Rollercoaster Month for Landlords

Rollercoaster Month for Landlords

Welcome to April's Newsletter!

Its been a rollercoaster of a month for landlords with the Government scrapping Section 21, and the Welsh Government announcing the date for the Renting Homes (Wales) (Fees etc) Act to come into force. Both reforms will have major implications for landlords in Wales, and will constitute the biggest change in over a generation.

Our buy-to-let deal of the month is already SSTC since seeing it last week, so I’ve got 5 top tips on how to get there first!

Finally, check out our latest Rental Checker report and I’m calling on all residents and business owners in Killay and Dunvant to come together as a community and help support our local park.

- Hannah McCartan, Managing Director

Date Set for Renting Homes Act

The Renting Homes (Wales) (Fees etc) 2016 has now been set to come into law on 1st September 2019. It will be the biggest change to the way we rent, let and manage tenancies for over a generation.

The new law completely rewrites residential tenancies in Wales which are currently governed by the Housing Acts 1985 and 1988, and will entirely replace assured and assured shorthold tenancy regimes.

Welsh Government Aims

The Welsh Government has wanted to completely review and overhaul the provision of residential rented homes in Wales for some time, with a view to seeking to create a system that offered better integration between social and private renting and make the sector more clear and simple for all users.

As well as protecting occupiers, this new system would be to reduce the number of barriers to renting by removing restrictions on landlords that did not serve a definable purpose, and by streamlining processes involved.

Under the Renting Homes Act, there are two types of tenancy agreement contract: the standard contract, and the secure contract. Modelled on the current assured shorthold tenancy agreement, standard contracts would be used for private tenancies by private landlords. Modelled on the current assured/secure tenancies, secure contracts would be used for social tenancies by social landlords (defined as “community landlords” in the Act). Standard contracts can be used for social tenancies, but only under very specific, limited conditions.

Amendment to Incorporate Tenant Fees Ban

Subject to the Bill receiving Royal Assent in the next few weeks, the tenant fees ban will come into effect in Wales on 1 September 2019, to coincide with the implementation of the Renting Homes Act.

The ban will mean tenants cannot be charged fees except those allowed under Schedule 1. Exemptions currently include rent, a security deposit, a refundable holding deposit (capped at 1 week’s rent), payments for defaults, and payments for services such as utilities and council tax.

All other payments are “prohibited payments”, and will be illegal. Charging prohibited payments could result in Rent Smart Wales licenses to let or manage tenancies being revoked.

The Rent Smart Wales Code of Practice will also be updated to reflect this change.

Banned Fees – Prohibited Payments

Landlords and agents currently charge a number of different fees to tenants to set up and start tenancies. The ban will mean the following fees are prohibited and cannot be charged:

• Administration fees
• Referencing fees
• Inventory fees (including check-in and check-out meeting fees)
• Renewal of contracts fees

There will be a list of other permitted fees such as charging tenants if they loose their keys, but this has yet to be released.

The End of Section 21 in Wales?

The First Minister of Wales, Mark Drakeford AM, announced at the Welsh Labour Party Conference that the Welsh Government intends to axe Section 21 notices.

The concern is that without being able to serve Section 21 notices, landlords could be forced to go to court to get their properties back. There are also plans to modify Section 8, and bring in new dedicated “Housing Courts” to handle housing-related issues.

Residential Landlords Association (RLA) Policy Director David Smith says: “Over the weekend (and narrowly beating England to the punch!) the Welsh First Minister announced that Wales would be holding a consultation on getting rid of its own version of section 21.

“In the Welsh case they do not in fact appear to be getting rid of section 21. What they are in fact proposing to do is to pass legislation which will amend the Renting Homes (Wales) Act 2016 to remove sections 173 to 180 inclusive. These sections create an equivalent power to section 21 in that they allow a landlord to give a tenant notice without specifying any particular breach or reason.

"Presumably there will be other consequential amendments to other parts of the Act to allow for possession to be sought in other appropriate cases.

“This is not a huge surprise in that the First Minister had already indicated that he was keen to do this. However, this takes the Act increasingly far from the conception originally put forward by the Law Commission and alters the balance in the legislation from that struck by the Law Commission and that originally approved by the Assembly. Whether other steps will be taken within the legislation to redress that balance remains to be seen.

“Additionally, the Welsh Government is not able to promise any aspect of Court or possession reform as it has no control over this area. Any changes to the possession process in Wales will essentially mirror those in England as they will be made by the Ministry of Justice, albeit that they will consult with the Welsh Government in doing so.

