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Short void periods, greater affordability, longer tenancies and higher rents

If you thought the potential to profit from buy-to-let investment was fading, it is time to think again. As demand for rental property increases, rents are rising, void periods are manageable, and rental affordability is increasing demand.

In this article, we look at the numbers that will have buy-to-let property investors salivating.

New surveys and statistics show the private rented sector is booming

After a sluggish couple of years, not helped by idiotic property tax changes made by the UK government, returns on buy-to-let investment appear to have turned the corner. The latest Goodlord Rental Index, Knight Frank, and LonRes point to booming rents across most of England and Wales.

21 – the average void period in the buy-to-let market in England and Wales

According to Goodlord, the average void period across the UK is now only 21 days. Investors in the West Midlands suffer the longest void periods, at 31 days. In London, the average void period is less than two weeks at 12 days – the lowest in England and Wales.

This matters to buy-to-let investors because it provides a good basis to work out your reserve fund. As you can read in the article “How big should your residential investment property reserve fund be?”, void periods are one of the three factors to consider when calculating how much money you should keep in reserve. When void periods are shorter, your contingency funding is smaller. This frees up money for other uses, such as further investment.

According to the Goodlord Rental Index for April 2019, average void periods across the eight England and Wales regions are:

3.75 – the average rental affordability in England and Wales

We hear a lot about housing affordability, but usually, associate it with the cost of a home. This number lets us see how affordable rental property is, by comparing average rent to average income. You may not be surprised to discover that the affordability of rental prices in England and Wales is lowest in the South of England and that the most unaffordable rents are in London.

Affordability of rent is defined as a tenant’s annual income divided by their annual rent. In other words, how many times a tenant’s income covers their rental amount. Here is how it measures up across England and Wales:

Greater affordability should allow tenants to more easily absorb rental increases. If affordability in the North West decreased to that of London, North West rental prices in the region would be 20% higher!

10.25 – the average length of tenancy in England and Wales

Tenancy length also matters to landlords. Ideally, you want great tenants to stay longer. This reduces the number of costly void periods. The shorter a tenancy and the longer a void period, the lower your return on investment.

Goodlord found that the average tenancy length is 10.25 months, but this ranges from eight months in the North West to 14 months in London:

903 – the average rent in the buy-to-let market in England and Wales

Goodlord also found that rents increased in most regions between March 2019 and April 2019. The only declines were experienced in the North East and the South West. Average rents from the index are:

The rent you receive is a key element of buy-to-let investment. It determines your gross income, is imperative to cash flow, and, ideally, should cover your mortgage and other costs (although some investors purposely invest for negative cash flow).

Prime London rents are powering ahead

Activity and rental prices in prime London property are booming. Figures from Knight Frank and LonRes indicate that confidence has flooded back to the capital’s rental market. Knight Frank reports that the number of agreed tenancies and the number of prospective tenants registered in the first quarter of 2019 have spiked higher:

  • Agreed tenancies and registered tenants in Q1 2019 are the highest since 2014
  • Agreed tenancies in super-prime (£5,000 and more rental per week) in Q1 2019 is the highest on record

According to LonRes, rents in prime London increased by 2.6% in the first quarter of 2019 compared to the same period in 2018. It also said that rents on the prime fringe were 2% higher over the same period. Rents are being increased most on new lets. With the fall in property prices, yields across the three areas covered by LonRes have increased to 3.7%. This is the highest rental yield since the third quarter of 2013.

Almost half of the respondents to the LonRes agent survey said that they had less rental stock on their books than last year, while only one in five said they had more. Tenancy renewal rates are on the increase, too.

What does this all mean to the buy-to-let landlord?

Rents are rising in most regions, London is bouncing. Renting is still more affordable than buying a home, and tenants are becoming more inclined to stay put rather than move. In London, a shortage of rental stock is helping to power rental prices higher. Prime London property – the hardest hit by Brexit uncertainty – is in demand from tenants.

These are a tremendous set of figures, and evidence that buy-to-let investment retains its long-term potential for exceptional returns.

The current environment is conducive to rental price increases. To learn how we are achieving an average rent rise of around 6% for our landlord clients, contact Ezytrac today at  +44 0 1522 503 717.

Live with passion

Brett Alegre-Wood

The post 21, 3.75, 10.25, 903 – the numbers that matter to UK buy-to-let property investors appeared first on Effortless Property Management by Ezytrac.

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Here’s why EU law could roadblock the UK government’s overseas investor tax plans

The government, letting agencies, property developers and non-resident investors in buy-to-let property in the UK should be watching a property tax battle in Spain very closely. It could put an immovable roadblock on the proposed 1% stamp duty surcharge on property purchases for non-resident investors in UK property.

What is the stamp duty surcharge in the UK?

The government has proposed that non-resident buyers of UK property should pay an extra 1% stamp duty, on top of the basic rates of stamp duty and the 3% surcharge on second properties. The proposal is that the extra 1% should be charged irrespective of the property’s value.

The proposal is currently in a consultation period, though the government could be waiting to announce its review until it sees what happens in Spain. The tax authorities there are in a battle with the EU.

What does Spain have to do with stamp duty in the UK?

Like the government in the UK, the Spanish government wants to increase its income. But, after a long period of austerity, increasing taxes is not popular.

