Further Government legislation

The current Conservative government clearly has a plan for UK landlords. And the idea is to reduce their overall numbers. Over the last few years we have seen a plethora of legislation all aimed at reducing the number of properties owned by private landlords. The aim is clear – to make homes more accessible to first time buyers. In a time when there is a shortage of property the government feels that landlords hold too many properties. Whilst on the one hand this idea is admirable, there are very real concerns that we could end up with more people becoming homeless.

Rent arrears and Guaranteed Rent

With a general squeeze on incomes this has taken a toll this on some tenant’s abilities to pay rent. As many as 52% of landlords have experienced rental arrears at some point. Whilst their are Rent Guarantee insurance products in the market we have found these to be lacking in the main. Landlords talk of problems in making a valid claim and the need to pay an excess upfront. The good news is that there are alternatives to Rent Guarantee insurance.  Some landlords now insist on much larger deposits that cover at between 3 – 6 months. Another alternative is to opt for a Guaranteed Rent scheme operated by specialist companies. This type of scheme will guarantee the rent on a property and in some cases will even cover minor maintenance issues. You can find out a lot more about this type of service here.

Restrictions in Buy to Let lending and mortgage interest tax relief

As a further blow to landlords, the government has now introduced a restriction on mortgage interest tax relief. This is something of a game changer for most landlords. In the past a landlord could deduct their total interest costs from rental income. From April 2017 this all changed with a steady phasing in of a 25% restriction per year over the next four years. By April 2021 landlords will no longer be able to deduct any of their interest costs. Instead there will be an annual taxable allowance which will help some landlords and at the same time make no difference to others. The stark reality is that for most landlords with a second income these changes will mean a considerable increase in income tax.

House prices

We have seen reasonably strong house price inflation since 2013. However, most predictions currently point to a slow down across many areas of the UK. The London market has certainly been fuelled by International buyers getting in on the property investment action. But London is now seeing a marked slow down. By contrast one or two regions are doing particularly well. Both the Midlands and North are currently tipped to perform the best over the coming few years.

What does this mean for landlords? For some landlords problems now exist in raising additional capital for further purchases. As house prices stagnate this means that a landlord is restricted on borrowing ever greater sums secured against their portfolio. This is a very real worry for some.

What can landlords expect in 2018 to affect guaranteed rent

Electrical Safety Inspections

We believe there will continue to be growing interest in legislating against private landlords. We fully expect that five year electrical checks will become compulsory across all rental properties. This would make sense and it has always been something of a bug bear why this has not been compulsory before.

Minimum Energy Performance standards

From April 2018 no property with an EPC rating below E will be eligible to be marketed for let. Landlords are being reminded now to take action on this and to improve the energy performance of their properties to ensure they stay on the right side of the law.

Proposed Tenant Fee ban

Perhaps the biggest news this year was the shock announcement that the government intends to ban landlords and their agents from charging tenants any fees. Whilst this might not sound much of a problem you only have to dig a little deeper to find out what this will mean for the average high street agent. To put it into context, it is anticipated that this one change alone could cost an agent as much as £6,000 per month in lost revenue. And this could be enough to force the closure of many agents. Property commentators say that some of the costs will merely be passed onto tenants in the form of increased rents. Time will tell. You can find out a great deal more about the government’s plans for the tenant fee ban here.

In summary

As ever it is not all doom and gloom. Landlords who take the time to educate themselves will always find a way to continue to make their properties work and perhaps even better than previously. And don’t forget it is still possible to enlist the help of a professional agent that could help you to achieve guaranteed rent. Perhaps the best advice we could give here is to take the time to speak to a good number of agents before deciding on one to employ.

We hope you have enjoyed reading through our review of 2017 and that you go into the New Year with a solid plan for your rental properties.

The post Guaranteed Rent – Landlords Biggest Concern for 2018 appeared first on Capitum.

First – what is an HMO property?

Regulations determine when a rental property stops being a standard rental unit and instead becomes classed as an HMO. Any property with three or more unrelated tenants, forming two or more households, will be classed as an HMO. The same tenants will also share amenities such as a toilet, bathroom or kitchen.

Why are landlords attracted to HMO property investment?

Renting out HMO’s can be attractive due to the potential for increased profits when done correctly. Unlike traditional rental properties, HMO’s have a higher rental income on average. Properties are let out on a ‘room by room’ basis. This has the effect of capitalising on the asset. However, with this increased potential for greater profits comes greater regulations that surround HMO property. And these regulations can end up costing both time and money. Landlords should research how such costs can mount up as HMO property is not for the faint hearted.

Legal responsibilities for HMO landlords

There are legal standards which HMO landlords face. For example, for all properties with five bedrooms or move and three storeys this may require both planning permission and an HMO licence. HMO properties typically require more time and effort than usual rental properties. If you are considering investing in a HMO property, make sure you have the ability and resources to meet the demands. Also consider seeking expert advice of an HMO letting agent. You may want to consider either their full management or Guaranteed Rent services.

The responsibilities for HMO landlords come under two important pieces of legislation:

• The Management of Houses in Multiple Occupation (England) Regulations 2006.
• Licensing and Management of Houses in Multiple Occupation (Additional Provisions) (England) Regulations 2007.

Regardless of whether your property requires a licence or not, you must conform to the management regulations. A breach of any of the regulatory terms is likely to be approached as a criminal offence. The landlord can expect to face prosecution by the local authority. Convictions are usually dealt with at the Magistrates court and hold fines of up to £5,000 or more in extreme cases.

