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An end to Section 21?

Yesterday, the Government made an announcement that Communities Secretary, Rt Hon James Brokenshire MP described as the biggest change to the private rental sector in a generation.

As part of a complete overhaul of the sector, the government outlined plans to consult on new legislation to abolish Section 21 evictions – so called ‘no-fault’ evictions.

This will bring an end to private landlords uprooting tenants from their homes with as little as eight weeks’ notice after the fixed-term contract has come to an end and will effectively create “open ended” tenancies.

Previously, landlords had typically gone down the Section 21 route for such issues as rent arrears, damage to the property, anti-social behaviour, tenant refusing to allow access for maintenance or compliance checks, and other such issues.

This line of repossession of the property is looking like it will now be closed down although there is still the consultation to take place, so nothing is set in stone.

However, it does show the direction of travel of the Government’s wish for the private rented sector … and that is to re-balance the relationship between landlords and tenants, by diluting the power landlords have over tenure.

Unsurprisingly, industry stake-holders, lettings agents, and landlords took to social media yesterday and made this a trending topic:

Adam Joseph, CEO of the Happy Tenant Company commented:

“My view is that this is just another reason to deter would be investors entering the buy to let market and encouraging existing landlords to exit.

Considering the shortage of homes in the UK which is constantly highlighted in the press, it seems totally counterproductive. Add this to the impending Tenant Fee Ban, we are clearly entering an unstable time for the sector.

Following the Deregulation Act 2015, it is already a minefield to try and gain possession and this will make it even more complicated.

Whilst I appreciate tenants need protection and security, Landlords should have the option to terminate a tenancy for relevant and justified reasons, especially if they intend to sell or perhaps not achieving a fair market rental value”.

David Smith, Policy Director for the Residential Landlords Association said:

“Whilst the RLA recognises the pressure being placed on Government for change, there are serious dangers of getting such reforms wrong.

“With the demand for private rented homes continuing to increase, we need the majority of good landlords to have confidence to invest in new homes. This means ensuring they can swiftly repossess properties for legitimate reasons such as rent arrears, tenant anti-social behaviour or wanting to sell them. This needs to happen before any moves are made to end Section 21.

“For all the talk of greater security for tenants, that will be nothing if the homes to rent are not there in the first place. We call on the government to act with caution.”

Richard Lambert, NLA chief executive, says:

“Landlords currently have little choice but to use Section 21. They have no confidence in the ability or the capacity of the courts to deal with possession claims quickly and surely, regardless of the strength of the landlord’s case.

England’s model of tenancy was always intended to operate in a sector where Section “21 exists. This change makes the fixed term meaningless, and so creates a new system of indefinite tenancies by the back door.

“The onus is on the government to get this right. It’s entirely dependent on the government’s ability to re-balance the system through Section 8 and court process so that it works for landlords and tenants alike. The government should look to Scotland, where they reformed the court system before thinking about changing how tenancies work. If the Government introduces yet another piece of badly thought-out legislation, we guarantee there will be chaos.”

David Cox, CEO of Association of Residential Lettings Agents commented:

“The effects of the Tenant Fees ban from September 1 have not yet been felt. Although in the majority of cases there is no need for Section 21 to be used, there are times when a landlord has to use the measures to regain possession of their property.

An end to Section 21 could be devastating for existing supply in the private rented sector and on new landlords considering investing in buy to let properties.”

The amount of legislation and regulation coming down the pipe for landlords (and currently in consultation) is significant.

Section 21 is one example, but there are numerous others.

With fines for non-compliance being up to £30K, landlords who do not think they can keep up with legislative changes should definitely consider letting their property through a professional agent or property manager.

At the Happy Tenant Company, we provide this service in London and for properties within the M25.

Please do not hesitate to contact the Happy Tenant Company to discuss our smart property management service.

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Benefits of professional property management

In our opinion and experience, property management is a topic that sometimes gets relegated to the back-burner, particularly by newcomer landlords.

When starting out in property investment, many people focus solely on the acquisition of the property, a process which takes a few months.

