Category: Landlord

Buy-to-let schemes have always looked attractive to many landlords. In fact, landlords under a buy-to-let scheme get more value for money than the banks savings and funds we know, and of course, the scheme is safer than investing in the volatile stock market. For many years, some landlord have experienced decent returns however this is now about to change.

The news come as shock. In April 2016, an 3% increase in stump duty tax for buy-to-let investors will take place. In practical terms, this means that if you buy-to-let a property costing £350,000 you will pay £18,000 instead of £7,500 today (a tangible increase of £10,500). So that you understand this better, let’s look how it words today.

Today, in the buy-to-let model there is no stamp duty on the first £125,000 but a 2% tax is applicable on purchases on £125,000 up to £250,000. Anything above £250,000, a 5% tax is applied. And of course, purchases above £250,000, higher rates will apply.

To facilitate your understanding of the changes that are happening in April 2016, we have put this together:

In practical terms this means the following:

So can this be the end of buy-to-let investment? It all depends of course but there is nothing that can stop landlords from increasing their rents in retaliation to the April 2016 changes.

The logic behind this change is to stop landlords to come into the market because there is an ongoing crisis in Britain where people cannot afford their first home while others have homes to spare. Also, the implication of these changes impacts the landlords’ ability to offset their mortgage interest as they need to declare on rental incomes. With all of these happening, it is expected that we may see an increase in landlords selling their second home to avoid the surcharge in April 2016.

There are of course lots of debate on this topic but the changes are taking effect in 2016. Some people are questioning the definition of second home. For example, it is arguable that when someone bought their first home, they did not buy it with the intention to buy-to-let but as life goes on they have acquired their second home.

Inevitably, many people has tried to escape the tax man. This means that some landlords are still declaring their buy-to-let property as they own home and rent it out through some estate agent. But in the last few months, the tax man is recently targeting landlords on this “dodge scheme” and have now partnered with mortgage providers and banks. Even those landlords who have already paid years of mortgage, are now on the tax man list. In other words, today you are more likely to get caught out if you try avoiding tax.

There are still lots of questions to be answered but considering that the decision is already made, there is nothing much that can be changed at this point in time. Maybe, the best way to escape the 3% increase it will be to buy a caravan, mobile home or houseboats – as these will not suffer from the higher rates.
The take away from here is that if you are considering buy-to-let as an investment opportunity, it is important to act fast before April 2016.

If you can afford it and don’t want to get involved in the day-to-day hassle of finding tenants, property maintenance and so on then a letting agent is a great choice. However, if you’re willing to put in the time and effort you could save money by finding tenants yourself.

Letting agents generally charge around 10% of the rental value for finding a tenant – so if you are charging £750 per month you could spend £600 a year on agent fees, not including extra charges for arranging paperwork such as EPCs, Gas Safety Certificates etc. Finding your own tenant also means you can vet your own candidates, so may find someone more suitable and reliable than an agent would. So how do you go about finding a tenant without an agent?

Where to market your property

There are various ways you can market your property without using a high street agent. The most basic is word of mouth – put an advert in the window of your property, ask friends and acquaintances in the area, or even talk to the neighbours of your property to see if they know of anyone looking for a place to live locally.

One step up from word of mouth is social media. Many landlords are now having great success using Facebook, Twitter and other platforms to find tenants. They key here is to choose a site that will give you the best chance of finding suitable candidates in the right area. For example, if your Friends List is mainly made up of people who live out of the area, they won’t be much help in directing you to the right market.

Whichever social media platform you use, tailor your approach accordingly. If using Facebook you can create a Page for your property with a description and high quality photographs and share it with your friends or post on local groups. If you’re choosier, you could create an album on your personal profile and share it with your friends and their friends only. If you’re using Twitter, create a catchy hashtag to include in your tweets, and regularly tweet photos of the property and local amenities. YouTube can be used to share videos of the property with your contact details displayed at the end of each video. Or if you’re looking for professionals, try LinkedIn – create a listing for your property on Gumtree, send it to your network of local contacts and ask if they know of anyone who would be interested.

A good ‘halfway house’ between going it alone and using a high street agent is an online letting agent – these will list your property on the major websites such as Zoopla and Rightmove for a fixed fee. The fee varies but is generally in the region of £50 excluding VAT for up to 3 months – a bargain compared to high street agency fees.

