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What Rules and Regulations Are Landlords Falling Foul of the Most?

In this three-minute read, we take a look at the most common rules and regulations that landlords need to remember.

Being a landlord is a tricky business. There are nearly 200 different pieces of legislation covering the how, why, and when of managing a rental property. Here are just four that landlords are often not getting quite right.

Deposit protection

In England, Scotland, and Wales, the deposit must be registered with a deposit protection scheme. The 2021 UK Landlord Survey found that 81% of landlords find registering their deposit difficult.

The deposit must be registered within 30 days of receiving cleared funds. The schemes are government-approved and the tenant must be informed where the money is deposited.

Energy performance certificates

Every rental property in the UK has to have an Energy Performance Certificate (EPC). They are stored on an electronic register that is publicly available. However, they also have to be included in any advertising you do for your property.

Electrical safety regulations

In June 2020, strict rules about electrical testing for new tenancies in rental properties came into force. Inspections must be carried out by a qualified person on all fixed electrical installations.

Since 1 April of this year, it also came into force for existing tenancies. A professional with an industry-recognised apprenticeship or Level 3 Certificate in Installing, Testing and Ensuring Compliance of Electrical Installations in Dwellings must carry this out. Any issues have to be resolved and the tenant must receive a copy of the inspection report within 28 days.

Gas safety check regulations

If you have gas going in to your rental property, all appliances, pipework, and flues must be checked annually.

As for the electrical safety tests, ensure that you use a qualified engineer and don’t plump for the cheapest. The report must be given to the tenant within 28 days as well.

TOP TIP: As with any time you need to visit, or arrange a visit to the property, make sure you give the tenant at least 24 hours’ notice. Keep a record of having given notice. If the tenant refuses access, you’ve then got the evidence that you tried.

If you’re a landlord and are not 100% sure on all the rules and regulations you need to abide by, get in touch with us at Nest in Essex. A free, no-obligation chat will show you what you might need to tweak or if you’re on the right track.

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How to Protect Yourself from Home Hijackers

In this three-minute read, we look at a devious dupe that fraudsters use to rip off homeowners.

Fraudsters will go to great lengths to make a buck – and that includes trying to steal a home from under the owner’s nose.

Now, this may sound far-fetched, but this type of crime – called home hijacking – is real. 

Last year, the Land Registry beefed up its fraud management systems in response to the threat. It also paid out £5.5 million in compensation for fraud and errors within its register.

House hijacking

The scam can work in various ways.

  1. The crook changes their name by Deed Poll to your name. They obtain ID in your name and put your house on the market. 

They claim they need to sell quickly, so ask for cash buyers only and market the house themselves on an online portal at a low price. A gullible purchaser then acts swiftly to grab the ‘bargain’. 

The house ‘for sale’ is often empty (it may be a second home) or in the process of being refurbished.

On other occasions, it’s rented out, and the tenant, or someone else with access such as a cleaner or gardener, cheekily takes the marketing photos and handles the ‘viewings’.

By the time the buyer realises they’ve been duped, the fraudster is long gone with their money. The genuine owner of the property finds themselves caught up in this tangled mess and has the stress of trying to rectify the situation.

2)    The fraudster assumes the owner’s name and identity and then takes out a loan against the property. Mortgage-free properties are common targets. The property owner usually only discovers the loan when they get a letter from a lender about missed repayments.

How to protect yourself

If you’re a buyer

  • Treat any ‘bargain’ that you spot online with suspicion, especially if it’s not marketed by a reputable estate agent.
  • Insist on viewing a property in person.
  • Never allow a seller to convince you to cut corners in the transaction process or pressure you to ‘pay up today’.
  • Always seek independent conveyancing advice.

If you’re a homeowner

  • Be aware that properties that don’t have a mortgage or have not been sold or mortgaged since 1998 are more at risk.
  • Check your property is registered with HM Land Registry.
  • Sign up to receive an alert from the Land Registry every time someone carries out an application or search on your home. 
  • Put a restriction on your title. This stops HM Land Registry from registering a sale or mortgage on your property unless a conveyancer or solicitor certifies you made the application. If you live in the property, this costs £40. If you don’t reside in the property, you can do it for free. 

For more advice about buying or selling a property, contact us here at Nest in Essex.

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Buy-to-Let Mortgages: What Landlords Need to Know

In this three-minute read, we compare the different types of buy-to-let mortgages.

When choosing the right buy-to-let mortgage, landlords face a key decision: go with an interest-only deal or opt for a capital repayment arrangement.

Both options have their pros and cons. Let’s take a closer look.

