source heat pumps

Courtesy of the Residential Landlords Association.

Landlords! Were you aware?

Landlords, were you aware that under the Deregulation Act 2015 their is now a responsibility to issue certain documents to the tenant at the start of the tenancy?

These are:

  • The latest version of the Government’s How to Rent Guide.
  • The deposit protection certificate together with the completed Prescribed Information.
  • Proof that the smoke alarms and carbon monoxide detectors were tested on the first day
  • A copy of the latest Energy Performance Certificate (EPC) for the property.
  • Any applicable License from the local authority.

In the case of a property that has one of our independent, pictorial inventories there is no problem in conforming to the proof of smoke alarms and CO2 testing, this is part of the service and documentation of the condition of the property.

However, where a Landlord uses our  ‘Tenant Find’ only service, with no independent pictorial inventory,  we will now be issuing forms for you to complete and submit back to us on the first day of new tenancy in order to comply with the Deregulation Act 2015 to state that you have checked the alarms and that they are in working order prior to tenant entry. If we can help in any way please call the office on 01548 853555. Or email us: info@appledorelettings.com