Tenants, did you know…?

A quick post to give you some information on your rights as a tenant!

Did you know that once you move in to a property, the landlord or the agent needs to register your deposit and give you the relevant information (Prescribed Information) within a month? If not, you can take the landlord to court and can be paid up to 3 times the amount! Deposits are usually 6 weeks rent, so multiply by 3 and the amount will be quite considerable.

Did you know that once you move in to a property, you have ‘exclusive possession’ of  it? This means that the landlord (or anyone else) cannot enter the property without your permission. In other terms, for the duration of your tenancy, that property is completely yours (unless you break a term of the agreement).

Did you know agents only have a duty of care towards you? This means they have no legal obligation towards you. However, good agents will do their best to help you. Look for agents who have memberships with the property ombudsman/ARLA.

Did you know that the landlord cannot evict you for no reason? Even if your contract has ended, and you remain in the property, the landlord will need to go through the courts to remove you completely from the property. I would strongly advise against this as it will affect your future references and may make future landlords hesitant too rent their property to you. There are certain grounds that the landlord will need to state as the reasons why he would like he property back. Some of the grounds are mandatory (where the landlord will definitely get it back through the courts) and some are discretionary (the case is reviewed and a judgement is made).

If you find this helpful, and would like more posts like this, leave a comment and I will provide some extra advice in another post. The unfortunate truth is tenants don’t know their rights so I would love to help tenants learn about what they can do. Tenants have a lot more rights than they think when it comes to renting a property, but they aren’t very well known. The reason is simple. It doesn’t benefit landlords and agents will not inform you of your rights as they want to satisfy the landlord. Agents work for landlords, not tenants  so please keep it in mind.

Enjoy!

 

 

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50,000 new homes to be built in London

image‘Shortage of homes’ – this term has been used frequently over the last couple of years, and although there has been a frenzied level of activity from private developers, especially in areas like Canary Wharf and Kings Cross, it still hasn’t been enough to solve the housing problem. However, things are starting to look promising in the Capital, with the government allocating £200 million of its £400 million fund towards the development of 20 new housing zones in London. This figure will also be matched by the Greater London Assembly, bringing the total figure to £400 million. It is estimated that it will take roughly ten years to build the targeted 50,000 homes and will also create around 100,000 jobs.

The Mayor, Boris Johnson, has also been given the responsibility and the authority to speed up progress of the developments if local boroughs fall behind schedule. It looks like the government are very serious about the housing crisis, and I applaud them for taking measures in improving the situation.

Johnson said that ‘Housing is the biggest challenge facing London’s economic development and these new £400 million housing zones will turbo boost housing supply across the capital. This major regeneration will transform communities and provide up to 50,000 much needed homes. They will support 250,000 Londoners into low cost home ownership over the next decade’.

I am pleased with this news as it was becoming a real problem. There just isn’t enough homes to go round for everyone and in recent years, we’ve seen overseas investors snapping up properties before the young Londoner even has time to consider it. With more options set to become available, it should give reassurances to those looking to buy, especially the first time buyer.

There are still some issues to be dealt with. Recently, we’ve seen rumours of an interest rate hike and stricter mortgage lending criteria so it will be interesting to see how things pan out in the future.

Just to finish off with a story as a I like to do, I believe this story sums up the current situation. I had an applicant who was searching for their first property and they had their heart set on a beautiful, modern development in Aldgate. Prices were just above their budget in the building but they were so keen that they offered anyway, at the highest price they could. The problem was, there was a line of other people with bigger nuggets who also offered. As expected, their offer was rejected. Their disappointment was obvious and I felt sorry for them. They had their perfect dream home in their mind and this property ticked all their boxes.

I showed them a few other flats but nothing was close to the quality of their first choice. They eventually gave up and stopped looking and are currently renting privately. This was a year ago and I like to call them to have a catch-up. They still have their eye on the market for another flat in the building, but unfortunately, nothing else has become available through me, or through other agencies. A lack of choices has left them looking up at the first rung of the property ladder.

Fingers crossed, for them and for every first time buyer, that an ideal property at a suitable price is found. With the Mayor’s involvement in the development of new homes, I feel optimistic for the future of the housing market.

Advice on investments

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You’ve decided to invest a property. Great! I’m sure you have an ideal image in your mind about your perfect home/investment, and I’m sure you can visualise exactly what you are looking for.
Without putting a dampener on your dreams (after all, dreams and goals help us work towards achieving our desired result), there are a few things you will need to keep in mind, the main one being finances.
Too often, I’ve seen investors look the price of the property, and excitedly calculate their annual yield from the rental monies they could potentially achieve on the property. This is a great start. Unfortunately, if it was this easy to work out, every investor in the world would be rich and owners of multiple homes.

There’s solicitors fees, agent’s fees, tax, keeping an amount of money as an emergency fund should something go wrong, along with all the other costs involved in purchasing a property. Suddenly, the yield you have calculated seems to be dropping with every calculation.
I advise that you should look for properties that can give you a pre-tax yield of between 4-6% annually. It’s difficult to find, but not impossible. The next thing you should work out is every single cost. Granted, it’s difficult to work out exact figures but it’s good to have a rough idea of what you will end up with.

