Good Landlording

The Renters’ Rights Bill makes significant changes to the rules about rent for landlords and tenants in England.

In this podcast episode, Richard Jackson and Suzanne Smith discuss the proposed restrictions on landlords when accepting offers from tenants, the new process that landlords will need to follow to increase rents, the new powerful rights for tenants to challenge and delay even reasonable rent increases, and what’s happening with advance lump sum rent payments.

They also discuss the challenges that landlords and letting agents face with a very short implementation timetable, with the expected “big bang” change over to the new tenancy system by the summer of 2025.

Finally, they share tips on how to successfully navigate the change.

>> Related episode: #26: What happens when Section 21 is abolished?

>> Blog post: The new rules about rent in the Renters’ Rights Bill

>> Ask a question: Click here for question form

Landlords will only be permitted to increase in-tenancy rent by giving at least 2 months’ notice to expire at the end of a rental period, using the statutory process in Section 13 of the Housing Act 1988, and what will be an updated Form 4.

Landlords won’t be able to increase rent by agreement (unless the agreement is to reduce rent after a landlord serves a s13 notice) and all rent review clauses in tenancy agreements will be null and void.

As now, tenants will be able to appeal Section 13 rent increase notices in the First-tier Tribunal, who will determine the market rent. If they do challenge a rent increase at the FTT, any increase in the rent will only come into effect on the date of the FTT determination. In other words, it won’t be backdated to the date specified in the notice.

This will have the effect of delaying an increase in rent that is fair and reasonable.

Given the current delays on a small number of cases in the FTT now and the expected increase in appeals, this may have the effect of what David Smith of JMW terms “rent suppression”.

The Bill does not say in words of one syllable whether advance lump sum payments may be made, and there is some disagreement between lawyers. This needs to be clarified urgently.

If upfront payments are outlawed, and given the expected increase in rent guarantee insurance as a result of the abolition of section 21, unless tenants have a good credit history, they may find it difficult to find somewhere to rent.

When landlords list or offer a property for rent, they will need to set a proposed rent. Landlords will not be permitted to accept offers above the proposed rent from prospective tenants.

Music: “Paradise Found” by Kevin MacLeod of Incompetech. Licensed under Creative Commons: Attribution 4.0 License.

In this week’s episode, Suzanne Smith and Richard Jackson discuss the practicalities of what will happen when the Renters’ Rights Bill will abolish Section 21 “no fault” evictions for landlords in England.

They cover: what is Section 21, how Section 8 will replace Section 21, the key new and changed grounds for possession, when it’s going to come into effect, and what landlords will need to do to adapt to the new regime. They also share their reflections on this new Bill.

As always, it’s a very practical episode.

PS As a general caveat, it’s still very early days with the Renters’ Rights Bill. The Bill is really difficult to understand, and we may well change our views on how to interpret it. It may also change as it goes through parliament. Before taking significant action, do get advice from a specialist solicitor. You can contact us by sending us a message on our contact page if you would like a referral.

>> Ask a question: Click here for question form

Before we get into the ins and outs of the abolition of Section 21, we wanted to share a promotion for listeners of Good Landlording that helps you, and helps support the podcast.

We all know it can be a hassle for landlords to keep on top of gas safety certificates, EICRs and EPCs, especially for those of us who have a portfolio in different parts of the country.

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If you haven’t heard of Symple, it’s a free platform that’s designed to help landlords streamline their compliance management. You can set it up to order  gas safety inspections, Electrical Installation Condition Reports (EICRs), and Energy Performance Certificates (EPC) with just one click.

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The charges for the certificates are reasonable, and all of the suppliers are vetted.

And best of all, Symple are offering listeners of Good Landlording a 5% discount on all of their products with the code GL05.

This is a paid promotion, but one that benefits our listeners as we have negotiated a 5% discount for our listeners on all certificates ordered from Symple using the code GL05.

Section 21 of the Housing Act 1988 gives landlords the right to evict tenants without needing to give a reason.  So long as that landlord serves a valid notice using Form 6A, which is on the government website, they give  two months notice  plus a few days for service (and assuming the landlord has, of course, served all the relevant documents when they needed to), then the landlord will get the property back.

