Property pets cat dog

What could the Pets Bill mean for tenants & landlords?

If you’re an adult and you live in Britain then there’s a 50% chance you own a pet or at least know someone who does. And if your aged somewhere between 35-45 you’re three times as likely to rent a house today compared to this time 20 years ago. If this is the case, you’ll need a home you can share with your furry friend.

Renting a home with a pet has traditionally always been frowned upon somewhat with landlords and letting agents reluctant to allow tenants to keep pets in their properties. You can’t blame them to be honest, given the cost of upkeep of their investment and a portfolio to keep afloat it’s just another unnecessary aspect to factor in.

But today we have a new issue with this. Covid-19. Not only is the virus bad enough on its own it’s brought new problems to the table. Animal shelters and charities have reported a huge surge in demand for puppies and kittens during lockdown and with an estimate reaching around 9 million dogs and 10 million cats in Britain it’s now crucial to find long term shelter for humans and their little (or big) furry friends.

The government recently introduced a new model standard tenancy agreement and laws that will make it easier for tenants to move with their pets.

What has the government introduced?

On the 28th of January 2021 the dogs and domestic animals (Accommodation and Protection) bill was brought forward by MP Andrew Rosindell. It’s a welcome change for lonely renters but is it a welcome from landlords?

The Bill has been placed to establish tenants rights to keep dogs and other animals in domestic accommodation under conditional terms.

This is to both protect the landlord’s property and the welfare of animals and that of their owners. Coronavirus has been a pivotal turning point in this change of bill over the last several months. As most people are now working from home, mental health struggles have become a real issue. We can’t ignore the benefits of pets with helping ease anxiety and stress and to provide real companionship at a time when it is most needed.

Why the rules have changed? Is there any benefit?

Pet campaigners claim the private rental market is discriminatory against tenants with four-legged friends. New conditional rules mean landlords will no longer be able to issue a blanket ban on pets. By ‘conditional’ it does however mean tenants don’t have an unconditional right to keep pets in their rental property but it does give a little wiggle room for those stuck for a place to live. There are pros and cons to this however…

Some of the benefits may include:

> Companionship (especially during lockdown)
> Improvement’s in mental health & immunity
> Reduced pressure on the NHS
> Improved and increased pet adoption rates
> General improvements in wellbeing (For pet and owner) 

The flipside of this however may paint a different picture and you have to ask is it worth it?

Some of the drawbacks may be:

> Landlords inflate rent prices
> No real consensus of guidelines for tenants who want to get a pet after they move in, how can they prove it’s well behaved if they don’t yet own the pet?

This could be a real sticking point as it’s highly subjective topic up to a point. And if a landlord doesn’t like pets to begin with, you have a potential problem there. It may be that over-time there exists standardised tests for pet behaviour but that’s whole different discussion for another day.

>There may be increased vetinary charges for certificates to cover indemnity costs.
>Will the bill cover flats? Or houses without gardens etc?

So, what are the new rules exactly?

Before looking at the new we must consider the old – currently and following a recent legislative change in June 2019 a landlord can only charge a deposit of 5 weeks rent preventing them from adding additional charges to a tenant’s deposit.

In most other places in the UK landlords can however request a deposit for pets in addition to a security deposit to cover any potential damages caused from a pet. However very few landlords advertise their property as suitable for pets. In these cases, they most likely included pet clauses in their rental contracts to allow for pets.

So, for over 90 percent of landlords that means, a blanket ban on pets of any kind was included in their contract. If a tenancy agreement included a ban on pets, getting one was reasonable grounds for eviction. This has, in reality, torn families apart, and some have even had to leave their beloved pets behind.

The new rules specify that a tenant can move a pet into a property if it is ‘well-behaved’ (This is a problem right from the get go – because what does ‘well-behaved’ mean what does it look like in the pet world vs the property world? In simpler terms it’s too subjective.)

The government’s aim of removing no-pet clauses from its model tenancy agreement is the focus but it doesn’t seem to go far enough. For a start it’s a voluntary but recommended guideline for landlords to follow it requires pet owners looking to rent to pass a ‘responsible owner ship test’ before they can move in their pet:

This would include:

>Proof of vaccination
>Microchipping the pet
>De-worming and defleaing

And ensuring the pet responds to basic commands – again this is subjective as to what justifies a ‘well behaved pet’ and really opens a can of worms as to the type of pet, age, trainability and so on and for those who want to get a pet after they have moved in where does it leave them?

The bottom line here is tenants won’t have unconditional rights but there is a glimmer of hope for those looking for a home for themselves and their pet.

How will it affect landlords and tenants?

For landlords the drawbacks may continue further; concern over property damages will be the main cause for concern and with this may bring forth a process in which a landlord can object to the pet.

This means more management work and the need to write an objection with 28 days from a pet tenant request. This does leave the landlord in a situation where they will need to give a reason.

