Lettings Market Updates & Property Advice!

Welcome to the September edition of the Greenstone newsletter. This month we turn our focus to the lettings market to provide an update on the recent changes. First up this month we share 5 essential property management tips to help you in the ever changing world of regulation. Next up we provide an update on the eviction ban extension and the mandatory electrical safety checks.

The governments furlough scheme is coming to an end in October, so we look into mortgage holidays and how they could reduce any concerns of financial difficulty but should also be approached with caution.

We hope you enjoy this months edition. We also provide property tips, insights, and updates on our social media channels which you can click to follow at the end of our newsletter. As always, please get in touch if you have any property queries.

Best regards

Lewis Green, Director

Five essential property management steps for landlords

The UK rental market has shown incredible resilience over the course of lockdown, with the government’s announcement of its stamp duty holiday causing a surge in activity from buy-to-let investors.

Whether it’s your first time letting a property or you’re already an established landlord, we’ve outlined the five essentials steps you need to take to fulfil your obligations and provide quality housing for your tenants.

Inform your lender

If you haven't already been granted permission from your mortgage provider to let your property, you'll need to inform them as they may impose conditions or actions for you to complete.

It's also a good idea to update any existing insurance policies, as specific landlord cover will give you more security should anything go wrong during the tenancy, whilst protecting you when the property's left empty for longer periods of time.

Get your home tenant-ready

From simple tasks like cleaning your property to meeting industry requirements, it's crucial to get your property tenant-ready.

If you have selected a fully-managed package, your lettings agency should take care of items like your Energy Performance Certificate (EPC), gas and electrical safety certification, and inventory for you.

With legislation constantly changing, a fully-managed service ensures your compliance, with these items routinely reviewed and made accessible to your tenants.

This year has seen the introduction of substantial changes within lettings, including for minimum energy efficiency standards (MEES), mandatory electrical safety checks, and the extension of the Tenant Fees Act.

Attract suitable tenants

Void periods can be costly for landlords, with an investment of time and resources needed to find tenants that meet your short or long-term property plans and requirements.

A quick, successful let requires having a winning property marketing strategy that showcases your home's key characteristics and features – which is something we’ve honed over the years for our landlords.

Once you’ve started receiving interest from applicants, it’s important to conduct viewings and credit checks, where you’ll be able to ascertain if they're financially viable.

Safeguard your property

You stand to lose £3,000 by not having the right landlord insurance in place.

Accidental damage is one of the most expensive claims to compensate for, yet 57% of landlords don't even request it as part of their insurance package.

Here are our recommendations for the policy types that you should consider:

Landlords' insurance – first and foremost, you'll want to have a policy that cover items like buildings insurance and accidental damage.

Contents cover – this will depend on if your rental is furnished or unfurnished, with the possibility that your tenants will need prompting to organise a policy for their own possessions.

Landlords' liability – often an added extra for student or social housing, this gives you more security in the event of injury.

Rent Guarantee Insurance (RGI) – for loss of rental income during periods your property is empty or instances of rent arrears.

Home emergency cover – in emergency repair cases, this will help with costs and ensure there's a qualified tradesperson available 24/7.

Property management on a day-to-day basis

Due to COVID-19, one in nine have fallen behind on their household bills, including 1.2 million tenants on rent payments.*

The government's decision to extend the ban on evictions for another four weeks – as well as their introduction of six-month notice periods – will have significant consequences for the country's two million private landlords in the coming months.

Should your tenants face financial difficulty, we can act as the intermediary to identify a resolution and repayment scheme – where appropriate.

What you need to know about mortgage holidays

It’s estimated that one in six Brits have taken out a mortgage holiday since the start of lockdown – on average, suspending payments of £755 each per month.

Initially introduced back in March and then later extended, the break on mortgage payments has proven to be a valuable lifeline for many households during the last few months.

With the government’s furlough scheme ending in October, there’s a concern that the number of homeowners and tenants facing financial difficulty will increase further.

Across the country, one in nine are currently behind on their household bills, which includes essential items such as rent, water, energy, council tax and credit card repayments.

