Landlord Investor SEPT 2015

SEPT

EMBE

R 20

15

LANDLORD | PROPERTY | INVESTMENT

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

IDENTIFYING YOUR WEAKNESSES In ThE PRoPERTy PuZZlE

bEIng A sTuDEnT lAnDloRD:IT DoEsn'T hAVE To bE DIffICulT

- Tom Entwistle

whERE now foR buy To lET InVEsToRs?

- Kate Faulkner

- Nick Gill

swoT: how Do wE DEAl wITh busInEss ChAngE?

C O N TA C T S H A W B R O O K T O D A Y

T 01277 751 112

[email protected]

W W W . S H A W B R O O K . C O . U K

ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT

S P E C I A L I S T

B U Y TO L E T

S H O RT T E R M LOA N S

& R E F U R B I S H M E N T S

C O M M E RC I A L

I N V E S T M E N T S

T R A D I N G

B U S I N E S S E S

T R A N S P A R E N T

L E N D I N G

Our commitment to sustainability and transparency has delivered over £1bn

in lending to property professionals, investors and SMEs.

Shawbrook helps property professionals succeed:

• Transparent finance underpinned by a responsible lending framework

• Personal, case-by-case approach to funding

• Clarity of fees and charges across all products, at all times

• Broad range of competitive short term and term products

• Lending available for individuals, LLPs and limited companies

MOST INNOVATIVE LENDER

2013 & 2014

BEST COMMERCIAL MORTGAGE PROVIDER

2015

Awards 2014

BEST SERVICE FROM A COMMERCIAL

MORTGAGE PROVIDER 2012, 2013 & 2014

COMMERCIAL LENDER OF THE YEAR

2013 & 2014

210x297_SB_CM_Transparent_Q2.indd 1 06/05/2015 16:24

lAnDloRD InVEsToR September 2015

06

2224

1014

34

38

2832

36

20

C O N TA C T S H A W B R O O K T O D A Y

T 01277 751 112

[email protected]

W W W . S H A W B R O O K . C O . U K

ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT

S P E C I A L I S T

B U Y TO L E T

S H O RT T E R M LOA N S

& R E F U R B I S H M E N T S

C O M M E RC I A L

I N V E S T M E N T S

T R A D I N G

B U S I N E S S E S

T R A N S P A R E N T

L E N D I N G

Our commitment to sustainability and transparency has delivered over £1bn

in lending to property professionals, investors and SMEs.

Shawbrook helps property professionals succeed:

• Transparent finance underpinned by a responsible lending framework

• Personal, case-by-case approach to funding

• Clarity of fees and charges across all products, at all times

• Broad range of competitive short term and term products

• Lending available for individuals, LLPs and limited companies

MOST INNOVATIVE LENDER

2013 & 2014

BEST COMMERCIAL MORTGAGE PROVIDER

2015

Awards 2014

BEST SERVICE FROM A COMMERCIAL

MORTGAGE PROVIDER 2012, 2013 & 2014

COMMERCIAL LENDER OF THE YEAR

2013 & 2014

210x297_SB_CM_Transparent_Q2.indd 1 06/05/2015 16:24

wElComE To ThE sEPTEmbER IssuE of lAnDloRD InVEsToR!It has been a very busy summer for us here at Landlord Investor and I am very pleased to say that after weeks of keeping our two boys busy in the summer holidays and juggling work we have all settled back into some sort of normal routine! Sending a huge thank you to our great team for all their help and hard work!

Time to celebrate!

I am delighted to announce that next month we will be celebrating the magazines 1st birthday, look out for our birthday issue which will be available on the 1st October.

More good news!

Audit Bureau of Circulation – Application Approved.

We are really proud to announce that we have had our membership accepted by ABC and are now being regulated by the audit bureau of circulation.

In this month’s issue, our monthly columnist Tom Entwistle explains how using SWOT analysis (strengths, weakness, opportunity and threats) in property investment can help you plan for the future.

Kate Faulkner, looks at where we should be investing our money next and Nick Gill explains why being a student landlord doesn't have to be diffi cult.

It is going to be a manic few months with fi ve Landlord Investment Shows and three issues of Landlord Investor. We really hope to see you at some of our events so please go to page 4 for a full listing of upcoming shows with links on how to book your tickets.

Happy Reading!

3

Expert AdviceIndustry Update

Tax AdviceLettings & Management

L.I.S UpdateGreat Property TipsBuy-to-Let Analysis

Industry SpotlightInvestment

Landlord InsuranceStudent Accommodation

ConTEnTs

Tenants History LTDSouthbridge HouseSouthbridge PlaceCroydon CR0 4HA

Statements and opinions expressed in articles, reviews and other mate-rials 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 Limit-ed 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.

EditorialEditor

Tracey [email protected]

Editorial Contributors

Art Dept.DesignCraig Edmonds

AdvertisingBeverley Meliniotis

Contact0208 656 5075

landlordinvestmentshow.co.uk

/LandlordInvestmentShow

@LandlordInShow

David HumphreyseasyPropertyKate FaulknerNick GillPaul ShamplinaPeter LittlewoodSimon ThompsonSpicerhaartSteve CoxSusannah ColeTom Entwistle

Tracey Hanbury | EditorLandlord Investor

Tracey Hanbury

September 2015 lAnDloRD InVEsToR

mEET ThE TEAm show loCATIons

If you woulD lIkE Any InfoRmATIon AbouT ouR 2015 shows, PlEAsE gET In ConTACT wITh A mEmbER of ThE TEAmoR AlTERnATIVEly, VIsIT ouR wEbsITE AT: www.lAnDloRDInVEsTmEnTshow.Co.uk

sEPTEmbER 24Th - noRTh lonDon / hERTsElsTREE holIDAy Inn

oCTobER 1sT - mAnChEsTERmAnChEsTER unITED fooTbAll Club

oCTobER 22nD - mAIDsTonE - kEnTmERCuRE gREAT DAnEs hoTEl

noVEmbER 19Th - lonDonolymPIA ConfEREnCE CEnTRE

noVEmbER 4Th - souTh CoAsTsouThAmPTon fooTbAll Club

TRACEy hAnbuRyEDIToR & sAlEs DIRECToRT: 0208 656 5075M: 07931 308 [email protected]

sTEVE hAnbuRyDIRECToRT: 0208 656 5075M: 07429 683 [email protected]

lEs hAnbuRyDIRECToR

RyAn DEnnIngTonsAlEs & EVEnTs mAnAgER

T: 0208 656 [email protected]

bEVERlEy mElInIoTIsADVERTIsIng sAlEs mAnAgER


bETh lITTlEwooDsAlEs & EVEnTs mAnAgER


CRAIg EDmonDsCREATIVE DEsIgnER


fRAn RobInssAlEs & EVEnTs mAnAgERT: 0208 656 5075M: 07950 284 [email protected]

4

your-move.co.uk

EA

L193

2 06

/201

5

YOUR MOVE is a trading name of your-move.co.uk Limited, registered in England at Newcastle House, Albany Court, Newcastle Business Park, Newcastle upon Tyne NE4 7YB (number 01864469).

We are members of The Property Ombudsman (TPO), there to protect your interests and we abide by the TPO code of conduct.

YOUR PORTALLet us help you keep track of your lettings information in an instant with YOUR PORTAL.

Landlords.

24/7?

Does your agent giveyou to

your lettings informationaccess

See for yourself. Visit your-move.co.uk/portal for a live demo or contact 0800 014 9329 for more information.

September 2015 LANDLORD INVESTOR

EXPE

RT A

DVIC

E

6

If you wEnT To busInEss sChool, oR you ATTEnDED Any soRT of busInEss CouRsE, IT's moRE ThAn lIkEly you wIll REmEmbER ThE ACRonym, swoT.It stands for: Strengths, Weaknesses, Opportunities and Threats, a useful business “tool” which assists anyone involved in running a business, or any sort of organisation for that matter. It will help you focus on what really matters, using a brainstorming approach.

I would encourage anyone involved in any sort of business, and investing in and renting out proper-ty is certainly a business, to sit down with your em-ployees, your business partner or marriage partner once a year to brainstorm a SWOT analysis on your business.

It really is a useful little device to focus attention on what’s important, and to get everyone involved see-ing the same bigger picture, singing off the same hymn sheet, in the jargon. Business consultants Pe-ters and Waterman in their classic business book, In Search of Excellence, came up with the phrase, “stick to the knitting”. In other words, do what you do best, play to your strengths and identify your weaknesses, but above all stick to what you are best at doing.

Successful businesses develop operating models, ways of working which they have perfected and have proved successful, and can be replicated. You might look at Domino's Pizza or Greggs for example, highly successful operations which have developed a suc-cessful formula, simple systems to be repeated over and over again.

how Do wE DEAl wITh busInEss

ChAngE?Tom Entwistle - LandlordZONE

LANDLORD INVESTOR September 2015

EXPERT ADVICE

7

Pretty much the same idea can be applied to a rent-als operation: develop systems and methods of working, documentary processes which can be fol-lowed by virtually anyone, and which can be replicat-ed. As your portfolio grows, or even if you want to remain small, you are then in a position to be organ-ised with minimum time input, an efficient operation growing an income and capital value which really benefits from economics of scale; make it once and use it many times. What the Americans term a “cook-ie cutter” operation.

