Category: Legal Updates, Information & Advice

Renters Rights Bill Update: What Locks Heath Landlords Need to Know

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On 11th September Parliament had the first reading of the Renters Rights Bill, and I want to take a moment to reassure Landlords that there’s really nothing ground breaking in these proposals that should catch you off guard. In fact, most of the changes were part of the Conservative Party’s agenda before they lost power in July. Regardless of which political party is in charge, these reforms were set to come into play, so there’s no need to worry that anything revolutionary is happening.

Let’s break down what’s involved and how it might affect you as a Locks Heath landlord.

The End of Section 21 ‘No Fault’ Evictions

The big headline in the newspapers was the abolition of Section 21 evictions. For years, Landlords have been able to give Tenants a two-month notice to leave a property without giving any reason. The proposed changes will scrap these ‘no fault’ evictions, which many have viewed as unfair, particularly when used to displace Tenants who challenge poor living conditions or refuse to accept rent increases.

But don’t worry, this doesn’t mean local Landlords are left powerless. You will still be able to evict Tenants who break the rules under Section 8 of the Housing Bill. This will cover situations such as non-payment of rent, damage to the property, or antisocial behaviour. The main difference is that it will require a court order, which, admittedly, has faced delays in recent years. The government has assured us that they will work to clear the backlog and streamline the process.

Rent Increases and Bidding Wars

Another important point is the ban on bidding wars. Many local Landlords and Letting Agents have seen some Tenants offering above the asking rent due to the high demand for rental properties. The new legislation will make it illegal to ask for or accept bids higher than the advertised rent. This may stabilise the market, but it’s something to keep in mind when setting rent prices for your local rental property.

Additionally, in-tenancy rent increases will be limited to once a year and will no longer be allowed during the fixed term of a tenancy. While this might seem restrictive, it provides a sense of stability for Tenants and can encourage longer-term lets.

Energy Efficiency and Property Standards

The proposed bill also introduces stricter regulations on the quality and energy efficiency of rental properties. By 2030, Landlords will need to ensure that their properties have an Energy Performance Certificate (EPC) rating of C or better. This is a long-term requirement, so while it may require some investment, there’s plenty of time to plan and budget accordingly.

The introduction of the Decent Homes Standard into the private rental sector means that local Landlords will also need to ensure properties are maintained to a certain standard, particularly regarding hazards like damp or mould. It’s a move aimed at improving the overall quality of rented accommodation, and while it will mean more responsibility for Landlords, most of you are likely already meeting these standards.

Let’s Chat

If any of these changes are causing you concern, don’t panic. We are here to help guide you through what these reforms mean for your specific situation. Whether you need advice on complying with new regulations or simply want to understand how these changes might impact your investments, we are available for a chat.

Feel free to reach out at any time to discuss how we can ensure your properties remain compliant and profitable.

📞 Drop me an email (james.hill@brooklettings.co.uk) or give me a call on 01489 570011 for a no-pressure nor obligation conversation.

Handling Black Mould in Your Home

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Black mould isn’t just an unpleasant sight—it can be a genuine health concern.

As the weather turns colder, it is important to take steps to prevent mould from developing in your home or rental property. Here’s what you need to know.

Why Does Black Mould Appear?

During autumn and winter, as temperatures drop and heating use increases, condensation can become a problem in many homes. Mould thrives in cool, damp areas where moisture from the air settles on cold surfaces.

While it may start as a cosmetic issue, mould can pose health risks. Once spores dry out, they can become airborne and be inhaled, potentially affecting lung health.

How to Deal with Existing Mould

If you spot mould, it’s important to clean it promptly. Using a mould-removal spray such as https://amzn.to/3QOxa5u or a mild bleach solution can eliminate visible growth, but without addressing the underlying cause, it may return.

Preventing Mould Growth

To reduce the risk of mould appearing in the first place, try these practical steps:

1. Drying Clothes

Drying wet clothes on radiators raises humidity levels in the air, which then circulates through the home, settling on cold surfaces and promoting mould growth.  To prevent this, dry washing outside where possible and avoid hanging over radiators, dry clothes using a tumble dryer if available, a portable heated airer with a cover, or any airer in a well-ventilated area with an open window or a dehumidifier to remove moisture from the air.