If you would like, I can generate a report for you breaking down potential costs. All you need to provide me with are the following:

– Price of property
– Estimated rental price per week

I will provide it for FREE. No incentives. No catches. I want to help you make an informed decision and I ask for nothing in return.

Simply fill in the form below with the information required and I will get this sent over to you as soon as possible. The picture above gives a snapshot of what the report will look like, but trust me, there’s so much more to consider, which you will be able to see once you have requested a report.

Please keep in mind, and I cannot stress this enough, the figures I send to you are a rough guide, and not to be taken as the exact amount you can expect. The property market has ups and downs so use them as a guide.

Understanding Your Credit Score

Great advice for those interested in purchasing a new home – article gives a good overview of why credit scores are important.

Carrie Goldstein Mortgage Blog

Understanding your credit score and how it impacts your home ownership prospects your credit score is an important part of your financial profile. It has a direct impact on your ability to take out loans. The score itself is a numerical reflection of your credit history. It gives lenders a way to discern your reliability before approving a loan like a mortgage for instance. Though this is the basic function of a credit score, it can also have a far-reaching influence over other aspects of home ownership. Mortgage Loan Approval: Will Your Score Make the Cut? First and foremost, the status of your credit score is a deciding factor in whether or not you are approved for a loan. Even if you put down a large down payment on your home, a low credit score can still cause the loan to be rejected. For this reason, it’s best to wait…

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What goes up, must come down

ImageThe media has been inundated with news of house prices decreasing recently, with research from plenty of sources citing some of the possible reasons why this is happening.

Rightmove, RICS and Nationwide are amongst the companies that have conducted the research and they have all found similar findings. A brief overview of the findings are below:

Rightmove have reported that in London, asking prices for properties for sale have dropped by 0.5% last month, compared to the first 5 months of 2014 where the increase was much more substantial. The report further states that there had been an increase in sellers on the market, but with the implementation of stricter mortgage lending criertia introduced by the Mortgage Market Review (MMR), buyers have become more reluctant to purchase.

A report by the Royal Institute of Chartered Surveyors claims that the slowdown in the market is due to a lack of choice of properties for buyers. The possibility of rising interest rates also is a deterrent to those who were initially interested in buying a home. They also reported that there has been a decrease in the demand for local properties for the first time since June 2013.

Nationwide’s report informs us that for the past 13 months, prices have risen, but similar to the other reports, they have also reported the growth to be slowing down. Their report have also placed some of the blame on the MMR, but also said that “the underlying pace of activity should become more evident as we move through the summer months and the impact of MMR becomes clearer.’

How has all of the recent news regarding the slowdown of growth affected sellers? I have been speaking with a client who has instructed a handful of agents, including myself, to sell his property. We valued it at £330,000, and advised him to consider offers below this amount. We believed the valuation to be an honest and true reflection of his property considering the age of the flat, the facilities it has and based on the view it had (which was of the main road – not one of the best looking roads at that). This was in March and he had agreed with the figure we had given him so we proceeded to take marketing pictures and place the property on all the major portals. We had interest in the property fairly quickly and conducted two viewings at the flat. One of the viewings went particularly well and they placed an offer on the property at the full asking price of £330,000. By the time the offer had been received, it was now April. I sent the details of the offer to the vendor and then called him to follow up and to see what his thoughts were. Based on the valuation I had given him and his apparent agreement of the price when we were first instructed, I was confident I would get the offer agreed for the buyer so we can proceed with the paperwork and instruct solicitors.

We spoke at great length about the offer and he told me that prices have increased, which I agreed with. I also reminded him that the figure of £330,000 was the top-end of what he could expect to achieve and that we had previously advised him that he should consider offers less than this amount. He wasn’t too happy with it as he believed he could sell the property for a lot more, and he informed me that Zoopla have valued similar properties for £343,000. I told him I didn’t agree with this figure as it is too high. Newer properties, with a better location, better facilities and better views were selling for this amount. But he was determined to achieve a higher amount, so he rejected the offer. We then adjusted the asking price of the property to meet his demands. I informed the buyer of this who (unsurprisingly) didn’t agree with the new figure and immediately withdrew his offer. He had enough money to increase his offer but felt it wouldn’t be a good investment to spend that much money on that particular property. 

Enquiries dried up for the flat, and by now it was May. I called the vendor to catch up with him and to provide some feedback on how we were doing after the price increase. We actually had no interest and no viewings. I advised him his expectation is too high and he needs to lower the price, which he again disagreed with. He then told me Zoopla has valued similar properties now at £351,000! I actually couldn’t believe what I was hearing. I informed him that Zoopla’s figures are estimates, and they actually haven’t seen his property and he needs to listen to what we are advising him as we are active in the market – the most his property can achieve now is around the £335,000 – £340,000. Realistically, he wouldn’t get more than this. He then told me one of the agents actually got him an offer at £337,000. In my mind, I thought ‘wow, that’s a great offer’ and assumed that he had accepted it. However, he then told me he had rejected it and he now wants £350,000 as the minimum as per Zoopla’s suggestions. I couldn’t help but think he is going to be disappointed if he keeps rejecting offers based on a valuation from someone who has never seen the property.