Like in the UK, popularist parties are gaining a foothold in politics. If there is one thing you can rely on politicians to do, it is to look after their own jobs. In fact, it’s probably the only thing you can expect politicians to do.

To square this circle, the Spanish government’s answer has been like that of the UK government. Raise taxes on foreigners. Especially foreigners who invest in domestic property. And even better if it’s on rental property. Evil landlords deserve to be taxed! Evil, non-resident landlords deserve to be taxed even more!

This brings me to Spanish tax law on rental property. Currently, if you are a Spanish resident and let a home (what the Spanish call a ‘habitual residence’), you receive 60% tax relief on your net rental income. Non-residential property investors are not eligible for this. They must pay the full amount of tax to the Spanish tax authorities. Popular with Spanish voters. Not popular with the EU.

The EU says you can’t treat non-residents differently

Here’s the rub. Under EU law, you cannot treat non-residents differently to residents. It is discriminatory. Spain’s treatment of resident and non-resident property investors gives Spanish resident investors an unfair advantage. They pay less tax.

The EU laws that this treatment contravenes is covered under Article 63 of the Treaty on the Functioning of the European Union (TFEU). Spain’s taxes on non-resident investors may be popular with the Spanish, and it may raise extra revenue, but it is a car crash when it comes to free movement of capital. That’s what the European commission has concluded.

What happens next?

The European Commission is serious about this. In March, it sent Spain a letter of formal notice.

Ok, so a letter doesn’t sound like much, but it is the first step in a formal infringement procedure. Spain’s government has two months to provide a detailed reply. If that reply isn’t convincing enough, the European Commission will then send back a ‘reasoned opinion’.

The reasoned opinion will set out the exact reasons why the European Commission considers Spain is violating EU law. Simultaneously, the European Commission will formally request that Spain comply with EU law. It will give Spain a further period (usually two months) to report what measures it has adopted in order to comply.

If Spain doesn’t comply with the European Commission’s directive, the EU could take court action. Spain could be taken to the European Court of Justice (ECJ) and face a legal battle. That could take years.

It wouldn’t be the first time that Spain has found itself in contravention of EU laws of the freedom of movement of capital. In fact, it is due to appear in the ECJ later this year. It will be contesting that the penalties it applies under its ‘Modelo 720’ are fair and proper.

The Modelo 720 case started in 2012. That is when the Modelo 720 was introduced in Spain. It requires that a resident’s foreign assets over €50,000 (in total) are reported to the Spanish tax authorities. If you don’t report them, the fines you face are draconian – €5,000 for each piece of information with a minimum of €10,000. If you are late reporting, the fine is a minimum of €1,500.

The EU started its infringement procedure against Spain for the Modelo 720 case in 2014. Five years later, and it is only now to be heard in the ECJ.

So, what does this all mean?

There’s a global trend toward spanking foreigners with taxes whenever possible. Governments are desperate to raise tax through popular measures. Here in the EU, it is difficult for EU members to do so. The EU considers it to be discriminatory, and against at least one of its guiding principles. And you don’t break the EU’s guiding principles.

The UK government is likely to play a waiting game. It could introduce the new surcharge, but it will then undergo the same procedure as is happening to Spain. And that could take years to process.

For the time being, we are in limbo. We don’t expect implementation any time soon.

Are you a non-resident property investor? Stay up to date with all the buy-to-let news that matters to you. To learn more about our comprehensive services for non-resident landlords, contact Ezytrac at  +44 0 1522 503 717.

Live with passion

Brett Alegre-Wood

The post Spanish taxes could stump stamp duty surcharge on non-resident buy-to-let investors in the UK appeared first on Effortless Property Management by Ezytrac.

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Tips to prevent an expensive nightmare experience

Despite more buy-to-let landlords entering the market, stories of nightmare tenants are still a big disincentive. If you have a tenant who trashes your property, it can be expensive and disheartening. Some great landlords have quit the market because they had poor tenants.

In this article, you’ll read about a landlord who suffered thousands of pounds’ worth of property damage. You’ll also learn how you can avoid the same outcome.

Landlord has property trashed by a tenant now missing

Landlord Michael Walker had his property trashed by a tenant who then did a disappearing act. When the landlord went to the property on Good Friday, he found the three-bedroom home ‘destroyed’. The issues included:

  • Rubbish piled in every room
  • Mattresses dumped in the rear garden
  • Walls covered in grease stains
  • Chipped plaster throughout
  • Half-empty bottles of oil, milk cartons and used tins on the kitchen counter and on floors
  • The washing machine had been moved to the living area, damaging the flooring
  • Mould growing on ceilings

Buzzing with flies, the property is no longer fit for human habitation. The landlord estimates the damage at more than £7,000 of repairs.

What comes first – unpaid rent or damage to property?

Unfortunately for Mr Walker, the damage to his property is not the only financial loss he is suffering. The tenant didn’t pay any rent for 11 months. They also ignored a repossession order that was served.

So, Mr Walker is out of pocket by thousands of pounds in rent, plus the costs of getting the repossession order, before the damage is taken into consideration. He has been to court three times to date. Total losses could run to as much as £15,000 to £20,000.