However, once acquired, the landlord is going to be in a commercial relationship with that property for up to 25 years, yet little thought is given to this part of the landlord lifecycle and how it might influence the overall profitability of the activity over the long term.

Many first timer landlords are under the impression that you rent out a property, sit back, and watch the rent come in. They believe this is a passive phase when in fact it is the start of managing and protecting both your tenant and your prize asset!

It is always worth remembering that tenants are people, not a rent payment.

As a landlord, you are legally obliged to provide a safe and compliant home and also a service to your tenants, such as undertaking repairs and maintenance in a timely manner, and ensuring that your property is safe for your tenants to reside in.

Failure to do this can result in penalties of up to £30K, and, in very extreme cases, your tenant being injured, harmed, or even killed as a result of your failure to meet your legal obligations.

This blog is posted on the one year anniversary of when a family of four from a rental home in Bishop’s Castle, a small market town in the southwest of Shropshire, were saved by smoke alarms after their house caught fire.

The above story contrasts with one from three years ago when two small children died in a rental house where smoke alarms were not fitted.

So fitting smoke alarms is just one example of how important compliant property management is. Lives literally are at stake!

No landlord EVER wants to receive a phone call notifying them of some tragic event at their property and this is why we believe landlords should place more importance on ensuring their property is professionally managed.

Aside from ensuring compliance, there are many other benefits of professional property management.

1. Tenants stay longer
If repairs and maintenance are undertaken promptly, it stands to reason that tenants will stay longer as they are happy in their rental property and know that they are renting from a responsible landlord. Happy tenants are more likely to pay the rent on time and also look after the property.

2. Maintenance costs are actually reduced
Fixing and repairing issues when they first occur means that costs are actually reduced. This is because, if something – for example a water leak – is not dealt with quickly, it can escalate and cause far greater damage.

3. Less voids
A well maintained property presents well on viewing to prospective tenants, meaning that it will let more quickly and therefore will suffer fewer void periods.

4. Achieve higher rents
A well maintained property will be able to achieve higher rents. However, if a property starts to deteriorate, the rents it can achieve will decrease and this tends to be a downward spiral.

5. Nip problems in the bud thereby reducing costs
A good property management company will encourage mid-term property inspections to see if the tenancy is running smoothly and how the tenant is living in the property. The Happy Tenant Company outsources this service as they feel it’s a specialist role and the level of detail in the report could be the deciding factor in a dispute. They have a panel of clerks who offer discounted rates for their landlords.

Mid-term property inspections will flag up such issues as repairs or maintenance that the tenant has failed to report, or, for example, if the tenant has sub-let the property, become a hoarder, or is not keeping to the terms and conditions of the tenancy.

One huge issue for landlords is rental properties developing condensation and/or mold.  Mould and damp is very dangerous to health, particularly in respect of young children, elderly, or infirm people, and it is one of the commonest complaints against landlords by tenants.  However, in most cases it is usually caused by the tenant not ventilating the property properly and/or drying clothes on radiators.

A professional Property Manager will notice this problem occurring and advise the tenant how to ventilate the property properly by opening windows, turning on extractor fans etc.  If the damp and mould is caused by a fault in the building fabric itself, this can be identified, and the landlord will have to undertake some remedial works to get rid of it.  One thing is certain – damp and mould are a big issue and one that tenants can go to the local authority with as a disrepair claim – so dealing with it quickly and appropriately is very important to protect the landlord from penalties (see below).

Again, addressing these issues as soon as they are seen to arise will ultimately mean the costs of resolving them are far less than if they are allowed to fester and/or escalate.

6. Protect the landlord from fines and penalties
Landlords can be fined up to £30K for not providing a compliant and safe home and attending to dis-repair issues. The tenant can bring a dis-repair claim via the local authority against the landlord and these costs can escalate and become very significant. So Professional Property Management protects the landlord against legal risk and also gives peace of mind that the property is safe and legally compliant.

