CMP (Client Money Protection)
This was made mandatory for all Letting (Estate) agents from the 1st April and must be displayed in an agents front window and on their websites. This has been a requirement for all Belvoir offices for many years but some other agents may still not have complied.
From the 1st June the maximum deposit for any tenancy will be 5 weeks rent. Currently many will request 1.5x a months rent. Also if a current tenancy is renewed for another fixed term after this date you will need to correct the deposit held to a maximum of 5 weeks. The other issue this will raise is where an extra pet deposit is taken in ‘Pet Friendly’ properties. As the deposit is now capped at 5 weeks rent it is likely that pet friendly properties will request a higher rent then the price advertised if there are pets.
EPC’s ( Energy Performance Certificates ) – A number of properties in Dunstable and Leighton Buzzard will have expired EPC’s. Does yours need renewing?
EPCs were introduced in England and Wales on 1 August 2007 as part of Home Information Packs (HIPs) for domestic properties the requirement for HIPs was removed in May 2010 but the requirement for EPCs remained.
The requirement for rental properties to have an EPC was introduced on the 1st October 2008 and the certificates are valid for 10 years. This now means that EPC’s obtained from October 2008 may now need to be renewed as their 10 year anniversary arrives, but only if you are advertising the tenancy to re-let (or sell). If there are tenants in the property when the certificate runs out you do not have to renew until they leave and you advertise the property again.
What is an EPC ?
Energy performance certificates present the energy efficiency of dwellings on a scale of A to G. The most efficient homes – which should have the lowest fuel bills – are in band A. The certificate includes recommendations on ways to improve the home’s energy efficiency to save money.
EPC’s are a result of a European Union Directive relating to the energy performance of buildings, as transposed into British law by the Housing Act 2004 and The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007.
The energy survey needed to produce an EPC is performed by an assessor who visits the property, examines key items such as loft insulation, domestic boiler, hot water tank, radiators, windows for double glazing, and so on. The assessor then inputs the observations into a software program which performs the calculation of energy efficiency. The exercise is entirely non-invasive, so the software will make assumptions on the insulation properties of various elements of the property based on age and construction type. The assessor has the ability to over-ride these assumptions if visual or written evidence is provided to support the presence of insulation which may have been subsequently installed.
A further objection is often made concerning the quality of inspection made to produce the certificate. It cannot be invasive, so the inspector cannot drill walls or ceilings to determine the state or even existence of any insulation. The Energy Assessor can either assume the worst (no insulation present) or rely on the householder to produce documentary evidence on what may have been installed. This can produce uncertainty about the validity of the output from the assessor's analysis.
New regulations for F & G rated properties
As from the 1st April 2018 there was a requirement for any properties rented out in the private rented sector to normally have a minimum energy performance rating of E on an Energy Performance Certificate (EPC). The regulations came into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020. It will be unlawful to rent a property which breaches the requirement for a minimum E rating, unless there is an applicable exemption. A civil penalty of up to £4,000 will be imposed for breaches.
For most landlords this will mean that they will no longer be able to rent out a property with a rating of F or G after April 1st 2018. As such landlords with properties in this EPC bracket.
Some Dunstable & Leighton Buzzard landlords still do not comply with the regulations regarding Smoke alarms and Carbon Monoxide Detectors in rental properties !
The Smoke and Carbon Monoxide Alarm (England) Regulations 2015 came into force on the 1st October 2015 and 3 years later I am still surprised at the number of properties I am asked to manage for a private landlord where I find they are not aware or have not complied with the regulations and therefore risk a £5000 fine and more to the point the safety of their tenants.
Before the 1st October 2015 there was no requirement for a smoke alarm to be fitted in a residential rental property unless it was a HMO although I always insisted on at least one smoke alarm being fitted in every property we rented for a landlord. Sometimes I would have to fit them myself on the day a tenant moved in.
The new legislation was very welcome and the requirement is for a smoke alarm to be fitted on each floor of a property. These do not have to be hard wired into the electrical system although all new properties built since 1992 and fi you have had any building work carried out requiring Building Regulations such as an extension it has been a requirement.
