I read an interesting news article this week. It seems one of England’s largest local authorities has increased its authority and powers. This will allow it to issue fines of up to £5,000 on local letting agents who deliberately break the law and who also do not join one of three approved redress schemes. With regards to the redress schemes there is very little argument for defence as the schemes have been up and running for some time now.
Prior to the increase in power, Manchester council’s Corporate Enforcement Policy did not allow it to fine agents who had not joined either Ombudsman Services Property, the Property Redress Scheme or The Property Ombudsman.
Although legislation making it obligatory for agents to be in one of the schemes came into effect on 1st October last year, only with the recent changes can the council now impose monetary penalties.
It does beg the question why it has taken them so long to address the issue?
The local authority have now promised that they will ensure proactive checks of mandatory membership will be undertaken as part of licence applications for Houses in Multiple Occupation (HMOs) and the city council will continue to investigate complaints received against unregistered landlords, agents and property managers.More Info >
Through our auctions you have an opportunity to exchange contracts on the same day and complete with 28 days.
You will need to:
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I read almost every day that there are proposed changes in legislation of some form or another. It must be quite difficult for a private landlord to keep up with what is changing and what are only proposals. Some within the industry feel there is a lack of official publicity for upcoming health and safety regulation changes.
One such regulation change is the requirement to fit additional alarms to your property. Research from British Gas and the charity Shelter states that 59% of landlords are not aware of new carbon monoxide and smoke alarm regulations even though they are planned to come into effect from October.
The Government carried out some research and their findings estimates that the new legislation regarding the carbon monoxide alarms, will result in up to nine fewer fatalities and up to 460 fewer injuries over 10 years. In addition, they estimate that by fitting a smoke alarm will prevent up to 231 deaths and 5,860 injuries over 10 years.
The government will have the new requirements enforced by local authorities and landlords who fail to comply with a remedial notice could be fined up to £5,000. Along with saving human life a fine of that nature would motivate most landlords to ensure they comply. As ignorance of the law will be no defence. It could be with all these changes I have noticed a sharp increase in the number of landlords asking us to manage their properties. A single fine could wipe out their profit for more than two years.
It is worth noting that landlords or their agents will require a gas safety check and record or certificate (CP12) for each property every year.
According to British Gas signs of carbon monoxide could be signs of staining, soot or discoloration on, or around your gas boiler, fire or water heater.More Info >
We have sold yet another off market deal. It consists of a property with planning permission for demolition and erection of 9 new build apartments. We managed to broker the deal within one week.
We have access to deals all the time, Birmingham and the West Midlands has a hot property market right now.
For off market deals call Sam Ginda on 0121 500 5517
What is an off-market property?
It is a property which never reaches the mass market; it is either sold privately, or sold so quickly that it never reaches estate agents’ windows.
Why would a property be sold this way? A seller might require a discreet sale which is organised through personal contacts or family offices which have a shortlist of serious buyers. This typically happens with properties valued over £5 million. The key here is serious buyers.
A second reason for a property being sold off market. When a particularly desirable property becomes available, a good estate agent will have a database of buyers waiting for certain properties therefor will be able to sell it before photographs and floorplans have been developed. This usually occurs in the £1-5 million category.
The advantage of using an Estate agent like Samuel & Co. We have built up a range of contacts both buyers and sellers. Therefore we hear when off-market properties are being viewed. Therefore, you’ll be first in line when a rare in-demand home becomes available.
Benefits to buying off the plan:
- Lock in a price – One of the advantages of buying off the plan is that you will pay the current market price for a property, even though it will be completed in the future.
- Securing a high value asset for a low initial capital outlay – While a deposit is made to secure the property, the entire payment doesn’t need to be paid until the property has been built. This provides you with time to organise your finances and if required sell your existing home without the need for bridging finance.
- Increase in property value – If the market experiences growth, the property you purchase off the plan today may increase in value when you settle two years later.
- Tax advantages – If purchasing for investment purposes, you may be able to claim depreciation on your tax for items like fixtures and fittings. It is important to consult your Accountant to find out if you are eligible.
- Stamp duty savings in some states – State governments (in certain states) offer bonuses and reductions in stamp duty for buying off the plan which can save you thousands of dollars.
- Seven year builders guarantee – Newly built properties in Australia come with a 7 year builders guarantee which means structural or interior building faults must be repaired by the builder.