A week later, I called him again to see if the property was still available. He informed me that the offer was withdrawn as the buyers couldn’t increase. He then started citing some research he conducted on the Internet about house prices and I gave him our feedback, which was the same as before – no interest at the price he is looking for.

Now it is June, and I am due to speak with him again shortly. At £351,000 we have received no enquries whatsoever for his properties. With all the recent media coverage on the prices slowing down, I wonder if he regrets rejecting the two offers he had received. It will definitely be an interesting conversation.

Government publishes renting guide for tenants

I was pleased to see that the government have published a check-list with advice and guidance on how to rent a property for tenants. To read their guide, click here.

The guide is great and provides tenants with the basic knowledge they need in order to rent a property. I’ve met too many tenants that do not know their rights when it comes to renting a property, especially with first time renters or those from abroad. There are an increasing number of tenants that I have spoken to who take the advice of a lettings agency without questioning them, and the guide published by the government gives tenants advice on what to look for when speaking with an agent. I’ve had situations with tenants where they are willing to hand over their money without really doing their own checks. Far too often I’ve heard the expression, ‘I love the property, I can pay a deposit right now’.

A property is a huge investment whether you are renting or letting a property out. For tenants, they hand over a huge amount of money over the course of their tenancy and it saddens me when I speak to some who have had terrible experiences in the past.

As I love to tell personal stories based on updates on the property industry, I’m going to share a story with you which illustrates the lack of knowledge that tenants have about their rights.

An applicant was completing their paperwork before their big move and we had started chatting about ther current home. They mentioned they were having problems with the landlord and the agent regarding the release of their security deposit. When they first moved in to that property, the check-in and inventory reported damp and mould issues in one of the rooms, and they were advised by the agent that they will inform the landlord with the view of getting it repaired.

However, the landlord failed to repair it and the tenants periodically reminded the landlord and agent that the mould issue hasn’t been fixed and it seems to be getting worse. The response was the same every time from the landlord – ‘no problem, i’ll get it looked at’.

They stayed at the property for 2 years and the landlord did not send anyone to look at the issue to get it fixed. As it was time to leave, they didn’t report it in the final few months of the tenancy and at this point, the mould had gotten considerably worse.

The tenants told me that the landlord was going to deduct some money off the deposit for the cost of the repairs for the mould issue. I thought this was strange but the tenants thought it was normal for this to happen as the mould got worse throughout their tenancy and they thought it might have happened because of the way they they were living there and assumed they were partly responsible. I asked if they had agreed to the deductions already to which they said ‘no’.

Now, agents have no obligation to offer tenants advice but they do have a duty of care towards them. Appalled at what I had heard, I advised them that they shouldn’t agree to the deductions. They had reported the issue to the landlord on many occasions and they had written evidence of this, so how can the landlord attempt to extract money from the tenant to repair an issue which is the landlord’s legal obligation? The health risks associated with sever mould are well documented and the tenants are lucky that they didn’t suffer any health issues from it.

The tenants were unsure of my advice, but I assured them that they had every right to contest the landlord’s proposed deductions. Reluctantly, they said they will try to contest it.

A week later, I received a phone call from the tenants who were extremely happy and grateful for the advice I gave to them. The landlord agreed to give them their deposit back without deductions for the mould.

The example I have given illustrates the need for more information and guidance for tenants. They are unaware of their rights because there isn’t much information out there for them, which is why the governments checklist is so important.

 

The 10 minute rule

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No, I’m not talking about the procedure that MPs need to follow in order to introduce a bill. The 10 minute rule that I am talking about is the rule that you should follow when purchasing an investment property. 

When you decide that you want to invest in a property, you are obviously going to keep a few factors in mind, such as price, age of the property and location. We’ve all heard the saying ‘location, location, location’, which has been made ever more popular after the Channel 4 programme. But what exactly about location do you need to keep it in mind?

This is where the 10 minute rule applies. Let’s think about it in more detail. You are purchasing a property as an investment, and what drives your investment? Tenants. 

When tenants are searching for a property to rent, it is temporary and usually short term. Properties that carry the most value are those that offer it’s residence the most convenience. We are beginning to see a trend where new developments are increasingly beginning to include a gym and a concierge for this particular purpose. 

So what is the 10 minute rule? 

This is relating to the location of the property. I strongly advise that if you are investing in a property, take a walk from the building to the nearest station. If it is within 10 minutes, this is ideal for investment purposes. You should also apply the 10 minute rule to the property’s proximity to local amenities such as schools, shopping malls, parks etc. 

The more local amenities fall within 10 minutes walk to the property, the better it will be for the value of the property over time. If at time of seeing a property, there isn’t many local amenities within a 10 minute walk, do a little research to find it what could be there in the future. You’d be amazed at how the value of a property can increase because of future regeneration in the area. 

So there you have it. A quick rule to keep in mind when you are searching for a property to drive your investment.