At the time we were expecting the installation of Carbon Monoxide (Co2) alarms to be included in the legislation for all properties with gas appliances. When the regulations were announced the requirements for Co2 alarms were only for properties with solid fuel appliances such as log burners and open fires which I feel was a serious shortfall in the legislation..
When I first meet a landlord at a property with gas appliances I will suggest the installation of a Co2 alarm for the tenant’s safety if there are gas appliances/boilers. I do expect that within the next 2 years the installation of Co2 alarms will become mandatory.
So who is responsible for the Smoke Alarms before and during a tenancy?
The legislation states that the landlord/agent must have proof that the smoke alarms were installed and working on the day the tenancy started. Some agents will have an inventory carried out before a tenancy sometimes days before and on the inventory it will state that there are smoke alarms and they are working. This is not enough to satisfy the legislation and when a tenant moves into one of our properties we meet them at the property on the day to take meter readings, hand over the keys and check the smoke alarms all of which the tenants confirm on the checkin sheet.
When the tenants have moved into a property it is there responsibility to test the smoke alarms and change the batteries when required. I will check the smoke alarms are still functioning when I carry out a visit to a property and am surprised at how many tenants remove batteries when the alarms start beeping because the battery is running low. They then close the alarm cover and forget to replace the battery. I try and educate them to leave the cover open so they remember to replace the battery and to do so as soon as possible for their own safety. I also carry spare batteries so before I leave a property being inspected I can replace the battery myself and leave knowing that the smoke alarms are working again. Of course if the smoke alarms are faulty it is the landlords responsibility to replace them.
I have been told that in Australia before you can sell a property you must have a hard wired smoke alarm fitted.
Where should you install carbon monoxide detectors, particularly how high off the floor?
Carbon Monoxide Alarms can be placed at any height on a wall or ceiling. It is a common misunderstanding that Carbon Monoxide Alarms must be placed near the ground to accurately detect levels of CO. In truth, Carbon Monoxide is roughly the same weight as air, and distributes evenly throughout a room. This means a CO detector can be placed at any height on a wall or ceiling. It is important to keep in mind that the CO Alarm must be placed in an area that allows for the siren to be heard. As Carbon Monoxide moves freely through the air, the Alarm must not be located near a ceiling fan, or blocked by furniture in order to detect CO levels accurately. Be sure to keep your Carbon Monoxide Alarm clean, and out of the way of children or pets.
If you would like me to check that you are compliant with all legislation including smoke alarms, Co2 alarms, electrical safety, deposit money, Right to Rent checks etc please email me at firstname.lastname@example.org
Warning for Dunstable or Leighton Buzzard landlords with shared accommodation. You may now require a HMO Licence
Many landlords who have been renting out a property with possibly 3 - 4 bedrooms to sharers without the requirement for a HMO licence are not aware of the new legislation which came into force on the 1st October 2018.
This was highlighted to me last Thursday when I carried out a viewing at a 3 bedroom property we have in Dunstable. The viewer turned out to be an investor looking to turn the house into shared accommodation using a ‘Rent to Rent’ strategy. This could include couples sharing the double bedrooms.
What is ‘Rent to Rent’ ?
This is an investment strategy which has increased in popularity in the last 5 years as the investor does not have to buy a property to be able to rent it to tenants. Usually a 3 bedroom house with a separate dining room and lounge is required as the investor is paying to rent a 3 bedroom house, but can have 4 bedrooms by using the dining room as the 4th bedroom.
How does this work ?
From 1st October 2018 Tenants living in shared houses in England could face eviction or increases in rent because of changes to government rules covering shared accommodation which have requires more HMO’s to require a licence.
Under the old licensing scheme HMOs that were three or more storeys and occupied by five or more people forming at least two separate households were required to be licensed. The new mandatory licensing of HMOs has been extended so that smaller properties (i.e. any storey height) that house five or more people in two or more separate households will also require a licence.
What the HMO changes will mean for landlords
Landlords who suddenly find that they now have a licensable HMO which has extra costs associated with it are likely to look to pass on that additional cost in the price, meaning tenants will pay more in rent.
