The Property Unleashed Podcast
The Property Unleashed podcast hosted by Mark Fitzgerald is for property investors looking to build property portfolios and Businesses using different creative investing strategies as well as HMOs, Serviced Accommodation, BRRR, Flips and BTLs, We are helping others live the life they desire through Property.
The Property Unleashed Podcast
Practical Landlord Compliance For May 1 Changes
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
VALUABLE RESOURCES:
Let me help you build your property business, Check out how I can support your investing now.
- Visit https://www.thepropertyunleashed.com/home
- My Property Investing Community called Property Education To Action, This is the best place to achieve your property goals and build the life you desire. https://educationtoaction.com
- Apply here: thepropertyunleashed.com — click Inner Circle
- Supportive Living help www.socialspaces.uk
- “Free Goal Setting Masterclass: Build Your Life In Five Days”
- “If you’ve enjoyed these episodes, leave us a five-star review”
- https://www.facebook.com/groups/816926952556608 to meet like-minded property investors and be a part of the community.
CONNECT WITH ME:
Facebook: https://www.facebook.com/mark.fitzgerald.7921
Instagram: https://www.instagram.com/markfitzgeraldentrepreneur/
Linkedin: https...
Welcome And Monthly Lettings Update
SPEAKER_00Hello and welcome to this month's lettings update with the lovely Allison and Anthony McMillan. Great to have you both on as always. How are you both?
SPEAKER_01Fantastic. Sunshining weather. Come on, we're loving it. The weather's got a little bit nicer now, which is lovely.
SPEAKER_00Good stuff, good stuff. So I know you've got an action packed session ready to share with us here. So I'll let you guys take it away.
SPEAKER_01Fantastic. So Alison, over to you.
Renters Rights Act Phase One Rules
SPEAKER_02Yeah. So just a bit of an update on the Renters Rights Act because we are approaching the first deadline or the first phase introduction of that. So going through some of the things, hopefully, have you got properties at the moment, you guys that are on here? Or yeah. So some bits and pieces that you need to do and need to be aware of. So first thing on the list current tenancies, you don't need to do a new tenancy agreement unless you have no written agreement in place already. So if you've got a written agreement in place, there's no obligation to give a new tenancy agreement. But you do need to serve the government guidance. So they have released that last month. Um, it's a download that you can get off the government website. And I can't remember what it's titled, but it's like the guidance for tenants. So that needs to be served. And you can do that either. Ideally, we want to have proof that we've served it. So if you're serving it by hand, I'd suggest getting the tenant to sign for it. If you're posting it, then obviously get photos, time and date stamped photos of you posting it.
SPEAKER_01One thing I will say if you've got an iPhone, there are apps that you can download for free where you can date stamp, I think, up to 10 photos. Uh it's like a date stamper app. It's a black background with an orange on the front of it, I think, if I recover rightly. But anything and everything you do, as I will come on to as well with a number of other things. Prove everything that you've done, date stamping app on your phone, that you can do 10 photos at a time, and it's free, a free app, as I understand, is very much worthwhile.
SPEAKER_02And then you can also send it via email. They have said text message as well, but it depends what your tenancy agreement says. So if your tenancy agreement says that you can serve notices via email, then I'd say you're all good to go and do it via email. If you haven't got that clause in there, then I would cover yourself and do it by post or hand delivery. And to kind of just go along with what your tenancy agreement says there. They do say you can serve it by text message and WhatsApp, but I prefer a little bit more formal in that respect.
SPEAKER_01So I think I think with this one, like when you're issuing notices, if you do it in multiple directions, that's a way of wording it, send it by email. But if you want to deliver it and it's not too out of your way, deliver it and post it through the letterbox and get date stamped photos of it. So you've done because, like, for example, if I'm going to court and issuing notices, I will send it by email electronically, but I will also deliver it by hand and have date stamped photos of my delivery. So again, proving you've done what you've done.
Serving Guidance And Proving Delivery
SPEAKER_02If you have an active possession claim going through, so if you've served as section 21 or plan to do so before the 30th, or you've got a section eight claim going through, don't serve that guidance yet.
SPEAKER_01It's really important. Really important.
SPEAKER_02Your contract at the moment is staying as an AST because you're going through a possession claim. In the event that you're not successful, then you have a month from that decision date to serve that notice. So don't serve it if you've got an active claim going through. And that's the guidance from National Residential Landlaws Association. And then any tenancies that are starting on the 1st of May or onwards, you need to have an APT, so an assured periodic tenancy agreement, as opposed to what you've probably got at the moment, which is an AST. So there are certain wordings and things that you need to make sure are included. So I wouldn't recommend trying to write your own. I'd go go through the National Residential Landlords Association or a Letting Agency and make sure you're covered in that respect.