The landlord gives an objective reason on a subjective matter, it’s difficult to justify in this case. (Such reasons could be the size of the property isn’t suitable, or that the vicinity of the property isn’t suitable or just the simple fact it’s impractical (think, noise complaints, no garden, high rise flat for example)

So far, the checklist of potential extra work for landlords and letting agents includes:

>Asking for a vet’s written confirmation that a pet has been microchipped and that the animal is registered on a national database
>Checking the tenant has a vet’s confirmation that the pet is vaccinated, spayed/neutered, free of parasites and responsive to basic training commands (in the case of dogs)
>Asking to see proof that a tenant is a ‘responsible owner’
>Assessment of the property to ensure it is suitable for a pet

If the new rules are passed in full for landlord’s it could mean quicker deterioration of their properties and furnishings. It may be a case landlords rethink their layouts or that they don’t provide furnishings at all. For example, fur might cover the property, smells can seep into the carpets and furniture, and scratches may appear on sofas.

In summary

We’ve heard the claim from pet campaigners that the private rental market is discriminatory against tenants with four-legged friends however this has not been the case it was just never required as policy by law so it was always at the discretion of the landlords and we’ll within their rights.

The new rules have changed this and mean landlords will no longer be able to issue a blanket ban on pets.

If as a landlord you object to a tenant having a pet, that rejection should only be made where there is good reason, such as in smaller properties or flats where owning a pet could be impractical. Yes, this may require some additional work and checks on your end but not all hope is lost and if we flip it on its head its actually a good thing.

If we consider the value of more extensive checks, and quality of tenants with pets (generally tend to be more responsible) not to mention the requirements that landlords are protected as tenants will continue to have a legal duty to repair or cover the cost of any damage to the property.

It’s been years in the making but from 28th January 2021 we see the bill in place for the foreseeable future – letting agents and landlords are now compelled by law to accept tenants with pets but as mentioned this isn’t a bad thing. It’s just a change.

 

Davids Comments:

This may come as bad news to some Landlords but let’s not get bogged down with things that are beyond our control. Instead, we should look at the positives of this. We want our properties to become homes for our tenants since this creates longevity in a tenancy. Statistics show that historically, tenancies that allow pets have a longer lifespan.

Besides this new piece of legislation is something us as landlords know about, 90% of tenants won’t know this has been introduced and should they cotton on to the fact, it certainly doesn’t mean they are going to rush out and buy a Long-haired German Shepherd any time soon.  

NUMBERS

Understanding The Numbers

In order to understand the commercial viability of a property investment, it is important to understand not just the numbers but the nuances of what those numbers represent.  There are plenty of deals out there that look fantastic on the surface but delving a little deeper exposes frailty.

Your property investments should be treated as a business, so even though you may seek the advice of experts, you need to carry out your due diligence with the same rigour as if you were about to present the deal to the Dragons Den.

There are lots of different figures bandied about, so I am going to concentrate on just four key numbers; namely below market value (BMV), cashflow, yield and return on investment (ROI).  For each one, you need to understand how it is calculated, what it represents and why that is important.

Market value.

To be able to calculate how much below market value a property is being sold for you first need to calculate the market value; that should be self-explanatory, it is the value of the property right?  OK, so is that what the vendor or agent is telling you? Is it based on 2-year-old comparables adjusted for market inflation or the figure that bloke Dave gave you when you met in the street whilst assessing the condition of the roof?  An economist will tell you that the value of something is what a buyer is willing to pay for it, but that isn’t particularly helpful either.

So, if you are new to an area the best way to value a property is by using all the figures you can gather (except for Dave’s) and applying some emotionally detached and objective common sense.  The big but here is that you need to, as far as possible compare like with like so factor in the condition of the property as far as possible.  Do not compare the price of a run-down repossession with that of a well-maintained family home two doors down.

The BMV is calculated by simply working out the discount over the market value, so a house sold for £90,000 that could be sold for £100,000 on the open market is 10% BMV.  Why would anyone sell BMV? That is for another time but suffice to say the vendor is more motivated by the speed and certainty of the sale than the sale price.

Why is BMV important?  Well firstly it gives you instant equity in the property, so you are now a proper investor. Maybe more importantly, it reduces your risk.  So, for instance, if there is a change in circumstances with the house, personally, financially, in legislation or any other factor, you have an exit strategy even if prices have dropped slightly.  If you are managing risk, you are now properly in business.

BMV concerns the capital and equity of the purchase, the other three indicators all concern the ongoing financial viability of the investment.  If you are buying to let, then we would always advise planning to hold the property for at least a few years because otherwise, the transaction costs will eat up a considerable proportion of your profit.

Cashflow

Cashflow is easy in explanation but requires careful attention to the detail for the calculation.  It is the estimated monthly income less expenditure.  Income will be rent (although not necessarily exclusively); the main items of expenditure are mortgage fees, agency fees, allowances for voids, allowances for maintenance (including accruals for large expense items such as boilers and roofs), service charges, ground rents etc.  These expenditure items can be difficult to estimate so be detached and as objective as possible.