Although the mortgage holiday deadline is open until October 31st for new applicants, experts are expressing caution before taking this option and urging for alternative solutions – where possible.

Miles Robinson – at online mortgage broker, Trussle – warns that some borrowers may be unaware of the “true cost” of taking a break from monthly payments, which may result in huge increases overall and potential difficulties in the future applying for new loans.

“The banks were very under-resourced when they were handing them out and people were allowed to essentially self-certify whether they needed one or not.”

The Financial Conduct Authority has been advising firms to help mortgage customers by offering a range of support options, such as waiving or reducing payments, once we’ve reached the end of the official mortgage holiday on the 31st October.

If you need guidance on mortgage restructuring, as well as any long-term or short-term measures in place for COVID-19 support, we’d recommend contacting your lender directly.

You can also talk to us for more information.

The eviction ban extension for tenants and landlords

In a move that was intended to “support renters over winter”, Housing Secretary – Robert Jenrick – announced key changes to regulations surrounding tenancy evictions.

The ban on evictions, which has now been extended until the 20th of September, will mark a six-month period in which no tenant has been legally evicted at the height of the pandemic.

From September 21st, it will be a requirement for landlords to provide information on a renter’s financial circumstances in relation to the coronavirus when making possession claims regarding rent arrears.

Alongside this, landlords will now need to provide a notice period of six months when seeking possession of their property. This will apply up to March 2021.

With courts prioritising hearings based on the severity of each individual case, coming to an agreed solution with your tenants would be the preferred approach to take, where rent payments are not being met.

Of course, exceptions have been outlined for the following instances:

• Anti-social behaviour – four weeks’ notice
• Domestic violence – two weeks’ notice
• Rent arrears totalling six months – four weeks’ notice

Could there be a better solution?

Given that the vast majority of private landlords (94%) are renting just one or two properties, this could have significant consequences on income revenue for these individuals.

In a recent letter to the Prime Minister, the National Residential Landlords Association have called for reconsiderations to be made to protect the private rented sector and enable landlords to keep offering accommodation to UK renters.

They wrote that: “failure to provide any direct financial support for the sector during the pandemic means that many landlords will be forced to seek money claims against renters building arrears. This would leave tenants' credit scores in tatters.”

The NRLA put forward the argument that the only way to untangle the conflict with COVID-19 related rent arrears is to offer interest-free, government-guaranteed hardship loans to tenants.

As this has already been introduced in Wales, the NRLA argue that it would be the best solution to “sustain tenancies and remove any risk of eviction as furlough is removed”.

We're doing our utmost to protect and support our landlords and tenants at this time, contact us for more information on how we can help you.

Managing the rental bounce and your mandatory electrical checks

Since June this year, it has been made a legal requirement that an EICR report must be carried out before any new tenancies begin, with electrical installation inspections conducted at least every five years from that point.

With the surge in demand for rental properties set to increase even more than what we’ve experienced this summer, property certificate providers say landlords need to be prepared to deal with the influx in demand.

Following the reopening of the property market back in May, there has been a surge in demand from tenants. This growth in activity looks like it is going to continue to develop, as there have been sustained positive reports throughout June, July and August.

A recent survey from RICS found that tenant demand has recovered to +35% in July, bouncing back from -44% the previous quarter. Meanwhile other research found that the number of tenants registering with letting agencies reached a record high in June!

Almost three in ten letting agents saw landlords increasing the cost of rent in June as a result from the high demands.

With landlords processing a higher number of tenancies, this also means more administration work needing to be carried out with new and challenging compliance measures to meet.

The most recent change affecting new tenancies is the introduction of The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 on July 1st.

There are a range of other things for landlords to follow, including providing copies of EICR reports to their new tenants.

We would recommend having access to a large pool of electricians, as this is going to be crucial to meet the high demand. An efficient online management system would also help landlords keep organised and up-to-date with each tenant.

Mandatory electrical checks have been introduced for a reason and it is to ultimately to protect your tenants and your investments. Managing this process through trusted suppliers and using highly qualified electricians is in the interest of all stakeholders.

If you’d like to talk to us about your compliance, contact us today.