Who to ask about regulations

Your local council will be responsible for regulating and enforcing the correct management for HMO property. The authorities have the power to introduce individual requirements for licensing. As an HMO landlord, your local authorities should be your first contact point for any queries you may have.

For information on any of the above or advice on anything relating to investing in HMO property within Nottingham, please do not hesitate to call us on 0115 740 1800.

Alternatively, get in touch by emailing us at hello@capitum.co.uk

The post HMO Property – Rich pickings or hard work? appeared first on Capitum.

So how does Rent to Rent work?

More often than not it all starts with a ‘tired’ landlord. Tired landlords no longer want to continue being in the middle of the letting process. After all today’s landlord faces a growing number of Government regulations. Instead, tired landlords want to benefit from a rental income without all of the headaches. Enter the rent-savvy individual, willing to take over the day to day job of looking after tenants. With a hard-to-refuse offer of Guaranteed Rent for a typical period of three to seven years, tired landlords can hand over their properties.

Is Rent to Rent for me?

Do you seem to fit the title of tired landlord? Rent to Rent has many pros and cons. It can provide you with an easy way to reap the benefits of your rental income whilst holding out for increases in the property’s value. You can keep earning while someone else does the harder graft for you. Provided you have found a credible rent to rent operator, there are no worries of tenant issues or lost rent. With a contract including light maintenance, you can guarantee your property will be returned in the condition you left it.

However, you will have to forgoe some rental income in order for the rent to rent operator to also make a return from the arrangement. Typically the rent to rent operator will pay around 60% of the gross rent for each room within a multi-let property. However, the numbers work best on a typical family. This is true where the rent to rent operator only has to carry out the minimum work to render it safe to sub-let.

For many, the buzzwords ‘infinite profit’ and ‘passive income’ are enough to peak their interest. With the day to day hassle of managing a property removed from the equation, rent to rent appears to be pretty simple. Find some tenants, do a few maintenance jobs, and head to the bank. Right? Not necessairly.

Behind every perfect scenario lay some risks.

Keep your eyes out for these potential problems:

Legal issues with Rent to Rent

Beware of the credibility of some rent to rent operators. In some cases both tenants and landlords could be negatively affected. One common example is when an individual or company portrays themselves as experts in the field and actually have very little knowledge or experience. Without prior knowledge it is all too easy to fall foul to many of the legal issues that rent to rent presents. Examples include ensuring a property has a HMO (House in Multiple Occupation) Licence where one is needed. The rules are out there to protect tenants and are to be ignored at your peril. For these reasons, it is important that you know who you are ‘getting into bed with’ to make rent to rent work properly.

Con-artist Renters & Illegal rent to rent operators

In 2012, Rose Chimuka was jailed for over 4 years after what police called an ‘elaborate fraud’. Using fake ID’s and an embellished story, she claimed to be a respected mother and wife. She leased properties which she said she would live in with her family. The asylum seeker then illegally sub-let the properties as she passed herself off as the real landlord. This scam affected 6 different landlords, who each lost up to a huge £86,000 each in rent. The potential issues of such scams are definitely something to be be careful about when thinking about taking this route.

Lost or no rent

With the rent to rent approach, it is rarely the sub-letter who faces the consequences. The ‘real’ landlord tends to be the one who suffers the loss of rent. Also, some end up left with sitting tenants and further difficulties removing them. Even with agreements being made, some landlords find themselves being left high and dry.

Before deciding on rent to rent, make sure you have done your research into what could potentially go wrong. It is important to recognize the risks should your renter be a fraud. You should check that you will still be financially stable if something did go wrong.

In order to be protected, it is vital to do your due diligence before moving forward. For more advice on how to be safe in the rent to rent industry, read the Lettingaproperty.com post here.

Having provided Guaranteed Rent across a wide range of properties for some years, the team at Capitum can offer tired landlords genuine help. You can see some of our current rent to rent properties here.

To find out how we can help call us today on 0115 740 1800.

The post Rent to Rent – What is it and how does it work? appeared first on Capitum.

And what better way to demonstrate this success than with the launch of a new company website. This new site has been created to showcase both Capitum’s work to date and to demonstrate our commitment to working to the highest standards.

Shared houses backdrop

“The UK is witnessing significant changes in the way the Government treats landlords. Whilst Buy to Let played a supporting role in the housing market during 1996 – 2015 there can be no doubt there has been a sea change in sentiment. UK landlords now face a new minimum 3% Stamp Duty tax on second homes. Together with the introduction of Mortgage Interest Relief restrictions coming into place on 06 April 2017 this makes it more important than ever to put new plans in place. These include the possibility of restructuring existing property portfolios and having the right structures ready for new purchases. ”
Garry Slater, Managing Director

About Capitum

Capitum Investments is a forward thinking developer of shared houses for working people. Our properties range from a typical 5 or six bedroom house right up to our flagship 32 bedroom ‘Super-Sized’ HMO in the heart of West Bridgford. We also joint venture with landlords looking for a Guaranteed Rent solution.

The business was established in 2015 to meet the needs of many young people typically struggling to buy their own home. Today tenants choose rooms in our properties for many different reasons. These include relocating to Nottingham for work or looking for a more affordable and convenient ‘all-inclusive’ rent.

You can view our latest house shares here.

Are you a house share landlord who feels now is the time to review your property strategy? If so, please get in touch with us on 0115 740 1800. We would be delighted to hear from you.

The post Shared houses developer Capitum Investments launches new website appeared first on Capitum.