Cashflow should always be positive, and you need to set a minimum level that you will accept to act as a buffer; I have heard various figures used from £50 to £250 per property.  If it is positive, then you are in business, if not then do not buy a liability.

Yield

Yield is the annual return of the property expressed as a percentage of its value.  The nuances here depend on what you include or exclude.  You can decide what you include when you know what you want to use it for.

Most investor folk use it to compare the headline returns of properties.  At WOPT towers we also find it useful as an at a glance review of the risk when using finance.  As a rule of thumb, the worst case scenario is that finance will cost about 6% and other costs (maintenance etc.) are around 2%; then the minimum acceptable yield for an investment will be 8%.

Return on investment.

ROI is a similar calculation to yield, but it strips away figures to reveal how hard the investor’s money is working.  It is calculated by dividing the net cash flow in a year by the investors capital; that is the equity in the property.

ROI is the actual return on your money similar to the interest rate at the bank and therefore allows the investor to compare investments across not only different properties but also different investment asset classes, e.g. shares gilts and bonds etc.  This is important as it allows the investor to check that they are making their money sweat as hard as they can.

Final Thought

Before we finish, it is worth mentioning that the figures are the sum of several estimates. So, to be really thorough you should calculate a best, worst and most likely scenario, only then will you have a true grip on the business case.

Time to deploy the spreadsheet!!

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Deposit Protection

First, I need to write that this article is not meant to act as legal advice in any way, shape or form.

We don’t think the law around the holding of deposits is particularly complicated, but we are certainly not qualified to give it advice.

The law/rules/guidance around what you can and cannot withhold from a deposit is, well, almost entirely subjective and frankly a can of worms (here is the advice the tenants are getting – link below).  

So, the purpose of this blog is a discussion of the nature of deposits and highlight what you should be aware of and possibly do more research into you can do that >>here<<.

 

Should I even bother to take a deposit?

Yes, you absolutely should…….. DEFINITELY!!

OK, so it almost goes without saying that a tenant can cause far more damage than will ever be recovered through the withholding of a deposit.

In many ways, the monetary value is secondary to the commitment to the property and superior financial management that the tenant is displaying in getting the deposit together.

Frequently the first question you’ll get asked by the tenant when they submit their Notice to Quit, is ‘when will I get my bond back?’.

It is quite clearly in their mind, and if that thought holds during the tenancy and they take that little bit of extra care with your property, then you are onto a winner.

The tiny bit of extra daily care that a tenant may take with your property will add up and, although I will never be able to prove this, I believe you will have fewer issues with tenants if you take a deposit.  And if that is too woolly and ethereal for you – well you have the cold hard cash from the deposit to cover any repair costs.

How much should I take?

Amount taken tends to be relative to the rent the equivalent of somewhere between 1 to 2 months.

However, there are a number of reasons why you would want to take a bit more; if the tenant wants to have pets, if the tenants are foreign and a greater potential to skip payments at the end of a tenancy are but two examples.

There is no right or wrong (although as at December 2018 the Labour Party are pushing to have an upper limit on the deposit – so watch out)

So that’s easy, I’ll take a deposit.  Now, what shall I do with the money?

Simple – register it with or submit it to a government-backed scheme.

Tenancy deposit protection was introduced on 6 April 2007 as part of the Housing Act 2004 and updated in the tenancy deposit provisions (section 184) of the Localism Act which came into effect on 6 April 2012.

Much of the justification for the acts was the sharp practices by some landlords predominantly betterment.  Betterment (made up word alert?) is the practice of spotting a small defect and then using it to justify making the property better at the tenant’s expense, for instance, a small mark on a wall could be used as a reason to re-decorate a whole room or house.

The deposit schemes are meant to bring greater parity between tenants and landlords about what the deposit monies can be used for.

Has it worked? We have no idea, but it certainly has changed the relationship and also created a new opportunity for the no win no fee lawyer if the deposit is not correctly registered and the correct paperwork served; You have 30 days from receipt of the money so act quick.

What is this ‘Deposit paperwork’?

The details of what paperwork needs to be served will be available on the scheme’s website, we haven’t listed the requirement here for fear of going out of date and thereby being misleading.

Broadly, it is a document that tells the tenant about which scheme you have used (the prescribed information) and T&Cs/leaflets that give greater depth of detail about the scheme.

To register or go custodial?

The schemes offer two options; in the custodial scheme the deposit is paid the money into a third party account managed by the scheme and registering the deposit involves the payment of a fee to register the deposit which is then held by the landlord/agent.

Which scheme is better?  Only you will be able to decide as it is very much linked to how you manage your affairs and the types of tenancies you have.  Bear in mind that you can use different schemes for different deposits if you so wish.

At the time of going to print the following providers were available, these are the only government schemes available, easily found on google.

  • Deposit Protection Service (DPS)
  • Dispute service (TDS)
  • mydeposits

Were all done then?