It’s our experience that tenants who don’t pay their rent are most likely to take less care of your property. They stop seeing it as a home and start treating it like a squat. Of course, if no rent is being paid, this is effectively what it is.

How can you ensure you are not the landlord in the nightmare?

Mr Walker’s tenant simply left the property. Perhaps it had become too much of a mess for even them to live in. View the photos of the damage online, and you will realise that the damage wasn’t done overnight. It is the type of damage that happens over several months. Probably from the first missed rental payment. Here are a few tips to help you avoid the nightmare that Michael Walker suffered.

Chase that rent

The first thing you must do to avoid a similar disaster is to stay on top of the rental payments. If your tenant is even a day or two late, you must chase that rent. It’s vital for your buy-to-let business and helps to protect you against the cost of any damage caused.

If your tenant falls into rent arrears, you’ve got to be tough. You cannot afford to accept sob stories. Always remember that once you allow a tenant to fall into arrears, it is easier for them to fall further behind. For tips to help you stay on top of rental payments, download our free book “How to deal with rent arrears”.

Inspect the property regularly

Make sure that you inspect the property regularly. Every three months is recommended. You can tell a lot from a property inspection. If more people are living in the property than allowed under the terms of the tenancy agreement, it will be evident. You’ll get an early warning of damage or neglect.

During a property inspection, you can remind the tenant of their obligations, point out if there are things not being done that should be, and ask if there is anything else that you can do for the tenant – this is a great way to show you care about the tenant and your property and improve your landlord/tenant relationship.

Use Section 21 notices to evict

Although the government is considering abolishing Section 21, it is currently still your best option to get a tenant out. You must serve a Section 21 notice with at least two months’ notice, and it cannot end before the end of a tenancy. This makes it ineffective to evict a tenant during a fixed-term tenancy, but highly effective otherwise.

Use Section 8 notices to evict

During a tenancy, you can serve a Section 8 notice. You can do this if the tenant has broken the terms of the tenancy agreement – for example, by causing damage to the property (seen and evidenced during a property inspection, for example) or when the tenant is in rent arrears. The tenant will have two weeks to respond.

In the case of rent arrears, the court will issue a possession award. If the damage is the grounds under which you are seeking possession, you will have to prove this. If you are considering issuing a Section 8 notice, you should ensure that you comply with all landlord laws. If you don’t, your Section 8 could be thrown out.

The major issue facing landlords with any eviction is cost. Legal fees can rack up during the eviction process and there may also be the additional cost of bailiffs if the tenant will not vacate the property.

Prevention is better than cure

Carrying out property inspections should help you to spot problems with a tenancy early, but prevention is always better than cure. Avoiding nightmare tenants starts before the tenancy commences. Here are five steps to take to help prevent getting that one costly tenant that you must avoid:

1.     Advertise your property properly

There are plenty of free-to-advertise sites online today. Not surprisingly, more bad tenants come through these than other methods of finding tenants. Perhaps scam merchants think it is easier to take advantage of a landlord who refuses to pay a few pounds to advertise their property professionally.

2.     Vet tenants rigorously

It is crucial to vet your tenants effectively. Make sure you contact their employer and previous landlords. Do carry out a credit check, and note the applicant’s credit history.

3.     Take and protect a tenancy deposit

Always take a tenancy deposit. This can be used to pay for damage at the end of the tenancy, but it must be protected in a registered tenancy deposit scheme.

4.     Get insured

Landlord insurance is also an essential weapon in your armoury. Make sure you choose the right policy and get covered for damage and rent arrears.

5.    Use an investment property manager

Advertising your property, vetting tenants, managing tenancy deposits correctly and managing tenants is not all plain sailing. DIY landlords are more likely to suffer from a nightmare tenant than those who have their property professionally managed.

To learn more about our comprehensive services for landlords, and how we keep on top of tenant management, contact Ezytrac at  +44 0 1522 503 717.

Yours in Effortless Property Management,

Michael Hollamby

The post How do you avoid a tenant refusing to pay rent and then trashing your property? appeared first on Effortless Property Management by Ezytrac.

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More council powers mean more chance of expensive action against you

It doesn’t take a lot to be in breach of health and safety regulations for buy-to-let properties, and if you are, you could end up with a hefty fine.

If a tenant complains to their local authority about the condition of your home, it could be given a housing health and safety rating system (HHSRS) risk assessment. If the inspection finds a hazard – for example, a broken boiler, cold bedrooms, or damp or mould – the local authority could hit you with a range of sanctions. If you ignore these, the consequences are going to be bad.

Ignore a prohibition order and you’ll get a hefty fine

One of the sanctions that a local authority can use is a prohibition order. This will put restrictions on access to all or part of the property. It could limit the number of people allowed to live in the property or ban you from letting it out until stated improvements have been made.

This is what happened to landlords Sandeep Jarjapu and Nattha Gohill.

In December 2017, they had been given a prohibition order under the Housing Act 2004. A flat that they had been letting out, above a commercial property in Chester, had been found to be in breach of health and safety regulations. It contained several serious fire hazards, and it had no windows and no heating.

The prohibition order banned the landlords from letting the property. Yet, in a surprise inspection carried out in June 2018, the local authority found that the property was still occupied. They didn’t hesitate to take the landlords to court. Jarjapu and Gohill were ordered to pay fines and costs totalling £5,286. And they still cannot let out their property.