Risks to buying off the plan:
- Falling property market – There is a risk that you may pay too much for a property if the market falls between the exchange of contracts and building completion. If this does occur you may find it difficult to secure finance for the full amount.
- Failed expectations – As many builders do not allow you to see the property until construction has completed, there is a risk that what you envision is not what you will receive. The quality of work may also not meet your standards.
- Rising Interest rates – Interest rates could increase before you settle on the property which is problematic if you wanted to fix the term of the loan at the current interest rate.
- Bankruptcy – Many buyers fear the developer could go into liquidation before the project is completed. You need to ask what the options are if this occurs; will you get your money back and what guarantees do you have?
With the removal of the wear and tear tax allowance, it does not mean a landlord will face property losses if managed correctly.
The new tax relief system will allow landlords to deduct costs that actually incur when replacing furnishings in rented properties. The internet and property meets are full of landlords discussing how they can best mitigate their end of tenancy expenses without being forced to make huge deductions from tenant’s deposits.
Of course there are specialist insurance policies available to landlords and letting agents that can help in this case providing insurance for tenants to help them protect their deposit against accidental damage to a rental property. When you look at the percentage of cost in relation to their rent it is surprising how few tenants take up this option.
Numerous landlords have already begun a petition to lobby the Government in an attempt to reverse the planned tax relief restriction on ‘individual’ landlords, asking for the planned restriction be reconsidered as it has unfair implications. However I cannot see the government reversing their decision but we can all live in hope. I sometimes see the private landlord in the same light as the motorist and easy target to tax.
The same as many SMEs, Landlords incur costs operating a rental property businesses and the planned tax restrictions outlined will unfairly target the sector by preventing landlords from offsetting costs in the same manner. The private rented sector is heavily reliant on individual landlords and the proposed changes are likely to result in increasing rents as landlords look to offset increased tax liabilities.
The National Landlords Association, (NLA) claim 47% of private rental sector landlords will be affected by the removal of the annual wear and tear allowance, which will increase operating costs. It will be interesting to see how this effects the rental costs. Will landlords have no choice but to pass these costs onto their tenants?
Some key findings from the NLA
- 24% of PRS landlords let their properties fully furnished
- 22% of PRS landlords let a mixture of furnished and unfurnished properties
- 53% of PRS landlords let their properties on an unfurnished basis
The new tax relief system is currently under consultation until the 9th of October 2015 and will apply from 6 April 2016 for Income Tax purposes and 1 April 2016 for Corporation Tax.More Info >
Some interesting facts why as a property investor you should consider Birmingham to expand or start your property portfolio.
Jones Lang LaSalle surveyed over 300 cities and put Birmingham at number 53 for foreign direct investment. PwC ranks it as the sixth-best city in Europe for investment, ahead of London.
A survey at the start of this year showed 46% of West Midlands firms reporting rises in output, and 34% reporting rising orders. That may explain why the city is showing the highest growth in manufacturing and technology jobs in the UK outside London.
George Osborne noted in his Budget in March, a job is created in the Midlands every ten minutes. It might go some way to explaining why Birmingham was the top regional city for people in their 30s leaving London in 2014.
Birmingham also has one of the youngest, most highly qualified and most diverse workforces in the UK, and a development policy that seeks to work with rather than against business.
So why are people and businesses choosing Birmingham? One reason is that the extreme cost of living in London has reminded everyone just how close Birmingham is to the capital (100 miles) and how much cheaper it is to set up shop outside London.
In addition the universities are working together to put a “strong sales pitch” to students and employers.
Since 2010, Birmingham’s 20-year Big City Plan has produced a pretty good infrastructure programme.
The airport has been extended and direct flights to China (the only ones outside London) began in July last year. The Midland Metro is being expanded. New Street station is to get a vast new atrium.
Of course if HS2 goes ahead you will be able to travel from London to Birmingham in 49 minutes. This will probably see further investment from both national and international brands.
As a final note it’s worth remembering that one of the reasons London is so expensive is that investors from less financially and politically stable places than ours use it as a safety deposit box for their money. However not everyone wanting to protect their wealth is filthy rich: for moderately affluent local and foreign buyers, Britain’s second city offers the same property rights at a rather lower price.More Info >
There’s more to Birmingham than curry and canals
Birmingham has and is changing with its intricate waterways, leafy parks and surprisingly low house prices, there are plenty of bargains in Birmingham
Did you know that Queen Victoria when passing through the region by train, asked for the blinds to be drawn. I am sure if she was alive today she would not only want the blinds to be open but to stop and pay our fair city an extended visit.