The landlord doesn’t need to give a reason. It doesn’t mean there is no reason, just that they don’ need to explain their reason.

>> Blog post: How and when will Labour abolish Section 21 no fault evictions?

The only way landlords will be able to bring a tenancy to an end after Section 21 is abolished is by using the Section 8 process.

Section 8 is from the Housing Act 1988 and allows landlords to evict tenants when they have a specific  grounds or a reason. The landlord needs to provide evidence of the ground.

There are two types of grounds:

The key new or amended grounds are:

>> Blog post: The 12 key provisions in the new Renters’ Rights Bill

Government Guidance has said there will be a single implementation date when all tenancies, new and existing, convert to the new system. There won’t be a staggered implementation as with the Conservative’s Renters (Reform) Bill.

Matthew Pennycook has said he envisages that the new regime will come into place by Summer 2025.

>> Blog post: Renters’ Rights Bill timetable – What happens when?

The new Renters’ Rights Bill will completely reset the relationship between landlords and tenants, giving tenants a lot more rights.

Landlords will need to become more involved, more professional. They shouldn’t regard being a landlord as “passive income”. They’ll need to supervise letting agents to make sure they’re doing a good job. Tenant selection and inspections will become even more important. Landlords will need evidence to use Section 8 to evict tenants, so they’ll need to keep good records.

Some landlords may decide to sell some properties that are marginal, and deal with problematic tenants before the implementation. Others may decide it makes sense to sell up before the new rules come into effect.

We’ll continue to share our thoughts as we move towards implementation of the Bill.

Music: “Paradise Found” by Kevin MacLeod of Incompetech. Licensed under Creative Commons: Attribution 4.0 License.

Suzanne Smith and Richard Jackson discuss their first impressions of Labour’s new Renters’ Rights Bill in this special episode of Good Landlording, shortly after Bill was published.

They go through the big ticket items in the new Bill, how it compares to the old Renters (Reform) Bill, and what landlords should do to prepare for the new Bill.

They’ll be discussing the Renters’ Rights Bill in more detail in the coming weeks and months, but this episode provides a useful overview of what’s in the Bill, and what’s not.

>> Ask a question: Click here for question form

The Renters’ Rights Bill is very similar to the old Renters Reform Bill, but with a fair few Labour “tweaks”, notably removing the concessions given to Conservative backbench MPs at the Report Stage of that Bill, banning rental bidding, and giving tenants more rights when it comes to challenging rent increases.

There are no dramatic surprises as the main provisions have been well signalled by the Labour government. The amendments that Labour proposed at the Report Stage of the Renters (Reform) bill have been reflected in the new Bill.

>> Useful resource: Renters’ Rights Bill Hub

>> Blog post: How the Renters’ Rights Bill compares with the Renters (Reform) Bill

The Renters’ Rights Bill takes the same approach to the abolition of Section 21 no fault evictions as the Renters (Reform) Bill. However, there will be no delay to the implementation for existing tenancies for the Lord Chancellor’s review of the operation of the County Court eviction process as there was with the Conservative’s Bill.

Instead, there will be a “big bang day” when all tenancies will switch to the new regime, without Section 21, whether they are new or existing tenancies.

The abolition won’t affect notices that are served before the Bill comes into force.

>> Blog post: How and when will Labour abolish Section 21 no fault evictions?

As per the old Bill, assured shorthold tenancies will be replaced by periodic assured tenancies and landlords won’t be able to sign up renters for a minimum period. Renters will be able to serve 2 months’ notice to quit at any time.

Labour have done this to make tenants flexibility so that they’re not tied in and can leave places that are in disrepair. It’s part of their aim of giving more power to renters.

There is no exception for student landlords, and they won’t be able to stop tenants moving out at Easter or after the exams in May.

Contrary to media reports over the summer, the Renters’ Rights Bill does not introduce a hardship test for Mandatory Grounds, which would have effectively turned all Mandatory Grounds into Discretionary Grounds.

Landlords will be pleased that the new Bill contains the new Ground 1A from the Renters Reform Bill which entitles them to possession if they can demonstrate they wish to sell the property.