SPEAKER_01But if you've got an agent management your tenancies, do dig into them and make sure they're doing these things. How are they informing their tenants with regards to this documentation? And also are they updating their tenancy agreements as well? And also making sure that if you you have got a live claim at the moment that they're not being issued this particular new legislation booklet as well.
SPEAKER_02Yeah, I mean, in terms of the guidance, as I understand it, if you have got a managing agent, they serve the guidance and you don't have to serve it yourself. If you're obviously managing yourself, then you need to serve it yourself. But obviously, the liability would still lie with you. So make sure your agent has served it if you are using an agent.
SPEAKER_00That's for proof.
Possession Claims And Notice Deadlines
SPEAKER_02And then in terms of the getting back possession, so if you've got a problem tenant at the moment or someone that you're not sure whether you want to continue, you can still issue a section um 21 notice up until the 30th of April. So running out of time. So if you've hopefully you've made that decision, if you're getting rid of somebody that you've already done that. Bear in mind as well, section eight notice. We're still using the current or the old style ones. So if you're serve notice to someone in arrears, the notice period applies at the moment that you need to give two weeks' notice and then they need to be in two months' arrears. From the 1st of May, that's increasing to four weeks' notice and they need to be in three months' arrears. So if you've got a tenant that's in arrears now, again, I would make sure you're serving that section eight before the first of May.
SPEAKER_01Sorry, I'm shaking my head because I just think it's bloody farcical. Sorry, pardon my French, but the fact that you're going to let your tenants get into more blimming arrears and the notice is longer, I just think it's farcical. But there we go. My opinion.
SPEAKER_02In terms of antisocial behaviour, I believe that that at the moment, I believe you have to serve one week or two weeks' notice. I can't remember off the top of my head, but that's been reduced to you can go straight away. So no urgency if it's an antisocial behaviour.
SPEAKER_01As far as the proofs of that, and is that classed as a mandatory or is that a discretionary term as far as the antisocial behaviour? And as long as you as long as you've got a police report of some sort, is that going to be classed as then a mandatory or not?
SPEAKER_02So mandatory term for antisocial behaviour is if they've got a criminal conviction. So the likelihood if they've got a criminal conviction, you've had that problem for quite a while. If it's more kind of they're a bit abusive to you, they're kind of being difficult, they're not getting on with other tenants, or the neighbours have complained, that's going to be a discretionary ground. So it's all about your evidence and your proof. I can't advise how it goes because, in all honesty, if we've had an issue like this in the past, it's just a section 21. So yeah, your your record keeping is going to be really, really, really important. So yeah, familiarise yourself with the grounds. Obviously, if you're looking to maybe, I'm guessing you guys aren't looking to sell because you're investors and looking to crow, but if you're looking to sell further down the line, familiarise yourself
Evidence For Arrears And Antisocial Behavior
SPEAKER_02with those grounds and what you may need to do. So just kind of have it in your plan. And rent guarantee and legal protection. I say it, I think every time we have this little session, but consider that, look into that. Really, I think it's a relatively low cost for what it offers. There's different providers. As a Letting agent, we can offer it to our fully managed landlords. I'm sure there's direct policies that landlords can kind of take out. But that basically covers all of the court cost and also the rent that's missing if the tenants aren't paying. So consider that now. We haven't seen any massive price increases, but I just think the next six months, I guess it's how it goes.
SPEAKER_01I mean, there's other providers, I will say this now, but um, we use letter Lliance as far as the rent guarantee insurance and legal cover, but we've had a couple of claims where they've acted and resolved it. And there's been one claim, I think it was they went to court and we had the legal assistance was there without the landlord having to be there. In addition to that, we had to get bailiffs as well. There was a whole array of different things, and it was all covered by the cover, which for ourselves we charge 3% plus that of the monthly rent. And when you've got a property that you're getting £12, £13, £14, £1,500 a month for, that may be £40 a month. But when all of a sudden that tenant hasn't paid their rent or you need to evict them, all of a sudden you've got five, six months worth of £1,500. That's an awful lot more than what it's cost you on the cover. There's no obligation on anything of it, but it may be something to one would assume a tax deductible as well. So if it's something you want to bet yourself um bulletproof as much as you possibly can do, at least anyway.
SPEAKER_02Yeah, and then the I just review your process for record keeping because a lot of these, I mean, in terms of the arrears going to the possession ground based on rent arrears, it's kind of straightforward because you've got their rental statement, you know, it's clear cut, they've either paid or they haven't paid. If it's some of the other grounds, so antisocial behaviour or there's grounds for deterioration of property where they're not looking after the property. I think historically most people would have just issued a section 21. In those instances, you're going to need lots and lots of proof. So make sure you're having your inventories done before they move in, make sure you're doing regular inspections, calling them out on it. If you're going in and the inspection is not satisfactory, you need to show that you're speaking to them, communicating with them, trying to get things resorted. Again, it's time will tell on how things will go through court.