Interest-only mortgage

Your payments only cover the interest on the loan and have no impact on the capital. 

Pros

  1. Lower repayments

Your monthly repayments are lower than that of an equivalent capital repayment mortgage.

For example, with a 25-year interest-only mortgage of £200,000, monthly repayments would be £573 (4.45%, fixed for three years). With a similar capital repayment mortgage, you’d pay £996 a month*. That’s a difference of £423 a month.

  • Less financial stress in between tenancies 

If the property is vacant for any reason, it will fall on your shoulders to cover the repayments. Lower repayments equal less stress.

  • Bigger monthly income

As your mortgage repayments are lower, less of the rent goes to your lender. Instead, it winds up in your pocket.

  • More flexibility

You can spend this extra cash on the upkeep and improvement of the property or divert it to other investments.

  • Sell and make a profit

If the property appreciates in value over time, you can sell up and make a tidy profit.

Cons

  1. You won’t own the property

As you won’t be repaying the capital loan, you’ll still owe a substantial sum at the end of the mortgage. (Although you can sell the property, pay this debt, and hopefully still be ahead.)

  • The lender earns more

You pay more interest to your lender over time compared to a capital repayment mortgage. This is because you never reduce the size of the capital loan, so the interest charges never reduce.

  • Risk of negative equity

Historically, property prices have been on an upward trajectory – last year, they grew in the UK by a whopping 8.5% – so the risk of negative equity is low. 

And even if prices do drop, if you’re prepared to ride out market fluctuations, then the long-term outlook is positive.

The real risk comes if you need to sell in a hurry. If the property’s value has dropped, you could end up owing more than the property is worth.

Capital repayment mortgage

Your monthly repayments cover the interest and gnaw away at the capital.

Pros

  1. Ownership

At the end of the mortgage term, the property will be yours.

  • Less interest

You pay less interest overall because the capital loan decreases – albeit gradually – with every repayment.

Cons

  1. Higher repayments

As we mentioned earlier, the monthly repayments will be higher, and you’ll need to cover them when the property is vacant.

Choosing the right option

There’s no one-size-fits-all solution, although most landlords opt for interest-only**. 

Landlords need to weigh up their circumstances and investment goals carefully. For some, the priority is earning a monthly income; for others, it’s working towards owning a property that they can pass on to their children or even move into themselves.

For advice about making a buy-to-let investment work for you, contact us here at Nest in Essex.

*Approximate figures only, based on a property worth £265,000. Always seek independent financial advice.

** National Landlords Association

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Tips for Getting a Good Mortgage Deal

In this three-minute read, we look at how homebuyers can get a good mortgage deal.

For most people, a mortgage is the biggest loan they’ll take out in their lifetime so, understandably, they want to land the best deal.

But with hundreds of mortgage products on the market, it’s easy for homebuyers to feel overwhelmed or confused.

There’s a lot to consider, including:

  • Interest rates (they’re currently low – but won’t be forever).
  • The term (most mortgages last 25 years, but some can stretch to 40 years).
  • Whether to go fixed (where the interest rate is set for a certain number of years) or variable.
  • Mortgage fees. Lenders can charge valuation, arrangement, early repayment, or missed payment fees. Now, you won’t necessarily be hit up for all of these fees – each deal is different – but it’s important to know what you’ll be charged.
  • An interest-only mortgage (you pay back the interest, not the capital) versus a repayment mortgage. 

Where to start

Given a mortgage is such a significant transaction, most people seek advice from a lender or independent financial adviser.

Talking to your bank or building society isn’t a bad idea (after all, they’ll know quite a lot about your financial situation). But this approach does have a significant limitation: the lender will only advise you on their products. 

For this reason, many people go with an independent mortgage adviser to get a broad picture of the overall market.

If you use an independent mortgage adviser

Always choose an experienced adviser with a good track record (ask friends or family for a recommendation).

Also, be aware that some mortgage advisers charge an upfront fee; others get paid a commission from lenders. So it’s best to know from the outset what the situation is.

Other mortgage tips 

If you’re re-mortgaging: Even if you think you know what you’re doing, it’s still worth getting advice as the market has changed significantly in the past 12 months due to Covid-19.

Get your paperwork in order. To make an application, you’ll need three months of bank statements, three months of payslips, ID, a P60 if you’re employed, or copies of your accounts if you’re self-employed.

Credit check caution: Avoid making multiple mortgage applications at the same time (either online or in-person), as this can negatively impact your credit rating. A single application won’t do any damage, but several ‘hard searches’ – when a lender takes an in-depth look at your credit history – will. Essentially, the system assumes that you’re trying to obtain several loans simultaneously and are in financial difficulty. 