2. Air flow

On average, a person exhales around two litres of water every 24 hours, and a family of four produces nearly 14 litres of water a day through activities like cooking, washing, drying clothes, and bathing.  To allow fresh air to circulate the home, it’s important to open external windows, particularly during and after cooking or washing in the shower or bath, and open trickle vents regularly.  Most double-glazed windows also come with a facility to lock them whilst slightly ajar allowing more airflow throughout the home.  If windows aren’t opened, moisture accumulates, leading to mould growth on cold surfaces such as walls.

3. Adequate heating

Cold spots attract moisture so ensure property is heated consistently. The World Health Organisation Guidelines for Indoor Air Quality: Dampness and Mould recommends keeping rooms between 18c – 20c. 

Hygrometers such as https://amzn.to/4iqGrwo monitor heat and humidity levels in your property to assist you with keeping moisture levels in the home under control.

4. Use extractor fans and dehumidifiers

Ensure any extractor fans are working and vents and filters are clear. Portable dehumidifiers are widely available at different price points through online and high street retailers.

5. Consider adding plants to lower humidity

Certain houseplants, such as peace lilies, ferns, orchids, palms, and spider plants, have traits that can help lower humidity levels.

6. Wipe down moist surfaces

To prevent build-up, it’s essential to wipe away any condensation or surface dampness that collects on windows or walls with a clean cloth or towel daily. This helps minimize the growth of black mould.

7. Put lids on pans when cooking to minimise steam escaping

Putting lids on pans while cooking is important because it helps retain moisture, reducing the amount of steam that escapes.

What Next?

If your mould problem persists, more extensive measures may be needed, such as upgrading insulation, installing ventilation fans, or addressing structural damp issues. Since every home is different, it’s worth seeking expert advice before making major changes.

Advice for Tenants

Alert your Landlord or Letting Agent if you have concerns. Sometimes there may be a previously unknown defect in the building which the Landlord can then address.

Advice for Landlords

If you are a Landlord that has had a complaint about mould, providing tenants with guidance on moisture management can help prevent recurring issues. If needed, seek professional advice to help find long-term solutions.

By taking proactive steps, you can help keep your home, or rental property, warm, dry, and mould-free throughout the colder months.

Should Locks Heath Landlords Be Worried About These New Rental Regulations?

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Everyone should be doing their bit to help reduce the UK’s carbon footprint on the globe – yet the question is, is that burden being put too much on the shoulders of Locks Heath landlords with potential bills of £7,600+ in the next four years?

The background – the UK has obligated itself to a legally binding target to be carbon neutral by 2050. One of the biggest producers of greenhouse gasses is residential homes.

To hit that carbon-neutral target (as one-fifth of the UK’s carbon output comes from residential property), every UK home will need to achieve a minimum grade of ‘C’ on their Energy Performance Certificate (EPC) by 2035. Each EPC has a rating between ‘A’ and ‘G’ – ‘A’ being the best energy rating and ‘G’ the worst – like an energy rating on a fridge or washing machine.

All UK rental properties have required an EPC. Yet, from April 2020, the Minimum Energy Efficiency Standards (MEES) regulations have required all private rental properties (including rental renewals) to have a minimum EPC rating of ‘E’ or above.

Yet new legislation being discussed by the Government’s Climate Change Committee has suggested that landlords should play their part and increase the energy efficiency of their private rented homes. Sounds fair until you dive into the details.

The Government is muting the idea that all new tenancies (i.e. when a new tenant moves in) in private rented properties should be at an EPC rating of ‘C’ or above by 2025 (and all existing tenancies by 2028). The issue is…

57.24% of all private rented properties in Fareham have an EPC rating of ‘D’ or below.

The problem is some Locks Heath landlords will find it very expensive, neigh impossible, to improve the energy efficiency of their Locks Heath rented properties, especially those Locks Heath landlords who hold older housing stock such as terraced properties built in the 1800s. These Victorian terraced houses never perform well on EPC ratings as they have solid walls.

Now, of course, you can improve the EPC rating of a terraced house by improving roof insulation, boiler replacement, solar heating, and high-grade uPVC windows. Yet, with some terraced houses, there will come the point where you will be unable to get to the haloed ‘C’ rating without installing external or internal wall insulation, sometimes even floor insulation.