SPEAKER_01Well, any of these observations is quite critical as well. Because in some cases, it may well be you see some landlords that have become accidental landlords that have inherited a parents' or a grandparent's house or whatever it may well be, and they've got an emotional tag to a property. I see this quite often. And the fact of, oh, I used to live there, or my grandma used to live there, and they're not looking after this, not looking after that. What I'll say to you is now this you are running a business, and the fact of take any emotions out of it, just any any claims you make or any communication you have, sorry, is factual. State the facts, and if you've got any tools in your toolkit of legislation that you can throw at them in a contract that you've actually they've actually signed, this is what you're in breach of, this is the term, and it's all facts, nothing can then be argued with on the fact of what a current situation is. In addition to that, we mean we outsource our periodic visits, we outsource our inventories. You've also got an independent party that may well not be construed as biased in what their findings are as well. So that may be another avenue you may wish to look down as well, independent company. And also the time it takes to do inventories and periodics, when you tie tally up what the cost of that is in comparison to outsourcing it. They're very comparable, and it means that you can use them when you need to use them, and another member of staff can be then using their expertise on something else instead.
SPEAKER_02But I think it's also about communication as well. So if you can you don't legally, if you can get that tenant to agree their surrender of their tenancy, you don't have to go through the court process. So we had an instance recently where we'd got a tenant that was quite abusive. He'd been a little bit abusive on the phone and a bit kind of hard to deal with. That kind of we had an instant overnight where we called at 11 o'clock at night and spoke to our out-of-hours team, got very abusive, racist. They had a recording of that. So we had the recording. He also, as part of that call, said that as nobody was going to go and let him in at 11 o'clock at night, he was going to kick the door down. So we found that the door was, in fact, damaged. So he'd admitted basically doing that on the reformed. Obviously, there was damage. So we had that conversation with him and said, served him a section eight notice at the time. Had that conversation with him and he kind of surrendered his tenancy, agreed it wasn't right. So it's still that that kind of informal kind of having that conversation with people. And he was obviously quite embarrassed about his behaviour after a few drinks. So that was kind of an easy way of dealing with it. If he wasn't in agreement, then we would have had to go down the broad.
SPEAKER_01A key fact for you as all as uh all landlords is possession is power. That is the power. Anything and everything you're trying to do, even if you have to take hits here and there to get back possession of your property, do it. Because once that tenant has vacated, handed over their keys, signed a piece of paper to say that they have left and it was their decision, they haven't been for. Because that's another thing to consider. A tenant could come back and bite you in the butt and say to them, Well, I was forced to I was forcefully evicted, unless you've got a document that states that as a tenant I have willingly vacated this property as requested by our landlord. So that's another thing to consider, another document that just basically covers your back if a tenant vacates in any of these circumstances isn't due to court, all these different things that you get them to sign a document that says yes, I willingly vacated, or an email from them that says that I'm happy to vacate, something that documents it. So you cover your back on that, an audit trail of it.
SPEAKER_02And then the next thing is rents increases. So you can only increase the rent by a section 13 notice. So make sure you're familiar with what you need to do for that. If not, if you're not familiar or you're not sure what to do, then it might be worth speaking with a letting agent on that one. You need to give two months notice. So just make sure you're documenting or you've got on your calendar when you can next increase the rent. And it's once per year.
SPEAKER_01I now understand the buttons tenant in the property. If it's a new tenant going to the property, you can still increase it as far as a new tenant is concerned. However, if it's a renewal of a current tenant in the property, then you need to um issue a section 13.
SPEAKER_02But I do understand that I've read recently, I don't, I believe this is a new introduction, that they're now going to be charging tenants if they wish to dispute it at the tribunal stage. So I believe it's a charge of £47.
SPEAKER_01Oh.
SPEAKER_02Which is still relatively low. I thought you were going to go something like £300, like £47, but I think to some tenants that's probably quite a lot of money. And I think it goes to show that doing those smaller increases every year is going to be better than doing a bigger increase after five years, four or five years.
SPEAKER_01Oh, they're great tenants. Oh, they're lovely. Oh, we look up. No. Get that rent up to market rent. Do them some benefit of increasing it to, I don't know, within 10% of what everyone else is paying, but do it. You're running
Rent Guarantee Cover And Record Keeping
SPEAKER_01a business and it means that you've got more chance of evicting them if need be, or they can move elsewhere because they're used to what the rents should be. And also better in your pocket than yeah.
SPEAKER_02Um and then if you've so going forward from the 1st of May, you're not allowed to take any rent in advance other than one month. So if you've got a tenancy at the moment that's paying quarterly, you'll no longer be able to demand that rent.