Be honest. Like it or not, most, if not all, of our financial activity is tracked online. If you lie in a mortgage application, chances are you’ll be found out.

For more advice about buying a property, get in touch with us here at Nest in Essex. We’re here to help.

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How Landlords Can Nip Garden Disputes in the Bud

In this three-minute read, we look at who is responsible for maintaining the garden at a rental property.

The most significant property trend to emerge from the pandemic has been the surge in demand – from buyers and renters – for properties with gardens.

The race for space is undoubtedly good news for landlords marketing properties with a garden, balcony, or courtyard. 

And it’s not just easier to rent out a property with a garden; it’s more lucrative, too. New research shows renters are willing to pay on average 25% more for a home with a garden*.

But letting a garden property isn’t always a bed of roses (see what we did there?); almost a quarter of all deposit disputes are over garden maintenance**. 

Often, the cause of tension is confusion over who is responsible for what when it comes to maintaining outdoor spaces.

This all should be spelled out in the contract, but generally speaking, the tenant should keep the garden in good condition and return it in the same state it was in at the start of the tenancy. Jobs that fall under the tenant’s remit include weeding, watering, and removing litter.

The landlord is responsible for tasks that require expertise, such as lopping off tree branches, fixing broken fences, and any other structural work. 

Here are a few ways landlords can safeguard themselves from getting dragged into a garden dispute.

  1. Lay the groundwork

Ensure that the garden is in good condition before you rent out the property. Plant low maintenance shrubs, sort out uneven paving stones, and get rid of that rickety old shed. 

  • Outline responsibilities

Explain (in person and in writing) what you expect from the tenant and what they can expect from you.

  • Keep records

Often landlords diligently record the condition of the fixtures and fittings of the property’s interior but make little or no mention of the exterior. Check-in and check-out reports should detail the condition of the garden with photographs and descriptions. 

  • Regular inspections

When you carry out a property inspection during a tenancy, don’t forget to look at the garden. Document its condition (photographs are a must), and if any issues are apparent, ask the tenant to rectify them.

  • Be flexible

A tenant is not allowed to make changes to the garden without the landlord’s permission. But if they ask to plant a veggie patch or add some more plants, be flexible. If your tenant is reliable and responsible, allowing them to create the garden of their dreams will encourage them to stay long term. Always clarify any agreed changes in writing beforehand. 

If you have any questions about tenant/landlord responsibilities, get in touch with us here at Nest in Essex.

*Analysis carried out by Paving Direct, based on the average price of renting a three-bed home in cities across the country on Rightmove. Read the full report: https://bit.ly/3gyOJEj

** Data from The Dispute Service. Figures cover the year up to March 2020. 

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Advice on Choosing a Good Removal Firm

This three-minute read gives you a few ideas to consider when choosing your removal firm.

Getting the right people to help you move home is so important. This means your estate agent, your conveyancer, and the people that will do the physical heavy lifting. Choosing the right removal firm will make a big difference, not only on moving day itself, but before, and after, your move.

Reviews and recommendations

A good place to start looking for a removal firm you can trust, is to ask people you know. This could be friends, family, or your property move team, like your estate agent and conveyancer.

After you’ve been signposted to a few companies, it’s time to do some research for yourself. People move home infrequently so it’s always a good idea to check for recent reviews.

If property professionals have themselves used a particular company when moving home, it’s normally a pretty good sign that they’re the best.

Do your research

You’ve looked at the reviews on the company website, social media pages, and an independent review site, like Google Reviews or Trustpilot. There’s a few bad ones but mostly positive. Should you just leave it at that and book with them? Of course, you could but there are a few more recommended steps to take.

  • Ask the company for some previous customers’ contact details. You can then have a real-life conversation with someone to explore the service they received. If the company decline, that’s a red flag.
  • Ask the company what their insurance policy is. Ask them to send you a copy. This is standard practice so if they have any objections, you know this is another red flag.

Check the Ts & Cs

It’s easy for someone to ping you a quote: “That’ll be £5,000 for your move”. What should also be attached are their terms & conditions. It’s important that you get these to look through and that you actually read them.

The British Association of Removers have a set that are good. Even better companies will adapt them to their own requirements.

Extra suggestions

When it comes to arranging a moving date, exchanges and completions can be a moveable feast. One removal firm we spoke to described it as ‘like juggling jelly’. Find out how good the removal firm is at communicating. What methods will they use? Email, phone, text, social media? You need to know that they will keep lines of communication open throughout, what can be, a tense time.