With wall insulation costing between £5k and £15k and floor insulation around £5k…

the bill to improve all Fareham private rented properties will be a minimum of £18,221,400.

But before I talk about what the options are for Locks Heath landlords, here’s the weird part of EPC’s. An EPC rating is calculated on the cost of running a property and not the carbon output or energy efficiency, despite its name.My advice to Locks Heath landlords – although it’s correct to create a future strategy, all I can say at this point is ‘more haste less speed’. These rule changes are only a discussion paper, and it remains open for consultation by any member of the British public until 30th December 2021. That means the Government’s strategies and tactics may change.

Given that 57% of private rented properties are below a ‘C’ EPC grade, it is hard to believe the Government could achieve this without making big cash grants available.

For example, there is presently a cap of £3,500 for energy improvements that Locks Heath landlords have to spend to get it to the existing EPC ‘E’ target grade on private rented homes (i.e. if you have a privately rented home at an ‘F’ or ‘G’ EPC rating, you only need to spend a maximum of £3,500 as a landlord on improving your EPC rating and still being legal even if those £3,500 don’t get you to the current ‘E’ rating minimum). So, if the current rules allow an exemption to the EPC renting rules, if a Locks Heath landlord can’t improve their Locks Heath property enough, conceivably, could this be extended?

So, what are Locks Heath landlord’s options?

One thing you could do is put your head in the sand and hope it all goes away!

Another thing some savvy Locks Heath landlords do (be they my client, clients of other letting agents in Locks Heath or even self-managing landlords) is to sit down and plan a strategy for their Locks Heath rental portfolio. I print off all the EPCs of their rental portfolio, look at the recommendations, then discuss a plan to ensure they are covered whatever the Government decides to make the new EPC rules. Like all things in life, plan for the worst and hope for the best.

If your agent isn’t offering that service, please drop me a line because I would hate for you to miss out on the advice and opinion that so many Locks Heath landlords have already had from me. The choice is yours.

Mortgage Interest Relief Restrictions – Are you prepared?

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It has been two years since we first heard the announcement that Landlords’ ability to deduct mortgage interest would be gradually phased down by 2020.  A recent YouGov Report suggests that, on the whole, mortgaged buy-to-let Landlords are fairly well informed about the changes.  But with the first phase of the restrictions due for implementation on 6 April 2017 I thought it was worth revisiting the subject.

The amount of Income Tax relief landlords can get on residential property finance costs will be restricted to the basic rate of tax.  As we now know these restrictions will be phased in over the next four years.

The restrictions will affect:

  • UK resident individuals that let residential properties in the UK or overseas
  • non-UK resident individuals that let residential properties in the UK
  • individuals who let such properties in partnership
  • trustees or beneficiaries of trusts liable for Income Tax on the property profits

The phasing down of mortgage and other finance costs will be as follows:

Tax Year % of finance costs deductible from rental income % of basic rate tax reduction
2017 / 18 75% 25%
2018 / 19 50% 50%
2019 / 20 25% 75%
2020 / 21 0% 100%

Those who will not be affected by the restrictions and will continue to receive relief for interest and other finance costs in the usual way are:

  • UK resident companies
  • non-UK resident companies
  • Landlords of Furnished Holiday Lettings

Most landlords who will be affected by the tax change will already be planning how they will prepare for the impact of the restrictions.  19% of the YouGov survey respondents declared that they would be making an increase to the rent.  Around one in five Landlords are considering either transferring the ownership of their property into a corporate structure or to a partner who pays a lower income tax rate.  About one-third are looking into remortgaging as a cost-saving option.

For more information or advice on the changes to mortgage interest relief and how it will affect you feel free to drop me a line at james.hill@brooklettings.co.uk or give me a call on 01489 570011.

7 Top Tips To Get The Best Tenant For Your Property

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What is your greatest fear as a Landlord?  Like most it is more than likely a Tenant either not paying the rent or trashing the property.

So how do you avoid the pitfalls and ensure that you give yourself the best chance of getting yourself a good Tenant?

Here I detail my 7 Top Tips to help you find the best Tenant for your property.