I have taken the last few weeks to assess what is currently happening in the UK housing market and economy at the moment. It would seem to me that the with the rental/sales market the way it is there is more to be gained from ensuring that landlords are making the most out of their current properties whilst looking for opportunities in a subdued sales market.
There are many mixed messages coming out at the moment:
I worked in Architecture for almost 30 years and we knew that every 10 years there would be a housing/construction slowdown. The last one in 2008 partly as a result of the Financial Crash which was mostly down to borrowing and bad mortgages on overpriced property. 10 years later with property prices again having reached unaffordable levels it seems the blame for the housing slowdown must be on Brexit ?
When Brexit does happen it is likely to affect many areas of our lives and these could be positive and negative, no one knows yet, but right now I believe a slowdown in the housing market is due to affordability and the need for houses to become more affordable from the bottom up.
It is evident that whatever happens in the London Housing Market then starts to ripple out to the rest of the country and it is a ripple. The London Market has been static/in decline for almost 2 years and we began to feel that in Dunstable and Leighton Buzzard about a year ago. This is now being felt in the midlands whilst further north and in areas of Scotland they are still in a rising market in many areas.
The Dunstable and Leighton Buzzard Housing market is currently very static and some would say a house price correction is taking place as you see many properties on the market for many months and having their asking prices reduced.
Is this a bad thing? Of course not ! The house prices in Dunstable and Houghton Regis had increased by eye watering levels over the last few years and this isn’t sustainable and was always going to come to a stop.
So what now ?
If you bought your house as a home it is still your home and you make it that. If you bought a property recently as an investor it should be a 10 year investment so looking at housing market cycles you should be ok too unless you were expecting capital gains on the property in the short term.
If you are a landlord investor you need to make sure your property is making a healthy return on your investment and that you are staying on the right side of any current and new legislations covering the rental sector.
I am still surprised weekly when talking to landlords and investors about their properties at how many are falling foul of the law. Usually I am told they are too busy with their own lives to make sure their properties and procedures are compliant and don’t have an agent to take care of this for them. In the last week I have met 2 landlords who fell foul of the basic requirements. One who didn’t have the required smoke alarms and the other who didn’t have a tenants deposit registered with a Deposit Scheme.
In the coming weeks I will produce some articles which will focus on the following topics that are a mix of current legislation that landlords should be aware of and new/upcoming legislation.
There is good news for Leighton Buzzard buy to let landlords as ‘top of the range’ well-presented properties are getting really decent rents compared to a year ago however, this rise in rents is thwarting many potential first time buyers from saving for both a deposit and money for a rainy day. On top of this, there is also a shortage of Leighton Buzzard homes coming on the market thus adding fuel to the slowdown and affecting not just Leighton Buzzard first time buyers but also those going up the housing ladder.
Whilst it is true that the Government’s initiatives, targeted at improving the supply of homes built and helping first time buyers obtaining necessary funding, are starting to work (albeit slowly), I also believe that to boost more existing home-owners and their properties onto the market, we as a Country, need to see a better focus placed on those looking to downsize (i.e. the mature generation).
If we took away some hurdles to home owners downsizing, such as removing stamp duty for those downsizers (as was done for first time buyers last year), together with encouraging even more first-time buyers with 100% mortgages to buy the smaller properties, this would in turn release more mid-range properties onto the market, which subsequently would encourage more mature homeowners to downsize from their bigger properties to buy those mid-range properties - thus completing the circle.
Looking at the most recent set of data from the Land Registry for Leighton Buzzard (the LU7 postcode in particular), the figures show the indifferent nature of the current Leighton Buzzard property market.
Only 579 Leighton Buzzard (LU7) Homes changed hands in the last 6 months
Leighton Buzzard property values and transactions continue to be sluggish, and the monthly peaks and troughs of house prices and properties changing hands doesn’t mask the deficiency of suitable realistically priced property coming onto the Leighton Buzzard property market, meaning the housing market is slowly becoming inaccessible to some would-be home owners.