For some reason the perception that Brum is a place you either pass through as quickly as possible or escape from hasn’t changed much over the years. Which if you stop to look at what the city and the West Midlands has to offer is an incorrect perception.
You can enjoy a champagne breakfast for a fraction of what it would cost in the capital.
The city has miles of intricate waterways, leafy expanses of rolling parkland and splendid public buildings. Did you know that in 2012 the The New York Times included in its list of 45 places to go in 2012 because of its remarkable cuisine.
- Some of the usual clichés associated with the home of the Brummie are:
- It has more canals than Venice,
- More trees than the Bois de Boulogne
- It has the Royal Ballet and the City of Birmingham Symphony Orchestra.
- There are several top flight football clubs.
- One world-famous cricket ground.
- A Capability Brown-designed golf course in the heart of Edgbaston.
The property prices are not what you would think for such a great city especially when compared to London. Another reason people are moving to and investing in Birmingham is education. It’s easy to find a good school in Birmingham, because there are lots of them.
When HS2 is completed more and more people will see the benefits of Birmingham, so if you are an investor now is the time to get ahead. If you are looking at Birmingham as a home city again now is the time to take advantage.More Info >
Why Tenants do not attend check-out
We found an report on the internet from the Deposit Protection Service who found that almost fifty percent of tenants in England and Wales did not attend the final check out appointment at the end of their tenancy. My first reaction was why would you not attend your check out as this can have a major impact on your deposit. I am a realist and I am aware that as an industry we are not always viewed in the best light, again another reason a tenant should attend.
During checkouts landlords or their representatives record the condition of the property in comparison to when the tenants arrived.
Many associations and government bodies recommends that tenants attend but 48% of respondents to The DPS’ recent survey of 8,035 tenants said they had not attended.
Now we potential find out why the tenant had not attended. It was claimed that almost half (46%) of tenants said that they had either not been invited or were not informed of the date or time.
Now it is very easy to quickly appoint blame to the landlord or letting agent, who should show a paper trail inviting the tenant to the check out appointment. However as a previous tenant myself I would want to find out when the checkout appointment was due, to ensure I could protect my deposit.
As many tenants and landlords will testify checkouts are one of the most important stages of any tenancy. By viewing the property and discussing its condition together, tenants and landlords can resolve problems quickly and help prevent longer disputes, for instance, over the return of the deposit.
The DPS has also issued its top ten tips for landlords to help ensure that checkouts are successful.
- Take along a report from the check-in. The first stage of making sure your check out process is successful is to carry out an inspection that is agreed by the tenant on the state of the property when he or she arrives. Bring the resulting report to the check out as a reference point for both your inspection and the discussions.
- Make sure you invite tenants in writing and with sufficient notice. It’s important you have a record of the invitation so its existence cannot be disputed afterwards; and tenants should be given a reasonable chance of being able to attend.
- Make sure the tenant understands the process. Explain that this is his or her chance to put forward their case regarding the state of the property. It’s sensible to include a description of the process in your written invitation, and give them an opportunity to ask questions when it starts.
- Consider the use of an inventory clerk. These are professionals who understand best what needs to be recorded when tenants arrive – and how best to assess and demonstrate change at the end of the tenancy. If you do use their services, make sure the tenant understands their role.
- Be safe. It is of course extremely unlikely that a check out will provide a risk to your safety, but make sure someone else knows where and when it is taking place and if you have any concerns, bring someone else along.
- Take your time and be thorough. Although confrontation can be difficult and it can feel awkward to be touring your property that has acted as someone else’s home –you are making life more difficult for both you and your tenant if you do not cover every aspect of your check in list properly, or later on refer to an issue that wasn’t noticed during check out.
- Make notes. In particular, record any of your tenant’s admissions or any agreements you reach. Ask your tenant to sign and date the notes. Make sure they receive a copy of these soon after check out takes place. As ever emailing a copy helps demonstrate that you were in touch.
- Bring a camera and take photos of any damage or anything else contentious. Digital cameras work best because they have a date stamp, which helps demonstrate when the photos were taken. Explain in your invitation that you may take photos during the visit.
