Residential lettings and property management becoming increasingly big business

With the uncertain economy and paucity of available mortgage funding for first time buyers, letting of residential property is booming, and this means significantly increased business for letting agents and property management agents.

In a recent report from Professor Micheal Ball, tasked to investigate and report on the possible issues and options for regulating letting agents, he dealt with the growth of the letting agency market and the issue of whether it should be regulated in the same way as estate agency. In fact, many would say that regulation should be stronger than for estate agency as letting agents handle a significant amount of client and tenant money, and it is perhaps an anachronism that lettings is not regulated in England but is in Scotland & Wales.

Market size

According to the report, letting agents fees are now estimated to be in the region of £1 billion a year, a rapid rise from an OIFT estimate of the market size in 2007 of £145 million. Agents are also estimated to deal with 500,000 members of the public each year, which clearly demonstrates this is a sizeable and important market with public policy consideration. Letting agents/property management agents of residential properties are estimated to deal with £14 billion of client money a year.

Regulation based on complaints needed ?

At present letting agent complaints generally go to The Property Ombudsman but there is no compulsory requirement for letting agents to be members of the Ombudsman Scheme. Some 60% are members, so the available data only relates to that proportion.

The figures given in the report are :-

  • There were  just over 7,600 complaints in 2011
  • The average compensation awarded was £300.00
  • 55% of complaints were made by landlords, 45% by tenants

On the face of it the numbers are not huge but this could be due to the fcat serious issues are taken elsewhere or landlords and tenants are unaware of their legal rights or even unaware of wrongdoing or conflicts of interest.

The major areas of complaint were found to be :-

  • Difficulty in contacting the letting agent
  • Delays in repairs being undertaken
  • Poor money protection
  • Additional unexpected charges

Checklist of tasks a good letting and management agent should commit to

  • Arrange convenient helpful viewings
  • Help choose tenant, take up references, consider and advise on rent guarantees and insurance
  • Arrange pre-letting visit to property & advise on repairs, etc.
  • Explain legal rights & responsibilities to both landlord & tenant
  • Complete suitable tenancy agreement
  • Arrange condition & contents schedules and agree with both landlord & tenant
  • Respond to calls & requests promptly
  • Provide details of utilities & local authority
  • Collect rent, regularly pay to landlord, provide statements to tenants and keep records of any outgoings
  • Explain separate client accounts & client money protection
  • Have professional indemnity insurance
  • Arrange safety checks and provide safety certificates to tenants
  • Periodically visit & inspect property
  • Arrange for routine maintenance and arrange any repairs promptly
  • Record any rent or other arrears and report to Landlord promptly and seek to find out reason from tenant
  • Serve notices in good
  • Check condition at tenancy end and seek to agree with Landlord & Tenant
  • Return deposit less any costs
  • Arrange repairs at tenancy end
  • Collect keys & sign-off property

 

For additional help and advice on any residential property legal issues, we would be happy to help at Darlingtons Solicitors. You can also visit our specialist lease advice website.

How to avoid a household disaster this winter

If you want to enjoy Christmas and New Year without worrying about your central heating system or waterworks – it’s time to get your house in order sooner rather than later. A little DIY and a few repairs don’t take long, but they could save you a lot of bother further down the line.

Arrange a boiler service

With the temperatures set to plummet over the next few months, arranging boiler cover should be at the top of your to-do list. An engineer will check that everything’s working properly and will repair your pilot light, or control settings if necessary. They will also inspect all ventilation routes and make sure you are not at risk of carbon monoxide poisoning which affects hundreds of people each year.

Insulate your water pipes

If a part of your water pipes freeze, it can create a burst that might cause extensive damage to your home. This can be disastrous – particularly if you have no-one to help you out – so you must insulate your waterworks. To do this, buy some high-quality foam from a nearby DIY store and wrap it tightly around each and every pipe. This will lock the warm air in and prevent the liquid inside from turning to ice.

Thaw out your condensate pipe

The condensate pipe carries condensation from your boiler to an outside drain and is prone to freezing – particularly if it’s exposed to the elements. If this happens, the blockage can cause your central heating shutdown, so it must be thawed as soon as possible. Pouring hot water over the pipe should do the trick, but if that doesn’t work fast enough, you can also use a hot water bottle or heat pack. If this doesn’t solve the problem, heating engineers are on hand to help.

Keep an eye on your thermostat

If your boiler thermostat is off or is set too low, you will have problems heating your house. Your radiators won’t get warm and there will be no hot water to take a bath or shower. This can be very inconvenient when there’s snow on the ground, so keep an eye on your temperature settings and check that the pilot light is lit. If you can’t detect the problem, call for help before your lips turn blue.