Yes and no.  It is also important to ensure that you complete a detailed condition report (inventory) of the property.

This should be a combination of at least a written report and photos; taking videos is also commonplace.

The inventory should be completed with the tenant prior to the point they move any of their belongings and must be signed off by the tenant as a true and accurate (It also is good practice to get them to witness the testing of fire and carbon monoxide detection equipment and take the meter readings at the same time, but we have now strayed to a different subject matter!)

The inventory will then form the basis of any future claims against the deposit if the tenant disputes any monies that you intend to withhold.

If you are not feeling confident, then you can use an inventory service.

You are not tied to this service forever, and it could be quite useful to get them to draw up the inventory in the first instance anyway!

Last words.

Play it by the book.

The idiom or the figure of speech “look for a needle in a haystack” is used to describe something elusive in a large space or a sisyphean task. Magnifying glass on the needle is isolated on white

How to keep a good tenant.

What Makes a Good Tenant?

Good question!

I suppose we all have definitions of a good tenant, in our earlier blog, we called a good tenant a suitable tenant.

They are, for us, one and the same thing.

The word GOOD is too subjective to classify in this instance. We look at a suitable tenant in the same way that we look at a good tenant.

A good/suitable tenant is simply one that pays their rent on time and looks after the property.

We could take this further and hope that the tenant is communicative and willing to do smaller repairs off his or her own back, they keep the property immaculate and even improve its condition by means of decorating etc.

For the purpose of this blog, however, a suitable V good V dream tenant is somewhat irrelevant, in essence, all we can ask of a tenant, and the tenant that at a minimum we all want to keep, is that they pay their rent on time and look after the property, anything else here is a bonus!

Ask Yourself One Fundamental Question

There is no dark art or hidden secret to keeping hold of that ‘suitable’ tenant

Just ask yourself this one question – ‘why would this tenant want to move?’

You will generally find the answer yourself

  • You’re raising rent continually and excessively
  • You are shirking your maintenance responsibilities
  • You are visiting the property too often
  • You will not reinvest in the property during a tenancy
  • You are not allowing them basic privileges upon request

Why do we NEED to Keep Hold of this Suitable Tenant?

In short, and by no means of beating around the bush, the tenant is your profit, they are the cogs of the industry, without tenants we have no business, no profit and a whole heap of liability.

This means that keeping (almost) any tenant has its benefits providing you are receiving your rent, but keeping a suitable/good tenant is increasingly important.

For one, anytime a tenant moves out of your property you are left with some form of expenditure, whether that is merely the council tax liability and subsequent mortgage payments, or it is the cleaning, disposal of goods, repairs and redecoration, it is all expenditure coupled with lost profit.

Generally, the longer the tenant is at your property, the more this will cost you when they move in terms of redecoration and repairs. The smaller repairs that they felt they could live with won’t be tolerated when the new tenant moves in so they will need to be dealt with as well.

Secondly, we have the added factor of hassle. When a tenant moves out we not only have to check them out of the property, we need to inspect against our inventory, deal with any repairs or damage that the tenant has either caused or unreported, we need to deal with the deposit, whether that is claiming against it or simply returning it. If we are claiming against it, we may need to request a statutory declaration if the tenant does not reply to the claim or we may need to use the dispute resolution service if they contest it, all this is a laborious and time-consuming task (see our DPS blog)

If only it was that simple! We also need to transfer the liability of the utilities into our name, there may be debt on the gas and electric meter, meaning that we either have to clear the debt or call the electric company, go through a drawn-out process to have the electric meter reset by means of going to collect a new key from the local shop, using a ‘reset’ code then returning to the property to clear the debt, only then can we return to the shop to add some credit to the key and get our supply back on.

If only the gas was that simple, in most cases the energy company will want to send an engineer out to the property to reset the meter, great huh? NO, this means we have to wait a few days, we also have to return to the property and hang around for the engineer to attend his 4-hour window, in the cold I might add!

We have to transfer the water into our name, notify the council that we are now liable for the council tax, make the decision to hold off payment until we either find our next tenant or we receive our arrears invoice. If we make the payment immediately, in some cases we would then receive the overpayment back in the form of a cheque after finding the new tenant, meaning we now have to go to our bank to pay this in.

OH! Lastly, we have the task of retaking pictures and starting the entire process of listing, advertising, speaking with prospective tenants, viewings, applications, tenant referencing and signing up that suitable tenant all over again! furthermore we can never be sure that they will be as good as the tenant we have just let slip through our fingers.