Change is inevitable in any business, but it’s how you adapt and embrace change that matters, or as this aphorism - purported but not proven to come from Charles Darwin - puts it: It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.

A case in point is Greggs recent change in strategy, a shops revamp programme that has targeted a “Food on the Go” market, a change which is proving highly successful; witness the tripling of Gregg’s share price over the last 18 months or so.

Change too is a feature of the residential rental mar-ket; right now more change than we’ve seen in 20 years. In 2015 the signs are that the pendulum is be-ginning to swing back a little in favour of tenants, a situation we last saw before the 1988 Housing Act came into force, and this is particularly so in the Scot-land and Wales where new tenant friendly laws are currently being introduced.

Section 21 of the 1988 Act embodied a principle which allowed landlords to reclaim possession of their property when 6 months and the tenancy term had ended, with no reason required, called a no-fault possession procedure.

This was the bedrock on which the rental market started its exponential growth after 1989, because landlords could at last let properties without the fear of being stuck with problem tenants on uneconomic rents.

Although the provision still applies, it is slowly being restricted by requiring more and more criteria to be met, including most worryingly, that a tenant who has complained about repairs can prevent eviction until it is dealt with by the landlord.

While the measure is well intended to act as protec-tion for tenants, it does not take a genius to see that the system is open to abuse by those tenants with a mind to stymie any eviction attempt. A tenant with a history of rent arrears may well be minded to be “creative” about the need for repairs in the property, whilst at the same time being less than cooperative about allowing tradesmen access.

A new section 21 notice will be introduced from 1st October which thankfully will simplify the process of possession proceedings in England. Most of the problems encountered by landlords in the eviction process have been because of the complexity of the s21 notice, with its critical dates etc, but that’s where the simplification ends.

Landlords and agents will need to be really well or-ganised to successfully execute an eviction using section 21.

ThEsE ARE ThE REquIREmEnTs:• Awrittentenancyagreement

• A correctly served prescribed section 21 noticewithproofofservice

• The section 21 notice to be served within stricttimelimits

• Adepositcorrectlyprotectedwithinthe30 daytimelimit

• Adepositnotice(s213)correctlyservedwith proofofservice

• A current Energy Performance Certificate (EPC)fortheproperty

• A current gas safety certificate, served on yourtenant

• Where appropriate a licence for a HMO (subjecttoredefinitionofwhatisanHMO)

• Nonoticesreceivedfromyourtenantsabout repairs

Where a local authority issues a repair notice after a complaint, the landlord will be prevented from serv-ing a valid s21 notice for 6 months.


EXPE

RT A

DVIC

E

8

Landlords will need to have installed smoke alarms and where appropriate, carbon monoxide alarms with arrangements made for testing. They will need to carry out risk assessments for legionella, electri-cal systems and appliance tests and general safety inspections including the grounds outside the prop-erty. It will also be a requirement to give tenants a copy of the Department for Communities and Local Government’s ‘How to Rent’ guide.

Landlords and agents will not be able to serve a sec-tion 21 notice during the first four months of a ten-ancy and will not be able to issue proceedings based on a notice more than 6 months after it was served. Although the new section 21 rules are due to come into force on 1 October 2015, the pre-conditions and time limits will only (until 2018) apply to new tenan-cies created after that date.

In addition, landlords throughout the country will soon be required to carry out right-to-rent or immi-gration checks, which could involve a rather compli-cated process of identification and verifying proof of residency status. The government has issued three guidance documents for landlords on right-to-rent totalling some 36 pages of text.

All of this is becoming quite onerous and time con-suming for landlords and/or agents when managing their tenancies, hence the need for robust systems, administration procedures and action points which produce good documentary evidence to prove that all the requirements have been met, should the need arise for a court process.

Returning to SWOT then; an analysis of your strengths and weaknesses comes down to looking at yourself and your own business model and deciding how you can improve it. Just what do you need to do to ad-dress any weaknesses you may have in the way you manage your rentals business vis-a-vis the above? How can I capitalise on my strengths as a person, and as a business to get the most out of it?

Opportunities are many in terms of property in-vestment in the UK, but we are still faced with many threats, not least of which are increasing bureaucra-cy through more and more regulations; landlord li-censing; tighter controls on mortgage applications; a less generous taxation regime for property land-lords; and campaigning pressure for more and more tenant friendly measures such as rent control, long-term tenancies, and eviction restrictions, from peo-ple that do not understand the motivations and is-sues that private landlords face.

Given all of that, buy-to-let is still likely to give a higher rate of return that most other alternatives for the av-erage small-scale individual investor: with a growing population, inward migration, an increasingly mobile workforce in a growing economy, a growing student population and a severe housing shortage in many parts of the country, all these factors bode well for the rental market for the foreseeable future. ⌂

Tom Entwistle is an experienced landlord andfounderofthewebsiteportal,LandlordZONE®

®

Professionals Rely on TenantVERIFY®

Established - 1999 - 0845 260 4421 - TenantVERIFY.co.uk

TenantVERIFY®

for Landlords & Letting Agents Credit Checks & ReferencingWe verify thousands of Tenants and Guarantors for busy Landlords & Agents every year.

We pride ourselves on our First Class, Fast & Efficient Credit Checks & Referencing -Residential & Commercial Tenants, Guarantors & Limited Companies.

Basic Credit Checks within 2 hours, full Referencing Checks normally within 2 days, & International Checks within 5 days.

C

M

Y

CM

MY

CY

CMY

K

TV_LALS_v14-2.pdf 1 2/5/2014 9:52:43 AM


shoulD I bE woRRIED AbouT ImmIgRAnTs?

Peter LittlewoodSouthern Landlords Association

A recent report by the Office of National Statistics shows net migration rising.

During the 1960s and 1970s, there were more people emigrating from the UK than arriving to live here, and during the 1980s and early 1990s, net migration was typically above zero.

Since 1994 however, it has been positive every year and net migration peaked between 2004 and 2007,

in part as a result of immigration of citizens from the countries that joined the EU in 2004.

Before the current peak, annual net migration has mostly fluctuated between around 150,000 and 250,000

Interestingly enough the same report shows that the trend is for EU citizens, rather than non-EU to come to this country.

It seems that immigration has been more present in recent media than ever before,and it's starting to worry landlords...

InDu

sTRy

uPD

ATE

Long-Term International Migration for the UK, 1970 to 2014 (annual totals) Source: Office of National Statistics

10


so how DoEs ThIs AffECT lAnDloRDs?Simple, no matter where they have come from, you will have to check the right for a prospective tenant to live in this country.

This is part of the Governments clamp down on illegal immigrants, in that in future no-one will be able to register with a doctor; open a bank ac-count; get a job, as well as rent a home unless they prove they are allowed to be in this country.

The scheme to check prospective tenants is being trialled in the Midlands and is due to be rolled out across the whole country soon – but no date has been announced as yet. However it is a good idea for landlords to start checking now. This is both good practice, and will ensure you don’t offer to someone you shouldn’t - because, although the legislation is not retrospective it will apply if a land-lord renews an existing contract.

A recent map published by the Guardian news-paper shows that the majority of immigrants are living in the South, especially London, and the Can-terbury area. So landlords in that area have to be especially wary of who they offer to.

And it doesn’t stop there. Landlords have to be sure that their tenants retain their right to remain in this country, so unless you know that they have some form of permanent right to remain you will need to check on an annual basis. You will need to see appropriate original documents and keep copies of them for at least 1 year after the tenan-cy ends. The list of valid documents is too long to re-produce here, but in essence are appropriate passports, with visas where required.

ThE goVERnmEnT hAs IssuED ThIs guIDE To ChECkIng:

InDusTRy uPDATE

How: Landlords must check:

1) Photographs and dates of birth are consistent across documents and with the person's appearance in order

to detect impersonation;

2) Expiry dates for leave have not passed;

3) The documents appear genuine, show no signs of being tampered with and belong to the holder;

4) The reasons for any different names across documents (e.g. marriage certificate, divorce decree,

deed poll). Supporting documents should also be photocopied and the copy retained.

Obtain

How: Landlords must ask for and be given original documents from either List A or List B of acceptable

documents.

Landlords must obtain original acceptable documents.

Landlords must check in the presence of the holder (in person or via live video link) that documents appear

genuine, that the person presenting them is the prospective occupier, the rightful holder and allowed to

occupy the property.

Landlords must make a clear copy of each document in a format which cannot later be altered, and retain the copy securely: electronically or in hardcopy. Landlord

must retain a record of the date on which the check was made, and retain the copies securely for at least one year after the tenancy agreement comes to an end.