Creating the advert

As well as knowing where to market your property, you also need to think about how you do it. Research rental prices for similar properties and pitch your price at just below market value to reel in enquiries (remember, you’re saving agency fees so can afford to do this!). Make sure your advert is tailored to the market you’re aiming for and includes all the important information – number and size of bedrooms, gardens, parking, condition, any furnishings or white goods included, and details of local amenities, schools and public transport links. Use plenty of high quality photos. It may help to be relaxed about the kind of tenant you’re looking for – for instance, renters with pets struggle to find accommodating landlords, so if you’re happy to have a few furry tenants mention this in the advert.

What happens next?

Bear in mind that it might take a while to find the right tenant – this could be a few weeks, or longer for a larger property. Make sure you keep on marketing your property throughout this time, so the impetus isn’t lost. And once you’ve found a suitable candidate be sure to deal with all the paperwork, such as tenant checks, contracts, deposit protection and so on. This may be time-consuming but can be done at a fraction of the cost letting agents charge.

Finding your own tenants isn’t an easy option, but with some hard work and patience you could save yourself money and be able to cherry pick the tenant you feel is best for your property.

If you’re an estate agent or landlord and you don’t yet know whether your tenants have a right to rent from February of next year, you’ve come to the right place. It’s important to know what rights your tenants have and how this may affect your rental properties. This article will explain what ‘Right to Rent’ means, why it matters to you and what you need to do to ensure that your tenants’ rights are respected, to protect you and them.

What is Right to Rent?

Essentially, right to rent means that landlords will need to check their tenant’s right to live in the UK before being able to rent to them. This means checking the tenant’s identity documents to determine if they are living in the UK legally. The Right to Rent scheme was introduced through the Immigration Act of 2014 and has been piloted in the West Midlands since December of 2014. The Home Office has said that “the scheme has been designed to make it straightforward for people to give evidence of their right to rent and a range of commonly used documents can be used.”

The right to rent checks must be undertaken by a landlord or estate agent at least 28 days before the start of a new tenancy for all tenants aged 18 and over and for all types of tenancy agreements, both written and oral. The checks do not have to be made for certain kinds of accommodation. One example is if the tenancy is in accommodation involving local authorities such as accommodation provided by local authorities to someone who is homeless or threatened with homelessness. Social housing, care homes, hospitals and hospices with continuing healthcare provision are also exempt. The tenants of hostels and refuges, as well as someone stationing their mobile home on a site to use as their only home do not have to be checked. Neither do the beneficiaries of tied accommodation provided by an employer to an employee, student accommodation or leases which grant occupation of 7 years or more. All of these forms of accommodation are exempt and do not warrant right to rent checks. It is important that you as an estate agent or landlord know which exemptions your tenant might fall under so that you do not illegally demand a background check of them.

How to Make a Check

The procedure for making a right to rent check is simple and involves a small number of steps. First, check that the tenants are 18 or over and that they will live at your property as their only main home. A property is generally the tenant’s main home if they will live there most of the time, if they keep their belongings there, if their partner or children also live with them there, if they’re registered to vote at the property or if they’re registered with their doctor using that address.

Then check their original documents that allow them to live in the UK. Various documents can be used to show this. A passport or identity showing that the holder is a British citizen or citizen of the UK, British Colonies, the EEA (European Economic Area) or Switzerland. A document issued by the Home Office showing that the tenant is allowed in the UK indefinitely, or exempt from immigration controls. A certificate of registration or naturalisation as a British Citizen. Certain documents are acceptable in combination, such as any two of these documents: a birth certificate, a letter from the government or police force, evidence of current service in the UK armed forces, a letter from a UK higher education institution confirming student status, a current full or provisional UK driving licence, benefits paperwork issued by MRC, local authority or a Job Centre Plus.

These documents must be checked that they are genuine and belong to the tenant, with the tenant present. Finally, copies of the documents must be made with a record of the date of the check.

Right2Rent

Some landlords have expressed reservations about right to rent checks. In the pilot scheme in the West Midlands, some have reported that they feel uncomfortable with asking tenants for documents as they do not want to be perceived as invasive. Neither do they want to be saddled with the legal burden of ensuring that their tenants are in the UK legally. Demonstrating the right to live and work in the UK can be difficult given the array of legal documents available as proof. It may also be unclear how thorough landlords have to be in determining the proof of identity.