“There is also the difficulty for the Welsh Government that they are seeking to amend an Act which is still not actually in force and which has been subject to considerable delays already. There is a risk that the Act will not be enforced before these changes are made in which case it will end up being delayed still further, possibly for some time.

“Further details will have to await the formal consultation in which the Welsh Government will have to make its intent clearer. However, this weekend has heralded a further period of significant change for the PRS with much more yet to come”.

Swansea Estate Agents Closing Down

A number of Swansea agents have already closed down or sold up this year ahead of these changes. We are hearing reports that landlords are suddenly finding themselves working with agents they didn't want to, or know nothing about.

Over 70% of our new clients come to us because we've been recommended to them by our current landlords. If you know anyone who have found themselves in this position, why not recommend switching to McCartan?

We are currently offering our set up service for transfer of management, free of charge. If you know someone who could benefit from even just a chat with us about what we have to offer, we'd be grateful if you could put us in touch.

RLA Landlord Survey

The RLA has recently launched a survey for landlords, collecting their views on the possession process. Please click here to share your views.

At McCartan, we take a proactive approach to property management and to keeping our landlords informed of changing legislation and how it might affect them. We will keep you updated on both the Renting Homes Act and the Tenant Fee Ban as they progress.

Disclaimer: The information on McCartan website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.

Sources: RLA on Section 21 / RLA on Tenant Fee Ban

Why is Section 21 Big News?

Landlords across the UK are being thrown yet again into disarray this week as the Government announce their intention to axe Section 21 (no-fault evictions).

The concern is that without being to serve Section 21 notices, landlords could be forced to go to court to get their properties back.

There are also plans to modify Section 8, and bring in new dedicated “Housing Courts” to handle housing-related issues.

McCartan Lettings Managing Director Hannah McCartan says, “Landlords shouldn’t panic though, as it may not be a totally disastrous plan. Reform of Section 21 and Section 8 are long overdue, and if axing Section 21 opens up a constructive debate about why it’s not working in our current, broken housing system, there is hope that an improved system – which is more relevant and supportive to both sides – can be introduced in its place.”

If the Government implement the Scottish system (which replaced the Section 21 equivalent in 2012), though landlords would need grounds to evict their tenants to regain possession, they could be provided with a whole array of new grounds to allow for this.

What is Section 21 and Section 8?

Section 21 appears in the Housing Act 1988. Since its conception, Section 21 has been the preferred method for landlords to regain possession of their properties as it gives them the legal right to do so without needing to give a reason or to obtain a court order. The related notice is served to the tenant, and provides them with 2 months’ notice to find alternative accommodation and vacate.

Should the tenant not vacate at the end of the notice period, the landlord can use accelerated court proceedings, which is essentially a paperwork exercise for the courts, and no-one is needed to attend court.

Like Section 21, Section 8 appears in the Housing Act 1988, and gives landlords the legal right to regain possession of their properties – but they have to give a reason from a list of grounds. The grounds essentially break down into mandatory or discretionary grounds, and include things like the landlord needing to move back in, rent arrears, and breach of tenancy agreement. For possession to be granted on a Section 8 Notice, both the landlord and the tenant are required to attend a court hearing.

This makes for a substantially longer process for eviction. Many legal professionals advise landlords to serve Section 21 Notices instead of Section 8 for rent arrears (especially if it is unlikely any rent will be recovered) due to the speed of regaining possession vs going to court on a Section 8.

From a property investment point of view, the ability to regain possession so easily (unlike with historic Assured tenancies) proved extremely popular and reassuring when it was brought in in 1988, and became the reason behind the buy-to-let boom in the early 2000s.

Over 20% of households are now rented in the UK.

Adequate Notice, Failure to Vacate, and Revenge Evictions

Many tenants are left feeling frustrated at the news they have 2 months’ notice to leave their home without being provided with a reason to do so. Depending on their circumstances and what is available in the market at the time, two months might be very short notice, and they suddenly have to find the money to fund a move. Families are especially worst hit, with the possibility of needing to move away from school catchment areas, taking their children out of school and away from their friends.

Many landlords are left feeling frustrated when they serve the notice, their tenants don’t leave, and they are forced to start court proceedings. Citizens Advice actively encourage tenants not to vacate if they don’t want to, thus forcing their landlord’s hand and meaning their landlord is unlikely to give them a good reference when they then do move out.

There’s also the issue of “revenge evictions”. The term, coined by housing charity Shelter and the press, refers to situations where tenants complain about maintenance and are evicted because of it so the landlord can re-let the property without dealing with any of the issues.