How: Landlords must copy and retain:

1) Passports: any page with the document expiry date, nationality, date of birth, signature, leave expiry date, biometric details and photograph, and any page

containing information indicating the holder has an entitlement to enter or remain in the UK.

2) All other documents: the document in full, including both sides of a Biometric Residence Permit.

Check

Copy

11


www.bishopandsewell.co.uk

If it matters to you, it matters to us

We can assist you with a full range of legal services including:

• Landlord and Tenant • Extending your lease • Buying your freehold• Right to Manage • Commercial Property • Residential Property

We are committed to supporting our clients with all leasehold property matters and are proud of the outstanding reputation and knowledge of our team of legal professionals.

Please contact Mark Chick’s team for an initial discussion:

T: (+44) 020 7631 4141 E: [email protected]

Bishop & Sewell LLP59-60 Russell Square, London, WC1B 4HP

Mark Chick Partner and ALEP Director

12


Additionally, it is strongly recommended that all prospective tenants are checked, even if they are not named on the agreement, but currently does not apply to children under the age of 18.

Also, don’t forget that all tenants have to be checked, even those holding a British passport. If in doubt contact the Landlords Helpline on 0300 069 979.

Please don’t ignore this – it is not going to go away.

goVERnmEnT ConsulTATIonsMr Osborne appears to have the Private Rented Sector firmly in his sights.

Firstly the allowance for landlords to improve the insurance in their properties – LESA (Landlords Energy Savings Allowance) – finished last April. So if you are yet to do last year’s tax and have spent money on insulation improvements make sure you claim your allowance.

This is the last time you can claim - it’s next to the 10% wear and tear allowance.

And talking of the 10% Wear and Tear allowance, this is also under threat as the Government is pro-posing to remove this and replace it with a scheme whereby you can only claim for actual expenditure. It is true that the 10% carte-blanche allowance has been very generous, but the proposed scheme will have a lot of administration for landlords and HMRC alike.

It is also (likely) to be complicated in that if, for instance, you replace a washing machine with a washer drier, then only that part of the expenditure deemed to be applicable to the cost of the washing machine only can be claimed. The extra is consid-ered an improvement and can only be classed as capital expenditure, only claimable when you sell the property.

There is a consultation on this to be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447461/150715_Wear_and_tear_condoc.pdf (sorry, rather a long one). I urge you to participate in this.

And finally, the big one. Mr Osborne is proposing to reduce the substantial allowance on interest payment to 20% only from April 2020. For anyone on the top rate of 45%, or even those on 40% this will result in much larger tax bills.

There is no consultation on this, but there is a peti-tion to be found at https://petition.parliament.uk/petitions/104880

The main message is to start long term planning on your budgets and finances. DON’T turn a blind eye. There may also be an interest rate rise next year – can you afford that? ⌂

InDusTRy uPDATE

13


TAX fREE REnT &no monEy lEfT In:ThE fIVE yEAR sTRATEgy 2015-20

David HumphreysProperty Investor Online

ThE ConsERVATIVEs ARE In PowER AnD shoulD REmAIn ThE goVERnmEnT unTIl 2020.In the post-election budget, they showed their hand regarding the Private Rented Sector, reducing the mortgage interest relief tax rate, which a substantial number of landlords are making a fuss about, and also abolished the 10% Furniture Depreciation Allowance, which was a very useful tax benefit because you could qualify for the 10% FDA by spending as little as £200 on a 2 bed property and deduct 10% of the gross rent before calculating your tax liability. Anyway that allowance has gone and if the Internet Forums are to be believed, nobody seems particularly bothered.

Thankfully, though, Mr Osborne did not reduce/limit a landlord's ability to set-off/deduct from their rental income the cost of repairing & maintaining their properties before calculating their income tax liability.

The result is that all property investors, from existing to thinking about it, can buy rundown housing, fix it up and set-off a high percentage of the fixup costs against their rental income, both current & new.

The result is that no tax is payable on any positive cash flow until all the "fixup" costs have been recovered and outstanding year-end losses can be carried forward year-on-year.

I must stress that I am not an accountant, and this article does not constitute, and is not intended to be either tax and or investment advice. This is a strategy I operate for myself and clients, and have done so for many years. If this strategy interests you then you should consider taking qualified professional advice before making any commitment.

TAX

ADVI

CE

14


And you may say, and some do, you may not have a tax liability with this strategy, but surely you will lose your positive cash flow because you will have to use it to pay for the fixup, and it will take years before you get your positive cash flow/income back. Thankfully that is not the case as I will show you.

It is accepted that if you buy rundown property, it is possible to fix it up so that the value of the property is greater than the initial cost of the property plus cost of fixup. The fixed up value can even be substantially greater than the two costs combined.

If the fixed up property is let, it is possible to re-mortgage the property, repaying the investor the cost of fixup leaving their positive cash flow unaffected and pay the interest on the re-mortgage with the new rental income from the fixed up property, possibly even generating a surplus.

Depending on the final fixed up value, it is also possible to borrow, via a re-mortgage, the whole cost of buying and fixing up the property resulting in a property investment that does not include any of the investor’s cash, a NMLI deal (No Money Left In) allowing the investor to reinvest/recycle their initial capital in a similar deal, possibly increasing the tax free years.

There is virtually an inexhaustible supply of distressed rundown property as is evidenced by the Empty Homes Agency Statistics which lists the total number (600,000+), with a County, City or Town breakdown so it is relatively easy to shortlist a number of potential investment locations based on the number of "empty" homes in the city/towns in your list.

As a property ages, it can quickly become distressed and rundown unless it is continually maintained on almost a monthly basis dependent on the season and any break in occupation, such as repossession, divorce, relocation, death, etc. can accelerate the deterioration.

In some locations there are literally streets and streets of distressed rundown property and, off-topic, I am sure that the well-publicised housing crisis in the UK could be substantially reduced if these properties were renovated and once again became sought after homes.

Unfortunately, street and streets of empty distressed housing generally do not make good investments, principally because few people like living next to an empty boarded up house as they are a magnet for anti-social behaviour, vermin, the four-legged variety, and can detrimentally affect the fabric of adjoining properties. So my advice for the single property buyer is to find a location/neighbourhood where people already want to live, also few investors can raise the capital needed to buy the entire neighbourhood.

Off-topic again, I once looked at a street of 27 terraced houses in Stockton on Tees. Bar a couple of the houses, all were boarded and in various states of distress. The surrounding neighbourhood was reasonable with the majority of the properties occupied. Our idea, client investors and I, was to buy all the properties, fix them up to a high standard either for letting or sale, removing a blight to the neighbourhood.

We worked out the mechanics of how we would do it so as to avoid the possibility of vandalism in the fixed up houses during works and before occupation, because once a vandalism has happened the property remains at risk till occupied, talked to a few local residents who said they would help us and then approached the property owners, a local Housing Association and the Local Authority who between them owned all the boarded houses. Whilst the Housing Association liked our plans, the Local Authority didn't and wouldn't play ball and so the project had to be abandoned.

TAX ADVICE

15


WE OFFER:Guaranteed Rent 1 to 5 years

•Rent paid even when your

property is empty•

No risk of rent arrears•

No risk of legal /eviction costs•

Protection againsttenant damage

‘The Guaranteed Rent Specialists’

Photo: Nish Dattani, Director of Green Assessors, Award Sponsor (left) with Romesh Muthiah, Co-Director of Central Housing Group Ltd (right).

PLEASE CALL TODAY on

020 8447 1222or visit

www.centralhousinggroup.comEmail: [email protected]

LANDLORDS WANTED!WE PAY GUARANTEED RENT!

N A T I O N A L L E T T I N G S A W A R D W I N N E R

Est. 2000

Woodgate Studios 2-8 Games Road Cockfosters Hertfordshire EN4 9HN

16


But there are many ways of finding single distressed rundown properties that are located in good neighbourhoods to buy that do make good investments because they need renovating, modernising, improving, updating, all terms used in estate agents particulars and auction catalogues.

They also come in a variety of degrees of distress so virtually every budget and investor level of experience can be satisfied. Some need little more than what is termed a "makeover", probably a new bathroom and/or kitchen, certainly redecorated, probably some repairs and generally tidied up, two, maybe three weeks work. These properties are generally sold by both estate agents and auctioneers.

Others haven't been touched for decades, even though they may have been lived in until quite recently. These properties are mostly sold through the auction rooms rather than estate agents and are the ones I want to buy because they are ideal for my strategy.

The reason I like seriously rundown distressed property is that it means that I can fix up the property to virtually as new condition. I am buying little more than the shell, floors, walls and roof, all of which may need a little TLC.

But what many investors don't realise is that provided the distressed property was "capable of being lived in" when bought, and "capable of being lived in" is very much a grey concept, the cost of fixup, the renovation, can be split between Revenue and Capital with the Revenue element being set off against the rental income of the entire portfolio before tax is assessed.

This means that normally taxable rental income can become Tax Free Positive Cash Flow until such time as the renovation costs have been completely set-off against the rents collected.