Bleed your radiators

Your central heating system should warm your house quickly, so if you’re not feeling the benefits there may be an airlock in the system. Pockets of gas often get trapped in the radiators, so learn how to bleed them and see if that solves the problem. If things still don’t improve, check that your timers and programmers are working, before calling for professional help.

A boiler breakdown or heating hiccup can be embarrassing if the in-laws are round, so know how to make basic repairs and organise a gas safety check.

Landlord liability and accident claims

We are all aware that accidents can happen at any time but how does this situation affect landlords? As someone responsible for the safety and general upkeep of a building in which others live, it is your responsibility to ensure that no unnecessary dangers are present – and this means any accidents which occur in the property could be your fault.

Whilst investing in liability insurance can help protect you from accident claims, it is important that you take necessary action to protect your tenants. This means providing them with a safe place to live and communicating with them regularly.

You also need to know a few facts surrounding accident claims and landlords. If you have liability insurance then any compensation will usually be taken from this policy – so you won’t necessarily be out of pocket.

 Accident claims solicitors

Accident claims solicitors are there to help make everything easier for the claimant. Some accident claims solicitors specialise in certain areas of accident claims. This may be medical claims or criminal injury claims and may affect the way in which they handle any cases against you.

Whilst people were often worried about filing an accident claim due to concerns over cost, this is now largely removed.

Many solicitors now operate on a ‘no win no fee’ policy .If they win their case against you then their fees are usually covered by your insurance, so the claimant pays nothing.

Staying safe

Whilst there is little you can do to prevent an accident claim against you once it has been filed, it is important that you continue to provide a safe environment for your tenants – regardless of whether they are claiming damages against you.

All properties which you own should be inspected regularly and you should keep a detailed inventory of any damages already present on the property. Any damages caused by your tenants can be billed to them but any structural issues or other problems are your responsibility to sort.

What can you take out of a tenancy deposit?

When you have a group of tenants move out, it’s time to take a deep breath and go in to assess the damage. There’s a good chance that you haven’t seen your property for anywhere between a few months and a few years, so it can be a daunting thing to go in and inspect what other people have done to your property.

Having had the occasional glimpse into other people’s lives through various house parties and seeing what people tend do to their rented accommodation, it’s fair to say that sometimes there’s no guarantee that the walls will still be there. At this point, even if you don’t have any landlord-insurance, you can at least take solace in the fact that there is a nice juicy security deposit that you can dip in to if needs be, but what exactly can you take out of that?

 Damage:

If the property is damaged, you can take money out of the deposit to cover this. What you can’t however take money for is normal wear and tear which is a frustratingly ill defined term.

What will classify as reasonable to take out of a deposit is best established by you putting yourself in the shoes of the tenants. Slightly scuffed carpets or faded curtains might not be a fair thing to complain about, but a gaping hole in the ceiling on the other hand might be.

 Missing items:

If there’s anything on your inventory that has mysteriously disappeared, this is one to flag up.

Sometimes there might be a good reason for it. I once had to throw away a wardrobe that came with my flat because it was missing a door making it structurally unsound and the inside was a blotchy blue/green colour with mould. It was also soggy. Even in this case however, the landlord got a phone call to not necessarily ask for permission, but to explain that I was saving him the bother of calling out a hazmat team, so it certainly wasn’t a surprise when it came time for us to leave the property.

 Cleaning:

There are two times that you can take cleaning fees out of the deposit. The first is if you have already agreed to take professional cleaning fees out of the deposit at the beginning of the tenancy, which is not uncommon. The second is if the property is truly filthy and been left in no fit state. This is not the same as “well it could use a bit of a vacuum” but covers a real sense of grime and squalor.

 Unpaid rent:

Any unpaid rent can be taken out of the deposit. Although they really shouldn’t, some tenants assume that the deposit is there to cover their last month.

 Advertising and agency fees:

If tenants have broken certain clauses of the tenancy agreement or haven’t exited from it properly, you might be able to cover agency and advertising costs for putting the property back on the market. This is not however the norm and it’s worth taking advice before you launch into this. It normally is only if the tenants have messed you around that you can do this.

 Some things to bear in mind:

To make your life a little bit easier, bear the following three things in mind. 

1) Don’t look for things to take out of the deposit and don’t try and pull a fast one if the damage isn’t really all that bad. If you’re not careful you could find yourself taken to a small claims court and as you are probably aware, the law sides very heavily on the side of the tenants. If you feel that there is a little bit of damage that isn’t entirely fair for you to put up with, it can sometimes be worth cutting your losses and taking the hit financially.

2) You can only claim for actual financial loss. You can’t impose a punitive fine on your former tenants if they have done something that you told them they couldn’t, like having noisy neighbour-aggravating parties, or keeping a dog. If that dog caused damage on the other hand, that’s a different matter.