Despite recent speculation, there are no rent controls in the Bill and no provisions to devolve the power to impose rent controls to local government and the Metro Mayors.

Landlords will only be able to increase the rent by using the Section 13 procedure, and the notice will be doubled from one month to two months.

Renters will have less to lose by challenging a rent increase that is above the market rent in the First-tier Tribunal as the tribunal will only have the power to reduce the rent or keep it the same. In other words, renters won’t run the risk of having the tribunal increase the rent.

The rent increase will come into effect from the date of the decision by the Tribunal, and Tribunal will have the power to relay the increase by two months in the case of “undue hardship” on the part of the tenant.

>> Blog post: How Landlords can increase rent with a Section 13 Notice 

Landlords and letting agents will not be able to encourage applicants to bid over the asking rent in the advert or listing, and won’t be able to accept offers above the asking rent.

As with the Renters Reform Bill, there are provisions on the Decent Homes Standard, the PRS Ombudsman, the PRS Database, no discrimination against families or people on benefits.

There also is wording that extends Awaab’s Law (Section 42 of the Social Housing (Regulation) Act 2023) to the PRS. This will introduce an implied term into tenancy agreements to the effect that all landlords will required to fix reported health hazards within specified timeframes. In other words, not just social landlords.

Landlords should control what they can control. This means getting organised, catching up on any outstanding repairs and focusing on tenant selection.

Follow Good Landlording on your favourite podcast app, so you don’t miss out on new content on the Renters’ Rights Bill.

>> Useful resource: Renters’ Rights Bill Hub

Music: “Paradise Found” by Kevin MacLeod of Incompetech. Licensed under Creative Commons: Attribution 4.0 License.

Almost 40% of the properties in the PRS in England are leasehold, so the chances are that if you’re a private landlord listening to this podcast, you’ll have at least one leasehold property in your portfolio. 

If you do own a flat in England or Wales, or are thinking of buying one, you need to listen to this episode of the Good Landlording podcast.

This is because the government plans to “take steps to bring the feudal leasehold system to an end”, by “reinvigorating commonhold through a comprehensive new legal framework”, and replacing leasehold with commonhold. As part of this, the Government say they will ban the sale of new leasehold flats so that commonhold becomes the default tenure.

This promises have significant implications for leaseholders, should it see the light of day, and it’s something that property investors need to understand.

However, abolishing “feudal” leasehold is also a lot easier said than done, and in this episode of Good Landlording, Richard and Suzanne discuss what it all means, and what’s likely to happen in practice.

They also talk about the implementation of the Leasehold and Freehold Reform Act 2024, and plans to abolish forfeiture and tackle ground rent for existing leases.

>> Ask a question: Click here for question form

The Leasehold and Freehold Reform Bill managed to get onto the statute just before the election, becoming the Leasehold and Freehold Reform Act 2024. 

The Leasehold and Freehold Reform Act 2024 has the following key provisions:

At the moment the Act has only received Royal Assent, but hasn’t yet come into effect. However the Government’s July 2024 King’s Speech says “The Government will act quickly to provide homeowners with greater rights, powers and protections over their homes by implementing the provisions of the Leasehold and Freehold Reform Act 2024”.

They also say in the King’s Speech that they will “will consult on the best way to bring […] the injustice of ‘fleecehold’ private estates and unfair costs to an end […] and implement new protections for homeowners on private estates in the Leasehold and Freehold Reform Act 2024.

It’s expected that leaseholders will need to wait until 2025 or 2026 before they can exercise their rights to extend leases for up to 990 years, but the Government will be under pressure to do it as soon as possible.

The King’s Speech refers to publishing a draft Leasehold and Commonhold Reform Bill that will “reinvigorat[e] commonhold by modernising the legal framework”. They will also “restrict the sale of new leasehold flats. The Government will consult on the best way to achieve this, so that generations to come will benefit from absolute homeownership”.

The use of the word “draft” means the Bill itself is unlikely to be presented to parliament in the next year. Instead, they will publish it to enable people to comment on it as commonhold is very complex.

The new draft Bill will also contain provisions regarding ground rent and forfeiture.

>> Blog post: What will be in the new Leasehold and Commonhold Reform Bill?