SPEAKER_01You've just said there is demand as well, isn't it?
SPEAKER_02So you're sending out that guidance information which will explain that to the tenants. So if they suddenly want to switch to monthly, then they are they can do that. If you've taken like a year up front already and you already have that money, you don't have to refund it. But going forward, you won't be able to take money in advance, larger sums in advance.
SPEAKER_01I'm a tenant. My mum and dad, bank and mum and dad, have given me a chunk of money to pay for my accommodation for the year and they want me to pay it up front. Can I still do that?
SPEAKER_02You can you can still take the money up front, but in your tenancy agreement, you'll only be asking for one month's rent in advance. So if they wish to pay it ahead, they can do, I'd be very wary of maybe holding that. Like as a letting agent, we wouldn't pay that out to the landlord. We would keep that aside because technically it's not due. If you're a landlord taking it yourself, then I'd be very careful about you know, you might have to pay that back if they decide to leave.
SPEAKER_01Because the lot of that pay could be in there for two months and a day. That's the key factor with the new legislation that's changing. Yeah.
SPEAKER_02So and then so that covers like the rent controls and rent increases. If you've got acceptance of pets and discrimination. So I would make sure that in terms of discrimination, you've got an affordability criteria and you're making sure that any applicant that's applying for your properties going forward has that affordability criteria and is clear on it. That same affordability criteria needs to apply to everyone, whether they're on benefits, whether they're working, whether they're a student, they need to meet with that criteria. So you don't have to necessarily accept universal credit tenants if they're not meeting with that affordability criteria, as long as you're not setting them something different to how you treat anybody else applying for your property. You can include it in your advertising and make sure that tenants are aware of it before they kind of commit to any like holding paid and nightly holding deposit.
SPEAKER_01Holding fee is not refundable. So our example of what we do at any household. So for example, if a couple wants to take a property, their joint income has to be two and a half times the annual rent. Now I see different cities and around the country that may have different to this, but two and a half times the annual rent. And then as far as so, for example, if it's £10,000 rent, they need to have £25,000 worth of joint income between the two of them. And that's the key thing, it's a household income. With regards to if they don't meet that, we need a guarantor. The guarantor needs to have three times the annual income. And when they need to obviously do those proofs that you need to have done on those, as well as all the right to rent checks and all the other things that you have to do as well.
SPEAKER_02And that that's kind of our standard. You can set whatever affordability criteria you want. If you want to set it, they have to be earning five times the rent, you can do that. You might not get many people applying, but as long as you're that same criteria is for everybody. In terms of pets, you have to consider a tenant's request for a pet. Doesn't necessarily mean you have to accept it. So you need to have a process in place for if you get a tenant asking you, you know, what questions, what do you need to know? So make sure you've got, we'll be having like an application form where tenants need to say what breed of pet it is, what type of pet it is, how long they've had it, what age it is, what are the arrangements during the day when they're out away from the property, things like that. So you can make a fully informed decision. But you need to have that process of what a tenant needs to do if they want to apply to have a pet in the property.
SPEAKER_01So if you're saying no, you've got to justify it. And you've got to have a due process to make sure that you have again gone through the due process you need to go through. So otherwise a tenant may well say, Well, you're uh you're you're discriminating. You're not you're not
Rent Increases And Rent In Advance
SPEAKER_01accepting me because of this. If you, as long as you've gone through the process again, no emotions, factual, all these different things and the key criteria, then that's where a decision can be made.
SPEAKER_02I think like people, HMOs, for example, I think it's a legitimate reason to refuse because of other tenants you've got to consider. And the likelihood is if you accept one dog, then they're gonna have a cat and they're gonna have a bird and they're gonna have a rabbit, you're gonna have like a a zoo quite quickly. So there is reasons. If it's in your lease for a flat that you can't have pets, then that's gonna be a legitimate reason. If your reason is something like I've had a bad experience in the past, or I don't like dogs.
SPEAKER_01I've just put a new carpet in.
SPEAKER_02I've just put new carpet, they're not gonna they're not gonna be. So, as well as all of that, the local enforcement, this is when they can start enforcing all of these rules. So the local enforcement will be starting from the 1st of May. So Coventry love their enforcement action where we are. I'm not sure other councils. Somebody at one of our networking meetings recently actually said that their council down in London was actively writing to tenants, making sure that they knew the rules and letting them know what they could do about it if their landlord wasn't compliant. So yeah. I think you need to make sure that swear words.
SPEAKER_01Can't use swear words today.
SPEAKER_02Um I mean, I see on Commentary City Council website there's lots of kind of buttons and lots of links for tenants to report things if they're or any concerns about HMOs or anything like that. So yeah, I think that's a good thing.
SPEAKER_01But yes.