Obviously, the higher the cost of renovation the longer the period of Tax Free Positive Cash Flow.

Whilst the same Revenue/Capital split applies to makeovers, because there is less cost involved in carrying out a makeover, it may only have the effect of reducing the tax payable in the year of renovation rather than eliminating it for some years.

So where do you start? Your first decision is where are you going to invest and your cash pot will probably be the principal driver. You can borrow up to 70% of the cost of buying "distressed" property, particularly at auction, from specialist lenders offering "Bridging Finance" which you will generally arrange through a Bridging Finance Broker, such as Kevin Wright whose Recycle Your Cash Workshop is reviewed on the Property Investor Online website, but the property costs of the strategy are not just the cost of the property, you will have legal fees to pay, plus auctioneers premium if you're buying at auction, and of course the cost of fixup, though you may be able

TAX ADVICE

17


For example the EIG August 2015 stats for the period May 2015-July 2015 lists the average hammer price for the North East Region at £73,000 across 526 lots sold out of 787 offered. There were also 261 lots unsold, either in the room or on the day of the auction. But but but, let's prove our 50% rule and see what we get for our money.

Auction House North East held an auction on the 21st July with 38 Lots, a relatively small auction, and you can see the results on their website because you have to be a member to see the results on the EIG website. Starting with Lot 5A, a 2 bed terraced house in Peterlee, County Durham, needing work, sold for 20k. Same auction, Lot 7, ground floor flat (3 rooms) in New Herrington, Tyne & Wear, went for 30k and finally, Lot 36, 2 bed semi in Hartlepool sold for 35k, still under 50% of the average hammer, so 3 Lots out of 38 sell for less than 50% of the average for the Region.

So take a look at the EIG Regional Analysis on Property Auction Expert FB page, because the average hammer is worked out for you. You will see that 6 Regions are less than 100k average, which means you can buy property for less than 50k, maybe as low as 30k. 3 Regions average less than 150k, so you can buy a property at auction, needing work and ideal for a Tax Free Rent & NMLI Strategy for less than 75k. Add 25k for fixup, borrow 70% with Bridging Finance and you can get started with less than 50k cash.

Next month I will look at what makes an ideal property for both long-term Tax Free Rent and equally importantly NMLI, No Money Left In the Deal.

Finding “Ideal Properties” can be compared to “Panning For Gold” because the Nuggets are there, but often very difficult to find!

If you want to know more about my Tax Free Rent, NMLI & Panning For Gold Strategies, all through Auctions, come to the Landlord Investment Show at Elstree Holiday Inn in Borehamwood, Hertfordshire on Thursday, September 24. ⌂

to delay some or most of these costs until you re-mortgage on completion of works. But, at the very least you will need cash to cover 30% of the cost of the property, plus legals, including auctioneers premium.

Now it can be difficult to find out what you can buy, or rather where you can buy, with a fixed amount of cash and this becomes even more difficult when you are looking at distressed property but there is a little-known source of this information which is in the public domain.

The source is the Essential Information Group, or more commonly called the EIGroup, which is the leading database for auction statistics in the UK. EIG is a membership site, but each month, and this aspect is little-known, they publish a newsletter which is available to the general public, you don't even have to register to view.

The newsletter is a "Regional Auction Analysis" consolidating & breaking down the results of all UK property auctions into each of 13 UK Regions, then splitting between "Residential" & "Commercial". Listed are all the relevant data needed to work out the average hammer price and number of unsold lots, unsold lots are very useful because generally they are owned by very motivated vendors now disappointed by failure to sell at the auction.

We number-crunch and publish this information, courtesy of EIG, on our "Property Auction Expert" Facebook page, but, let me tell you, that having number-crunched the results we can show that it is possible to buy a property in any of the regions for as little as 50% of the average hammer price for that particular region.

TAX

ADVI

CE

18


96 PROPERTIES IN 9 MONTHS, £8.5 MILLION PROFIT, £48K+ IN MONTHLY RENTSI’LL SHOW you how YOU can do it yourself! And even SHARE the profits

Marco Robinson is a leading local and international property expert. He owns over 100 properties both locally and overseas.

Normally

worth £3,000

now £29.99 for the

1st 100 SEATS ONLY

AAend this seminar& you will receiveONE FREE TICKETto win a Bali holiday1. Four award winning Research Tools that guarantee you will find positive cashflow properties in beginning cycles.

2. NINE Ways of Borrowing money to buy properties so powerful you will be owning property within 3 weeks of aaending this one day workshop

3. How to invest SAFELY in the United Kingdom & secure a UK property without using your own money!

4.4. How to get great cash paying tenants before you even buy the property

A total of 8 hours Award Winning Education for £29.99

WE ONLY HAVE 100 SEATS AVAILABLE. WE ARE ALSO DOING A CAMPAIGN ONLINE....SO PLEASE HURRY AND BOOK YOUR SEAT RIGHT NOW

Disclaimer: people aaending this seminar at their own emotional risk. We are not responsible for anyone being offended. No property will be sold or offered at this seminar. All claims will be substantiated though real life case studies and company bank statements. *Based on August 2011 mph online, monthly bestseller

10th OCTOBER10am - 5pm

or Email [email protected] or SMS 5SEM to 88802 for further details

MERCURE LONDON WATFORD HERTS WD25 8JHBOOK NOW CALL 01923 866 093 OR GO TO WWW.SEMINARWATLANDLORD.CO.UK

11th OCTOBER10am - 5pm

or Email [email protected] or SMS 12SEM to 88802 for further details

THE HILTON PARADISE WAY COVENTRY CV2 2STBOOK NOW CALL 02475 070 138 OR GO TO WWW.SEMINARMIDSLANDLORD.CO.UK

Simon Paul is a property investing expert and landlord with over 24 years experince in the field he currently owns over 100 properties

Yes, this 1 day property bootcamp that is seeing thousands of investors financially free is back with a vengance. World renowned property experts Marco Robinson & Simon Paul are going to be revealing their strategies that will take your property buying skills to dizzying new heights.....

IDEAS EXPERTISE

Right-To-Rent Checking ServiceSafeguarding landlords from facing a £3k fine and five years in prison

üZero liability for landlords and estate agents

üFree access to our immigration helpline

üGuaranteed compliance with the Immigration Act

ü20% off your first ten right-to-rent tenant checks

üInstant turnaround – no delay on tenancy

üRight-to-rent certificate

Protect yourself today

0843 357 [email protected]

19


lAnDloRDs ARE sAVIng ThousAnDs by DoIng IT ThEmsElVEs

wITh hIgh sTREET EsTATE AgEnCIEs ChARgIng hIgh RATEs of CommIssIon on lETTIng sERVICEs, IT ComEs As no suRPRIsE ThAT mAny of bRITAIn's lAnDloRDs ChoosE To go IT AlonE.But in an effort to save hundreds - or even thousands - of pounds in fees, DIY landlords may struggle to find quality tenants.

Void periods and bad tenants both end up costing you money, but fear of the first can often lead to the second. The solution is to quickly generate a large number of good quality tenant enquiries, giving you the widest possible choice. Combined with proper referencing, this gives landlords the best chance of finding the right tenant.

gETTIng EnquIRIEs ThRough RIghTmoVE AnD ZooPlAHigh street agents talk about having lots of quality tenants ‘on their books’ - but the truth is 90% of people looking for a property do so online, and nowhere more often than through the UK’s leading property portals, Rightmove & Zoopla. These sites drive the vast majority of quality enquiries nowadays.

However, only registered agents can directly upload properties to these sites, making it tough for DIY landlords to gain access to the best tenant-find tools. Until recently, they had to choose between expensive agent fees or making do with leafleting, local press advertising, or classified ad sites to find tenants themselves.

However, this has now changed in a big way with the rise of online agents.

20

lETT

Ings

& m

AnAg

EmEn

T


'PICk-AnD-ChoosE' lETTIng AgEnTsLandlords can now buy all of the services they would expect from the high street – for a fraction of the cost. Not having branches, it turns out, saves a lot on overheads, and those cost-savings are passed onto customers in the form of lower prices.

For example, the standard letting pack from easyProperty.com offers industry-leading tenant referencing, an eye-catching ‘To Let’ board and, most crucially, an advert on Rightmove, Zoopla, and PrimeLocation to get those viewing requests flowing in.

Try it for the first week for free with no tie-ins, and then if you want to continue, pay just £9.99 a week. A package like this represents a saving of hundreds of pounds when compared to high street agents – whose commissions commonly run to over 10% of your monthly rent for a ‘let only’ tenant find service, more if you’d like them to manage the property as well.

DoIng ThE sumsLet’s imagine you’re a landlord with a 3-bedroom house in Harrow. After some research, you decide to rent out the property for £1,500 a month. If you choose to find tenants through a high street estate agent, you would be facing around 10% commission (often more) month in, month out, for as long as those tenants stay.