No No-Fault Evictions

Hannah says “the fact of the matter is, most landlords love long term tenants; they want to keep their good tenants who want to stay long term, who keep the property well and pay their rent on time.

“It is a misrepresentation to say a Section 21 notice is a no-fault eviction in the real world, as most landlords only consider serving them if given a reason! In many instances, the reason could be made up of several more minor reasons that all add up to it being necessary to end the tenancy, rather than one major breach of contract, such as non-payment of rent.

“As an example, a landlord wouldn’t necessarily consider evicting a tenant who doesn’t regularly clean the property, even though failure to clean is a condition of the contract. However, if the rent isn’t always paid on time, their pet is fowling in the garden and not being picked up after, and the neighbours are complaining there are loud parties every weekend and send photographic evidence of broken beer bottles outside their front door, a landlord might feel they need to find a new tenant, even though these things don’t constitute a concrete breach of tenancy.”

Significant Improvements

According to the Ministry of Justice, the average eviction time is 298 days* – not quite the quick and easy process that lead to the buy-to-let boom!

The Residential Landlords Association (RLA) has grave concerns about the Government’s plan to modify the Section 8 process. RLA Chairman Alan Ward says the Section 8 process “requires significant improvements” before the new Housing Courts system is put in place, and those improvements will need time to bed in.

Renting Homes Act

Although these changes will initially affect only England, landlords in Wales have been told by the First Minister that the Welsh Government are set to follow suit. “Section 21” as a name, however, will not be applicable in Wales from 1st September when the Renting Homes (Wales) Act will replace the Housing Act 1988.

Have Your Say

The RLA have launched a landlord survey asking for experiences and what important aspects you, as landlords, want to see protected amongst the Section changes. You can click here to take part.

Sources: Letting Agent Today on Alternative to Section 21 / Letting Agent Today on Scrapping Section 21 Long Overdue

*as quoted by HomeLet

Related: New Law for Welsh Lettings / DPS Over 6 Weeks Behind on Deposit Dispute Decisions

Spring Cleaning 2019

Maintaining your rental property is an essential part of being both a landlord and a tenant. Here are some tips from our Maintenance Manager Laura on things to consider.

Landlords

Gutter Cleaning. Blocked gutters can cause damp issues within the property, which can be costly (and difficult) to rectify. Getting your gutters cleaned annually helps keep them working properly.

Deck Cleaning. Avoid slips and falls by getting your garden decking cleaned annually. Cleaning will also prolong the life of the wood.

Boiler Servicing. Is 2019 the year you commit to annual boiler servicing? Getting your boiler serviced every year can reduce the risk of costly breakdowns.

Budgeting for Emergencies. When reviewing your finances for the new year, did you budget for emergency maintenance? We all hope it won’t come to it and at McCartan, we want to work with you to minimise the risk, but boilers do break and pipes do burst. If you can put a small amount of the rent you receive away each month for those rare emergencies, you’ll be more prepared should the worst happen.

If you are a self-managing landlord, now might be a good time to check in with your tenants, plan any property visits, and ensure they know how to best contact you to report any maintenance issues.

Tenants

Gardening. Gardening is the major one! This warm weather mixed with all this rain is making everything grow! Plan to mow your lawns, trim the hedges, and get a jump-start on any weeding. If you’re struggling to manage your garden or you just don’t have the time, let us know and we can recommend a gardener to you (at your own cost).

Bleed radiators. If your radiators aren’t heating up properly, they might need bleeding. This is tenant responsibility, and helps keep the heating system healthy.

Mould and Mildew. If you have any, make sure you wipe it down, and heat and ventilate your property properly to avoid reoccurrence. Rent Smart Wales produced a handy guide on preventing and managing mould and mildew – you can click here to take a look.

Remember to report any maintenance issues as soon as they arise. Managed tenants can report maintenance to us through the “report maintenance” button on our website. You will have been given our emergency maintenance mobile number on your Move-In Information Sheet.

If you’d like recommendations for qualified, insured contractors, or if you’re looking for a proactive managing agent, please don’t hesitate to get in touch. You can call the team in the office on 01792 430100, or click here to send an email.

Buy-to-Let Deal of the Month

My Buy-to-Let Deal of the Month is back in Dunvant - and once again, by the time we get to publish our newsletter, it's been sold subject to contract.

Click here to view the brochure. It just goes to show that when good properties with good prices come onto the market, they don’t hang about!

This 3 bedroom terrace is in need of modernisation (which is reflected in the asking price). What makes it interesting is not only that it would give a nice 6% yield (based on a purchase price of £130,000 and a rental income of £650pcm once modernised), but that there is lots of scope for adding capital value to the property as well.

