Buy to let investors need to be patient

During the jovial times of a huge property boom, owning a second property was a sure means of making good fortune that provided for one’s future.
It was not long ago that each and every ‘wannabe amateur landlord’ was spurred on by a host of property makeover ideas and programmes, which promised to make substantial money from bricks and mortar. Buy to let as an investment option looked so very easy, rosy, simple and straightforward. That was the time when all buy to let investors found their bank managers in an accommodative, generous and receptive mood.  In fact, cheap buy-to-let mortgages during that golden phase were very easy to come by.
With prices tumbling fast in recent times coupled with unfavourable mortgage market, the scenario has changed quite a bit. There is no doubt that falling property values are creating headaches for property investors who had entered the fray in it for a quick buck. Indeed, the tide has turned for buy to let, and how? Of course, things can still change, It is a cycle that has come a full circle, and buy to let investors need to be patient, and wait for things to change for the better!

Understanding finer aspects of Possession Actions for residential property

Most landlords, who choose to let their residential properties, need to be aware of the fact that tenants have certain key rights. These rights prevent them (the tenants) from being unlawfully harassed or evicted by a landlord.

With the exception of a few specific categories of lettings, it is a legal requirement on part of a landlord that he or she obtains a court order before enforcing any ‘right to re-entry to or possession’ of the property.

The two common exceptions to the above situation are properties that are let as a holiday letting as well as properties where the landlord happens to be resident in the same property as his or her tenant.

Except in these instances, a landlord who plans or intends to evict a tenant – without first obtaining a court order – is inadvertently committing a major criminal offence. The landlord may face heavy penalties, if found guilty.

If the tenancy happens to be an assured shorthold tenancy, the landlord enjoys a right to possession under section 21 of the Housing Act (the section 21 route) at the end of the tenancy.

Chancellor asks mortgage lenders to pass on to homeowners benefits of interest rate cuts

Chancellor Alistair Darling has asked leading mortgage lenders to pass on to homeowners, benefits of recently effected interest rate cuts. The move, as and when it happens, will act as a big boost to the property market, and buy to let market, in particular. The Bank of England (BoE) in its latest move has cut UK interest rates to 5 per cent from 5.25 per cent in a bid to spur the economy amid the global credit crunch.

Mr. Darling stated it was (high) time for lenders to ‘play their part’ after being assisted by the Bank of England (BoE) pumping £15bn into the markets amid the current credit crisis. Meanwhile, Prime Minister Gordon Brown stated he as well as the chancellor would talk to the leading lenders regarding measures to boost the mortgage market. He also urged banks to ‘come clean’ about their prospective bad debts.

Mr Darling made this appeal, while speaking to the BBC in Washington for attending a meeting of G7 finance ministers. He faced immediate attack from the Tories. Shadow chancellor George Osborne stated: “Everybody wants to see the cost of living come down for homeowners, but when it comes to the decisions Alistair Darling has control over, he has (actually) raised the cost of living – with tax rises in his most recent budget. He should be showing leadership to alleviate the burden on people in these tough times instead of commenting from the side lines.”

Be strategic in executing extension jobs for letting purpose

It is important that you refurbish your home well for the purpose of letting. Extensions can be an effective tool to achieve this goal. Here are some handy tips to make them work for you, and help you secure a better deal.

Tip 1: It’s advisable for an extension to jell well with the architectural style. It should enhance the overall layout and look.

Tip 2: You need to be strategic in executing extension jobs. Large kitchens and extra bathrooms are usually good investments in family-sized homes from point of view of prospective customers. A garage in a busy, urban area will certainly add value.

Tip 3: Loft conversions are another good means of enlarging your house.

Tip 4: Try to customise the living space to meet the needs and tastes of prospective customers, Even though the criteria will vary from person to person, you can still stick to broad design and utility parameters that homeowners give importance to. For example, enlarging the kitchen is a good idea. Adding a kitchen/diner creates the farmhouse kitchen that most people want.

Tip 5: It’s vital that you get the best people to do the job since a botched extension can spoil everything. It can have a counter effect, and end up devaluing your property.

Buy to let investors look to cater to overseas vacationers by investing abroad

An increasing number of people seem to be shunning the regular or conventional holiday packages – involving a stay at traditional hotels – especially, when they’re travelling abroad.

Overseas travellers now more seem to be in favour of renting a nice holiday home for the entire duration of their stay overseas. This trend has created new interesting opportunities for those individuals looking to tap foreign property markets for the purpose of investing.

The difference between the emerging buy-to-let sector and traditional, more established hotel market is the ‘quality’ and ‘feel’ of properties, according to investment experts. According to them, rented houses usually carry the odd ‘additional advantage’ like homely comfort and luxurious finishes, which vacationers relish a great deal.

Such exquisite touches or stand-out elements can make short-term rents a much more attractive proposition for those travelling abroad, more so for those venturing out with families. A spacious two-bedroom apartment can indeed be an attractive alternative to a ubiquitous hotel room that the traditional package holiday have on offer. No surprise, buy to let investors are eager to capitalise upon this trend.