- Use video evidence where appropriate. Demonstrating that equipment is no longer working, for example, may most easily be achieved using a video. However, most often photos provide the best form of evidence, as adjudicators can study the image more easily.
- Carry out the check-out before any repair works take place. Although it seems obvious that evidence of the damage will help demonstrate your case, unfortunately the rush to overcome problems ready for the next tenant sometimes means opportunities to record them are missed.
Why use a property auction?
With all the recent changes in pension provisions we have entered a more flexible pension environment. Savers over the age of 55 have the option of taking some lump sums from their pension pot with a proportion of it being tax free. The recent reforms will benefit those that have built up a large pension pot and would like to take greater control of that investment.
Some may use the released money to fund short-term lifestyle purchases, however many will put the released funds into other long term investments with property investment a popular choice. Although many do not consider commercial property investment as an alternative to the traditional buy to let property investment.
With a potential influx of cash rich buyer how will this affect the property auctions? Many investment experts state that property is still one of the best long term investment choices, evidence tell us that over the last 20 years it has substantially out stripped those returns delivered from shares, bonds and cash. The combination of capital growth and rental income make it the logical choice for ordinary people in their retirement years.
This new group of buyers will sensibly turn to the buy-to-let sector and could use buy-to-let mortgages as a further lever to increase their purchases. This would enable a modest lump sum of £25,000 once extracted from the pension fund to be used to purchase properties of approaching £100,000; and a withdrawn sum of £50,000 could make it possible to purchase at approaching £200,000. After buying, and refurbishing as necessary, the property can be let and managed by an agent or by the new owner. Rental income should more than cover mortgage repayments and over the medium/long term a handsome rise in capital value can be expected.
Property auctions are fast becoming the popular route for investors in property to purchase houses and flats; and regional auction rooms are the ones preferred and better frequented by small local investors, including those buying their first rental property. Many state that it is the ease, speed and certainty of auctions that attract them as well as the chance to pick up a bargain for less than the maximum they had set.
Without doubt the idea will appeal too many in this new group of pension funded buyers. If you are one of them you’ll need to start by consulting your pension’s advisor and putting your financial plan together. Then to get comfortable with the auctions process we suggest that you attend a couple of auctions to familiarise yourself with the sale room process. Then decide on the area and type of property that should suit your requirements, speak to auctioneers and estate agents to get their views, and then begin your internet search for the right property. You will also want to take advice from lettings agents and other property professionals to ensure that your sums work and that there will be a continuing demand from tenants. Research and planning is important but the experience can be rewarding and when you are successful the long term result should be extra income and greater financial security in you latter years.More Info >
A leading national estate agent recently carried out a survey and looked at how the males and females answered differed.
One of the key questions was what motivation for moving house. Women cited the quality of the school, the speed of the broadband connection as being high on the motivation factor. Still on the list but not as important was distance to family and friends, access to good public transport. Finally shops and amenities were listed as high influencers on motivation to move to a particular property.
The men as you can imagine rated different aspects when it came to moving key were tax changes, retirement, pension support, political environment and mobile coverage. The last one surprised us, you would think in this modern world mobile coverage was almost a given, but clearly not.
When the estate agent looked at what needed to be included in a dream home. The survey identified that 14% of men wanted a cinema/screening room and 12% wanted a wine cellar. This compared to what the ladies considered important with, 24% of women rated an AGA oven as their top home accessory, while 18% wanted a kitchen island.
When it comes to outside space, men are far more interested in living on or near water than women, perhaps to enjoy a little fishing. Homes with sporting facilities such as a gym, pool and tennis courts were also more popular with men, while more women were keen on equestrian amenities.
The survey then asked about the private rented sector to be able to make a comparison between house buying and renting.
When looking at the type of home services, men tended to be far keener on convenience and practical amenities. Having a porter/doorman, in-house cleaning services, car sharing, banquet services and refrigeration drop-off storage were all far more popular with male respondents. For females, it was important that pets were allowed and disabled accessibility was also a priority.
Environmental features appeared to be of more importance to men than they were to women. Code level 5 ratings, renewable energy, living walls, grey/potable water and green roofs were all markedly more popular with male respondents.
As you could expect both genders place personal finances as important which reflects both the capital growth of the last 30 years from residential property, as well as the ability to either use equity for lifestyle reasons or as deposits on a future property purchase.More Info >