Located close to Dunvant Primary School and Olchfa Comprehensive, it would be ideal for working family tenants who are generally more likely to stay long term.

The trick is always to see these properties first, so here are my top tips on getting there first:

1. Know the stock. Immerse yourself in the local property market; once you are familiar with the local streets and areas you are interested in, you’ll soon see when the bargains come up.

Extra tip: Don’t let an estate agent tell you where the best place to invest in buy-to-let is - their job first and foremost is to sell you a property!

2. Register with all the sales agents and pop in regularly. If the agent can put a face to the name, you should be at the forefront of their minds and hopefully they’ll call you first when a good deal comes on the market. After all, as I said above, their job is to sell you a property!

3. Be specific. Make clear with your requirements, budget and locations – not only with yourself, but with the estate agent as well. A net spread too wide will not yield great results. Speak to your local dedicated letting agent; as letting agents, it's our job to know what is and isn't a good property choice for let in Swansea.

At McCartan, we use our expert local knowledge and understanding of the market to help you narrow down what it is you need to be looking for to suit your needs.

4. Get organised. When the perfect property comes up, you need to be in a strong position to act quickly. Get your finances in order - speak to independent mortgage advisor ahead of the search and get a decision in principle (DIP) in place, or ensure you know your budget ahead of time if planning to make a cash purchase. It's also wise to get a solicitor lined up to do your conveyancing as you’ll want to instruct as soon as you have an offer accepted!

Extra tip: Don’t forget about the 3% stamp duty surcharge on second properties!

5. Be flexible with viewings. Once a property comes to the market, you’ll need to get to view it as soon as possible in order to make an informed decision about whether to spend any more time and money on it. This is the biggest obstacle most landlord-investors have. If looking for property full time isn’t going to work for you, carve out time in your diary every fortnight to concentrate solely on the search and get viewings booked. Try to organise your time so you know when you can be in a position to view quickly if you do see something interesting come to the market.

If you're interested in investing in buy-to-let and would like advice on the best areas or what to look out for, we'd love to speak with you. We offer a complimentary buy-to-let investment advice service. Call us in the office on 01792 430100 to book an appointment, or click here to send us an email.

Are You a Resident or Business Owner in Killay or Dunvant?

I'm appealing to all residents and business owners of Killay and Dunvant to help support Friends of Dunvant Park in getting a fence installed around the childrens' play area in Dunvant Park.

The park is a wonderful space for the whole community to enjoy, but as the play area is not enclosed, it is difficult to stop children from running off and dogs are free to run in, causing a risk to both the children and the animals.

A fence will create a more inviting space for families to enjoy and attract more visitors to the park. With more families visiting the park, it will also have a positive knock on effect of reducing the amount of anti-social behaviour the park is currently experiencing.

Charity Quiz Night

We are also organising a Charity Quiz night in The Commercial in Killay on Saturday 8th June (2019). It starts at 7.30pm, and there will be an auction and a raffle.

Tickets cost £5, (which include a chicken curry and chips!), and can be bought from The Commercial or the McCartan office, both on Gower Road, Killay.

We are also looking for donations for the raffle and auction. Please get in touch if you can help.

Hope to see you there!

If you have any questions, feel free to get in touch - click here to email me.

McCartan Rental Tracker

Average Asking Rent in Swansea

	1 bed	2 bed	3 bed	4 bed	5 bed
Houses	£524pcm	£600pcm	£720pcm	£795pcm	£884pcm
Flats	£556pcm	£760pcm	£765pcm	£1,046pcm	£1,071pcm
All	£548pcm	£708pcm	£734pcm	£823pcm	£887pcm

Difference from March 2019

	1 bed	2 bed	3 bed	4 bed	5 bed
Houses	0.77%	-2.76%	-2.04%	-1.00%	8.07%
Flats	2.39%	-0.78%	-6.59%	-5.25%	29.66%
All	2.05%	-1.39%	-3.04%	-1.67%	8.44%

Number of Properties Available

	1 bed	2 bed	3 bed	4 bed	5 bed
Houses	117	113	86	120	227
Flats	336	233	37	15	4
All	453	346	123	135	231

Difference from March 2019

	1 bed	2 bed	3 bed	4 bed	5 bed
Houses	-0.85%	-3.42%	-20.37%	1.69%	-0.44%
Flats	7.35%	-2.92%	-5.13%	0.00%	-33.33%
All	5.10%	-3.08%	-16.33%	1.50%	-1.28%

Source: Zoopla (as at 29/04/19)

Related: March Stats / February Stats