Looking at what each property type is selling for in LU7 (note the data from the Land Registry is always 4/5 months behind) makes interesting reading ….
One must remember these are the average prices paid, so it only takes a run of a few expensive or cheaper property types (as can be seen with the variance in the Semi Detached and Apartments in the table) to affect the figures..
Looking at the numbers of properties for sale … I looked at my research for early Summer 2008, and at that time, 790 properties were on the market for sale in Leighton Buzzard.. and when I did my research on this article today, just 312 properties for sale.. a drop of 61%.
The Government needs to seriously consider the supply and demand of the UK property market as a whole to ensure it doesn’t seize up. It needs to do that with bold and forward-thinking plans but, in the meantime, people still need a roof over their head, so as local authorities don’t have the cash to build new houses anymore, it’s the job of Leighton Buzzard landlords to take up the slack. I must stress though, I have noticed a distinct ‘flight to quality’ by Leighton Buzzard tenants, who are prepared to pay top dollar for an exceptional home to rent. If you want to know what tenants are looking for and what type of things you as a Leighton Buzzard landlord need to do to maximise your rental returns – drop me a line.
Dunstable & Leighton Buzzard Property Values (were) 7.3% higher than year ago – What’s the PLAN to fix the Dunstable & Leighton Buzzard Property Market?
It’s been over 18 months since Sajid Javid, the Tory Government’s Housing Minister published the White Paper “Fixing the Broken UK Housing Market”, meanwhile Dunstable & Leighton Buzzard property values continue to rise at 7.3% (year on year for the council area) and the number of new homes being constructed locally bumps along at a snail’s pace, creating a potential perfect storm for those looking to buy and sell.
The White Paper is important for the UK and Dunstable & Leighton Buzzard people, as it will ensure we have long-term stability and longevity in property market as whole. Dunstable & Leighton Buzzard homeowners and Dunstable & Leighton Buzzard landlords need to be aware of these issues in the report to ensure they don’t lose out and ensure the local housing market is fit for purpose. The White Paper wanted more homes to be built in the next couple of decades, so it might seem counter-intuitive for existing home-owners and landlords to encourage more homes to be built and a change in the direction of housing provision – as this would appear to have a negative effect on their own property.
Yet the country needs a diversified and fluid property market to allow the economy as whole to grow and flourish ... which in turn will be a greater influence on whether prices go up or down in the long term. I am sure every homeowner or landlord in Dunstable & Leighton Buzzard doesn’t want another housing crisis like we had in 1974, 1988 and most recently in 2008.
Now, as Sajid Javid has moved on to the Home Secretary role, the 17th Housing Minister in 20 years (poisoned chalice or journeyman’s cabinet post) James Brokenshire has been given the task of making this White Paper come alive. The White Paper had a well-defined notion of what the issues were.
The first of the four points brought up was to give local authorities powers to speed up house building and ensure developers complete new homes on time. Secondly, statutory methods demanding local authorities and builders build at higher densities (i.e. more houses per hectare) where appropriate. The other two points were incentives for smaller builders to take a larger share of the new homes market and help for people renting.
However, lets go back to the two initial points of planning and density.
For planning to work, we need a robust Planning Dept. Looking at data from the Local Government’s Association, in Central Bedfordshire, the council is above the regional average, spending £41.60 per person for the Planning Authority, compared the regional average of £36.50 per head – which will mean the planning department should have no problem meeting those targets.
However, 72% of planning applications are decided within the statutory 8-week initial period, below the regional average of 86% (see the graph below). I am slightly disappointed and also pleased with the numbers for our local authority when it comes to the planning and the budget allowed by our Politician to this vital service.
(2) Density of Population
3.6 people live in every hectare (or 2.471 acres) in Central Bedfordshire
It won’t surprise you that 154,109 of 254,381 Central Bedfordshire residents live in the urban conurbations of the authority, giving a density of 13.4 people per hectare (again – much lower than I initially thought), whilst the villages have a density of 1.7 people per hectare.