1. Make sure you carry out background checks

If you are going to be letting a Tenant live in your property you want to make sure that they have the income or savings to pay you every month.  Proof of income can be in the form of confirmation from an employer or accountant, payslips or bank statements.

You also want to know what sort of Tenant they have been in their previous property that they have been renting so get their current Landlord or Agent’s information and contact them for some details of their tenancy. Some good questions to ask are:

  • Have they paid their rent on time and in full each month?
  • Did they leave the property in good condition at the end of their tenancy?
  • Would they let to them again?

Needless to say that the sure-fire method of carrying out background checks is through a professional referencing agency. But if you are doing the checks yourself don’t be afraid to be intrusive and ask some detailed questions to ensure you have the full picture on your prospective Tenant.

2. Avoid Facebook groups

We all like to save some money and Facebook has become a very popular medium for us to buy or sell second hand goods. ‘For Sale in….’ groups have popped up for most local small towns and villages and Landlords have turned to these to advertise their properties.  But before you take your photos and upload them to your local Facebook Group there is something you need to consider…  Are you going to be attracting the best quality Tenant?

Some prospective Tenants are legitimately looking to save some money on fees by going to a private Landlord.  Sadly however there are also a lot of Tenants with chequered pasts that resort to Facebook because they know that full referencing checks will not be carried out. The warning signs may not be there at first; they may come across really well at your face to face meeting at the property but once that agreement is signed and they have moved in things can quickly change.

3. Have the right legal documents in place

Having the right tenancy agreement is essential when letting your property.  Without the right clauses protecting you you could end up with no recourse should the Tenant let you down.

Always ensure that you use a properly written and legally binding contract. If your proposed tenancy is eligible you should always use an Assured Shorthold Tenancy.

4. Take a deposit and handle it correctly

Typically in the SO31, PO14 or PO15 areas a deposit of between one month and six weeks’ rent is taken from Tenants.  Needless to say that this should be paid by your Tenants in cleared funds prior to you handing over any keys.

To comply with Deposit Legislation the deposit should be registered with a government recognised Deposit Protection Scheme and prescribed information regarding the deposit should be issued to the Tenants all within 30 days.

The deposit will remain protected until the end of the tenancy and will protect you against any damages to the property or the contents.  In the event of a dispute between you and your Tenant the Deposit Scheme will adjudicate.

5. Carry out an Inventory

In correlation with the deposit it is essential that you prepare an Inventory on the condition of the property and the contents.  This should include a full list of all fixtures, fittings and furnishings and some photographs showing them.

The Inventory should make reference to any existing defects, blemishes and wear and tear.  You and the Tenant should both sign the document on the day of occupation to confirm agreement that the document is a fair representation of the condition of the property.

Although it is an additional expense to an already long list of upfront costs I would always recommend getting an independent third party to prepare a professional Inventory.  This keeps everything impartial and free from any bias.

My article on the importance of an Inventory goes in to more detail on this subject.  CLICK HERE to read more.

6. Take ID and carry out a Right to Rent Check

It goes without saying that you want to be sure that your Tenant is who they say they are.  But the Immigration Act 2014 and 2016 now takes that a step further by stipulating that Landlords must ensure that their tenants have a ‘right to rent’ – the right to remain in the UK.  This means that you must carry out Right to Rent checks on all prospective adult occupiers.

Establish who will live in the property.  Obtain, Check and Copy one or more original documents that demonstrate the Right to Rent in the UK for all adult occupiers for that property in the presence of the holder.  Acceptable documents include a UK passport and a permanent residence card or travel document showing indefinite leave to remain.

Landlords must also carry out follow up checks where tenants satisfied initial checks using time limited ID.

7. Trust your gut instinct

Although credit checks and other references from employers can confirm whether the Tenant is financially sound it doesn’t necessarily guarantee that they will be a good Tenant.

First impressions count for a lot and your face to face meeting with the Tenant on the viewing is the ideal time to chat to them and get a feeling for what type of person they are.

Trust your gut instinct and if you are the slightest bit unsure about the Tenants do not agree to let to them and keep looking.

If you would like any more information or would like to discuss any other property related matter please give me a call on 01489 570011.  You can also email me at james.hill@brooklettings.co.uk.

For more articles like this one and all the latest buy to let deals for investors visit The Locks Heath Property Blog.