Local authorities don’t mess around with landlords

Buy-to-let landlords are seen as fair game for local authorities, which now have even more powers to act. As Maria Byrne, Director of Place Operations at Cheshire West and Chester Council said, “As a council we are very keen to ensure that tenants living in the private rented sector are housed in properties that are safe and free from hazards. We will not tolerate landlords who choose to house their tenants in a property that is not fit for human habitation.”

If you let a property that doesn’t meet the standards required, it’s even more likely now that the local authority will clamp down on you. They will use all the powers at their disposal to make you toe the line or be fined.

With finances so tight, we expect more local authorities to beef up their inspection departments and chase errant landlords – it could be a valuable source of extra income.

What does this mean to you as a buy-to-let landlord?

The government seems to be on a mission to increase landlord regulations and make it as tough as possible to keep up with them.

While the story of Jarjapu and Gohill is an extreme (there aren’t too many properties with no windows), you should be aware that there are multiple ways in which your property could fail a local authority inspection. For example, under HHSRS there are 29 categories of hazard assessed. In addition, landlord laws and regulations that come into play include:

  • The Housing Act 2004
  • The Smoke Detectors Act 1991
  • The Furniture and Furnishings (Fire Safety) Regulations 1998
  • Gas safety checks
  • Electrical Installation Condition Report (EICR)

As if this isn’t enough to be concerned with, a tenant can now also take you to court directly, thanks to the introduction of the Homes (Fitness for Human Habitation) Act 2018.

How Ezytrac helps landlords

To sum up, local authorities have a lot of powers. You can expect them to use them. They want to be seen to be clamping down on bad landlords – which, we think, is a good thing – but good landlords who have made an honest mistake are likely to be in the firing line, too.

To avoid making a mistake and getting slapped with sanctions and fines, you must stay up to date with all the laws, rules and regulations that apply. Ignorance is no defence in the law. This is where Ezytrac’s landlord clients excel.

Our team is highly qualified and becoming more so every day. They know the landlord laws and know what your obligations are. On top of this:

  • When we inspect a property, we can tell immediately if there are deficiencies
  • We keep you updated with landlord law changes through this blog and other means
  • We help make sure that your property doesn’t fail all the health and safety regulations that apply to it

Isn’t it time you benefitted from the peace of mind you get from effortless property management? Contact us to find out more.

Live with passion

Brett Alegre-Wood

The post How landlords can avoid a £5,000 fine from their local authority appeared first on Effortless Property Management by Ezytrac.

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The news that all UK landlords need to know

At Ezytrac, our business is to ensure that our landlords and their tenants get the best service possible. So, it won’t surprise you that we are avid watchers of all the news that affects UK buy-to-let landlords, investors and tenants.

We’ve captured the news that you may have missed recently and that we think you can’t afford to ignore. Below are our top 10 buy-to-let news items from the last few weeks. These include:

  • According to an RLA survey, almost half of buy-to-let landlords could quit if the government goes ahead with its plans to end Section 21. Nine in 10 landlords support the idea of a special housing court to bring all housing disputes under a single body.
  • Prior to the release of its Section 21 survey results, the RLA welcomed the government’s pledge to review court procedures and make repossession of properties easier for landlords when there are legitimate reasons.
  • The Tories may have lost their grassroots support because of their atrocious handling of Brexit, but it appears that their atrocious handling of the BTL market has lost them the support of the UK’s landlords, too. According to the NLA, almost 70% of BTL landlords voted Tory in the 2017 general election. Only 16% of NLA members would now vote Tory.
  • Rental market demographics continue to evolve. Middle-aged workers are less able to buy a home today and more likely to rent. Research commissioned by Intus Lettings found there has been a 15% rise in the number of people aged between 35 and 44 who now rent in the last three years.
  • The Right to Rent guidance has been updated, in preparation for the new post-Brexit world – should it ever happen. You may not be border police, but you must check EU nationals’ right to rent.
  • Ever wondered how much you are likely to make as a landlord? Figures released by Hamptons show that 85% of landlords sell for a profit, and the average profit is £80,000. This is down a little on 2017, but still a cracking result with an average hold time of less than 10 years.

You can read more about each landlord news item by clicking on the headline or the ‘Read more’ link. And don’t forget, if you have any questions, get in touch with the team here at Ezytrac.

Half of the landlords more likely to sell over Section 21 plan

Nearly half of UK landlords and letting agents are more likely to sell some or all of their rental homes as a result of government plans to end Section 21 repossessions, so-called ‘no fault’ evictions. (Read more)

RLA welcomes MP’s pledge to fix court system before Section 21 is scrapped

The Residential Landlords Association (RLA) has welcomed the housing minister’s pledge to make changes to the courts to speed up the ability of landlords to repossess properties for legitimate reasons. (Read more)

Landlords abandon Tories in protest at the buy-to-let crackdown

Landlords are turning their backs on their traditional ally, the Conservative Party, to punish it for a series of policy changes that have squeezed property investors like never before. (Read more)

Middle-aged renters on the rise

Rising UK house prices have left many middle-aged workers unable to afford a first home, or as accidental renters after a relationship break-up, which is why significantly more older tenants are now renting from a private landlord than they were a few years ago. (Read more)