SPEAKER_02So just make sure that you are, you know the rules. And if if it's not something that you want to be able, if you can keep on top of and make sure you know the rules and look at letting agents or somebody that can help you with that side of things. Things coming forward in the future, just quickly, phase two will be later this year. That's the landlord database. They haven't published any costs for that. But Scotland already have a similar thing in place. Principal fee for that is £80 per application, £18 for each additional property, a late application charge of £160 because you have to renew it every three years. If you've got multiple authorities, so if you're kind of over two. Different councils, you're gonna have to pay multiple fees, but they're slightly reduced, and there's discounts for joint owners. So if you've got the main owner or the one owner's paid, the second owner doesn't necessarily have to pay. That is Scotland's procedure. I'm not saying that's gonna be what we're gonna have.
SPEAKER_01It's smidgen more expensive, I imagine.
SPEAKER_02But that's sort of the costs that they've got. I wouldn't say that I don't think they'll be able to justify anything dramatically different to that, but who knows? I know Wales is lower cost for theirs than Scotland, so I don't know, but that's an idea of the costs. Once that database is in place, you're gonna need to update all upload all of your information, including safety certificates. So we deal with some landlords that are really good at their admin and keep everything in place. And if we need something, we'll ask them and they'll send it. We have other landlords that just ignore us or don't send things on and take a while to find things. So just I'd start getting everything together today. Make sure you've got all your folders for your properties to make that process as smooth as possible when it's time to do that. Also, the landlord ombudsman, that's gonna follow on, I believe. We might start hearing things at the end of this year. I think that'll be next year more than anything. And again, I think that's gonna maybe be staggered, maybe it'll be like an optional thing to start with, and then possibly a mandatory thing. There'll be costs involved in that as well as the database. If you have a HMO license or if you're going through a local fraud, you've got the HMO license or a selective license an area, that won't change having your registration with the landlord database. You'll still they'll still be treated as separate things. So more admin on that, unfortunately. And then the decent home standard, that's going to be phase three. They've started publishing a little bit of information on that, and there's going to be key criteria that the property needs to meet. Although the kind of enforcement and effective date is not going to be until 2035. They're very much saying don't leave it until 2034 to start thinking about it. You know, your properties are going to have to be at that standard by 2035. So more information will come on that, but just be aware that in the next kind of 10 years, you may have to do some work on your property, depending on what condition it is in at the moment. The EPC regulations are coming in from 2030, so you will need to be a C rating by then. They are reviewing that system at the moment, so there will be some changes. My advice at the moment is don't run out and spend large amounts of money getting your property up to the C grade because things are going to change. If you have a D rating at the moment, but you're very close to the C, have a look and see if there's anything low cost that you can do and get that EPC done again because then you'll have 10 years. I spoke to somebody recently that was a D rating but one point off a C. I was like, go and speak to an MG. Go into an EPC that says sometimes there's something that can get you up to a C, and then you've got that certificate for 10 years at a C rating
Pets Requests And Fair Affordability Checks
SPEAKER_02that's compliant. It's not to say that the new rules it might make it easier for that person to get a C. I don't know. But just I think it's silly if you're just that close not to review it. Now it's kind of that's what's coming.
SPEAKER_01Kind of a big take a big sigh now, guys. Um ready and ready and raring to go. But the different phases of it all, the the key thing is the phase one things and getting really into that and making sure. Now Alison has whizzed through that in the last 20 minutes. We do actually have a free webinar tomorrow evening where we're going to go into even more detail on the Renters Rights Act, certain situations, certain problems you need to. So the the website itself is covertrylandlordwebinar.co.uk. So that's covertrylandlordwebinar.co.uk. It's free. Uh it's tomorrow evening at seven o'clock. Razlin and I are going to be going into greater detail. As you can hear, Alison is the expert on this, very much so. Uh so yes, you'll also have the chance to ask questions and answers, which of course you'll have to do now as well. But yes, it's it's a really in depth. We've we've this is our second one. We've got well over a hundred people already registered and it's growing and growing and growing. And lots and lots of people need to know about this. It's not something to neglect or to ignore because it could come back and bite you in the bum significantly financially from that.
SPEAKER_02The plus point for investors is if you're looking to grow, knowing this regulation inside out, you know the pain points for people, for land current landlords that are looking to sell. So you know this, it puts them in a really good place to kind of make the most of those opportunities. Which brings me on to Anthony's bit about knowledge is power. Investing in properties and what things to consider.
