Lettings Without The Headache


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Are you a landlord, or thinking of becoming one? Nockolds Solicitors and Mullucks Wells provided a free briefing on the key issues affecting the rental property market on April 18th 2012, find out more here.

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Lettings Without The Headache

  1. 1. Tim TrembathChairman & Director of Residential Lettings
  2. 2. Joan BullResidential Lettings Manager, Bishop’s Stortford
  3. 3. RICHARD MORRISIndependent Mortgage Adviser
  4. 4. Buy to Let market Snapshot Still 12% of the whole market More tenants than properties Rents are rising Void periods decreasing New Lender Entrants to the market – mostly through Intermediaries 555 products available as at March 2012 compared to just 214 in July 2010 and a low of 145 products in 2009 Source: CML, ARLA and Trigold
  5. 5. Drivers for increased rental demand Significant barriers to home ownership Reduced numbers of FTB’s Higher Student numbers A growing population and more households More pensioners and increased immigration Let’s look at these in more detail:
  6. 6. Tenant demographics. Pensioner One person Age of Net s households first time Migration up Increasin buyer g 24% 252,000 29 16% (assisted) 2005-2010 2006-2016 2010 2010Source: Communities andLocal Government
  7. 7. Buy to Let lending history £44.6 billio n £27.2 billio n £8.5 £10.4 £13 billio billio billio n n n 2007 2008 2009 2010 2011• 1.3m BTL mortgages outstanding worth £152bn– 12% of all mortgagesSource: CML
  8. 8. Buy to Let Lending today  The average LTV across portfolios is 46%  Many Landlords are enjoying low SVR rates with their current provider  Some lenders will allow redemption without fees or given incentives  The benefit of low rates may be lost due to low gearing (LTV) and higher tax takes  Solid tax advice should be sought to maximise income/minimise tax liabilitySource: ARLA Review andIndex – Q3 2011
  9. 9. Buy to Let Lending today  73.6% of Landlords DO NOT expect to sell their property in the next 12 months  8.6% of Landlords DO expect to sell their property in the next 12 months  The average investment period is 19 years with 35.5% of landlords expecting to keep their property for 20+ years  73.6% of respondents report more tenants than properties available for rentSource : ARLA Review & Index2011
  10. 10. Buy to Let Lending  26.7% of landlords DO expect to buy more property in the next 12 months  AVERAGE HOUSE PRICE  Quarter 1 1985 - £33200  Quarter 1 2005 - £152790  Quarter 4 2010 - £163244  March 2012 - £163327Source: ARLA review and Index 2011 Nationwide Building Society
  11. 11. Cash & Geared investments Cash Key Geared Differences £150,000 Investment £150,000 1 Property for Property 3 properties at 70% LTV £150,000 with100% risk during void Risk Spread the risk of void periods periodsRental Income- Wholly Income Potentially lower tax taxed after allowable liability off set against mortgage interest. 1 x Capital Growth Potentially 3 x Capital Growth
  12. 12. Buy to let lending Facts Minimum 20% Deposit (best rates with higher deposits) Minimal earned income required First Time landlords No maximum Age Interest only or Capital and Interest repayments available Rental coverage 125% of interest only payments HMO’s (homes of multiple occupancy) available Light refurbishment products available
  13. 13. RICHARD MORRISIndependent Mortgage Adviser
  14. 14. Lettings without the headache Maria-Christina Peyman Dispute Resolution Solicitor Nockolds LLP 18 April 2012
  15. 15. 1. Breaches of the tenancy terms2. Landlord’s rights & obligations3. Following service of s8 & s21 notices
  16. 16. 1. Breaches of the tenancy termsFailure to pay the rent• Do not ignore it• Arrears of 2 months or more – “Section 8 Notice”Bringing a pet in to the property• What are the grounds for issuing a claim for possession• “Ground 12” a discretionary ground• What is the impact of a discretionary ground
  17. 17. 2. Landlord’s rights and obligationsI gave my tenant 24 hours notice, now I want toenter the property• S11 Landlord & Tenant Act 1985 and s16 Housing Act 1988• Reasonable access for repairs• Quiet and peaceful enjoyment and permission• The tenant who persistently says “no”
  18. 18. Has the property has been deserted?• Landlord is able to take possession – Housing Act 1988• Illegal eviction – Protection from Eviction Act 1977• Consequences of illegal eviction• Steps to ascertain desertionIs a landlord required to supply an EPC?• Yes - The Energy Performance Regulations 2011 and 2012Letting a property for 4 months• Housing Act 1996
  19. 19. What notice do I have to give to get my propertyback?• S21 Housing Act 1988Taking 6 months rent in advance• Ensuing periodic tenancy and the rental period
  20. 20. 3. Following service of a s8 or s21 notice• When to use which• What are the timescales• What happens if the tenant does not go• Issuing the possession claim – accelerated procedure / standard procedure• The possession date passes but the tenant still has not gone• Bailiff’s appointment
  21. 21. Summary• Keep rent arrears in check• Make sure that any notices are correct, any errors simply lead to more time and if arrears are an issue then higher arrears• Consider whether you are likely to recover the arrears – if not might a s21 notice be more time and cost effective• Association of Residential Letting Agents• LASTLY in your packs you will see details of the fixed fee service we offer for s21 notices and the ensuing work
  22. 22. Richard RobertsManaging Director & Director of Commercial Services
  23. 23. What are the risks?
  24. 24. 9 Stephenson Road, Southend On Sea, SS9 5LY
  25. 25. Occupier Demand• Location• Condition of Building• Planning
  26. 26. Tenant & Lease• Covenant• Length of Lease• Income Cover Ratio
  27. 27. Loan to Value• Loan to Value• Amortisation• State of the Market