Ban on Letting Agents’ Fees is Likely to be Bad News for Tenants

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autumn-statement

Philip Hammond today announced government plans to ban Letting Agents from charging Tenants upfront Agency Fees.

This news will be music to prospective Tenants’ ears as according to Citizens Advice currently the national average fee charged to Tenants when renting a property is £337 per person.  In Park Gate Tenants’ Fees can even be as high as £500 with some Agents.

However I think once the dust settles on this news and Agents are forced to review their business models it could end up proving very costly for Tenants.

David Cox, the Managing Director of the Association of Residential Letting Agents (ARLA), has already released a statement today warning that

“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. It will be the fourth assault on the sector in just over a year, and do little to help cash-poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.

Most letting agents do not profit from fees. Our research shows that the average fee charged by ARLA Licensed agents is £202 per tenant, which we think is fair, reasonable and far from exploitative for the service tenants receive.”

Ultimately if Tenant Fees are banned, the costs will end up being passed on to Landlords in one form or another.  The Landlords, of course, will then be looking to recover these increased costs elsewhere – inevitably through higher rents.

I fear that banning Tenant Fees will end up hurting the very people the government is intending on helping the most.

If you are concerned about how this change could affect you, please feel free to email me.

 

To increase the rent or not increase the rent? That is the question.

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money-with-wordingRent increases can be a tricky subject to tackle but it is something I am discussing with increasing regularity with Landlords so this week I thought I would break from my usual articles and share my thoughts with my lovely readers.

So should you rock the boat and increase your Tenant’s rent or not?  Let’s have a look at some points to help you make your mind up…

Potential problems

Before you make a decision you should take time to consider whether an increase is really needed.  A hasty decision could damage your relationship with your Tenant and in extreme cases could lead to them leaving the property altogether.  This can leave you with an empty property and some costs involved with finding a new Tenant.

Why am I thinking about an increase?

Ask yourself why you feel an increase is necessary – Are you increasing it because your costs or mortgage rates have risen or are you doing it out of greed?

From my experience, if you have a good Tenant (i.e. one that pays the rent on time and looks after the property) and treat them fairly, that usually equates to the most profitable experience – even without increasing rent.

Good reasons Vs Bad reasons

Some valid reasons for an increase can be a mortgage rate increase, changes in taxation, changes in market conditions or simply that the property is costing more to maintain.

However if you are increasing the rent out of greed or just because you can then I would recommend leaving it alone.

If you think that your property is worth more rent than you are currently getting then you should speak to a local lettings expert who can advise you on the current market conditions and give you an accurate up-to-date valuation of your property.

Am I able to increase my Tenant’s rent?

Before making any other considerations you need to know if you are actually able to increase your Tenant’s rent.

If you are currently within a fixed term tenancy then you cannot make an increase unless there is a clause in the tenancy agreement that specifically states that the Landlord can review the rent during the fixed term or it is specifically stated that the rent will increase to a set amount after a period of time (ie. After the first six months).  Of course any such clause would need to be deemed fair, and too much of a dramatic increase may spur your Tenant to contest the new rent amount at a tribunal.

How do I increase the rent?

Ok, so you’ve finally made up your mind and are looking to increase the rent.  Before you take the plunge there are strict procedures to follow.  Failure to follow the correct procedure could lead to your request for more rent being invalid.

  1. Negotiate the rent increase when renewing the Tenant’s contract.

If your tenancy has recently come to an end you may want to renew it on to another fixed term tenancy.  If this is the case the easiest way to enforce a new rent can be to agree it as part of the renewal process.  Just ensure that the new rent is detailed in the new tenancy agreement.

  1. Agree an increase mid-tenancy and document it

As I briefly mentioned earlier in this article you can agree a review of the rent or a set increase to take place during a tenancy before the tenancy agreements are signed.  Any clause must be fair and detailed within the tenancy agreement.  You should also write to the Tenant when the time comes to notify them that you would like to enforce the clause giving adequate notice.

  1. Serve the Tenant with a Rent Increase Notice

If nothing is done to renew the tenancy agreement after the fixed term ends it will roll on to a Statutory Periodic tenancy.  In this instance you should issue your Tenant with a Rent Increase Notice if you wish to increase the rent.