Sometimes, you can judge a book by its cover. It helps if the firm has a clear, concise website and if the staff and offices are presented tidily. Check their vehicles are clean and in good condition.

Bonus tip

Did you know? Many insurers will be able to extend your existing contents cover. This means that when the movers are in your home, you’ll have extra cover. It’s always worth taking a ‘belt and braces’ approach.

If you need any recommendations, don’t hesitate to get in touch with us on 01268 500988

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The Truth about Bad Tenants

In this three-minute read, we look at what can go wrong if you side-step tenant reference checks and wind up with a bad tenant.

New landlords often flirt with the idea of ditching traditional tenant selection processes and taking a DIY approach instead.

After all, there are so many ways to source tenants these days – like Gumtree or social media – why bother with anything else?

Trust us, side-stepping a formal selection process may seem like it might save you time, but it can be so much costlier in the long run.

Wind up with a bad tenant and you can expect:

  • Sleepless nights.
  • Sky-high legal bills.
  • Lost income.
  • Property damage.

Let us explain more about the risks of skipping proper reference and credit checks.

If you use an online platform like Gumtree

The internet has made it easier for landlords to find tenants, but not easier to find good tenants. Post an ad online, and you’ll get lots of responses – but many of them will be from time-wasters and con artists, not genuine candidates. Professionals are more likely to use a traditional bricks and mortar letting agent because they’re wary of getting ripped off in an online scam.

Tenants aren’t the only ones to fall prey to online scammers; landlords can be targets, too. Online crooks often use ‘to let’ adverts as ‘phishing’ opportunities. They pose as tenants to get as much information as they can about you and your vacant property, before they get to work fleecing you.

If you let to a mate or relative after asking around on social media

You may be tempted to ask your contacts on WhatsApp or Facebook if they’re looking for a place to rent. But be warned: things can get very messy when you blur the lines between personal and professional. If things don’t work out, it could cause a major family fall-out or friendship rift.

Sometimes, when a landlord knows the tenant, they don’t bother with a contract. Please, never, ever do this. If you do get into a dispute later, your legal options will be limited.

Some buy-to-let mortgages prevent landlords from renting to a family member or friend. Always check the fine print before making a decision.

Insurance companies often get twitchy if the tenant is a relative. In some cases, your cover is invalidated if the tenant is a family member. In other circumstances, you won’t be covered if you haven’t conducted reference checks.

What’s the alternative?

Here at Nest in Essex, we have a gold standard tenant selection process that offers you peace of mind and legal protection. It involves screening candidates by phone, in-person interviews, and rigorous reference, credit, and employment checks.

If you want to know more, contact us here at Nest in Essex.

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Should You Use the Help to Buy Scheme for Your First Property Purchase?

Three-minute read to help you consider the Help to Buy Scheme from all angles.

The Help to Buy scheme is a government-backed equity loan opportunity. It is also referred to as ‘shared equity’.

The scheme is currently only available on new build properties. The loan from the government is up to 20% of the purchase price (40% in Greater London). This means that you only need to raise a 5% deposit and get a 75% mortgage (55% in Greater London).

Let’s consider the benefits and downsides of using this option.

Pros

Although this can be called a ‘shared equity’ scheme, you will own the property 100% outright.

This low deposit amount is what can make the scheme appealing to many. It allows you to get onto the property ladder often much quicker than if you had to save for a 10% or more deposit. It’s also cheaper than getting a 95% mortgage, which is what you’d have to do without the scheme.

The first five years of the loan are interest-free and there is no maximum household income cap.

You have 25 years before it has to be paid back in full.

Cons

There isn’t a household income cap but there are regional price caps. For example, in the North West, you couldn’t purchase a property for more than £224,400 using this scheme. In London, you couldn’t spend over £600,000.

The first five years are interest-free but after that, you’ll be charged an annual fee of 1.75% on the outstanding loan amount. This fee goes up each year with inflation. The loan becomes more expensive over time but your wages may not increase at the same rate.

When you sell the property, you must pay off the loan in full. However, because the loan is a percentage of the market value of your home, the loan amount may end up being more if your home has gone up in value. This might mean that you are left with a lot less from the property sale than you would have otherwise had. This can make upsizing harder as you’re not scaling the property ladder in a linear manner.

It’s important to seek specialist financial advice if you are looking to take advantage of the Help to Buy scheme. We can recommend trusted independent financial advisers and mortgage specialists.

If you would like some support to explore what route to take when buying your first home, don’t hesitate to get in touch with us on 01268 500988