SO…..How do you Keep a Suitable or Good Tenant

Sorry that the above paragraph was a little drawn out, we need you to appreciate that loosing (almost) any tenant is bad news for an investor/landlord

Returning to my earlier question ‘why would this tenant want to move out’ we have the following:

sometimes matters are beyond your control, and despite your best efforts a tenant may still move on. However, we need to do whatever is within our control to keep this suitable tenant

We need to be a GOOD landlord

  • When a tenant reports a problem, we need to act and act as soon as is reasonably practicable
  • We need to address the more significant issues like a broken boiler with our tenant in mind, especially longer-term tenants
  • We need to show the tenant respect and allow them to LIVE in THEIR home comfortably and allowing them space without constant intrusion
  • When a tenant requests a change or seeks a pet, common sense needs to prevail
  • We need to avoid becoming complacent, the longer the tenant is at the property the more value you should attach to them

This list really could go on, but I am sure you get the picture by now.

Having balance and of course with revenue in mind, you need to do everything within your power to eliminate the controllable reasons why a tenant would want to leave your property.

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Possession: A Quick Guide

An Overview of Possession – service notice on a tenant.

OK, guys, we will apologise in advance, this isn’t going to be anywhere near entertaining.

Nevertheless, it needs writing, we are going to, for the sake of continuation get straight to the point, avoid our usual satiric approach and simply get down to business!

Shall I, shan’t I?

So, after much deliberation and consideration, you have decided that you would like to take back control of your property.  There could be a multitude of reasons for this; but whether the tenants’ departure is benign or not, the strategy considerations will be broadly the same.

In the next few paragraphs, the intention is to run through strategic choices, touching on the legal procedures.  As ever, if you have any detailed or specific questions, you may need to consult a lawyer.

Carrot or stick?

The best option to get possession of your property is to find a solution agreeable with your tenants.  If you manage to do this, then make sure that you get the agreement in writing as soon as possible. This is normally with either a ‘notice to quit’ or a deed of surrender.

The difference between them is that a ‘Notice to Quit’ is a unilateral notice from the tenant informing you that they intend to leave whereas the Deed of Surrender is an agreement by the landlord and the tenant to terminate the tenancy, so it can be as flexible as you are.

The main practical differences then are that the Deed of Surrender should be used if the tenancy is still in the fixed term and it can include financial considerations. The Notice to Quit should be aligned with the terms in the tenancy agreement so in theory is less flexible. With either form, once signed the tenant is committed to leaving on the agreed date unless the landlord agrees to a change.

If the tenant makes it known that they intend to be problematic about leaving, then the landlord will need to serve notices and could ultimately require court action and bring in the bailiffs.  These tools should be avoided if possible because they are time-consuming and expensive.

However, if the tenant won’t sign the paperwork then is clear that they do not intend to make possession easy. At this point it is worth mentioning that there are only two legal weighs to end a tenancy, the first mentioned above, voluntary surrender; the second is to obtain a possession order from a court.

What about abandonment? Yes, I know, new rules are in play but we’ll save that for a different article.

Help, I don’t know where to start?

First, you need to understand the difference between Section 21 and Section 8 notices.

A Section 21 notice is the no-fault route. It is designed for scenarios in which the landlord would like to take possession – it could be to move back in, to sell the property etc.  Therefore, it follows the tenancy agreement clauses closely, i.e. two months (periods) notice, it cannot be served to expire within the fixed term, and there is no recovery of monies – other than pro rata rent.  So long as your procedure is correct, the judgement is guaranteed.

Section 8, on the other hand, stipulates failures (called the grounds for possession) by the tenant to stick to the clauses of the tenancy.  There are currently 17 grounds you can use, be careful some are not mandatory so they will be at the discretion of the judge as to whether you get possession.  It also differs from the Section 21 because you can include monies in the judgement to recover the arrears.

Both routes have a standard form that you need to use, a Form 3 for a Section 8 and a Form 6a for the Section 21.  There are grandfather rules for these forms, so you need to check that you don’t fall foul of them if you are dealing with an old tenancy.  You need to be up to speed with how the notices should be served.

You can serve both notices and then choose which path to follow at a later date.  However, if you need to go to court, you will need to decide which notice to use and make this extremely clear to the tenant so that they don’t use confusion as a ‘get out of jail free’ card.

However, before you start completing any forms, it is worth checking that you have set up the tenancy correctly, meeting all the legal requirements.

You should have supplied the following paperwork;  

  • A written Assured Shorthold Tenancy Agreement
  • The up to date ‘How to Rent’ leaflet.
  • The Deposit Prescribed Information – in the correct format.
  • The property ‘Energy Performance Certificate’.
  • The Gas Safety certificate.
  • Moreover, that you have protected any deposit taken in an approved scheme, if you haven’t done any of these things it would be worth ‘playing catch up’ as soon as possible, the implications for not doing these things is a collapsed court case – expensive, time consuming and avoidable!.

It may be worth mentioning that when you serve notice, it’s a good idea to include the most recent ‘how to rent’ leaflet as it may differ from the one issued at the start of the tenancy. You can download the latest version here

The notice has expired, but nothing has happened?

If the notice has expired, then you will need to initiate court action.  You complete the paperwork (or do it online) and enclose the evidence.  The court issues you with a date at which you should get a possession judgement granted.

But the tenants won’t leave?