SPEAKER_01Okay, right. So, as an investor, uh I'll have a quick whiz through here of different things you need to consider. It's almost like a checklist of things. So a lot of people come to me and say, Anthony, I'm really looking to invest in properties. And I'm like, brilliant, great stuff. And I say, I've got investment capital, I've inherited some money, all these different things. I say, well, what sort of strategy are you looking to go for? Are you looking for capital gain, which is a property with a growing value but make you some money? Are you looking for really good cash flow? Are you looking to buy a property, do it up and sell it? All these different strategies. I'm not sure. What would you recommend? And you just okay. It's one of those situations. An awful lot of people in this position, they go, well, property is great. I hear my mate says it's really good to invest in property. I say, Well, what's your strategy going to be? So the key thing is gonna be why are you doing it? What is that going to, you know, what is that going to facilitate? And some people may well say, I want to get into property and build a portfolio so I don't have to work. Some people will say, I just want a little bit of extra money to pay for the holiday each and every the family holiday each and every year. Or you want to make some quick money because you want to buy another property or a whole array of different things. Keeping those ideas in place. Now, when you've then cleared up that idea, location is going to be important. So different strategies will be more driven on location. So if you're looking for a house multiple occupation, HMO, location is critical because you think to yourself, okay, I'm young professionals, students, all these different types of people that are going to likely be living in your property. Is it close to supermarkets? Is it close to railway links? Is it close to a bus stop? In addition to that, have you got universities nearby? Very important. Have you got a business estate nearby where people potentially will be looking? So, for example, if you've got an Amazon, like we've got here in Coventry, and you've got an Amazon warehouse where people are doing a lot of work. We get people from working there or near the hospital. Those are the things you've got to consider to yourself. But with anything with HMOs and any investment, always put your property in a location where you can let to every type of tenant. So there's certain areas in Coventry, for example, where you'd be like, well, it's just Warwick University. And then I'd say, well, what about you know other students? Coventry university. Well, no, it's a different location. Or if you go out near the hospital, you're like, well, your only market is the hospital. Potentially you've got some other areas, may or be you can get as far as university, you're too far out. Because we all know, and I all remember the um the lectures at nine o'clock and rolling out of bed at five to nine of the morning to get there to make sure you get to your lecture at nine o'clock. So that's what's really important if it's a university student and building. And as has happened, and I see in a lot of cities, the universities and private organisations are building more and more student accommodation. There's bank and mum and dad are happy to pay silly money for their kids to live in these accommodations to build those relationships with people, which means demand is lower. But if you can then do slightly higher
Enforcement And Future Phases Ahead
SPEAKER_01spec properties, you may well get graduate schemes and people, master's students, and that tends to be the thing. So, for example, if you're putting ensuites in there. So that's the ensuite, the obviously the HMO side of things. But a key thing to then consider after that, right, I'm gonna, I want to invest in HMOs. You then have to dig even deeper. You say, right, what legislation is in commentary, such as Article 4? Now, Article 4 is where obviously there is a limit on the number of HMOs. That's what the council have introduced, article four for. So if a property is currently being used as a HMO, brilliant. That's great. Look at when Article 4 came in. So Article 4 in commentary was September 2023. So was it being used as a compliance? What's a key word with this? HMO prior to September 2023. So yes, it was, brilliant. Did it have a HMO licence? Yes, it did. Brilliant. Okay, so it's the number of boxes ticked. If need be, do you have proof if I need to go to the council to prove that it was being used as well? Yes, I've got a license. I've got utility bills that I was paying, I've got tenancy agreements, I've got rental statements, I've got all these different things. Because then one thing, for example, Coventry, if you're buying a HMO that's ready-made, tenanted, all these different things, the boxes ticked, you get something called grandfather rights detailed on the website, which means the new owner will automatically inherit the planning permission that was in place. However, if you've not got these proofs, the likelihood will be you're then trying to apply for planning. The reason why they bought article four in was because they wanted to limit the number of HMOs, for example, in Coventry. They're not likely to give you planning permission. I'm not gonna say definitely not, but the likelihood is the reason why they bought it in was to appease residents in the city. So think to yourself, right, okay, so buying a C3 residential house, converting it to a HMO, I'm gonna have problems there. So it may well be you think to yourself, right. If HMOs is your route, you're gonna think, right, I need to find a tired HMO with the key criteria that had the license in place and all the proofs you need to have. Now, one thing that a landlord may well have that ticks a number of boxes into one swoop for you is something called a lawful development certificate, which basically says the look the council have stamped to say, yes, you are a compliant HMO, which means that if you then buy that property, you have got that stamp on it already, which is fantastic. Now, there is a cost for doing that. Now, as we know, there's normal HMOs where you'll do one application for a HMO if it's just rooms that you're letting out. However, if the city has something called additional licensing, which is another thing that may will