3) Legally, you must return the deposit to the tenants within 14 days of them asking for it, so you shouldn’t hang around when deciding what to take out of it.           

Summary

Renting out your property is a daunting process, as is being on the other side of the rent equation and everyone has stories of terrible tenants, shifty letting agents and greedy landlords. The best thing you can do is make sure you are not the latter, but make sure you are not taken advantage of by the former two.

 Written by David Hing, YOUR Insurance blog editor. YOUR Insurance specialises in public liability insurance for small businesses as well as landlord-insurance.

Latest buy-to-let deals

There’s a lot of demand for rental properties these days: would-be homeowners everywhere are struggling to save up the deposit they need to get their own home, so they’re staying in rented accommodation longer than they expected.

At the same time, the record-low base rate means there are good buy-to-let mortgage deals out there.

We’ve put together a list of the latest buy-to-let deals from our panel of lenders, to show you what’s out there. These are some of the buy-to-let mortgages listed on Your Mortgage Deals – who supplied this article – on 9th October 2012. We’ve ordered them by rate, showing the ones with the lowest interest rates first.

Latest buy-to-let deals

At the top of the list, there’s a two-year tracker from Abbey, with a rate of 2.75%. You’ll need a deposit of at least 40% to qualify. Overall cost for comparison: 4.24%.

Next, there’s a two-year tracker from Principality Building Society. The rate’s slightly higher, at 2.99%, and again, you’d need a 40% deposit. Overall cost for comparison: 4.99%.

Third in the list, another two-year deal from Abbey – a fixed-rate mortgage this time, with a 3.09% rate. Again, you’d need at least a 40% deposit. Overall cost for comparison: 4.24%.

A buy-to-let mortgage from Godiva Mortgages comes next. At 3.15%, it’s a two-year fixed-rate mortgage that requires a lower deposit (35%). Overall cost for comparison: 4.74%.

Then there’s another mortgage from Godiva Mortgages: a two-year fixed-rate deal with a rate of 3.3%. This one’s also available to landlords with a 35% deposit. Overall cost for comparison: 4.74%.

If you’re looking for something with a higher LTV, Abbey offers a two-year tracker with a maximum LTV of 75%, so you’d need to put down just 25% of the property’s value. Overall cost for comparison: 4.24%.

Economists don’t seem to be expecting any increase in the Bank of England’s base rate anytime in the next few years, so a lot of people who’ve always gone for a fixed rate might now be considering a tracker mortgage. If you’re one of them, just bear in mind that if the base rate does go up, it’ll take your rate up with it…

Your home may be repossessed if you do not keep up repayments on your mortgage.

Subject to status. The actual rate available will depend upon your circumstances. Please ask for an illustration.

 

Home insurance for landlords

If you’re entering into the buy-to-let sector, consider the kind of insurance you’ll need. As a landlord, basic home and contents insurance isn’t going to be enough to cover you for third party risks – the third party being your tenant(s).

You should purchase specialist landlord-insurance, but different insurers offer different levels of cover for different risks. Additional policies can be purchased, depending on the level of cover that you feel comfortable with, and based on what you need.

Some additional insurance for-landlords to consider includes public liability insurance, rent guarantee-insurance, legal expense cover, or unoccupied cover, which we’ll tell you more about here:

Public liability insurance

This kind of insurance protects you in the event you were sued for damage to your tenant’s property, or if your tenant suffered personal injury or illness as a result of living in your accommodation.

Rent-guarantee insurance

Redundancy, illness, divorce – unfortunately these things could happen to almost anyone, including your tenants. If they aren’t able to pay their rent, rent-guarantee insurance could help you to cover the cost until the matter is resolved. This is especially important if you’re still paying the mortgage on the rental property.

Legal expenses cover          

If you became involved in a dispute with your tenant over unpaid rent, damage to the property, a deposit dispute or eviction dispute, legal expenses cover could help you cover costs in the event of a tenant dispute of this nature.

Other things to consider

Some basic landlord policies may cover these things or part of these things or could include additional extras such as cover for the cost, or repairing malicious damage.

You may need a lower level of cover if the property is unoccupied – which may be relevant if you’re doing up the property, or you rent to students who are away for part of the year.

This article was provided by Home & Life.

What to look for in the best landlords insurance policies available

Both experienced landlords and first-time buyers will always be looking for the best landlord insurance policies available. A quick Internet search should deliver you with a series of quotes and potential deals for you to compare. However, what should you look for in a good landlords insurance policy?

Naturally, you will want a policy that provides the cover you need for a price you can afford. When you are shopping online for your policy, make sure you take into account the entire cost rather than the initial charges. Too few excess charges will increase the overall premium, so it is important that you negotiate all the features you want from your policy first.

The best landlords insurance policies should include a loss of rent insurance. If your property should be damaged to the extent that you are losing the income of rent that you would normally take. A good policy will provide you with the financial support to get you through any difficult times.