The Conservatives had promised in their 2019 election manifesto that they would restrict ground rent to a peppercorn for existing leases. The 2023 King’s Speech referred to it as well, but although the Conservatives carried out a consultation onto how to restrict ground rent, it was never added the Bill. It was rumoured that the Treasury had opposed it.

Labour have been very vague about what they will do with ground rent, saying they will “tackle unfair ground rent” for existing leases.

>> Related podcast episode: Flats versus houses as landlord investments

>> Related podcast episode: Election manifesto pledges on leasehold reform

The 2024 King’s Speech briefing notes say the Government will “end the injustice of forfeiture so that leaseholders are protected against losing savings they have in their home for potentially small unpaid debts”.

The briefing notes go on to say: “Landlords need an effective way to recover debts but the fact this can happen over what might be a small breach underlines its draconian nature”.

If a leaseholder refuses to pay a sum over £350, eg the service charge or ground rent for more than three years, and they’ve admitted it’s payable, then the freeholder can forfeit the lease. There’s no set off, so the leaseholder would lose the entire value of the leasehold property, even if the lease is worth significantly more than the money they owed the freeholder.

Therefore, if someone has a flat worth a million pounds in London and they don’t pay a service charge of £500 for 3 years, they will potentially lose the flat through forfeiture. 

Forfeiture shows that the balance between freeholders and lease holders is very tilted towards the freeholders. It underlines that leaseholders are in a landlord and tenant relationship with freeholders. 

It’s likely the Government will introduce a simple clause to the Bill that abolishes forfeiture. It may be along the lines of what they attempted to do with Amendment NC5 of the Leasehold and Freehold Reform Bill. However, as with all of the Labour amendments to the Bill, this was voted down.

In the briefing notes to the 2024 King’s Speech, the government said they will “take steps to bring the feudal leasehold system to an end, [by] reinvigorating commonhold through a comprehensive new legal framework and banning the sale of new leasehold flats so commonhold becomes the default tenure”.

They plan to consult on the best way to go about it “so that generations to come will benefit from absolute homeownership”.

We’ve had commonhold in England and Wales since it was introduced by the Blair government in the Leasehold and Freehold Reform 2002 Act. However, it has not been popular, with under 20 blocks converting to commonhold ownership since then. The Government intends to “reinvigorate” commonhold, addressing some of the reasons why it’s been unpopular so it becomes easier and more flexible to operate.

The best way to understand commonhold is to contrast it with leasehold.

When someone buys a flat in England and Wales at the moment, they may believe they’re the owner of the flat, but they’re not. They just have a right to occupy that flat for a certain amount of time and are in a landlord and tenant relationship with the person who owns the freehold. This is also be the case for leasehold houses.

Leasehold property is a time limited wasting asset because its value falls as the unexpired time on the lease reduces. Of course, leaseholders can extend the lease, but it’s complicated and expensive.

With commonhold on the other hand, the owner of a commonhold flat is a “unit holder” who owns the freehold of their flat. It’s not a leasehold.

A well as owning their flat as a unit holder, they’re also a member of a common hold or residence association, which owns and manages the common parts of the building for all of the unit holders.  With commonhold, there is no lease, and the commonhold association decides how to manage the property. 

It’s a completely different concept to leasehold, and the right to manage, as the people who own the block are all the unit holders. They also have the freehold of their flat, so there isn’t a lease between the flat owners and the freeholder.

It’s not a new, groundbreaking concept as it’s very similar to the condominium structure in the USA, and the strata concept in some Commonwealth countries.

However, the way it’s been implemented in England and Wales to date has been problematic, which the Law Commission summarised in their 640 page report in 2020 Reinvigorating commonhold: the alternative to leasehold ownership. The report had 120 detailed recommendations on how to improve commonhold.

As the government will be consulting on how to modernise this this framework so it is fit for purpose, it’s a very long term project, and won’t be happening any time soon.

The Government believes that leasehold isn’t working, especially as there have been so many issues with newer developments with the freeholders treating it as an ongoing profit centre.

Doubling ground rent clauses and secret commissions on insurance have shown how much of a power imbalance between the leasehold and many freeholders.