Post-Brexit Right to Rent guidance issued

New guidance on Right to Rent checks for EU citizens after Britain leaves the European Union has been published by the UK government. (Read more)

Where landlords are cashing in on buy-to-let

Times may be tougher for Britain’s landlords, but new figures suggest the blow of selling up for many has been softened by years of house price gains. Figures released today from estate agents Hamptons International show that landlords who sold a buy-to-let property in England and Wales last year did so for £79,770 more than they paid for it. (Read more)

Letting market activity slows

There was a notable drop in the number of new rental listings, while the volume of properties let last month also fell, as reduced supply restricted choice for potential renters, according to the latest data from the Agency Express Property Activity Index. The figures show that there was a 14.1% drop in national month-on-month figures for new listings to let in April, while properties let during the period fell by 9.9%. (Read more)

Inventory provider anticipates a surge in tenant activity next month

Landlords and letting agents are being urged to prepare for a significant increase in tenant activity from the start of next month. No Letting Go believes that many tenants will be looking to move after the Tenant Fees Act officially becomes law on 1st June in order to avoid paying upfront fees and benefitting from capped security and holding deposits. (Read more)

For the news, advice and services that will make a real difference to your property investment profits, get in touch with Ezytrac at +44 0 1522 503 717. We make property management effortless.

Live with passion

Brett Alegre-Wood

The post UK buy-to-let news roundup June 2019 appeared first on Effortless Property Management by Ezytrac.

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9 questions all buy-to-let investors must ask themselves

For buy-to-let investors, one of the most important decisions to make is whether you should employ an investment property manager. If you are undecided, then these nine questions will help you make the right decision.

1.    Do I have the time to manage my buy-to-let property?

If like many buy-to-let landlords, you have a full-time job, then this will be the most important consideration for you. Time is money, and the time you spend performing the obligations of a buy-to-let landlord could be expensive. Taking care of your landlord duties might mean missing out on family time, or that you must turn down valuable overtime at work.

Hiring an investment property manager will let you relax during your spare time, and allows you to be available for overtime if your boss offers it.

2.    Is my investment property near my home?

The further the distance between your investment property and your home, the more difficult it is to self-manage. If you live in the South of England and own buy-to-let property in the North, there are a lot of miles to cover should something go wrong.

It is not only when things go wrong that makes distance a difficulty. It will be more difficult to find good tenants, meet with them, conduct property viewings, collect rent, and carry out property inspections.

The time it takes to travel and the cost of doing so adds up. Hiring an investment property manager makes a lot of sense if there is a lot of distance between your home and your buy-to-let property.

3.    How many buy-to-let properties do I own?

The more properties you own, the more responsibility you have. There are likely to be more maintenance issues, more tenant complaints to handle, and more void periods to deal with. If your properties are spread geographically, this will add an extra burden.

4.    Am I a good tenant manager?

It is imperative that you develop a good landlord/tenant relationship. This can be difficult if you aren’t good at dealing with irate tenants, who are bound to contact you when it is most inconvenient to demand that you deal with a dripping tap (or similar).

Investment property managers are trained to deal with difficult tenants, and they have the back-up team to deal with maintenance needs and tenant complaints. They know the landlord laws and act as a buffer between the tenant and the landlord.

5.    Do I suffer from a high void period rate or poor cash flow?

If you suffer from frequent or long void periods, it’s probably because you aren’t attracting the right tenants. You must market your property effectively and vet tenants properly.

Cash flow issues can quickly mount if you have a maintenance issue to deal with. Repairs must be made in a timely manner. If you don’t have a network of maintenance people working for you – as investment property managers do – you could end up paying through the nose for repairs to be made. This will have a negative effect on your cash flow.

6.    Do I want to be an employer?

You may need to negotiate maintenance contracts, and, if you grow your portfolio, you may decide to hire a team to manage your properties for you. This will put you in the position of being an employer, with all the responsibilities of running payroll, dealing with HR issues, paying employer and employee taxes, and so on. Do you want to do this?

7.    Do I have the experience to manage my properties?

Inexperienced landlords are most likely to make costly mistakes when managing their own properties. If you don’t know the landlord laws, hire the wrong maintenance people, carry out ineffective tenant vetting, and a whole host of other potential pitfalls, your profits are likely to disappear very quickly. Hiring a good investment property manager removes your inexperience as a negative actor.

8.    Am I happy to give up control?

Your investment property manager can look after everything for you, from marketing your property, through the lifetime of a tenancy, to evictions, maintenance, collecting rent, etc. Are you happy to relinquish this level of control?

9.    Can I afford an investment property manager?

Property managers charge a fee, based on the rental income of the property. You’ll need to assess whether your cash flow is strong enough to pay these fees.

To discuss our investment property management fee structure, the advantages of using Ezytrac, and how your cash flow and lifestyle could benefit, give us a call at +44 0 1522 503 717 or send us an email.

Live with passion

Brett Alegre-Wood

The post Should you employ an investment property manager? appeared first on Effortless Property Management by Ezytrac.

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Is letting a house with a landlord furniture package a good move?

One of the questions we are most often asked is whether it is a good idea to supply landlord furniture. In many cases, the answer would be yes. This is especially the case if you wish to take advantage of the largest growing sector of the PRS: young professionals and young families.