I would agree with the Governments’ ambition to make more efficient use of land and avoid building homes at low densities where there is a shortage of land for meeting identified housing needs, ensuring that the density and form of development reflect the character, accessibility and infrastructure.
It’s all very good building lots of houses – but we need the infrastructure to go with it.
Talking to a lot of Dunstable & Leighton Buzzard people, their biggest fear of all this building is a lack of infrastructure for those extra houses (the extra roads, doctors surgeries, schools etc.). I know most Dunstable & Leighton Buzzard homeowners and landlords want more houses to be built to house their family and friends ... but irrespective of the density ... it’s the infrastructure that goes with the housing that is just as important ... and this is where I think the White Paper failed to go as far as I feel it should have done.
Interesting times ahead I believe!
Nearly 3 babies have been born for every new home that has been built in Central Bedfordshire since 2012, deepening the Dunstable & Leighton Buzzard housing shortage.
This discovery is an important foundation for my concerns about the future of the Dunstable & Leighton Buzzard property market - when you consider the battle that todays twenty and thirty somethings face in order to buy their first home and get on the Dunstable & Leighton Buzzard property ladder. This is particularly ironic as these youngsters’ are being born in an age when the number of new babies born to new homes was far lower.
This will mean the babies being born now, who will become the next generation’s first-time buyers will come up against even bigger competition from a greater number of their peers unless we move to long term fixes to the housing market, instead of the short term fixes that successive Governments have done since the 1980’s.
Looking at the most up to date data for the area covered by Central Bedfordshire Council, the numbers of properties-built versus the number of babies born together with the corresponding ratio of the two metrics …
The simple fact is we are not building enough properties. If the supply of new properties is limited and demand continues to soar with heightened divorce rates, i.e. one household becoming two, people living longer and continued immigration, this means the values of those existing properties continues to remain high and out of reach for a lot of people, especially the blue collar working families of Dunstable & Leighton Buzzard.
Looking at some recent statistics released by the Government, the ratio of the lower quartile house prices to lower quartile gross annual salaries in Central Bedfordshire Council has hit 11.15 to 1.
What does that mean exactly and why does it matter to Dunstable & Leighton Buzzard landlords and homeowners?
If we ordered every property in the Central Bedfordshire Council area by the value of those properties, the average value of the lower quartile properties (i.e. lowest 25%) would be £230,000. If we then did the same, and ordered everyone’s salary in the same council area, the average of the lowest quartile (lowest 25%), the average salary of the lowest 25% is £20,634 pa, thus dividing one with the other, we get the ratio of 11.15 to 1.
Assuming there is one wage earner in the house, the chances of a Dunstable & Leighton Buzzard working family being able to afford to buy their own home, when it’s over eleven times their annual salary, is very slim indeed. The existing affordability crisis of people wanting to buy their own home is the unavoidable outcome of the decade on decade failure to build enough homes to keep up with demand. Nevertheless, improving affordability is not a case of just constructing more homes. Central Bedfordshire Council needs to ensure more properties are not only built, but built in the right locations and of the right type and at the right price to ensure the needs of these lower income working families are met, because at the moment, they presently have few options apart from the private rental sector.
Looking at the historic nature of the ratio, it can clearly be seen in the graph below that this has been an issue since the mid 2000’s. Previous figures from the late 90’s to mid 2000’s (South Bedfordshire Council) were significantly lower.
However, if one looks at the historic data, those on the bottom rung of the ladder (those in the lower quartile of wage earners) used to be housed by the local authority instead of buying. However, the vast majority of council houses were sold off in the 1980’s, meaning there are much fewer council houses today to house this generation.
Many of the lower quartile working class families were given a lifeline to buy their own homes in middle 2000’s, with 100% mortgages, but the with the credit crunch in 2009, that rug (of 100% mortgages) was rudely pulled from under their feet. You see it is cheaper to buy than rent ... it’s the finding of the 5% deposit that is the challenging issue for these Dunstable & Leighton Buzzard working class families. So unless the Government allow 100% mortgages back, the fact is, demand for rental properties will outstrip supply.