Then you will need to get the bailiffs to evict them. This requires more paperwork (and money) to book them through the county court.

You should now have possession of your property.

Final thought.

The best way to protect yourself starts at the beginning of the tenancy.

Get the right tenants and set up the tenancy right.

Ducks in a Row rendered

Systemising Your Property Business

As soon as you start your property business you should be concerned with making it as efficient as possible. The best way to do this is to systemise your approach. We have laid out an overview of how to achieve this which we hope will give you a clearer idea of the what, where, how and why?

Are you crazy? I don’t have a business, I just have a couple of rentals?

Even if you currently only have one property and don’t intend to go any further; you should still treat it like a business otherwise it will turn into an unwelcome hobby. Nobody knows what the future holds neither of us thought we would be sat here 12 years on writing blogs, delivering training courses, running property management companies and reaping the rewards of a passive income through property investing.

The aims of systemising are to make the management of your business quicker, easier and more consistent.  You should do this even if you do in-fact only have one property…… currently!!.

  

So how do I start?

Following a meeting at WOPT towers, we produced the diagram below to show my headline processes.  Each of these processes can then be broken down into a series of activities, we use a checklist to track what should be done next and keep an overview on progress.

Each process will have associated documents; be it letter/email templates, notices, reports etc.  The first one you write, copy or ‘benchmark’ will become the template which you should store somewhere safe and obvious in order that you can use it next time; at which point you will no doubt improve it and so on.

Sounds straight forward.  Can I have a look at your checklist?

Of course, he is a sample from the end of tenancy process – to see what other checklists are available, click here

Actions

     Related Documents

1.      Informed of tenant’s intention to quit. 
2.      Collect the signed Notice to Quit receipt from the tenant.    Notice to Quit form
3.      Deliver a rent statement and check-out letter to the tenants.

    Check out letter

    Rent statement

4.      Initiate the Letting Checklist for the property. 
5.      Agree date of the check out meeting with the tenant. 
6.      Print up to date rent statement. 
7.      Collect the check-in inventory and the property keys. 
8.      Conduct the end of tenancy meeting    End of tenancy report.

This all sounds very stone age – is there an app for that?

We recommend never using tablets or stone to document your system because other than the obvious weight issue any system should constantly be reviewed and improved.

There are numerous property management applications, and it is becoming more common that they are scalable, so you don’t need to pay a hefty monthly payment whatever the size of your portfolio.

We won’t recommend a particular package as selection depends on what your criteria is both now and how you see your business developing in the future.  Needless to say, there are numerous articles on property forums and websites that recommend applications based on the author’s view of the world.  Just make sure you are GDPR compliant!!!

One of the experts at WOPT Towers uses Excel for just about EVERYTHING, (pretty sure he creates his shopping lists on it), and it works well for him so as ever there is no right and wrong… Other than NOT systemising.

Sounds really simple, anything else?

Well no, not really, it is that simple when you break it down but it is remarkably effective in achieving the aims of making business quicker, easier and more consistent.

Property Training at WOPT

Here at WOPT we only offer responsible and ethical property training.

We believe firmly in transparency and will never sell you the dreams of yesteryear and never try to guide you to the impossible. We believe firmly that success is a journey and NOT a destination and that setting impossible targets can be counterproductive.

We believe in honest, straight-talking guidance, that’s why our training courses have become the best around because we genuinely care about your success.

We are so confident in our unique and personal approach that we even offer a no quibble money back guarantee.

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keys in hand

An Overview of Possession – Service notice on a tenant.

* COVID UPDATE (02/2021) – In light of the current CoV-19 situation we strongly suggest seeking professional advice on this matter. However, the bulk of this article is still relevant.

Ok, guys, we will apologise in advance, this isn’t going to be anywhere near entertaining.

Nevertheless, it needs writing, we are going to, for the sake of continuation get straight to the point, avoid our usual satiric approach and simply get down to business!

Shall I, shan’t I?

So, after much deliberation and consideration, you have decided that you would like to take back control of your property.  There could be a multitude of reasons for this; but whether the tenants’ departure is benign or not, the strategy considerations will be broadly the same.

In the next few paragraphs, the intention is to run through strategic choices, touching on the legal procedures.  As ever, if you have any detailed or specific questions, you may need to consult a lawyer.

Carrot or stick?

The best option to get possession of your property is to find a solution agreeable with your tenants.  If you manage to do this, then make sure that you get the agreement in writing as soon as possible. This is normally with either a ‘notice to quit’ or a deed of surrender. 

The difference between them is that a ‘Notice to Quit’ is a unilateral notice from the tenant informing you that they intend to leave whereas the Deed of Surrender is an agreement by the landlord and the tenant to terminate the tenancy, so it can be as flexible as you are.

The main practical differences then are that the Deed of Surrender should be used if the tenancy is still in the fixed term and it can include financial considerations. The Notice to Quit should be aligned with the terms in the tenancy agreement so in theory is less flexible. With either form, once signed the tenant is committed to leaving on the agreed date unless the landlord agrees to a change.