Over the first year, this works out to £1,800 – not including additional charges for tenancy agreements, inventories and other such admin, and before VAT is added on at 20%, so you’d be looking at agency fees of at least £2160 all-in.

For an online agent’s take on the traditional high street service, just consider easyProperty’s Complete lettings pack.

Forasimpleone-offflatfeeof£275you’dreceive:

There is no commission to be paid, and no mandatory extra fees. What’s more, the price includes VAT, so no need to factor in an extra 20% on top. There’s also a special summer offer giving you 6 months free property management when you choose this pack.

By going with easyProperty over a high street letting agent you will have saved at least £1,885 in the first year alone.

Once you do the sums, it’s easy to see why landlords are leaving the high street in droves. ⌂

Tofindouthowyoucanprofitfromusinganonlineestateagent,gotoeasyProperty.com

A professionally created advert(with photos, floor plan and descriptions)

Listings on Rightmove, Zoopla, and PrimeLocation

An eye-catching ‘To Let’ board erected for you

An open house (or group viewing)

Tenant referencing at no cost to the landlord

Arrangement of deposit protection

An ARLA-accredited tenancy agreement

Management of tenant enquiries

21

lETTIngs & mAnAgEm

EnT


22

Dear Reader,

ABC (Audit Bureau of Circulations) is an independent industry body that audits the circulation fi gures for a range of media. Our primary function is to off er you, the advertiser peace of mind by providing independent verifi cation of the circulation fi gures quoted to you by media owners.

I am writing to you with the news that Landlord Investor had its ABC application approved on 20th August 2015.

For publishers, an ABC Certifi cate gives credibility to what is often the most sensitive and vital aspect of a magazine’s competitiveness; the circulation. Within the UK, most leading publications have their circulations authenticated by ABC – an independent, internationally recognised circulation audit bureau.

Truly independent circulation audits require publishers to verify their circulation claims with print and distribution evidence, full mailing lists, and, supporting source documentation where applicable, all to an agreed industry standard. Publications with uncertifi ed circulations provide no independent guarantee that their circulation is accurate or indeed targeted to the buyers you need to reach.

If you would like to know more about ABC and its activities then have a look at our website atwww.abc.org.uk or call our offi ces on 01442 870800 and ask for the Business Media Division.

Yours sincerely,

AbC gIVEs lAnDloRD InVEsToR ThE gREEn lIghT

l.I.s

uPD

ATEs


lET's look AT how To buy youR PRoPERTy DEAl AT AuCTIon. These are the stages I go through when buying from auction:

1. Auctioneer publishes properties, on line and in their catalogue.

2. You do your desk and telephone research to evaluate the properties and identify a number you would be happy to buy – I never focus on buying only one, I always prefer to have a number of properties, usually 4 plus. This makes auction work more efficient as I increase the chances of buying, and reduces any emotional involvement with an individual property, which is bound to push up my top price.

buyIng fRom AuCTIons:PART onE

Susannah ColeThe Good Property Company

I loVE buyIng PRoPERTy fRom AuCTIons. IT Is A fun, EXCITIng, fAsT AnD CERTAIn wAy To bE suRE you hAVE sECuRED youRsElf A PRoPERTy.It is absolutely one of my favourite ways to buy property deals.

Did you know you can buy property three ways from Auction; pre, during and post, thus increasing your chances in picking up a great deal? Here at The Good Property Company, we pretty much buy from auc-tion every month, landing some fantastic property deals as a result.

Snap up a fantastic property deal at Auction – simple when you know how.

24

gREA

T PR

oPER

Ty T

IPs


3. Identify which strategy for each property you are interested in – am I going to Buy and Sell the property, rent it out as a single let or move it to a Shared House, or HMO (House of Multiple Occupation). I also want a worked out Plan B for each property, in case Plan A does not quite come off – it has been known in property!

4. Identify a funder for each property, usually bridging company or cash purchase.

5. Attend Viewing slots – often once a week, for 30 minutes, first yourself and then a second visit with your builder

I do a very quick viewing, as most of the work in iden-tifying a deal is desk research and administration – sorry to make it sound so glamorous, but knowing what it is worth and how you can fund it will get you closer to a deal than spending hours enjoying the view of something you may not buy!

hERE ARE A fEw of my AuCTIon VIEwIng TIPs

1. Take a camera and photograph the site. This is to help you remember the property – once I have viewed more than 10 I tend to lose the detail.

2. Take a clipboard plus a prewritten form (I call mine the Property Viewings Recorder). Fill it out in advance with the address, so you can record aspects about the property to remind you about layout, property attributes, costs and work needed, as well as neighbourhood details that can only be picked up from being on site, that are easily forgotten or mixed up once you drive off.

3. Enter onto your Sourcing Offer System, which is a spreadsheet we use to track all our viewings, offers and properties bought. That way we can track our efficiencies – how many we view, as a ratio of how many we buy is a great measurement to track. It also allows you to know how many you need to view in the future, to hit the number of properties you want to buy.

4. Look at buying one of at least four properties at each auction, and work on all four, knowing only one will be coming home with you that night!

5. Listen to the auctioneer, but don’t listen! What I mean by that is that they are there to sell, not to neutrally inform you. I once was at a viewing of a house worth no more than £130k, done up, which had a guide price of £95k. It had serious subsidence, and required a large refurb to get it back to standard. The house next door had sold, in a bubble I think, for £178k.

25

gREAT PRoPERTy TIPs


However, by doing wider research, it was clear that the general market value of these houses was £130k. The auctioneer took great delight in telling every person who entered the property (and there were hordes) that the neighbouring house fetched £178k, which to be fair was true, but a real fl uke. As a result, the property got an unrealistically high price at auction, tens of thousands more than it was worth. The buyer had not done their homework, and I always wondered if the buyer had managed to get funding on the property, due to paying so much over the odds, or if they got stung and lost their deposit.

So now we have looked at general tips on viewing and buying properties coming up for auction, let’s look at how to benefi t from Buying from Auction...

ThE ThREE RouTEs To buyIng AuCTIon PRoPERTIEs:1.PreAuctionPurchase

2,AuctionPurchase

3.PostAuctionPurchase

The fi rst, buying the property prior to auction is not a widely known strategy. We aim to buy at least one a month in this manner, as you get great property bargains, swiftly. I thought it would be useful to go through the stages of buying a property pre auction.

PRE AuCTIon PuRChAsE CAsE sTuDyPembroke Road

• Bought £175k

• Refurb 20k

• Sold £240k

• Reason – owners in Dubai, tired fl at

• Location: best part of Bristol

As you can see, buying pre auction can be highly profi table. Let’s cover the stages you need to follow.

8 buyIng fRom PRE AuCTIon sTAgEs1. Find out which properties are available for pre auction off ers – some will and some won’t. Your auc-tioneer can guide you here.

2. Do your analysis on their end value, and also the cost to refurbish the property

3. Identify how you will fund the property, and start the funding application with a fast funder – likely a bridging company, so that you are ready to actually submit the second you buy it. So in practical terms, make sure you know what documentation the funder will need, and make sure you have it to hand. Also see if you can get a DIP (decision in principle) for your top price, so you go to auction fortifi ed by this knowl-edge; fewer sleepless nights will follow!

4. Put in pre auction off er, with proof of funds (which may at this stage only be a deposit, with an applica-tion pending for bridging) and your solicitor’s details

5. Get your off er accepted – congratulations!

6. Conveyance on a daily basis, working with your funder and your solicitor, to complete all paperwork needed to get the funding and exchange prior to the auction day. We have been known to exchange around 3.30 pm, when the auction starts at 6.30, a little hair raising, but at least we withdraw the prop-erty for sale at auction that way!

7. Exchange very fast, in advance of the auction date, (often only a few hours, but aim for earlier!) paying a 10% balance.

8. Complete within 28 Days, by paying the balance of the purchase price in time.

Pre Auction is probably my favourite way to buy – you know it will get bought in less than 3 weeks, all parties’ minds are focused and you can get onto the property development super fast with no time wast-ed, and no uncertainty about buying it once you have exchanged. ⌂

26

gREA

T PR

oPER

Ty T

IPs

Recently Sold Lots from our July Auctions include ...

The UK’s Leading Independent Regional Land & Property Auctioneers

September Catalogue Now Available E-catalogue, download or post

Entries invited for the following Sales2-6 November Closing date: 5 October14-18 December Closing date: 16 November

GIL

LIN

GH

AM

, KEN

T

BR

IGH

TON

, E. S

USS

EX

Residential Investment (3 Flats)SOLD: £312,000

Freehold Ground RentsSOLD: £28,000

SID

CU

P, K

ENT

High Street InvestmentSOLD: £340,000

PEN

GE,

LO

ND

ON

CH

ATH

AM

, KEN

T

12 Lock-up GaragesSOLD: £56,000

Vacant CommercialSOLD: £106,000

GO

SPO

RT,

HA

MPS

HIR

E

Re-development ProjectSOLD: £298,000

WES

TCLI

FF, E

SSEX

Ground Floor Flat for InvestmentSOLD: £119,000

ST A

UST

ELL,

CO

RN

WA

LLFire Damage/Re-development

SOLD: £70,000

Suitable Auction Lots Include> Houses, flats, bungalows & cottages for improvement.> Tenanted properties (commercial & residential). > Vacant commercial premises, building plots, development sites & conversion projects. > Farms and smallholdings, woodland, grazing & leisure land. > Garages. > Freehold/Leasehold ground rents. > Unusual lots such as Martello towers; nuclear bunkers; churches; theatres and even sea forts!> Any property where there is potential to add value.