come in and it's in coventry at the moment, which means anything that's passed as a HMO, something where a property has been split into individual bed sits or studios or one bedroom flats, there's no building rates, there's no planning permission, you need something called a section 257 HMO license, which all of a sudden you're like, okay, right, okay, so I need to get a license. And all of a sudden, when that comes in, you say, Well, has it got that? And all of a sudden, you there's a whole array of different things that you then think to yourself, right? Well, if you've not got that, I need to get that. All these different things you need to consider as far as the HMO route is concerned. Fingers price, you've got the lawful development certificate that ticks every box. If you've not, as long as it's got the actual license in place prior to, brilliant. You've got all those proofs. Now, in a section 257 HMO, it's a case of if you've got, like, say, five flats or bed sits in this particular property, you have to do five applications. Now, Coventry's pricing at the moment per lawful development certificate is £500 a property, I believe. So that's going to be two and a half thousand pounds. It used to be pittance, but then the different law came in, and all of a sudden, I've let's put that price up. And I know people that have got those licenses, no problems at all, having been using that property like they have for many, many, many, many years. And that's something the council are hot on, though, with making sure landlords are compliant. So that's your HMO route. May well be you want to just look for properties that are tied HMOs that have been used as HMOs for a number of years and then enhance them, whether that be cosmetically, because a lot of we you know, we've got some landlords on our database, please spend some money, flowery curtains, red flowery carpet from 1965, the divan bed base is a different colour to the mattress,
Investor Checklist Strategy Location Due Diligence
SPEAKER_01you know, like spend a couple of hundred pounds and you'll get that back in probably two or three months' return on investment. So that's that's potentially the avenues you could go down, is enhancing and also retired, retiring landlords may well be an avenue to look at as well. And also with the new legislation coming in, that could be your hook. So if you know those pain points, as Alison was saying, as far as landlords are concerned, with the new renters' rights act, it may well be you say to yourself, look, you've got all these HMOs, all these problems, and all these different legislation you've got coming in, as well as the landlord database, all these different costs. Let me take that hand, take, take all those problems off your hands.
SPEAKER_02And I think the opportunities are out there. I know we're seeing landlords that have been in the market for a while that are perhaps kind of in that retirement era of their lives, they are maybe moving their kind of time frame up and offloading properties a little bit sooner. But I think the Renters Rights Act has perhaps driven them and pushed them forward in doing that. So there are landlords out there that are looking to kind of sell portfolios if that's what you're looking to kind of do with your investments.
SPEAKER_01One thing if you're considering investing in Coventry, we do do off-market property sourcing. Um, it's free to register, you get the deals. So if that's something you're interested in, I'm just trying to think of a way. In fact, Mark, I'm not sure there's a way you can put you to have our contact details somewhere, aren't you? I think. Let us know. If you're interested in investing in coventry, we've got off-market property sourcing, we do, we've got a number of off-market deals at the moment that are available. So then you think, okay, well, HMO's doesn't really want to go down. I want to go down single family lap routes. And you say, okay, no problems at all. Now, with every property you buy, I must emphasize don't skimp on your due diligence. Do a home buyer survey. And that's also in your back pocket as far as your ace card. If you're negotiating a price down, again, you're using somebody else's expertise to get you a better price. So use that expertise, use that report because it's not you providing it. You've
HMO Rules Article 4 And Licensing Risks
SPEAKER_01said, please go and look at this property and make sure it's okay. But if they come back and they say, Oh, there's a problem with this, there's a problem with that, you say, Well, I'm gonna have to get that resolved. And because of that, it's gonna cost me this much. So, with that in mind, I need you to reduce the price. Whether it be me doing this or somebody else, they're gonna have the same problem. So that's your argument to get a better price, perhaps. In addition to that, as I said already, the legality side of things, the planning side of things, the licensing side of things, as well as the condition of the property as well. And then obviously do your due diligence nearby on what realistic rents are. Don't make the rents work. Be pessimistic. Think you're gonna get less than you think you're gonna get. Work those numbers and make sure those numbers work right as far as your return on investment is concerned. And also lenders will need to see the rent being, in some cases, 1.4 times what the mortgage is, as far as those stress tests are concerned. So key do but do bear that in mind. And as far as your power team is concerned, a solicitor that you know and trust that you can contact, that's really, really useful. Paying a little bit more, that extra 200, 300 pounds for a solicitor that you can contact who's accountable is invaluable. And you can get them to put pressure on it. As far as a mortgage advisor, no one could be an expert in everything. Oh, I've got my mate who does that. No, get multiple quotes. Get a mortgage advisor who's an expert in doing that. As far as the end side of things, make sure you've got then a point of contact, but there'll be a letting agency that can give you advice and guidance so that you're spending your time perhaps finding deals or rather than then the worry of then the lettings, the tenancy, the finding tenants, all these different things. And then one thing I'm also saying, buying a property that's tenanted, don't be scared of that, but dig into