If you don’t want to have to go through the process yourself or don’t feel qualified to do so, there are agencies who can provide this service for you. The legal firm Right2Rent is one such agency, providing document checks of tenants for landlords and in so doing taking on the responsibility of confirming right to rent. This can seem prudent to some, as for a small fee it ensures that they are not prosecuted or fined if their tenant is found to be illegally in the UK. However, the process as we have seen is relatively quick and easy, so this is unnecessary for most landlords.

If you are found renting a property to someone who isn’t allowed to stay in the UK because you failed to make the necessary checks, this may result in a fine of up to £3,000. You should go to the UK government’s official website to learn more about right to rent. Some of the powers with which the government can enforce the scheme are currently being debated in Parliament. This means that some of the conditions of right to rent, or penalty for not making the check may change between now and February 2016. Knowing about right to rent protects you from legal action and your tenants from having their rights violated, so it’s imperative to follow right to rent guidelines.

The Gas Safety (Installation and Use) Regulations 1998 set out the responsibilities of landlords regarding gas appliances, and one of these responsibilities is to have an annual Gas Safety Check on every appliance or flue and provide tenants with a copy of the Gas Safety Certificate. But do you need to get a new Gas Safety Certificate every time there is a change of tenant? First of all, let’s look at what your responsibilities are and what a Gas Safety Check involves.

What are my responsibilities?
Landlords are responsible for ensuring that all pipework, appliances and flues are properly maintained, and appliances are serviced as recommended in the manufacturer’s instructions (or annually if these are not available). Appliances provided by the tenant are not the responsibility of the landlord (unless they are left when the tenant moves out – more on this later) but the related pipework does still need to be maintained by the landlord.
The Gas Safety Check is another landlord responsibility and must be carried out by a Gas Safe registered engineer every 12 months on every appliance or flue provided by the landlord. A record of the Gas Safety Check (the Certificate) should be given to tenants within 28 days, or to a new tenant before they move in, and the landlord should keep a copy for two years.

What does a Gas Safety Check involve?

Gas Safety Checks are carried out by Gas Safe registered engineers and include the following:

• Checking appliances for gas tightness;
• Testing of standing and working pressure where test points are available;
• Checking the burner pressure and gas rate against the manufacturer’s data plate;
• Checking the provision of necessary ventilation;
• Testing of flue flow to ensure all products of combustion are removed;
• Checking that flame failure devices are operating satisfactorily;
• Checking the physical stability, presence and effectiveness of stability brackets where appropriate; and
• Investigating and reporting on any evidence of unsafe operation.
• All of these checks must be completed before a Gas Safety Certificate can be issued.

New Tenants
There is no legal obligation for you to obtain a new Gas Safety Certificate before a new tenant moves in provided it is less than 12 months since the last Gas Safety Check and you have a copy of the Certificate to show this. However, you do need to inspect all appliances and flues between tenants, as the former tenant may have damaged, tampered or unsafely removed appliances. If you suspect this is the case, a new Gas Safety Check should be sought. Also, if a tenant has left a gas appliance belonging to them in the property, you must either arrange for it to be removed safely or assume responsibility for maintenance and checks. In this situation a Gas Safety Check would be required prior to the new tenant moving in.

The laws around gas safety are there to keep your tenants safe. If you are in any doubt as to whether your gas appliances are functioning properly, it is best to get this checked by a Gas Safe registered engineer before any new tenancy begins. This could save you future problems if anything does go wrong – and, more importantly, will protect your new tenants. For more guidance on Gas Safety Certificates, the Gas Safe Register and Health and Safety Executive both provide useful guides.

What is Legionella?

Legionella is a pathogenic bacteria which causes Legionnaires’ disease, an illness with symptoms similar to pneumonia and Pontiac fever, a mild, flu-like illness.

The symptoms of Legionnaires’ disease include fever, chills and a cough, sometimes with bloody sputum. Some people with Legionnaires’ disease also suffer from muscle aches, tiredness, loss of appetite, loss of coordination or ataxia, chest pains, diarrhea or vomiting. A less common but still nonetheless present symptom is confusion and impaired cognition. The length of time between the onset of Legionnaires’ disease after exposure to legionella and the appearance of symptoms can range from 2 to 10 days. Pontiac fever has all the symptoms of a mild flu, but unlike Legionnaires’ disease the fever is self-resolving and will probably go undiagnosed.