The professional and effective land and property auctioneering service across southern England

For advice regarding all aspects of the auction process call

0345 8500333 or [email protected]


ThE lAsT 12 monThs hAVE bEEn A bIT of A RollER CoAsTER RIDE foR PRoPERTy InVEsToRs.On the one hand there has been good news with the cost of mortgage finance dropping for many, but on the other, my constant warnings at the landlord investment shows over the last 12 months of the likelihood of taxes being increased for landlords has come true (for some) with the changes to mortgage tax relief and wear and tear allowance. And, based on feedback I’ve received it’s rightly frightened many an investor.

So what are the real implications for property inves-tors of the changes to mortgage tax relief? Well in reality it’s not going to start to bite until 2017, then it’s introduced in stages, so the full effect won’t be felt until 2020.

This means there is no need to panic, but it does mean you can’t stick your head in the sand and ‘hope’ for example that you can just increase rents each year to compensate for the lost relief as the market may not allow for this.

REVIEw youR fInAnCEsFor those already owning property, what you really need to do is double check you are paying the lowest fees for the biggest cost you incur: which is likely to be your mortgage. The majority of landlords I have asked over the last 12 months have told me they ha-ven’t reviewed their mortgage finance at all. This is despite the opportunity of saving thousands a year if you have multiple properties or saving this level of money over several years if you have just the one.

And don’t forget to go to an experienced buy to let broker such as Mortgage Advice Bureau. Many mort-gage lenders don’t deal directly with landlords, so not going to see one and trying to do it on your own isn’t necessarily going to get you the best result.

whERE now foR buy To lET InVEsToRs?

Kate FaulknerProperty Checklists

28

buy

To l

ET A

nAly

sIs


ChECk youR REnTI review all the rental indices I can every quarter and talk to agents on a regular basis. One of the most interesting learnings is how little individual landlords increase rents annually – especially to existing ten-ants. It’s ironic that there are those looking at rent controls when the Office of National Statistics has shown that on average, rents increase at a lower rate than inflation, just 2% annually over the last 10 years. And according to Countrywide, rents to existing ten-ants hardly increase at all over the time the tenant lives there, so effectively there is a ‘natural cap’.

Up until last year it was pretty difficult to increase rents to tenants as they can only afford typically to pay more rent if their earnings are rising at a faster rate than inflation. This didn’t happen for some years since the recession until October 2014 and low and behold, rents started to rise when wages started to increase beyond the rate of inflation.

What’s even more fascinating is that social rents and rents from large landlords tend to increase by infla-tion or inflation plus a higher amount, say 0.5% or 1%. And to verify this, the English Housing Survey 2014 measure social rents increasing at twice the amount of private rents since 2008.

So if you haven’t increased your rents to your exist-ing tenants, then double check if local rents have in-creased and aim to negotiate an increase with your tenants which is deemed fair for both sides. This means you can still keep them in the property, but start to help reduce the effect of the further loss of tax relief.

AVoID VoIDsIt’s worth making sure too that your property is in a decent condition. Spending money on a property at a time when you are going to earn less income might seem hard to do, but a property in good condition will rent well and quickly. And it is essential to make sure that you keep your property in a good state of repair so if you need refinance or sell, you can max-imise the value.

gET InDEPEnDEnT fInAnCIAl ADVICEMany landlords or would be investors I speak to are investing in property because they don’t trust finan-cial advisors. But just because you’ve been let down in the past doesn’t mean you will be in the future.

The reality is not getting independent financial ad-vice can cost you – and anyone inheriting from you – a fortune if your affairs are not properly in order from a trust or tax perspective.

But there is also another reason now why you need to see an independent financial advisor. What is not been talked about much by property investors is the changes to tax for other types of investment, some of which may end up being potentially good news. Now to me, you need a regulated, independent fi-nancial advisor, such as Chase de Vere who I work with. They can advise you on what to do with your money to reach your goals such as financial freedom, retiring early etc. But if one asset is being taxed more and other assets are attracting a better taxation re-gime, then this is something that just like checking on the pros/cons of mortgage re-financing, you need to keep up to date with so you know the best way to invest for the future. Remember, just because prop-erty has delivered well for you in the past, it doesn’t mean it is necessarily the best moving forward.

29

buy To lET AnAlysIs


look foR CAPITAl gRowTh oR go foR PuRE InComE gEnERATIonBoth now and in the future, you really have to crunch the numbers on property investment. Just relying on rent being 25-30% more than the mortgage doesn’t always mean the property will be cash fl ow positive. Buy to let for capital growth overtime is still achiev-able, but if it’s income you want, then you may have to look at other ways of generating it, unless you go down the Houses in Multiple Occupation route.

Remember, you invest your hard earned cash in property to get the best return you can, if the rules and returns change, especially from a tax perspec-tive, you need to make sure that it’s still the best place for you to invest in the future.

Then do contact me via: www.propertychecklists.co.uk and I’ll do my best to get you the independent, professional help you need. ⌂

FOR MORE ABOUT HOW TO MAKE MONEY FROM PROPERTY IN YOUR LOCAL BUY TO LET "HOT SPOT",

COME TO MY PROPERTY SEMINARS AT THE LANDLORD INVESTMENT SHOWS ACROSS THE COUNTRY:

www.landlordinvestmentshow.co.uk

MANCHESTEROCTOBER 1ST

MAIDSTONEOCTOBER 22ND

SOUTH COASTNOVEMBER 4TH

LONDON OLYMPIANOVEMBER 19TH

30

buy

To l

ET A

nAly

sIs

Download all the FREE checklists a Buy to Let Investor will need

Independent expert advice on:

• Property prices, rents, returns and forecasts

• Analysing your buy to let

• How to buy property below market value

• How to choose the right buy to-let services

SEE OUR CHECKLISTS FOR ALL THE BUY TO LET HELP YOU WILL NEED

www.propertychecklists.co.uk T: 01652 641 722


ThERE's A ThEoRy ThAT sEPTEmbER Is A quIET monTh of ThE yEAR, PARTICulARly In ThE PRoPERTy woRlD.With kids back to school and people coming back from summer holidays, things slow down in many offices, but not here at Landlord Action! We’ve had an extremely busy summer, not only doing our every day job of helping landlords regain possession of their properties, but filming, advising on industry issues and trying to effect change that will help landlords now and in the future. Here’s a flavour of what’s been going on.

sECTIon 21 noTICEsWe attended another Government Think Tank meeting, along with other industry figures, to hear about and assist with the new proposed Section 21 which is believed to be going live from October 2015. The revisions will make it easier for landlords to serve Section 21 notices on tenants, the end date of expiry after 2 months will be much simpler and will include fixed term and periodic provisions combined in one form.

noTICE of AbAnDonmEnT foRmThe DCLG (Department for Communities and Local Government) attended our offices last month because we have been consulting on new procedures and the new proposed notice of abandonment form – typically used when a tenant absconds from a property mid-tenancy. We are pleased they have asked for our input on this because we feel it is something that has needed to be addressed for some time.

InDu

sTRy

sPo

TlIg

hT IT's All ACTIon In sEPTEmbER

Paul Shamplina - Landlord Action

32


blACk lIsTIngIn another meeting this month, we learned of Government proposals to bring out a ‘black list’ of rogue letting agents and landlords. We gave our full support to the idea that any letting agent found to be stealing rent (I.e. not passing it on to the landlord) should be placed on a list, jointly supported by all property redress schemes and letting agent associations, and which should then be for consumer use, namely landlords and tenants. It’s very important also that Rogue Landlords are named and shamed. This is the link to the DCLG’s consultation on the subject. https://www.gov.uk/government/consultations/tackling-rogue-landlords-and-improving-the-private-rental-sector

Obviously, sitting on the advisory council for the Property Redress Scheme, my aim is to ensure the standards of letting agents are improving and that the few rogue operators don’t tarnish the reputations of those good agents who offer a great property management service to landlords.

ClIEnT monEy PRoTECTIonThere is a tendency to always think a problem tenancy is the result of a bad tenant, but our debt recovery department is regularly involved with acting on behalf of landlords who are trying to recover rent from rogue agents who have not passed on rent to landlords.