If the tenant makes it known that they intend to be problematic about leaving, then the landlord will need to serve notices and could ultimately require court action and bring in the bailiffs.  These tools should be avoided if possible because they are time-consuming and expensive.

However, if the tenant won’t sign the paperwork then is clear that they do not intend to make possession easy. At this point it is worth mentioning that there are only two legal weighs to end a tenancy, the first mentioned above, voluntary surrender; the second is to obtain a possession order from a court.

What about abandonment? Yes, I know, new rules are in play but we’ll save that for a different article.

Help, I don’t know where to start?

First, you need to understand the difference between Section 21 and Section 8 notices.

A Section 21 notice is the no-fault route. It is designed for scenarios in which the landlord would like to take possession – it could be to move back in, to sell the property etc.  Therefore, it follows the tenancy agreement clauses closely, i.e. two months (periods) notice, it cannot be served to expire within the fixed term, and there is no recovery of monies – other than pro rata rent.  So long as your procedure is correct, the judgement is guaranteed.  

Section 8, on the other hand, stipulates failures (called the grounds for possession) by the tenant to stick to the clauses of the tenancy.  There are currently 17 grounds you can use, be careful some are not mandatory so they will be at the discretion of the judge as to whether you get possession.  It also differs from the Section 21 because you can include monies in the judgement to recover the arrears.

Both routes have a standard form that you need to use, a Form 3 for a Section 8 and a Form 6a for the Section 21.  There are grandfather rules for these forms, so you need to check that you don’t fall foul of them if you are dealing with an old tenancy.  You need to be up to speed with how the notices should be served. 

You can serve both notices and then choose which path to follow at a later date.  However, if you need to go to court, you will need to decide which notice to use and make this extremely clear to the tenant so that they don’t use confusion as a ‘get out of jail free’ card.

However, before you start completing any forms, it is worth checking that you have set up the tenancy correctly, meeting all the legal requirements. 

You should have supplied the following paperwork;  

  • A written Assured Shorthold Tenancy Agreement
  • The up to date ‘How to Rent’ leaflet.
  • The Deposit Prescribed Information – in the correct format.
  • The property ‘Energy Performance Certificate’.
  • The Gas Safety certificate.
  • Moreover, that you have protected any deposit taken in an approved scheme, if you haven’t done any of these things it would be worth ‘playing catch up’ as soon as possible, the implications for not doing these things is a collapsed court case – expensive, time consuming and avoidable!.

It may be worth mentioning that when you serve notice, it’s a good idea to include the most recent ‘how to rent’ leaflet as it may differ from the one issued at the start of the tenancy. You can download the latest version here: https://www.gov.uk/government/publications/how-to-rent

The notice has expired, but nothing has happened?

If the notice has expired, then you will need to initiate court action.  You complete the paperwork (or do it online) and enclose the evidence.  The court issues you with a date at which you should get a possession judgement granted. 

But the tenants won’t leave?

Then you will need to get the bailiffs to evict them. This requires more paperwork (and money) to book them through the county court. 

You should now have possession of your property.

Final thought.

The best way to protect yourself starts at the beginning of the tenancy.

Get the right tenants and set up the tenancy right.

See our article on finding & keeping the right tenant

 

casio

Making Tax Digital

OK, so you have just sailed through GDPR, used the new stamp duty and tax regime for property income to out manoeuvre your competition; what is the government planning next?  Well, one thing is Making Tax Digital (MTD) also referred to as Real Time Information (RTI) in some press sources.

What is the difference between MTD and RTI?

Well for the purposes of this article nothing really.  Making Tax Digital (MTD) is the name given to the specific government project whereas RTI is a generic term for any recording of information in a digital format thereby making it more accessible and ‘real time’.  It is just the case that MTD will turn accounting information into real-time information (RTI). 

So what is Making Tax Digital (MTD)?

Making tax digital is the government’s scheme to move all our tax accounting onto digital platforms. It was due to be introduced for businesses and landlords in April 2018 but as is so often the case with government IT projects it has been delayed.   

The Government statement on July 13, 2017 read; ‘the changes mean that the smallest businesses and landlords will be able to move to keeping digital records for tax at a pace that is right for them.

Lots of references to businesses, my portfolio isn’t structured as a business?

Maybe not but the legislation is now more often than not lumping the property investor in with any changes affecting businesses.  This appears to certainly be true with MTD.

Then what do I need to do now?

Keep your eyes peeled and remain vigilant, This one is coming. The new timeline is businesses will need to move onto the digital accounting platform in April 2019 to meet VAT obligations.  If you are a non-VAT business the government have stated that you won’t need to move onto the digital platform before 2020. We will of-course keep you fully updated and posted along the way so watch out for our next article on this.

EPC fail

EPC Changes – What you need to know!