Understanding the surrender of tenancy by operation of law

If a tenant has apparently chosen to ‘surrender’ or give up the tenancy, the landlord on his part is entitled to possession under the Housing Act. Likewise, if a tenant holding under a periodic tenancy has opted to serve on the landlord a valid notice to quit, this may act to bring the tenancy to a close at the expiry of the notice served.

However, if the act of surrender happens to be less obvious or equivocal, care needs to be taken before the landlord re-lets or takes back the property. If a landlord takes possession and then it emerges that the tenant still happens to occupy the property, the former faces the prospect of proceedings for unlawful eviction.

Surrender can rather take place expressly (by way of a written document or ‘declaration of surrender’ that is willingly signed by the tenant), or by operation of the law in question.

The crux of ‘surrender by operation of law’ lies in the consensual giving up of possession of the premises by the tenant to the landlord. For example, when the tenant returns the keys to the landlord – declaring his intention to give up possession that the landlord accepts on his part, with the intention of accepting possession, it can be called surrender by operation of law.

Special rules that apply to the letting houses in multiple occupation

Special rules apply to the letting of properties where there’re a number of individual occupiers who don’t form members of the same household or family. These are called as ‘houses in multiple occupation’ or HMOs. So if you are going for HMOs letting either as a landlord or tenant, you need to do necessary groundwork.

HMOs typically comprise houses converted as a hostel or for bedsits/ flats. There are quite a few houses (according to some estimates around 300,000 in England – excluding self-contained flats), which can be classified as HMOs.

Let’s follow some of the peculiar aspects that are crucial to the to the letting of houses in multiple occupation
•    Local authorities have authority to require landlords for bringing HMOs up to a standard that is fit for the number of people occupying the property. They may force the landlord to provide additional sanitary fittings, facilities for storing/ preparing/ cooking food and heating installations.
•    There are also fire safety provisions to be made.
•    Grants may be made available to the landlord for enabling him to execute the necessary work.

Understanding various finer aspects of tenancy agreements

There are various finer aspects of tenancy agreements – written and implicit that govern the tenant-landlord relationship. Let’s consider some of them.
•    If a person happens to pay weekly rent, a rent book needs to be provided.
•    It may be possible or permissible for tenants to seek housemates to move in as lodgers or subtenants. It’s pertinent to note that a landlord’s consent must be sought for this or else a tenant may well be in breach of the tenancy agreement.
•    Landlords should ensure that infrastructural facilities are provided. Electricity, heating and water equipment need to be up to mark.
•    Landlords should get other agreed work done. For example, they must provide for a valid gas safety certificate validated for every gas appliance.
•    On their part, tenants are and accountable for safety of their home. They are responsible for looking after it. This includes keeping it neat and clean.
•    Tenants are not expected to rush to the landlord for every routine task, such as replacing bulbs and fuses.
•    If major repairs are required, tenants must inform the landlord. If the latter refuses to oblige, it may be possible to legally force them to do so. Landlords must by law perform repair jobs to keep the premises in good condition.

A look into the basic rights enjoyed by tenants and landlords

The law provides certain basic rights and subsequently, other conditions may get added into the tenancy agreement to be signed by the tenant and landlord.

Tenants enjoy the right to stay there until the agreement gets over or a court order is sought, to get relevant information about their tenancy arrangement/agreement provided within 28 days. They otherwise can prevent others entering their home and also get repairs done.

Which are the other basic rights enjoyed by tenants? Let’s consider a few of them.
•    A tenant enjoys the right to live in the home without being coaxed and disturbed.
•    The landlord and other individuals cannot enter freely as and when they wish.
•    Any individual, including the landlord, must seek permission to visit a tenant’s home– usually, at least 24 hours – at a mutually convenient time for both parties.

On other hand, landlords have certain rights to protect their interests. For example, an agreed rent must be paid by the tenant on time. If the rent is not paid within time and dues are pending, landlords may initiate court action to get tenants evicted.

Assured shorthold tenancies and other tenancy types

The vast majority of individuals who happen to rent their home (buy-to-let) invariably do so, on assured shorthold tenancies (AST) basis.

However, other agreements also exist that afford different levels of rights. For example, tenants – who are not on an AST – and if they’re a council or housing association tenant, they may be on a secured or assured tenancy. This type of arrangement holds increased rights against actions like eviction as well as for passing on tenancies. On other hand, individuals, whose accommodation arrangement forms part of their job or are part of agricultural premises, are covered by a different set of rules.

Assured shorthold tenants – Private rented tenants will be assured shorthold tenants by default if they moved in after February 28, 1997, pay rent to a private landlord, not living in the same building. Same would be the case if they happened to move in after January 15, 1989 and were handed a notice, informing them they were assured shorthold tenants. An assured shorthold tenancy arrangement provides individuals a right to stay in their home, either on a rolling contract called as a periodic tenancy or for a fixed-duration.