Legionella grows in warm, humid conditions where iron is present. Areas which run the risk of transmitting the bacteria include hot tubs, air conditioning and water heating systems in homes, offices, hotels and hospitals. The ideal temperature for the bacteria is between 25ºC and 45ºC. It is transmitted through contaminated water or through water vapour in the air. Diseases arising from the bacteria are more likely to affect people who are older, smokers and people who have an already compromised immune system. The fatality rate for Legionnaires’ disease can range from 5% to 30% depending on the speed of diagnosis and treatment. The disease can be difficult to diagnose because of the unusually long incubation period before symptoms begin to show, after which multiple tests need to be undertaken to rule out other pneumonia-like diseases.

Given the high death rate from Legionnaires’ disease, it’s important that the home remains free from the bacteria, meaning that steps have to be taken to reduce the risk of conditions which the bacteria finds favourable. Any water system has to be properly maintained as per health and safety regulations. As a landlord, you should know the extent to which this responsibility falls upon you and how to ensure that this is undertaken.

Home Maintenance and Landlord Responsibilities

As a landlord, you have a legal duty to combat Legionnaires’ disease by ensuring that your property is habitable and doesn’t pose a risk to tenants or visitors. Part of that legal duty involves carrying out a risk assessment, in order to identify and assess sources of, as well as manage, risk of bacterial infection from legionella. Another part of that legal duty involves maintaining the facilities in your property to minimise as far as possible the risk of legionella and making sure that your tenants are aware of any risks and know how to manage and safely maintain the facilities in the property in the light of these risks.

You need to carry out the risk assessment either by yourself, or by an employee. You need to record the risk assessment so that if legionella does become a problem, or if you are taken to court because a tenant claims that you did not take the proper precautions, you can demonstrate that the proper steps were taken in a specific time frame. This record would include the facilities checked, how they were checked and what the results of the check were.

The law is clear. Since the L8 Approved Code of Practice (Third Edition) was published in 2001 and the Control of Substances Hazardous to Health Regulations in 2002, a framework for the assessment of risk of legionella has been laid out for landlords in both business and residential properties.

The Health and Safety at Work Act, in force since 1974, says “It shall be the duty of every self-employed person to conduct his undertaking in such a way as to ensure, so far as is reasonably practicable, that he and other persons (not being his employees) who may be affected thereby are not thereby exposed to risks to their health or safety.”

What are the penalties for failing to comply with these responsibilities?

For landlords who do not comply with the Code of Practice, local authorities can undertake an enforcement action, forcing the landlord to comply. If the landlord still fails to comply, they can face a fine or even a prison sentence.

How to Prevent Legionella Growth?

Legionella thrives when two conditions are present. The first is a source of water that is at between 25ºC and 45ºC. The other is the presence of impurities in the water that could be used by the bacteria for food, which can be rust, algae or limescale.

The first thing that you can do to prevent legionella from occurring in a property that you’re renting out is to know the risks. People who are 50 or over, smokers, people with long term illnesses or weakened immune systems, are all at a higher risk than the general public. If your tenants fall into any of these groups, you should take extra care to make sure that the home they are paying to live in is hospitable, free from damp and properly heated. If they are eligible for a winter fuel allowance, you might want to make them aware of it if they do not take advantage of this already.

The next step is to work at actively maintaining the proper functioning of the property’s heating and water supply. This means maintaining and making any necessary repairs to the boiler system, to the water pipes and to the plumbing. It is important to check for bacterial infection as well as sources of limescale or rust in the water and checking that the pipes and heating are working properly.

Next, if there are any signs that your tenant has some or all of the symptoms of Legionnaires’ disease or Pontiac fever, you should advise them to seek medical attention and check that the heating system and property are free from any signs of legionella. Since water systems of neighbouring houses are connected, you should notify the Water Board and the local authorities to ensure that legionella doesn’t spread to any of the other properties.

If you follow these simple steps then not only will you have fulfilled your legal duties as a landlord to ensure the health and safety of your tenants, you may prevent them from getting a life threatening disease. Legionella can kill, so negligence in this area is not an option.