A Section 13(2) Notice of the Housing Act 1988 must be served proposing the new rent and the date at which you would like it to commence.  For a monthly, weekly or fortnightly tenancy, you should provide at least one month’s notice to your Tenant of the increase.

What if the Tenant refuses the rent increase?

If the Tenant feels that the rent increase that you are trying to enforce via a Section 13(2) notice is excessive and they do not wish to discuss it with you, they can refer the rent increase to the Tribunal.  They must do this before the starting date of the proposed new rent.  In this instance they should notify you that they are doing so.

The tribunal will consider the Tenant’s application and decide what the maximum rent for the property should be. In setting a rent, the tribunal must decide what rent the landlord could reasonably expect for the property if it were let on the open market under a new tenancy on the same terms. The tribunal may therefore set a rent that is higher, lower or the same as the proposed new rent.

A note to remember…

If you have a good Tenant paying the rent on time and looking after your property then think before increasing the rent.  A good Tenant can be hard to find so if you already have one then take into consideration how much time and money it will cost you to find a new Tenant should they not want to pay your increase.

Keep an eye on the market and comparative rental prices.  If you are charging less and the market is buoyant then it may be a good time to bargain with your Tenant.  If they can see that an alternative property will cost them more a month and that they will incur more fees and moving costs they will be more inclined to accept your increase.

For more articles on the local property market please visit www.thelocksheathpropertyblog.co.uk.

Mortgage Interest Relief changes – How will they affect me?

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Home & CalcFollowing my article last week on Landlords’ Wear and Tear Allowances I was contacted by some of my readers to discuss their tax allowances in more detail.  These discussions inevitably led on to the planned changes to Mortgage Interest Relief for Landlords so I have decided to talk about the details of the changes on this week’s article.

Currently residential Landlords are allowed to deduct the full amount of finance costs they have paid against their rental income.  However the Chancellor announced last year that Mortgage Interest Relief for residential landlords would be restricted to the basic rate of income tax (20%) in the future.

The good news, however, is that the new rules are going to be introduced over a four year period starting from 6 April 2017 meaning that Mortgage Interest Relief will be available as follows:

  • In 2017/18, the deduction from property income will be restricted to 75% of the finance costs incurred, with the remaining 25% being available as a basic rate reduction.
  • In 2018/19, 50% of the finance costs will be given as deduction and the remaining 50% will be given as a basic rate reduction.
  • In 2019/20, 25% of the finance costs will be given as deduction and the remaining 75% will be given as a basic rate reduction.
  • In 2020/21, None of the finance costs will be given as a deduction.  100% will be given as a basic rate deduction.

After the changes come in Landlords may remain as Basic Rate tax payers but for some the changes could end up pushing them in to the Higher Rate band.  So let’s look at the following scenarios based on the figures for the final tax year in which the tax changes have their full impact (subject to changes in the personal allowance rate):

Before After
Non-property Income  £   20,000.00  £   20,000.00
Rental profit excluding finance costs  £   20,000.00  £   20,000.00
Mortgage Interest -£   10,000.00  £                   –
TOTAL Income  £   30,000.00  £   40,000.00
Tax due  £      3,880.00  £      3,880.00

In this first example above the Landlord would remain a Basic Rate tax payer after the changes so the tax due would remain the same.  However when we look at the second example below it is a different story:

Before After
Non-property Income  £   30,000.00  £   30,000.00
Rental profit excluding finance costs  £   35,000.00  £   35,000.00
Mortgage Interest -£   35,000.00  £                   –
TOTAL Income  £   30,000.00  £   65,000.00
Tax due  £      3,880.00  £      8,403.00

This Landlord would be pushed in to the Higher Rate tax bracket after the changes meaning that the tax due would jump from £3,880.00 to £8,403.00.

As you can see from these examples the full impact of the changes will affect Landlords.  However what I would say for now is don’t panic.  You do have time to plan for the changes and get some professional tax advice so get planning!

If you want more news, views and commentary about the Locks Heath and Park Gate property market, there are more articles on the Locks Heath Property Blog at www.thelocksheathpropertyblog.co.uk.

For impartial buy-to-let advice feel free to contact me on 01489 570011 or at james.hill@brooklettings.co.uk.