Similarly, a good landlord insurance policy should give you cover for any accidental damages. Even if you are taking great care of your building as the landlord, you can’t control the accidental damages inflicted by tenants or the weather conditions. Having this sort of cover is a great way of putting your mind at ease about accidental damages.

The best landlord insurance policies should ensure that you are covered for all types of tenant. As a landlord, you don’t get to control who wants to rent your property, so it’s good to have a policy that is prepared to cater for all types of people from all walks of life; making sure that you can get the income no matter who is paying the rent.

When shopping for your quote, remember that the best landlord insurance policies should offer overall cover for each potential problem you could face as a landlord.

How to find budget landlord insurance

As a landlord, you want to make sure your property and source of income is covered against all the problems you may face. There are so many policies available and sometimes it’s very difficult to find budget landlord insurance, but it can be done. How can you find budget landlord insurance cover for your property?

The first thing you need to do is frequently and persistently search online. A simple Internet search can unveil all sorts of deals and quotes that you can cross compare in order to get yourself the cover you need. There are also a number of websites that give you a comprehensive collection of all the quotes available.

By shopping for your insurance deals online, you should automatically save yourself some money through online discount. Many companies offer discounted prices for their policies based on the fact that you have found them online.

Another way to get budget landlord insurance is if you are a returning customer. Some companies will offer a discount on your policy premium from the previous year if you renew with them when it ends. The discount sometimes increases if you buy both buildings and contents cover.

It is also a useful idea to insure multiple buildings at once. This is because some companies offer a multi buy discount for customers who are insuring one or more property. If you have more than one property that you need to insure, then it makes sense to take advantage of any additional discount that you can receive by insuring them all at once.

Remember, it is a legal requirement from insurance companies to provide you with a key fact sheet about their policy and there is nothing to stop you from collecting quotes. Shopping around and frequently comparing is the best way to ensure that you are getting the budget landlord insurance that you want.

Facts about buildings insurance for buy to let

If you are a landlord and own a property, it could be in your best interests to look into purchasing buildings insurance for buy to let. There are a number of facts surrounding the idea of owning buildings insurance, so what are they and what do they mean?

The first thing to consider is that – although it may be in your best interests – purchasing buildings insurance is not required by law. Nevertheless, if your property that you are letting is under a buy to let mortgage, full buildings insurance is most likely going to be necessary.

Purchasing buildings insurance for buy to let does not cover the items and materials that are separate to the building and its foundations. If you require contents cover for the property you are renting, you will have to purchase buy to let contents insurance separately.

Buildings insurance can offer you a great degree of protection from the potential accidents that can occur as a result of infringements on health and safety. As a landlord, it is your responsibility to ensure that your building is safe for tenants, visitors and even passers-by.

If any accident or injury occurs and the quality of health and safety of your building is judged to be the cause, this could spell significant financial difficulty. Having buildings insurance can assist you in covering not only the legal expenses, but in preventing the problem from ever occurring in the first place.

The final fact that you should know about buildings insurance for buy to let is that it does not cover an empty building. By definition in the insurance world, an empty building is a property that is unoccupied for a period of consecutive days. This time limit will be determined by your provider. As a result of this, it may be important for you to look into the purchase of unoccupied property insurance.

Always consider every possible problem when shopping for buildings insurance to ensure that you are prepared for the unexpected.

Buildings insurance for landlords: FAQs

Whether you are an experienced landlord or someone who is new to renting out properties, there may be some questions that you want answered. Here is a compilation of the some of the frequently asked questions about buildings insurance for landlords.

Do I have to have building insurance to rent my property out? The short answer is no. Buildings insurance is not compulsory by law. Nevertheless, it is strongly advised that you invest in some form of cover in the event of a difficult situation arising. One of the biggest reasons for having buildings insurance is that it comes with public liability insurance. This means that any accidents or injuries that occur on your property will be covered by your insurance. You have to ask yourself – do you think you are financially capable of paying for the damages? If the answer is no, then buildings insurance is a must have.

Do I need to have a special type of buildings insurance as a landlord? Buildings insurance for landlords is different to the standard buildings insurance policies. If you are letting your property, a standard policy will decline any claims that you make. Make sure you purchase the insurance that is tailored for landlords who are renting their properties out to tenants to ensure you don’t experience problems.

Can I get buildings insurance if my property to let is empty? This scenario is quite difficult because many companies will refuse to cover an empty property. The loose definition of an empty property is one that is unoccupied for a certain period of consecutive days. For example, some companies will decline you a policy if your property has been vacant for 30 consecutive days. Nevertheless, if you heighten the intensity of your search, you are bound to find a provider that is prepared to cater for empty properties for a longer period of time.