Deregulation Act 2015

The TDS has kindly provided a summary of the Deregulation Act 2015 to assist people in understanding the changes:

The Deregulation Act 2015 came into effect on 26 March 2015. It amends the law to clarify deposit protection requirements following two court rulings.

Superstrike v Rodrigues 2013: This case confirmed that a statutory periodic tenancy is a new tenancy. The court decided that deposits on new statutory periodic tenancies must be protected, and by implication, prescribed information must be served within 30 days of the start of that tenancy, even if requirements for deposit protection had been met at the start of the fixed term.

Charalambous v Ng 2014: The court decided a deposit taken before 6 April 2007 did not need to be protected but a landlord could not issue a valid s21 notice unless the deposit had been protected or returned to the tenant.

The Deregulation Act says:

If the deposit was received before 6 April 2007 and is held against a statutory periodic tenancy, which also began before 6 April 2007:

-          The landlord is NOT required to protect the deposit under the Housing Act 2004.

BUT

-          From 26 March 2015, if the landlord wishes to gain possession of the property under section 21 Housing Act 1988, the deposit must be protected and prescribed information must be served before a valid section 21 notice may be issued.

-          No financial penalty applies for late protection.

If the deposit was received before 6 April 2007 and is held against a statutory periodic tenancy which began after 6 April 2007:

-          Unless the landlord has already done so, the landlord must protect the deposit and serve prescribed information:

o    by 23 June 2015 or; if earlier

o    before a court decides on proceedings under s21 Housing Act 1988 (for possession) or s214 Housing Act 2004 (for failure to protect a deposit)

-          If on 26 March 2015 the tenancy no longer exists or no deposit is being held, the deposit protection requirements are deemed to have been complied with.

If the deposit was received on or after 6 April 2007 and was correctly protected at the time:

-          The deposit does not need to be re-protected nor prescribed information served again on renewal (or at the start of a statutory periodic tenancy) as long as:

o    The tenant(s), landlord(s) and the premises remain the same; and

o    The deposit is held in the same scheme

Prescribed information can include details of a person representing the landlord

The Act confirms that where an agent has protected the deposit on behalf of the landlord, the agent’s contact details may be provided in place of the landlord’s.

Who is affected by these changes?

The law is relevant to any deposit currently held on an assured shorthold tenancy.

It assists landlords who did not re-protect deposits or re-serve prescribed information when a tenancy was renewed or when a statutory periodic tenancy arose. Tenants must still be given revised prescribed information about their deposit if there is a change in tenant(s), landlord(s), premises or the deposit protection scheme.

If as a result of the Deregulation Act a tenant loses a claim relating to deposit protection or loses their challenge to a section 21 notice, the court will not order the tenant to pay the landlord’s costs - as long as the tenant started their court case before 26 March 2015.

Tenancy Deposit Scheme requirements when renewing a tenancy

You may not need to do anything extra to comply with the law. However, depending on your terms of membership, your tenancy deposit protection scheme’s rules may require you to re-protect the deposit on renewal. TDS members must re-protect a tenancy deposit on the renewal of a tenancy when:

-          Using pay as you go protection (TDS for Landlords, DepositGuard, Let Only).

AND

-          There is a new fixed term agreement OR the periodic tenancy has material changes to the original agreement, such as rent or tenant(s) named on the agreement. 

Heat network regulations may affect landlords

The Residential Landlords Association (RLA) has warned that some landlords may be required to notify the National Measurement and Regulation Office (NMRO) regarding their property heating systems by 31st December 2015.

A ‘Communal heating’ situation will typically trigger a need for landlords to provide details to the NMRO.

The RLA hoped these notification responsibilities would only impact institutional landlords, such as university halls and nursing homes. However, it appears they may affect HMO and bedsit property landlords who could be required to send notification of their ‘heating network’ to the relevant authorities.