Whilst the Government has the big picture of abolishing leasehold and replacing it with commonhold, there isn’t detailed road map to get there.

We also don’t know how the conversion of existing blocks from leasehold to commonhold will work, or how much it will cost. The process needs to be simple, and that isn’t easy. It’s not like a lease extension and will undoubtedly be great for lawyers!

It’s likely that the initial focus will be on creating new developments as commonhold, before converting existing properties. Some may decide not to convert their tenure to commonhold.

Music: “Paradise Found” by Kevin MacLeod of Incompetech. Licensed under Creative Commons: Attribution 4.0 License.

In this summer special episode of Good Landlording, Richard Jackson and Suzanne Smith pick the brain of Wendy Whittaker-Large about what makes a successful, systemised HMO business.

The episode a fantastic source of information for anyone who has HMOs, is thinking of converting a property into an HMO or is just “HMO-curious”.

Wendy gives an insider’s view of how to make HMOs a success, and build an efficient systemised HMO business.

>> Ask a question: Click here for question form

Wendy Whittaker-Large is the multi award winning founder of BestNest, a property development and lettings business, and HMO Success, a specialist  HMO training and mentoring company.  She’s also the chair of the HMO Council Tax Reform Group which successfully overturned the single banding of HMO rooms for council tax in 2023.

Wendy is a landlord who’s grown a large property portfolio since 2012, mostly focused on HMOs. 

She has also published two books about HMOs: 101 Essential Tips for Running a Professional HMO and Extraordinary Profits from Ordinary Properties (Amazon links).

Wendy is a regular on the speaking circuit, and has a successful podcast called the HMO Success Podcast which is available on Apple, Spotify and Podbean).

An HMO is a house in multiple occupation, in other words, a building in which three or more households live together It’s a cross between a hotel and a house, with people living there, or a family home where you might have you know four or five adults living.

Whatever happens in the market, there is always a need for good quality, dense housing.

Wendy believes HMOs offer tremendous benefits both for the people who live there and also, of course, for landlords investing in this type of housing. 

Buying an HMO allows one property to generate more revenue than renting it out as one single family let.  Wendy says that an average yardstick would be £1,200 – £1,400 pcm net profit across the country.

On the other hand, there is more work, more investment and more management time. HMOs cost more to refurbish, as they need to have better fire doors and fire protection, and amenities. The HMO is likely to need a licence, and they are subject to more legislation, such as the HMO Management Regulations.

>> Blog post: Property investor guide to the successful management of HMOs

Renters like HMOs as usually they only pay one amount which includes the rent and the bills. In an age of uncertainty over fuel bills and the cost of living, tenants like only paying one amount per month which covers everything. 

Living in an HMO is very flexible as there is usually no long term commitment. Tenancies are usually for 6 months and are suitable for those on contracts, who are maybe working across the country, who don’t know where they’re going to be in the future.

Wendy recommends cities and large towns with more than 80,000 people, as they are likely to have the demand from HMO renters.

HMO landlords should use a specialist tenancy agreements for HMOs, as opposed to ones for where the property is let to one household or two sharers. This is because professional HMOs tend to be let by the room, and not as a joint tenancy. The renters have exclusive possession with quiet possession of their room (and perhaps an en suite), and share the common parts.

The landlord is able to enter the common parts for inspections, and often include a cleaner in the rent.

Although it’s possible for HMOs  with four large bedrooms to achieve £1,200-£1,400 pcm profit a month as they’re big rooms with en sutes and a kitchenette in a good location, on the whole, Wendy believes that the ‘sweet spot” is a six bed HMO for 6 occupants.

Unless the property is in an Article 4 area, no planning permission is needed to convert a house into an HMO if there are up to 6 occupants.

HMOs with 7 or more occupants are “large HMOs” and require “class sui generis” planning permission.

Local authorities may put an Article 4 direction in place for an area which requires landlords to obtain planning permission if they convert a normal family home (C3 use) into an HMOs (C4 use).

Consequently, if you’re planning to convert a single home to an HMO in an area subject to Article 4, you’ll need to allow extra time for the planning permission. Also, there may be a risk that it’s not granted, so you’ll need a Plan B.