This article will help you decide whether you should provide a landlord furniture package in your buy-to-let property.

What is a furnished rental property?

First, let’s establish what is meant by a property being furnished, by looking at what a landlord furniture package won’t include, before discussing the difference between fully furnished and semi-furnished rental properties.

Items that won’t be included in a furnished property

When considering the items that typically won’t be included in a furnished property, you could sum them up in a single word: personal.

Anything that is personal – whether because of use or sentimental reasons – is rarely included as landlord furniture. This includes things like perishable items, bed linen, tea towels, pictures, glasses, and small electrical goods such as kettles and toasters. Often, you would include items such as crockery and cutlery as being personal items.

What is a fully furnished rental property?

The best way to describe a fully furnished rental property is as being ready to move into, except for personal items. The renter won’t have to buy any items for their new home, except for personal items.

If you could walk into a new home with a suitcase or two, containing personal items and clothes, and live comfortably, the property would be considered fully furnished. That’s one suitcase for things like plates, knives and forks, soaps and detergents, and so on, and one case for clothes.

To be considered as fully furnished, the following rooms might have the following landlord furniture:

·      The living room

A sofa, coffee table and lamp, one or two armchairs, a bookshelf, and a television stand

·      Bedrooms

A bed, bedside table and lamp, a dressing table/chest of drawers/wardrobe

·      Dining room/dining area

Dining table and chairs

·      Kitchen

White goods (washing machine and tumble dryer; fridge/freezer; microwave; oven and hob), waste bin

·      Bathroom

Wastebasket, shower curtain, bathmat, bathroom cabinet

What is a semi-furnished rental property?

Semi-furnished is a little more difficult to define because it means something different to different people. For example, an applicant tenant may request semi-furnished because they have beds and a dining room table and chairs; what they require are living room and kitchen furniture. Another applicant tenant may have white goods, but no bedroom furniture.

However, the most common description of a semi-furnished property is one which benefits from the big pieces of furniture – a sofa in the living room, a bed in the bedroom, and table and chairs in the dining area, for example.

The advantages of offering a landlord furniture pack to your tenants

An investment in a landlord furniture pack could help to find tenants faster and cut down on the cost of void periods. You should be able to charge higher rent, too, and when furnishing an unfurnished property, you can claim the expense as tax deductible. As the furniture needs replacing, the cost of replacement could be classed as wear and tear. In summary, letting a house or apartment as a furnished property should:

  • Enable you to charge a higher rent. Tenants, especially young professionals and young families without a home full of furniture to move into a rental property, will be happy to pay extra for a furnished home. They don’t have the upfront costs of buying furniture, and this could be worth as much as £100 per month or more.
  • Allow you to take a higher deposit. You must protect yourself from damage to your furniture. Good tenants are unlikely to cause damage, but accidents do happen. A higher deposit gives you extra peace of mind about the items you furnish the property with.
  • Reduce your tax bill. When you buy furniture for an unfurnished property, it is an expense that can be deducted from your rental income when calculating your tax liability. Further down the line, you can claim wear and tear when replacing furniture.
The disadvantages of letting a house as furnished

Though the pros of letting a house as furnished are compelling, before making the decision you should consider these potential disadvantages:

  • The potential for damage means more responsibilities for repair and maintenance. Most tenants will look after your property as if it is their own – it is their home, after all. However, if the tenants don’t take care of your property, your furniture could suffer damage. Your responsibilities for repair and maintenance increase when you furnish a property. To protect yourself against such damage repair, consider regular property inspections.
  • Turnover of tenants might be higher. Furnished properties are most appealing to the sector of the tenant market who are traditionally more likely to rent for shorter periods: young professionals, young families, single people and students. However, we’re witnessing a change in lifestyles. In particular, young professionals and young families are becoming more likely to rent for longer. The average length of rental is now more than four years.
  • You may have to store landlord furniture. If a new tenant doesn’t require all the furniture you provide, you may need to pay for storage.
In summary

The decision to let your property as furnished should always make financial sense. There are some compelling reasons to invest in a landlord furniture pack for your property. You could charge more rent, suffer shorter void periods, and make your property attractive to a growing sector of the rental market.

To discuss whether landlord furniture is a good choice for your property and location, give us a call at +44 0 1522 503 717or send us an email. We’re here to help landlords maximise the potential of their investment property.

Please check my videos on our Ezytrac Facebook Page and Ezytrac LinkedIn Page

Yours in Effortless Property Management,

Michael Hollamby

The post Landlord furniture pros and cons appeared first on Effortless Property Management by Ezytrac.

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Why more crackpot policy should not concern buy-to-let investors

The government has put Section 21 in the dock. It is pulling no punches in its attempts to abolish no-fault repossession. Like an outclassed boxer, Section 21 is on the ropes. Soon, the rope will be round its neck. But does this mean that a landlord’s ability to remove a tenant will be strangled?

Why landlords love Section 21

Section 21 provides a route to easier eviction of a tenant. It is called ‘no fault’ because it doesn’t require the landlord to prove a reason for repossessing the property. It is a swift, relatively hassle-free way of gaining possession of your property, and the most common route to repossession.