A landlord must submit notification to the NMRO regarding details about the heating system of the property by 31 December 2015, and if required, install individual meters by 1 April 2016. There will be ongoing duties regarding maintenance and billing.

A landlord is a heat supplier if ALL of the following apply:

·         there is distribution of thermal energy in the form of steam, hot water, or chilled liquids from a central source in a building (e.g. a gas boiler)

·         the thermal energy is used to provide heating, hot water or cooling

·         the building is occupied by more than one final customer

·         the landlord bills more than one occupier for the heat or hot water that that person has used (or a proportion of).

Where the landlord is a “heat supplier” as defined above, the landlord must notify the NMRO by 31 December 2015. The notification must contain certain prescribed information. Although there is no prescribed form for this notification, the NMRO has produced a template that is suitable for this purpose.

The RLA is working with DCLG and DECC to find out just how these new regulations will impact landlords, see what can be done to limit their scope and to ensure there is clarity about what properties will be affected.

Top investment purchase

It can sometimes be hard to find a property to buy that you know will rent out well.  It is therefore advisable to buy a property which has been let previously or is in an area renown for letting well.

So on that note, I introduce this superb four double bedroom end-terrace house in Kings Heath at £250,000.

The property has previously been successfully let for a number of years and is suitable for a large family, sharers or a company let - with so many facilities near by such as excellent schools, supermarkets, retail parks, public transport and access to the M5 there is little wonder why the area is so popular.  If you would prefer to purchase a property with tenants in situ, we have a very similar property that is soon to become available in the same area with tenants in situ.

Please follow the link below for the full details.

http://www.martinco.com/property/for-sale/192826

Investing in Exeter Property

Buy-to-let in Exeter is currently very popular.  We have seen a vast increase in the number of investors contacting our office looking to purchase their first or an additional property.

With the current number of investors looking to buy-to-let and the lack of top rental property on the sales market, it is easy to see why some purchases are made without having the time taken to fully analyse the market to ensure there is longevity in the investment.  We have previously looked into the potential rental returns of property a number of times, however the renovation of property can also provide a large boost to the capital growth of an investment.

There are many stories where investors have got it exactly right, like a property in St Leonards which sold for £178,750 in December 2012 then again for £246,500 following refurbishment just over two years later, giving a gross profit of 37.9%.  Granted they have spent some considerable money on the property and it looks superb, however with an increase of £67,750 there must be a reasonable profit.

On the other hand, at that time in 2012 for around £180,000 you could have bought a 2 bedroom apartment at the Quay or near the city centre in good condition, let it for around £800pcm but still have a value of around the £180,000 mark.  A two bedroom apartment for a similar price to a decent semi, doesn't in hindsight, quite stack up. Although these stories are few and far between, I still see mistakes being made on a day by day basis in Exeter. If you make even a small mistake, it could still prove to be very costly.

So what should you buy in Exeter? One option is a House of Multiple Occupation (HMO). While they can be profitable, they can make things considerably more complex and costly, with the need for an HMO licence, higher levels of wear and tear and so on.  If you look back at some of my previous articles, you will see a lot of interesting facts on which types of properties let well and also, sell well!

Mortgage rates on buy to let are also very low at the moment and for the right property and person you can get rates below 3.9% if you put down a decent deposit of 25%, but the best rates are for deposits of 40%+. Also, the deposit will ensure you have plenty of equity in the property, if the property market stagnates in the future. The important thing to remember is the amount you can borrow is driven by the rental income, so it is vital you can identify a property with a decent yield, that lets easily.

Finally though, if are investing so much time and money in building wealth for you and your family, it is equally important for you to identify ways to protect it. Do not forget, if you spend years building a successful property empire in Exeter, when you are no longer around, your family could face an inheritance tax bill of 40 %, which they would have to pay within six months of the death. In a buoyant market, like now, selling in six months is not an issue, but what if the market was like it was in Exeter between 2008 and 2012, when things took seasons to sell, not weeks. Quite apart from losing nearly half of the assets you built for your family to the tax man, if they had to sell some of your portfolio, possibly at a discount because the taxman wanted his money quickly, it might be wise to consider some life insurance that will offer protection against inheritance tax. 