For me, when the Government makes it mandatory for all letting agents to have Client Money Protection Insurance in place, then we will know our industry really has made great strides in thoroughly protecting our landlords and tenants

fIlmIngThis month I have also started filming the next series of ‘Nightmare Tenants, Slum Landlords’, with Channel 5 has just confirmed will be 10 episodes long and due to air in March 2016. It doesn’t seem two minutes since the last series finished. We’re very grateful to our clients for agreeing to participate on this Channel 5 program as their stories could just help to save hundreds of others. I’m planning to expose more professional bad tenants, subletting scammers and rogue letting agents.

So, there are lots of very early mornings and late nights at Landlord Action at the moment, as we keep numerous plates spinning in our efforts to raise standards and protect the good guys of the industry. ⌂

InDusTRy sPoTlIghT

33


InVEsT In nEw Is A sPECIAlIsT fREE To usE nEw sERVICE foR buyERs AnD DEVEloPERs.It’s exploded in popularity since launching in January and its website has been created to ‘join hands’ be-tween developers and keen new investors. Invest in new discretely accelerates the sale of developments, (or even parts of developments not yet released to the market) and cleverly offers newbuild property to pre-qualified private and corporate buyers. Many of its purchasers are in a position to buy immediately and a number of unique discounts and incentives are available.

investinnew clients can purchase discounted prop-erty in a few simple steps at rates otherwise only available to investment funds. Many of the devel-opers using it also offer the convenience of paying across stages with a variety of payment plans that better suit the buyer.

nEED moRE?What about 10 year lasting rental assurances? More still? What about upfront rental from even before completion? What better comfort than to know that your initial outlay is safely tied into an immediate in-come producing asset, of which you have full con-trol?

What’s more, as a complete hands-off investment finder we are geared up to manage the whole pro-cess from start to finish; from the initial reservation, right through to the sale & build completion.

InVE

sTm

EnT

lET us holD youR hAnD:InVEsT In nEw, A unIquE & fREE To usE buy-To-lET PRoPERTy

souRCIng sERVICE ThAT hElPs buyERs AnD DEVEloPERs.

Property investment used to be only for a specialist cash-rich minority, but today anyone can become a property investor with a relatively small amount of cash and not a

great deal prior knowledge.

34


With pension pots looking a little lacklustre & un-steady at the moment many investors are looking to grow an investment portfolio to top up their pension provision. With a team of dedicated account man-agers on hand to simply your next investment or to hold your hand and talk you through the whole pro-cess investinnew are here to help.

On investinnew many of the developments offer a 10 year rental assurance scheme which takes away the stress and worry of rental voids - it really does become a lower risk purchase. Coupled with pay-ment plans to suit each individual investor deposits can be paid across the build period eliminating lump sum requirements. We work closely with new homes mortgage professionals and protection specialists to ensure that if you do need a mortgage then we can assist in finding the right mortgage for you and your budget.

So whether you have limited knowledge of the prop-erty industry, very little time to spare, have no access to large cash deposits, or are purely buying a proper-ty to sell on… investinnew can offer a solution.

wE Don'T nEED To shouT AbouT ouR EXCEllEnT sERVICE, wE lET ouR REPEAT InVEsToRs Do ThAT foR us!“I have been working with invest in new for around 4 months now and have invested and explored nu-merous investment opportunities with them. In a short space of time they have proven to be a reliable source to gather information on potential invest-ments, in order to make an informed decision.

I trust their judgement and on numerous occasions they have gone out of their way to ensure I have the best deal available.

It is a pleasure working with invest in new as they always go above and beyond to deliver the best ser-vice to their investors. I look forward to working with them and investing in other investments in years to come.” ⌂

Buyers can register online for free by visiting:www.investinnew.co.uk or call us to discuss yourdesireson01206812222or(0114)2452471.

Developerspleaseemail:[email protected].

InVEsTmEnT

35


obsTAClEs To lAnDloRD InsuRAnCE AnD how ThEy

CAn AffECT youR PREmIum

Steve Cox - Alan Boswell Group

lAnDloRDs' InsuRAnCE CAn bE A mInEfIElD of RIsks. EACh of ThEm CARRy 'wEIghTIng' whICh CAn ImPACT ThE CosT of ThE InsuRAnCE AnD In somE CAsEs CAn ACTuAlly lEAD To youR InsuRAnCE bEIng REfusED. howEVER ThE VAsT mAjoRITy of ThEm CAn bE oVERComE.

unoCCuPIED oR unDER REPAIRMany policies include a clause stating that if the property is unoccupied for a certain period - typically 45 days or more - then your cover is invalid. Lack of occupancy for more than six weeks isn't something any landlord would want, but it can happen - for example while repairs or renovations are taking place.

The amount of renovation work being undertaken can itself often prove to be something of a sticking point, with many policies insisting on a fixed limit to the value of work being done. The nature of work, value and time scale may affect the premium. In this situation I’d talk to the client to look at the work they’re having done so I can put together a package, tailored specifically to their requirements.

Steve Cox, Property Insurance expert from Alan Boswell Group, discusses some of the common reasons why your buy-to-let insurance can be expensive or even why it can be refused or revoked.

lAnD

loRD

Insu

RAnC

E

36


unConVEnTIonAl PRoPERTIEsSome policies also require your house to be 'of standard construction' i.e. with brick or stone walls and a conventional pantile or slate roof. A flat roof can also be an obstacle, with many insurers querying what percentage of your roof is flat, and penalising you to that degree. Because a flat roof can increase the risk of flooding and a thatched or timber property can be an increased fire hazard, those features can lead to a higher premium being demanded. However, none of these unconventional features should mean that you’re unable to get quality comprehensive landlord insurance.

noT ConsIDERED sECuRESecurity issues can also jeopardise your chances of obtaining landlord insurance. While I would always advise you to make your property as secure as possible, if there are good structural reasons why all of your windows can't be fitted with modern key locks, this should be able to be taken into consideration.

bACkgRounD ChECksYou can also be refused insurance for reasons that are nothing to do with your property at all. This could be because you've previously been declared bankrupt, or been subject to a county court judgement, or even just because you've been refused insurance in the past. Your choice in tenants may be a problem for some insurers or if the property is let to the local authority, housing association or a charity. Again, these are not impossible hurdles to overcome and can be helped by an insurance broker shopping around on your behalf to get you the best deals.

usIng A bRokERIf you are getting a quote for your buy-to-let insurance yourself, it can sometimes be difficult to understand why it comes out so expensive or even why you have been refused a quote. Using an insurance broker can help you understand what factors cause an inflation in premium and will help you find suitable cover.

For further advice or a quote on your insurance,contactSteveCoxon:

T: 01603 218031 M: 07766 715654 W: alanboswell.com/landlords E: [email protected] Boswell Insurance Brokers Ltd offers a range of other services including business, home, travel and car insurance.

lAnDloRD InsuRAnCE

37


"sTuDEnTs mAkE ThE bEsT TEnAnTs" hAs bEEn ThE TITlE of mAny lAnDloRD REPoRTs oVER ThE PAsT 2-3 yEARs.Surveys consistently find that students pay rent promptly, have parents or guardians guaranteeing payment and provide a year-on-year demand for properties. Whilst the focus of each report may dif-fer slightly, what is abundantly clear is that student landlords receive some of the highest yields in the UK property market.

Unlike other rented properties there is always a con-stant demand for student accommodation. In recent years UCAS has reported on rising student figures as more people make the choice to go to university. Such an influx has even prompted the relaxation of caps on the amount of students universities are al-lowed to admit. In 2014, there were an extra 30,000 places, in September 2015, the caps will be com-pletely abandoned. This is just as well, as student fig-ures are only forecasted to keep rising.

The other notable growth in the student market is the increase in international students coming to the UK for their education. Since 2002/03 the amount of foreign students in the UK has risen by a massive 54.5% and this doesn’t look set to stop. The gov-ernment document International Education: Global Growth and Prosperity estimates a further 15-20% increase in the next five years. This is good news for landlords, as over 52% of international students choose to live in Purpose Built Student Accommoda-tion (PBSA).

sTuD

EnT

ACCo

mm

oDAT

Ion bEIng A sTuDEnT

lAnDloRD:IT DoEsn'T hAVE To bE DIffICulT

Nick Gill - Intus Lettings

38


so whAT Do sTuDEnTs wAnT?With the increase in size of the student population, so comes an increase in expectations. Over the past decade there has been a definite shift in terms of what students want from their accommodation. Whilst there will always be a market for the tradition-al house share; students have been reported to pay up to 70% extra for luxury PBSA.

loCATIon Is EssEnTIAlA short walk to university means students don’t have to pay extra for travel passes and can have longer lie-ins. Other musts include high quality furnishings, as well as fast and reliable internet. The 2013 Stu-dent Accommodation Tracker found that only 28% of accommodation currently meets students’ expec-tations, so landlords with properties that tick all the ‘must-have’ boxes are seeing increased demand.

PRoPERTy mAnAgEmEnTManaging a student property can also put more pressure on landlords, particularly due to the per-ceived nature of this particular market segment as being dirty, untidy and generally having a lack of re-spect for the property they reside in. If you invest in PBSA, then the management of the entire building will generally be the responsibility of an appointed lettings and management agency.