Why the government wants to abolish Section 21

The government wants tenants to feel more secure in their homes, free from the threat of being thrown out for no reason. Sounds reasonable, but it could backfire on the government (like so many of their actions do).

If Section 21 is abolished, then you will need to prove that there is a ‘concrete, evidenced reason already in law’ to bring a tenancy to a close.

Why abolishing Section 21 could backfire

Has the government really thought this through? Its own data shows that the average tenancy length is longer than four years. Nine out of 10 tenancies are ended by the tenant, and not the landlord. This is hard ‘concrete, evidenced reason’ for kicking Section 21 into touch.

Landlords don’t want to evict tenants. They want a good landlord/tenant relationship that benefits both parties. Every time a tenant leaves – whoever’s decision it was – it invariably leads to a void period. And void periods cost money – not the way to profit from a buy-to-let investment.

Section 21 enables landlords to remove bad tenants with less fuss and cost than other methods of eviction (such as Section 8, which the government has said will need to be reviewed). Take away this ability to remove tenants more easily, and the government risks:

  • Prospective buy-to-let investors deciding against investing, because if they needed to sell they may not be able to easily
  • Some existing landlords who have suffered a nightmare tenant may decide to sell up to avoid a worse experience in the future

This could further limit the supply of properties in the private rented sector and drive rental prices up. In addition, before the ban comes into force, any landlords considering using Section 21s may bring their plans forward. If this happens, the market could be flooded with more tenants looking for vacant properties.

What are the reasons to evict without a Section 21 notice?

If Section 21 is knocked out with a killer punch from the government, it doesn’t mean you cannot get shot of bad tenants. Valid grounds for eviction of tenants include:

  • The tenant is in arrears of more than eight weeks
  • The tenant consistently pays their rent late
  • The mortgage company is repossessing the property from the landlord
  • The terms of the tenancy agreement have been broken by the tenant
  • The landlord wishes to make repairs or renovations (though there must be suitable alternative accommodation for the tenant)
  • The tenant undertakes anti-social or illegal behaviour
  • The tenant has damaged the property beyond normal wear and tear
  • The tenant provided false information to obtain the property
In summary

If Section 21 is abolished, it will send shivers down the spines of some investors. In reality, abolishment will affect very few. Only one in 10 tenancies are ended by the landlord. Many of these are ended amicably. Very few tenancies are ended in acrimonious circumstances, and the average length of a tenancy is more than four years.

It’s more crackpot regulatory change by a crackpot government. Sent to try us, but there are still ways to evict a bad tenant.

If you are concerned by the potential death of Section 21, give us a call at +44 0 1522 503 717 or send us an email. We’d love to hear your concerns, and we’re here to help. We make property management effortless.

Live with passion

Brett Alegre-Wood

The post Section 21 is on the ropes but there will still be ways to evict tenants appeared first on Effortless Property Management by Ezytrac.

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The news that all UK landlords need to know

At Ezytrac, our business is to ensure that our landlords and their tenants get the best service possible. So, it won’t surprise you that we are avid watchers of all the news that affects UK buy-to-let landlords, investors and tenants.

We’ve captured the news that you may have missed recently and that we think you can’t afford to ignore. Below are our top 10 buy-to-let news items from the last few weeks. These include:

  • Average rents are up by 1.9% year-on-year, with rents rising strongly in London again. Other rental price research shows that rental affordability has improved modestly. In the North, renting is more affordable than it has been for 10 years. (On the subject of rental price increases, our landlords are benefitting from an average 4.6% rise – more than twice the rate of inflation.)
  • The rise in popularity of staycation holidays could offer some huge potential for buy-to-let investors to diversify their portfolio and benefit from this growing market.
  • The government is racing toward a ban of Section 21 evictions. It says it will improve the court process to allow speedy repossession of property for landlords. Is it the right strategy?
  • Despite the fanfare when banning orders were introduced for rogue landlords, the legislation appears to have been a complete failure. Not a single banning order has been made.
  • A warning to tenants: fraudsters are preying on you. Fake landlords are on the prowl and targeting desperate tenants who are going DIY and searching for a home without using a letting agent or property manager.

You can read more about each landlord news item by clicking on the headline or the ‘Read more’ link. And don’t forget, if you have any questions, get in touch with the team here at Ezytrac.

·      Slow growth in rents leads to ‘modest improvement in rental affordability’

Weak rental growth has resulted in improved affordability for renters across many parts of the country, including London, while rents in Northern regions are now the most affordable for a decade, new research shows. (Read more)

·      Average rents up 1.9% year-on-year

Rents in Great Britain increased 1.9% year-on-year in March, driven by a 3.7% rise in Greater London where rents hit a record high, according to new research. (Read more)

·      Rise in popularity of the ‘staycation’ creates opportunities for BTL landlords

The rise in popularity of holidaying in the UK – or ‘staycation’ – has led to a mini-boom for the UK tourism industry. (Read more)

·      Is a holiday let a good investment?