There are plenty of good advisors in Exeter who can help you with the mortgages and life insurance, we would be able to point you in the right direction for this. We can also help you choose the right Exeter property to buy and we currently have a number of superb properties for sale with tenants in situ so please call us and we can advise you on the latest best buys.

Landlord body outlines changes to S8 and S13 notices

A trade body says new legislation which came into effect this week means there are now strict procedures which landlords must follow when seeking to end an Assured Shorthold Tenancy.

This refers to the two main termination options, Section 8 (usually rent arrears) and the standard Section 21 route to possession.

The National Landlords Association says it is offering via its website the latest version of the Section 8 notice, using the correct wording - this replaces the old wording which, if used, may be thrown out by a judge if a landlord subsequently has to apply for a Possession Order.

The association says any notices served prior to Monday April 6 will still be valid, if the original wording was used and they were served correctly.

There are also changes to the Section 13 notice, typically used to notify a tenant of a rent increase - again the new wording is available on the NLA website. 

The association says that if a landlord’s tenancy does not include a rent review clause, a Section 13 notice should be served if the rent is to be raised. 

‘Help to rent’ scheme for young people proposed by Liberal Democrats

The Liberal Democrats have announced plans to provide government loans for tenancy deposits to help young people to rent their first home.

The party’s proposed “help to rent” scheme would allow people aged 18 to 30 to borrow up to £1,500 (£2,000 in London) from the government to use as a deposit on rented accommodation. The loans would be repaid over a period of either 12 or 24 months.

The party says many young people are struggling to save deposits to rent without help from family members, forcing them to live with their parents for longer. The average rental deposit in the UK is £1,200, usually six weeks of rent.

Leader Nick Clegg, travelling on the Lib Dem campaign bus in south-west England on Thursday, said: You’ve got this generation that is sometimes called ‘the clipped wing generation’, or ‘the boomerang generation’, of an increasingly large numbers of youngsters – I think the estimates are now about 2m people in their 20s and 30s – who simply can’t find the money needed for a deposit to rent a flat or home of their own.

“They simply can’t find the up front costs to move into rented accommodation, so move back or stay with their own parents. That’s obviously unfair on them, because it means they’re just not getting their feet on the rung of the rented property ladder.”

Clegg said the fact that young people were unable to move out of their parents’ homes had a negative effect on the property market.

“It means that couples whose children have grown up are not downsizing as readily asthey might because they have to keep large properties to maintain space for their kids. So we have a very simple idea which is in effect to extend a system of government loans,” he said.

To be eligible for the proposed loans, tenants would need to be aged 18 to 30, in paid employment and not be home owners or seeking social housing tenancy. Once paid off, the money could used for future rental properties. The interest rate would be pegged to the cost of government borrowing (currently approximately 2.5%).

Clegg said the policy would not “cost the government much in terms of year-in, year-out expenditure” and stressed that, as it was a loan, it counted as an asset not a liability, so the loan would not count against the national debt.

“For those parents who want their kids out of their hair, it will give them their own home back and for those parents who want to downsize, it frees them up as well,” said Clegg.

“It’s trying to address the barriers to market entry, the up front costs, much like we are trying to address the up front costs of a deposit on a mortgage.”

All of the main political parties have made substantial offers on housing policy during the general election campaign. The Labour party has pledged to introduce three-year tenancy agreements with strict rules to make it more difficult to evict tenants, while the Conservative party have committed to a help-to-buy ISA, announced in the March budget.

The Lib Dems have previously announced proposals to build 300,000 new homes a year and a “rent to own” scheme to help first-time buyers get on the property ladder by renting their way to ownership.