and make sure those tenancies are compliant. Because the last thing you want is to inherit something that could be awful. Now, with regards to single let properties as we're finding now, again, you think to yourself, okay, well, what are the key USPs for a house that's going to be left to a family? Schools. If you can be near a school, wonderful. That will mean that you will have tenants in their womb assume if you look after them for a number of years. And then obviously nearby, supermarkets, convenience stores, you know, bus stops potentially for the children if that. But the the criteria location quasi isn't quite as critical as far as um families are concerned. However, yes, you all think I'm going to buy this house, I'm going to have it forever. However, you will come to a point at which you need to sell your property. So, with this in mind, would I buy this house if it wasn't at the price it is at the moment? I'm getting if you're getting it for a good deal. Is it a saleable asset? I mean, I've had a number of people coming to me about a property that's on a main road. It's opposite a supermarket, which is great, but it's a family property and it's a family home, it's on a main road, there's no parking, there's no driveway. Yes, it's got a back garden, but it's on a really busy main road. And I say, right, if you're a family that's going to want to buy this house, you've got a house around the corner that may well cost £5,000 more. It's got a driveway, it's quiet, it's
Building A Power Team And Buying Smart
SPEAKER_01a cul-de-sac. Or we go for your house that may well be a little bit cheaper. However, it's a main road, there's no driveway, the concern of your children, the noise, all these different things, consider that. Because in the long term, am I going to be able to sell this? It may well look amazing. You may get your big deal at the money at the front end, but then is it a saleable asset? And that's what these particular vendors are now having the problem of, and they've dropped price significantly and still can't sell it. So think a bit on that side of things. But as far as family lects looking after them, what are the USPs? And that's the key fact with all of these different things. Then finally is then the flip strategy, which is bad. So buy a property, do it up, and then sell it or keep it. Now, again, don't sit there and think just, oh, it's going to be worth a million pounds. It's going to be amazing. No, it won't. Think pessimistic. I'm a pessimistic bugger, but I'd rather it be that I'll sit here and say to you, no, no, no, no, no. You know, I remember the the days in which we used to do HMOs and buy it for a certain amount, and I'd say, right, let's say that you've just spent 100 grand. I think that will have gone up by 135 in value. I said, Well, it's gonna go on and buy more of that. I says, no, let's expect it goes up by that much. And he then says, right, so we've got a 35k increase on market. So yes, 1.3, 1.35 times what you've spent is what I think they've increased in value will be. And then in some a lot of cases, it's come up more than that. And what they've done, refinance, same loan to value and all those different things. But work on a worst-case scenario. Don't make the numbers work because in the end, there's plenty of deals out there that will come along that you'll find the right deal there for you. And also be clear on your strategy because I know different courses, different training, you get taught all of these different strategies, all these different things that you can go on. Wow, what am I gonna do? Focus on one or two of those strategies for a period of time so you really focus yourself because rather than going one way, going another, and then spending no time and getting nowhere. But power team, very important. Do your you know, experience the moment a location is so, so, so important um for HMOs, still important for families. But if you're buying in a city you don't know, go speak into a letting agency or an estate agency and say, look, I'm just thinking of different areas to invest in. Keep me on your database, keep me updated. They won't mind giving you free information. Do a bit of research and say, What's your thoughts on this area? What's your thoughts on this area? This is my strategy, and they'll soon tell you, don't want to buy there, don't want to buy there. There's a reason why that value hasn't increased in the last 10 years. Yes. So hopefully I've given you a number of different checklists and things, a barrage of information I know, but do your due diligence, make the deal work. But another thing on the flipped end of that, don't find reasons why not. When you first start out, detail your reason why and detail your criteria. And if you've got, I don't know, a list of 10 and say, right, as long as it's got seven out of those ten things, do it. Do your due diligence, of course, do your home buyer survey. Yes, it's a couple of hundred quid more than you want to spend, but that could well save you a house that you can't sell in the future with subsidence or rising damp that's cost you five, six, seven grand to get sorted and you didn't get it taken off the asking price.
Final Tips Webinar And Closing
SPEAKER_01And there we're done. Any questions at all, Gorlands?
SPEAKER_02Just I'll just add to that as well. When you're going through estate agencies and you've put in an offer and it gets rejected and sold to someone else, don't kind of close that off. Keep revisiting that because one in three sales at the moment are falling through. So just because they've gone with someone else's offer doesn't mean that you can't keep track of that and make sure you're kind of revisiting, get those relationships with your estate agents in your area, kind of keep working those.
SPEAKER_01See if you can find out what the offer is as well, because you can then structure your offer next time. So, oh, the vendors won't be very oh, I've missed out on that deal. Well, I'm gonna come in and I'm gonna offer you what I offered you before, which was lower. I'm not gonna offer you the same as they're offering because you're motivated now, you've just missed out on a sale, eager to get the sale. There you go.
SPEAKER_00Amazing, as always. Thank you ever so much for your time and your wisdom. It is always really, really appreciated. And some great questions there as well.