Buy-to-let property investors have been put under some pressure over the last couple of years. However, property remains a solid investment in the UK. Are holiday lets a good investment for investors who want to maximise the potential of investing in UK property? (Read more)

·      Government set to abolish Section 21

The government is today proposing to consult on scrapping Section 21, so-called ‘no fault’ repossessions in the private rented sector in favour of improving the court system to ensure landlords can more speedily repossess properties through them in legitimate cases. (Read more)

·      Mum ‘’searching for a warmer house for kids’’ loses entire deposit to a fake landlord

A mum-of-two who’d been saving for months to raise enough money to move her kids to a warmer home has revealed how she lost hundreds of pounds to a ‘fake landlord’ and is now trapped. (Read more)

·      RLA welcomes tax relief for rental home improvements proposal

The Residential Landlords Association (RLA) has welcomed calls by a parliamentary committee for tax incentives for private landlords to improve the quality of their property. (Read more)

·      How will the gas boiler ban affect BTL landlords?

On 13th March the Chancellor announced that it will be illegal to install gas boilers in new build homes from 2025. The decision was taken after advice from the government’s independent advisory organisation, the Committee on Climate Change (CCC). Will these affect landlords? (Read more)

·      Banning orders flop: not even one issued after 12 months

This was despite a prediction a year ago that there were as many as 10,000 rogue landlords in England alone and that a possible 600 would be put on the database. (Read more)

·      New EPC rules mean buy-to-let landlords could face costs of £8,500 

Buy-to-let landlords can no longer claim a funding exemption from making their properties more energy efficient – meaning they could be on the hook for improvement costs of up to £3,500 and fines of up to £5,000 if they fail to make necessary changes. (Read more)

For the news, advice and services that will make a real difference to your property investment profits, get in touch with Ezytrac at  +44 0 1522 503 717. We make property management effortless.

Live with passion

Brett Alegre-Wood

The post UK buy-to-let news roundup appeared first on Effortless Property Management by Ezytrac.

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You could build higher rents and property values, and reduce your taxes

No, it wasn’t a late April Fool’s joke. On 4th April 2019, a House of Lords committee made a recommendation that is sure to be welcomed by an overwhelming majority of landlords. It recommended that there should be “stronger incentives for private landlords to improve the quality and design of their properties”. This could include tax relief on improvements made to a buy-to-let property.

How are improvements taxed at today?

Currently, buy-to-let landlords cannot claim tax relief on improvements made to a property. If you build an extension, add a bedroom, or create an ensuite, you cannot deduct the cost of the improvements from your rent to reduce your tax bill.

Instead, if you make improvements, you must keep your receipts and use the costs to reduce your capital gains tax liability if and when you sell the property.

Why should improvements be tax deductible?

Many in the buy-to-let industry have argued for a long time that property improvements should be tax deductible. Now the House of Lords Select Committee on Regenerating Seaside Towns has signalled its agreement.

The committee recognises that poor-quality homes are a significant problem for many seaside towns, with ‘perverse financial incentives to offer poor accommodation’ among the issues causing such problems. Tax relief on property improvements to a residential property is among several recommendations made by the committee, which believes this would encourage landlords to upgrade the homes of their tenants.

If tax deductibility for improvements is brought in, then it may also cover improvements recommended on Energy Performance Certificates – a boost for buy-to-let landlords who may be caught in the new MEES regulations trap.

Should you spend your rental profits on home improvements?

If the recommendation is passed into tax law, then you may be tempted to make improvements. The question is, should you, and what impact might improvements have on the value of your buy-to-let investment property?

Recent research published by the Federation of Master Builders (FMB) and the HomeOwners Alliance (HOA) says that you could add £50,000 to the value of your property in just seven days. This is the amount it has found that removing an internal wall to create an open plan kitchen/diner would add to the value of a property in London. At a cost of just £3,500, this is a huge potential profit. In Surrey, adding a garden room would add more than £35,000 to a property’s value in only 14 days.

Other projects and their costs that could add value to a home in London include the following:

  • Creating a toilet from a cupboard under the stairs at a cost of £2,622 could add £9,683
  • Making kitchen improvements including a new worktop, flooring and cabinet doors at a cost of £4,127 could add £16,946
  • Creating an ensuite in the master bedroom would cost £4,713, and add £14,525 to a property’s value
  • Putting in a new driveway, at a cost of £2,208, would increase the property’s value by £9,683

(You can view the complete list here.)

The bottom line

Improving a home for tenants could help your profits in several ways.

It makes your property more attractive to potential tenants, encouraging them to stay longer and pay higher rents.

Low-cost projects could increase the value of your property, too. If you are considering selling your buy-to-let property or remortgaging to invest in a further property, spending a relatively small amount could increase the property’s value significantly and get you a step closer to your investment goals. Even better, such improvements can be completed quickly.

CEO of the HOA Paula Higgins noted that the research is good news for homeowners. Improvements make for a more enjoyable living experience, and the increase in the value of a home gives a financial boost when it comes to selling. We believe that it is also good news for buy-to-let investors – and will be tremendous news should the recommendation to make the cost of improvements deductible for tax purposes become tax law.

One caveat: before making any improvements to a buy-to-let property, an investor should speak to an investment property manager to see what improvements would add the most value. They should also seek tax advice.

For the news, advice and services that will make a real difference to your property investment profits, get in touch with Ezytrac at  +44 0 1522 503 717. We make property management effortless.

Live with passion

Brett Alegre-Wood

The post Could landlords benefit from tax deductible property improvements? appeared first on Effortless Property Management by Ezytrac.

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