In the long term, to alleviate that, I would suggest the Dunstable & Leighton Buzzard community hold their local politicians at Central Bedfordshire Council to account for the actions they could take to ensure the affordability of housing and the extent to which they work with private developers and housing associations and aggressively use the planning tools at their disposal to safeguard the local community getting the new households we need. Central Bedfordshire Council could make certain parcels of residential building land for private rented development only, eliminating the opportunity of the land being bought to develop large executive homes, which do not solve the current problem.
Yet in the short term, all this means is demand for rental properties will continue to grow, keeping Dunstable & Leighton Buzzard house prices high and Dunstable & Leighton Buzzard rents high.
A noteworthy number of buy to let landlords in Britain plan to buy more properties over the next year notwithstanding the frustrations, challenges and seismic changes in the private rented sector. According to Aldermore, the specialist Buy To Let lender, their research shows around 41% of portfolio buy to let landlord’s objective is to grow their buy to let portfolio (Portfolio landlords are landlords that own more than one property).
So, I thought, “Are Dunstable & Leighton Buzzard landlords feeling the same?” If so, if these numbers were applied to the Dunstable & Leighton Buzzard private rental market, what sort effect would it have on the Dunstable & Leighton Buzzard property market as whole?
Talking to the landlords I deal with, most are feeling quite optimistic about the future of the Dunstable & Leighton Buzzard rental market and the prospect it presents notwithstanding the doom and gloom prophecies that the property market will shrink. Many of those Dunstable & Leighton Buzzard landlords who are looking to enlarge their portfolio are doing so because they still see the Dunstable & Leighton Buzzard rental market as a decent investment opportunity.
With top of the range Bank and Building Society Savings Accounts only reaching 1.5% a year, the rollercoaster ride of Crypto currency and the yo-yoing of the Stock Market, the simple fact is, with rental yields in Dunstable & Leighton Buzzard far outstripping current savings rates, the short term prospect of a minor drop in property prices isn’t putting off Dunstable & Leighton Buzzard landlords.
The art to buying a Dunstable & Leighton Buzzard buy to let investment is to buy the profit on the purchase price, not the anticipation of the future sale price.
No matter what the historical economy has thrown at us, with the global meltdown in 2008/9, dotcom crash of 2000, ERM in 1992, the three day week, oil crisis and hyperinflation in the 1970’s (the list goes on) ... the housing market has always bounced back stronger in the long term. That’s the point ... long term. Investing in buy to let is a long-term strategy. The simple fact is, over the long term with the increasing demand for rental properties, predominantly among Millennials as many cannot afford to get on the property ladder, and with councils not building enough properties of any kind, many youngsters are having to resort the private rental market for their accommodation needs.
So, what if I look at the numbers involved in Leighton Buzzard?
There are 367 landlords that own just one buy to let (BTL) property in Leighton Buzzard and 798 Leighton Buzzard landlords, who are portfolio landlords. Between those 798 Leighton Buzzard portfolio BTL landlords, they own a total of 1,675 Leighton Buzzard BTL properties and they can be split down into the size of landlord portfolio in the graph below….
If I apply the Aldermore figures that means 327 Leighton Buzzard landlords have plans to expand their BTL portfolio in the coming year or so.
However, the Aldermore Research also showed that 8% of private landlords intended to reduce the number of properties they own. They put this down to continuing Government intervention in the housing market (as many landlords mentioned too many limitations and higher taxation) while some believed that tenants are excessively protected to the disadvantage of the landlord.
I would say there is no repudiating that the buy to let market has taken a bit of a beating, thanks to a plethora of Government regulation, new mortgage underwriting rules in 2014 and George Osborne’s tax changes. Yet there still remains an overall consciousness of optimism among the vast majority of Leighton Buzzard buy to let landlords. Despite these latest changes, many landlords still view buy to let as a good investment, as long as you buy right and expand your portfolio taking into account the second rule of buy to let … assess your position on the ‘buy to let seesaw’ of capital growth and yield.
Daniel Bourke is the owner of Belvoir Lettings Dunstable and in his previous career in Architecture he was an Associate in a leading London Architectural practice