With EPC’s firmly back in the spotlight and with the new regulations approaching we take a close look at what the changes are, what you need to do to comply and how they may affect us as landlords or property managers.

What is an EPC?

Ok, so we are not about to patronise you here and demonstrate the sucking of the proverbial egg. You don’t need to be a property guru to be familiar with the term EPC, but for those who are completely new to the industry and perhaps are not familiar with the term, we will give you our 8-second layman guide to an EPC.

EPC stands for ‘Energy Performance Certificate’ and just like Ronseal it does exactly what it says on the tin, and by that I mean it is an overview of how a particular property performs in relation to energy or rather more accurately how energy efficient the property is.

It has been law to provide tenants with an EPC since the 6th of April 2008 and to clearly show the EPC rating on any property advertised since the 9th of January 2013. The latter has been enforced by the threat of a £200 non-compliance fine, but the new laws which come into effect on 1st April 2018 and 1st April 2020 respectively are set to throw all this wide open and maybe just maybe cause a very small stir for a very small amount of you.

What do the new regulations state?

Here at WOPT our team have been working tirelessly to develop simple ‘no-nonsense’ guide to the changes, and we think we have it here for you, for free, because we care!

Simply read through our list below and see which applies to you to see if there is any action you need to take

  • If the property has a current EPC rating of E or above your activity level, as a result, is that not too dissimilar of a sloth, garden slug or giant tortoise. And for those of you who are not zoologists or are not 100% clear on this, it basically means nothing at all!

Job done!

  • If the property has a current EPC rating of F or G but has a current AST in place, and you have no plans to renew that tenancy, i.e. you are continuing with your rolling contract then again your immediate action levels are that of a sloth, garden slug…… ok, you get the gist! Job done!

However be prepared, you will need to make previsions to get your overall rating improved and up to a rating of E or above by 1st April 2020.

  • If the property has a current EPC rating of F or G but has a current AST like in our example above, BUT you plan to renew this at the end of the term, then the minimum efficiency standards will apply as soon as you renew the contract. It may be worth considering a rolling contract at this point if you are unable to bring the rating up to standard in that time. Remember that this will need to be implemented before 1st April 2020 anyway.

  • If the property has a current EPC rating of F or G and is empty or untenanted, then you will be required to adhere to the new law as of 1st April 2018. This means you either let the property before this time buying you a couple of years grace or you do the inevitable and bring the property up to standard before you rent it.

Somethings to be noted on the above scenarios are:

  1. If the initial fixed term of the AST (shorthold or non-shorthold) comes to an end after the 1st of April 2018 and subsequently falls automatically to a rolling tenancy or a ‘statutory periodic tenancy’  then this is deemed a new contract or new letting for these purposes and the new regulations need to be adhered to.

    An example being, the six months fixed term was started in December 2017, therefore the initial term ends in May 2018, one month after the new laws comes into effect. This would usually mean that the tenancy is an existing tenancy, and would harbour no action. Think again. If the property has an F or G rating, then you need to make previsions to bring the standard up to and E.

    2. This one may confuse or baffle you, BUT there is a loophole that will reflect a very small portion of existing tenancies out there. Like previously mentioned it became law to provide your tenant with an EPC from 6th April 2008, however EPC’s only last 10 years and there is no obligatory requirement to obtain a new EPC if the tenant is still in place.
  • This means that if your property has a rating of F or G, but you are still letting to the same tenant in 2020 (meaning the tenancy is more than 10 years old), then there is no need to obtain a new EPC, therefore no need to adhere to the new regulations. As soon as this tenancy ends, of course, there will be a mandatory requirement to bring the property up to specification before you either re-let or sell the property. As far as we are aware, there are no plans to close this loophole.

Note: here at WOPT  we believe in responsible letting so even in the case of the above we would always recommend that the property is brought well in line with the required standards. 

Flats, Bedsits and HMO’s

Self-contained units such as flats need their own EPC. Even if the building has its own obligatory EPC, then it is the individual flats, not the building’s certificate that needs to be issued to show that the minimum standard has been met.

This one could open a can of worms so I am going to keep it light and general so as not get roped into the whole S21 argument. 

So IN GENERAL, non-self-contained units such as some bedsits or HMO’s do not need their own EPC, however, if the property has an obligatory EPC, like in the case it has been sold or bought since it became law to provide EPC’s with the sale AND this EPC is current then, yes you guessed it, the minimum standards do apply, until of course, the EPC runs out!

Exemptions to the rule

Ok, so there are some exemptions to the rule. Listed buildings, devaluation of the property, unable to gain consent, cost-effectiveness and even a six-month grace for new landlords, but if you feel that you may be mitigated because of one of the above you should seek further advice.

In general

Be warned that non-compliance can carry hefty fines of up to £4000

The Government has declared its wish to raise these standards further, such that the minimum standard is likely to rise to a D rating and a C Rating in 2030.

To see if your property has a valid EPC certificate and to see its current rating, simply accept the terms and input the relevant postcode into the following link online EPC register