However, managing your own property can be a tire-some process that leaves you feeling frustrated and annoyed at the very tenants who are paying you rent. Broken furniture, noise complaints and issues with payments all culminate into a headache you could do without.

TAkE ThE hEADAChE AwAySo why not allow a specialist company to take that headache away? Intus Lettings is an independent lettings and management company that offers a comprehensive service either on a let-only or ful-ly-managed basis. Specialising in both student and residential lettings, Intus Lettings is a nationwide agency with a portfolio of properties that spans the UK. Geared for both single property and portfolio landlords, Intus Lettings offers a straightforward process to help you let and manage your properties. Each property has a presence on Zoopla, Rightmove and Gumtree until a suitable tenant is found, and the aim is to find quality tenants in the lowest possible time frame, ensuring the minimum of void periods.

Let-only service: Intus Lettings will be happy to find, source and reference tenants on your behalf.

Fully-managed service: Intus Lettings will manage the day-to-day running of the property and deal with any maintenance issues that may arise on your behalf.

Looking for a new letting agent? Speak to the Intus Lettings team and discover how you can save up to £700 on your lettings fees, including 6 months’ free management and your first month’s let free. ⌂

sTuDEnT ACComm

oDATIon

39


� Latestresearchfrom Accommodationforstudents.comreveals averageweeklystudentrentfor2015is £82.09,upjust£1.43from2014.Rents haverisenconsistentlybyanaverageof £1.67eachyearsince2010.

� SixoftheUKstopuniversities(accordingto TheCompleteUniversityGuidefor2016) areinthetoptenmostexpensivecitiesfor studentaccommodation.

� StudentsintheLondonarea(including peripherylocations)payalmosttwiceas much(£122.01perweek)asstudentsin Wales(£69.70perweek)andmorethan £30perweekmoreonaveragethan studentsinanyotherregion.

� StudentsintheSouthpayonaverage18% higherrentthanthoseintheremainder ofthecountry(£90.96versusbetween £76.23and£77.32)

� Forthefirsttime(sincerentaldatabecame availablein2005)morethanhalfof propertiesavailabletostudentsofferat leastsomebillsincludedwiththerent.

� Thetopthreemostexpensivestudent locationsareLondon,Cambridgeand Kingston,thethreecheapestare Wolverhampton,StocktonandWalsall.

Accommodation for Students (accommodationfor-students.com), the UKs number one student accom-modation website, today released its annual report on the cost of student accommodation. Student accommodation markets have generally remained stable, with a modest average rent increase of £1.43 from 2014 to £82.09. However, according to the average rents table, students attending six of the UK’s leading universities (Cambridge, Oxford, Impe-rial College London, London School of Economics, Exeter and University of Surrey) are likely to pay on average between £20 and £58 more per week than the national average.

Lancaster University was the only top ten ranked university (The Complete University Guide for 2016) where average rental value for student accommoda-tion fell below the national average at £78 per week.

sTuD

EnT

ACCo

mm

oDAT

Ion sTuDEnTs PAy A hIghER

PRICE To ATTEnD ToP unIVERsITIEs

Simon ThompsonDirector of Accommodationforstudents.com

40


LANDLORDSGUARANTEED market rent for your property for up to 5 years – UK WIDE

Call Dave on 07412 487926 www.fastcompletion.com

BENEFITS TO YOU

• No voids• Guaranteed monthly payment• Property maintained and managed by us

HASSLE – FREE SOLUTION

FOR YOU

The No1 Property ManagementSoftware for Property Managers & Landlords

✔ I wanted more free time

✔ I wanted to be more effi cient

✔ I wanted to look more professional

“With Arthur unique approach I achieved this and more. My tenants couldn’t believe that they got an app when they move in”

- Sarah (portfolio Landlady)

With its suite of Mobile apps for your Tenants, Contractors, Agents and owners, this is the future of Management

Come and see us at the show

www.arthuronline.co.uk+44 207 112 4860 Option 1

Powered by

If you woulD lIkE To PRomoTE youR ComPAny To ThousAnDs of lAnDloRDs,

InVEsToRs AnD PRoPERTy PRofEssIonAls

by uTIlIsIng ThIs sPACE,

PlEAsE ConTACT ouR ADVERTIsIng mAnAgER bEVERlEy by:

EmAIlIng:[email protected]

oR CAllIng:0208 240 4470 oR 0208 656 5075

Landlord Accounting Services Self-assessment tax returns Rental property accounts Tax planning & advice

Lambert Chapman LLP is an approachable and independent practice of Chartered Accountants, Auditors and Business Advisors with offices in Braintree, Maldon and London.

We provide a full range of services to help private landlords file their tax returns efficiently and help property developers unlock their business potential by offering a one-stop-shop for all your accountancy and taxation needs.

Contact Nick Forsyth to arrange a complimentary introduction meeting to discuss your property portfolio.

Making life simpler for you Nick Forsyth: 01376 326266 [email protected] www.lambert-chapman.co.uk Offices in Braintree, London and Maldon

Contact Chris Harman to arrange a complimentary introduction meeting to discuss your property portfolio

Chris Harman: 020 7148 [email protected] in Braintree, London and Maldon

41


Regional disparities in rent values remain in place, as students in the North of England continue to pay much less (£14.73 less per week) than students in the South, whilst students in and around London pay considerably more on average (£122.01 per week) than the rest of the UK. Students in Wales pay the least, with an average weekly rent value of £69.09, followed by students in Scotland who pay an average of £72.81 per week.

London (£140), Cambridge (£124), Kingston (£115), Aberdeen (£109) and Guildford (£104) are the cities with the most expensive average rental values. Inter-estingly, despite being some of the most expensive places to live, London and Kingston do have some of the greatest average differences in rent between lowest and highest, ranging from £80 to £195 and £19 to £139 respectively. Guildford and Aberdeen have some of the least variation with an average dif-ference of £39. Despite seeing its average rental val-ue fall by £9 per week, Uxbridge is still in the top six most expensive locations, down from second place last year, and Oxford has climbed two places to sev-enth in 2015.

Plymouth, Exeter, Nottingham and Liverpool were re-corded as having the greatest range in weekly rents, a difference of between £138 and £146 between the lowest and highest rents recorded in these cities. For example, the lowest recorded rent in Plymouth was £39 but the highest was £185.

Bolton (£62), Middlesbrough (£62), Wolverhampton (£62), Stockton (£49) and Walsall (£48) offer accom-modation with the lowest average rent per week, none of which are home to universities in the top thirty of the 2016 league table.

Luton, Bangor and Derby have seen this year’s great-est increases, up on average 20% on 2014, all mov-ing from offering accommodation at a renal cost be-low the national average to being on or above this year’s average.

The number of student properties offering a bills in-clusive option was greater than the non-bills inclu-sive property sample for the first time recorded in 2015, continuing the upward trend in the availability of bills inclusive accommodation. The average addi-tional cost in bills inclusive properties is £9-£13 per week.

Simon Thompson, Director of Accommodation for Students comments “It’s great to see that the overall market has remained stable over the last year, this is positive for both investor landlords and students. Unsurprisingly, the north/south divide in rent values remains apparent, just as in the private rented sec-tor. Naturally rental increases in some areas will be governed by student demand, often determined by what courses are available, but it is interesting to see that there appears to be some correlation between the highest ranked universities and cost of student accommodation.

Bills inclusive rental options are increasingly preva-lent which shows landlords are reacting to student needs. Anything which helps students to manage their finances is appealing and I think this trend will continue to grow over the next few years as the cost of attending university creeps up” ⌂

With over 2 million student visitors per year, we simply don’t have enough student property to service demand...

RENT YOUR PROPERTY TODAY!

LANDLORDS,PLEASE HELP!

No excuses, you can even try us for FREE! • Visit www.accommodationforstudents.com • Create a landlord account • Add a property with promo code: RAD21844

AFS15_A5 Landlord Ad.indd 1 30/04/2015 09:21

sTuD

EnT

ACCo

mm

oDAT

Ion

42

Call Ashley today to set up your FREE ad - 0207 758 4608

F L A T S H A R E W I T H A S M I L E

ADVERTISE YOUR PROPERTY FOR FREE THE LARGEST DATABASE OF VERIFIED TENANTS

GET CONTACTED BY 100,000+ POTENTIAL TENANTS

• ADVERTISE YOUR PROPERTY FOR FREE • • THE LARGEST DATABASE OF VERIFIED TENANTS •

• GET CONTACTED BY 100,000+ POTENTIAL TENANTS •

Landlords! smile & earn higher yields by renting to flatmates

C

M

Y

CM

MY

CY

CMY

K

150625_2-YPN-Fullpage-ad-MARKS.pdf 1 29/06/2015 12:14:26

020 3096 5412

Landlord Investor SEPT 2015

Documents

Transcript of Landlord Investor SEPT 2015