7. Keep costs reasonable
A professional Property Manager will have a good understanding of how much repairs and maintenance cost and have contacts with trusted tradespeople to undertake repair and maintenance work.

Many novice landlords are taken advantage of by unscrupulous trades who over-charge for work, so a Property Manager can ensure that all costs incurred to maintain and repair the property are fair and reasonable and also that the tradesperson is fully insured to undertake the work.

At the Happy Tenant Co. we only charge our landlords the exact amount invoiced by the tradesperson i.e. we do not add on “commission” or admin charges, unlike some other firms.

8. Maintain asset value
A property is probably the biggest investment that any individual will make. It therefore makes sense to repair and maintain a property as this helps maintain the value of the asset over the long term.

A property that goes into a state of dis-repair will start to lose value and desirability within the marketplace for both sale and rental.

8. Property management is tax deductible
When the tax landscape for landlords is becoming increasingly onerous and hostile, it is worth noting that any fees spent on professional property management are tax deductible and can therefore help reduce a landlord’s tax liability.

The Happy Tenant Co. specialises in professional Property Management within London and the M25. We have built up relationships with trusted tradespeople and suppliers and we ensure that all properties and tenants in our care are treated to the highest standards of service.

Happy Tenant Co. CEO, Adam Joseph, was recently interviewed by Property Tribes landlord community on the important topic of Property Management:

If you have a property portfolio in London or within the M25, why not give us a call to discuss how we can take over the property management of your portfolio, so that you can enjoy all the benefits outlined in this blog, including, of course, that all-important peace of mind – and there really isn’t a price that can be put on that!

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New Addition to The Happy Tenant Team!

The Happy Tenant Company are excited to announce their latest addition to the team. Elaine Aristides has joined as Business Development Manager mainly tasked with promoting their services to Portfolio Landlords and ‘Build to Rent’ Developers who can benefit from this one stop shop of services. Elaine comes with over 15 years’ experience within the property industry in various roles including Head of Property Management and Business Development.

This experience gives Elaine a solid understanding of both Landlord and Tenant needs and what a model property management service should offer. Elaine says, “The Happy Tenant Company prides itself on transparency and integrity, which is often lost among many traditional Managing Agents who can tend to be more focused on sales and lettings as opposed to the actual management of the property.”

Elaine has been hired by The Happy Tenant Company in order to promote their unique property management service which incorporates not only the day to day management but also how they are able to offer Landlords reduced Tenant Finding fees with no renewals via a panel of Letting Agents.

This is just one example of how they are leveraging their size to gain discounts from suppliers in order to maximise their Landlords return on investment. Having carried out recent surveys on Landlord requirements and concerns, The Happy Tenant Company always try to be proactive with new technology, better communication and staying on top of new Regulations.

The team are very excited to see what Elaine can bring to the table and are confident that their success will continue to grow across London. Please kindly refer to the website for further information on services.

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Business Development Manager Elaine Aristides

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How to Conduct Property Viewings

We live in an age where people want things instantly. Especially in London, where you will find people passive aggressively tutting at the slightest delays of their train or bus. The ability to access any information you want in a matter of seconds with a device that fits in your pocket has certainly furthered this attitude.

Embrace the On Demand Property Viewing

It would be wise for property management companies to embrace this change in people’s way of life. The competition is always increasing and companies offering everything online, including property viewings at a time that suits the customer.

Whilst you may finish work at 5 pm/6 pm, your website is always on. The online forms are ever present there, as is your phone number and email address. This tells the potential customer that you are open 24/7 and that they can contact you whenever they want and expect a swift response.

People are able to watch any film or TV show instantly, listen to any song instantly, buy almost anything and have it delivered to their home the next day. This has taught people that they can have anything on demand, even a property viewing.

It is important to have an accompanied viewing, a property expert there to answer any questions a potential tenant may have. Therefore, property companies need to be prepared to cater to viewings outside of their office hours. Especially as you should consider that most potential tenants will have the same office hours. This could involve hiring staff to work evenings and weekends to ensure all time requests are covered.

This all may seem excessive and like adding more work but ultimately it should lead to a happy tenant.

If you want to know more about how a property management company can help you, then please contact us today.

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How to fix property management

HTC achieves NLA Recognised Supplier status.

CEO Adam Joseph explains how our fixed fee management is disrupting the market.

How are you challenging the status quo in the residential property market?
Our philosophy as a firm is captured in its name: The Happy Tenant Company, as we believe that serving tenants well is an obligation of the landlord, but it is also completely in their interest to develop a better long-term relationship. Whether you manage your own properties or use an agent, we provide a superior, better-value and more-effective service. That’s because, unlike agents, we don’t mark up any services or take any kickbacks from service providers. We make sure you’re not at risk from not meeting all your obligations, and we take away all the hassles of managing the property from the moment you let it through to the day-to-day challenges that can come from keeping tenants happy. We are challenging the market, as we believe that we manage properties better than everyone else, having created the most efficient formula for property management. Many landlords we speak to like the idea of being a landlord, but just don’t want the burden of the responsibility that goes along with managing their own property. Our view is that being a letting agent and a managing agent are two very different specialist functions that are too often connected in order to maximise profits. We don’t take commissions or kickbacks from anybody – our fixed annual management fee is the only payment required for us to do our job. All cost savings we can make for our landlords are passed on in full.

How did you come to be an NLA Recognised Supplier? What assessment did you have to go through?
It did take a long time, which is a good thing. The NLA is a well-respected organisation, so I appreciate it’s not going to make just anybody a Recognised Supplier. The team that considered our application did their due diligence. I had to complete a lengthy application form, give two landlords as references (and I know they were both contacted); they looked into our accounts, checked our client money-protection policy, and I’m delighted that we were approved. I’m excited to get involved with the NLA and I look forward to speaking to the chief executive at some point to see how I can get involved in committees and panels, and offer any help that I can.

What are today’s tenants looking for in a rental property?
Tenants are very clued up about the market now. They’re aware of overcharging and how high reference fees can be, and they won’t stand for it any more. They want to be able to trust their landlord and property manager. The properties they are renting are their homes. They have every right to feel safe and secure. It pays to look after good tenants. And if the tenants are happy, the landlord will be happy.

What are the hot topics you feel the most passionate about?
I think it’s crazy that anybody off the street can set up as a letting or managing agent. In the US, you need to have a real estate licence to even show a property, let alone let one. It should be the same here. I was just emailing Heather Wheeler MP about her new working group, tasked with setting up a new regulation for letting agents and managing agents specifically around the behaviour of agents so that there is a higher degree of professionalism in the sector. We are all for that. We’re not afraid of regulation. In fact, we’d welcome it!

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Tenants can sue over poor housing

The Happy Tenant Company comments on Bill allowing tenants to sue landlords over poor housing

Today, MPs have voted in favour of The Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill. The bill hands more power to tenants and will allow them to sue landlords over poor housing. The vote also takes it a step closer to becoming law.

Adam Joseph, CEO of The Happy Tenant Company which manages over £500m of property on behalf of London landlords, comments:

“On the whole, this is a positive step forward in holding landlords accountable for the condition of their properties. This forces them to raise standards and consistently maintain their property portfolios. It goes without saying that homes should be presented and maintained in a state fit for human habitation. Any subsequent law brought in will have little impact on the vast majority of professional landlords who already take their legal and moral obligations seriously. Any change which helps force those unscrupulous landlords, who are happy to take a rent cheque without ever tending to their responsibilities, out of the market should be welcomed.

“However, there’s a concern that this could lead to unjustified claims for compensation by tenants. It will now be paramount for landlords, who use managing agents, to be kept up to date on the wellbeing of their tenants and property. Transparency and clear record keeping of regular itemised inspections from managing agents will be fundamental to landlords.”

Contact one of our specialists today to find out how The Happy Tenant Company can help manage your property.

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Landlord aims to raise money for charity

Happy Tenant Company Landlord aims to raise £100,000 for charity in 3000 mile bike ride

Stuart Bookatz, a landlord member of the The Happy Tenant Company, is aiming to raise £100,000 for charities on both sides of the pond in an epic 3000 mile coast to coast bike ride from the Pacific Ocean in California, to the Atlantic Ocean in Florida.

 

The fully supported bike ride will start in San Diego on 1st April 2018, and go through Arizona, New Mexico, Texas, Mississippi, Alabama and finally into St Augustine, Florida on (date), taking a total of 46 days to complete. In the UK, Stuart will be raising money for Make-a-Wish UK, Mental Health Awareness, Variety Club and Jewish Care and is appealing to his supporters to donate to the charity of their choice.

 

The Happy Tenant Company has supported the charity Make-a-Wish UK, which grants magical wishes to enrich the lives of children and young people fighting life-threatening conditions, since the company began in 2012.  Adam Joseph, CEO of The Happy Tenant Company says: “Stuart has been a landlord member of The Happy Tenant Company for 5 years, we have come to know him very well and know that whilst he is not an iron man or an athlete, he is passionate about helping others. We’ve supported many of our members over the years in various initiatives, but this really would be an exceptional achievement both personally for Stuart and financially for the charities.” To support Stuart in this grueling challenge and help him achieve this remarkable target, HTC will be donating and raising awareness throughout their network of agents and landlords.”

 

Commenting on embarking on this challenge, Stuart Bookatz said: “People have asked me the question, “Why are you doing this bike ride?”.  My answer is this, over the last 5 years I became an avid cycliust and it’s something that I took to and really enjoyed. Over that period, I took part in various bike rides, notably London to Paris, which was an incredible experience, as well a 500 plus mile trips to California, Israel and Europe.


I have also been an advocate for the awareness of mental health, something which I and close family members have struggled with. This bike ride gives me the opportunity to raise awareness and money for some important causes, whilst enabling me to thank those who have helped me through a tumultous period and it helps me affirm a life goal of a spectacular bike ride.”


If you would like to help Stuart reach his £100,000 target, you can donate to any of his chosen charities by visiting the following links…

www.justgiving.com/stuart-bookatz

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Landlord’s New Year’s Resolutions

It has been well documented that the introduction of tighter rules on tax relief and borrowings will hinder some landlords’ ability to profit from buy to let in the future.  However, while changes may have dampened the appetite to expand portfolios, those who already have successful buy-to-let businesses, be that one or ten properties, are looking at ways to make their investment work harder.  Our top tips for 2018 are:-

  • Have a good grasp on your existing financial affairs. Landlords with mortgages need to understand what impact changes to mortgage interest tax relief will have on their profits. Some landlords may consider realigning their portfolios, selling off properties which are perhaps in less attractive areas or in need significant updating, and replacing with more appealing investments which offer higher yields.
  • Put a price on your time – If you are struggling to keep on top of changing legislation and your obligations as a landlord, seek professional help. The cost of having your asset taken care of will be far less than a fine for non-compliance.
  • If you are going to be looking for new tenants and you have already considered a particular agent, it may be worth checking their first year rates because when the tenant admin fee ban comes in next year, they may have to increase their fees to landlords
  • Keep stringent records of all costs associated with your portfolio.  Following the introduction of stricter affordability tests imposed by lenders this year, landlords need to have this information readily available.  Getting organised and forming a business plan is now essential in supporting a smooth mortgage application.
  • Use any down time to carry out essential repairs and renovations to your properties so you can command the market rate for your property
  • Avoid void periods – If you have had a void period on your property, now is the time to seek some advice on changes you can make to either your marketing strategy or your property itself.  If your tenant turn-over is high, find out why. Are you managing the property efficiently? Happy tenants tend to stay put for longer so get some feedback and make some changes.
  • If you are self-managing, make sure you are carrying out inspections. We recommend quarterly or 6 monthly. Quite often, repairs are needed, and tenants aren’t aware of their obligation to inform the landlord.
  • Check with an accountant what landlord expenses are tax deductible – you may be surprised!
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