Each local authority will have a map on their website that shows any Article 4 areas (and areas that require landlords of small HMOs (3-5 people) to obtain an Additional Licence.

If it’s an Article 4 area, the investor must check whether it’s likely they’d get planning permission for to convert a family home to an HMO. Some local authority areas offer the option of a pre-planning application to obtain initial advice and feedback from the planning authority. Other local authorities don’t offer this.

Assuming that planning isn’t an issue, the first big step is to start the development.  Investors should draw up proper floor plans- they are crucial for a first development because it’s very easy for a builder to misinterpret or reinterpret  what the investor wants to achieve. 

Wendy recommends a full specification of works  based on a proposed floor plan, which shows where, let’s say, the en suites are going to go, how the kitchen is going to be planned, how the communal space is going to work out, and how the development will comply with the amenity standards.

Most local authorities have amenity standards for HMOs. Although technically it is guidance, it’s important to follow them. Some are very detailed and some are broad. They usually include the minimum room sizes and may go so far as to say how long the work top in the kitchen should be.

>> Useful resource: Cheshire East’s Amenities and Facilities Standards for HMOs

>> Useful resource: Lambeth’s Amenity standards for HMOs

It is advisable to start the application for Mandatory Licence as soon as the landlord starts to let the individual rooms. This is permittable as landlords don’t need a Mandatory Licence until they have 5 occupants.

Assuming the property does not need an Additional Licence (where there are 3-5 occupants from two or more households), the landlord can have 4 occupants in the property without a Mandatory Licence.

>> Blog post: Property investor guide to HMOs

Mortgage companies typically need to see signed ASTs to show the property has paying tenants, the completion certificate from Building Control, and the HMO licence.

Generally it can cost £14,000-£18,000 per room, or a minimum of £80,000 for a six bed HMO. This would cover it back to brick, putting in en suites, putting in new sanitary ware throughout, stud walls, plastering, new kitchen, all the all the fire requirements, interlinked smoke detectors and fire alarm system, fire doors, rewiring, replumbing and sometimes acoustics to limit noise.

For successful professional HMOs, Wendy recommends requiring that tenants are over twenty one and in full time employment. They check the right to rent and references from their employer and their previous landlord. They also insist on a guarantor.

>> Related episode: #2: How to select good tenants

It is efficient to provide all of the paperwork online, and sign the AST electronically. Once they are signed up, Wendy recommends sending the new tenants a welcome pack and giving them an induction when they move in.

The induction involves going through everything in the property, explaining what to do in the event of an emergency, and where the stopcock is. It’s important to introduce them to some of the other tenants. as it’s a home, not an institution or a hostel.

Managing HMOs can be very overwhelming, particularly when an investor starts to scale the business beyond 4 or 5 HMOs. Here are tips to avoid being overwhelmed by your HMO business:

Wendy recommends that HMO investors read The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael Gerber (Amazon link). “It’s an absolutely fantastic book  that will help you to systemise your business effectively so that you can have time  to do what you should be doing, whether that’s being an entrepreneur, a business owner, or a parent”.

Music: “Paradise Found” by Kevin MacLeod of Incompetech. Licensed under Creative Commons: Attribution 4.0 License.

In the third of four summer special episodes, Richard Jackson and Suzanne Smith speak to Lisa Brown, nurse turned property developer, who explains how landlords can make a success of leasing their properties to providers of supported living housing.

In this episode, Lisa explains what supported living is, how it works, what type of properties are suitable, adaptations, choosing a provider and the advantages and risks for the landlord.

You can also connect with Lisa on LinkedIn and find out more information on the Supported Living Property website, the Supported Living Property Podcast and the Supported Living Property YouTube Channel.

>> Ask a question: Click here for question form

Lisa had nursing career of over twenty years working her way up to senior sister and emergency nurse practitioner in a busy East London A & E, and she also worked as a health visitor.  She saw firsthand a direct impact that poor quality housing or lack of housing has on people’s health and well-being. 

Lisa discovered supported living herself by chance and found it a natural fit with her experience as a nurse.  However, she also discovered that property investors  often struggled to let properties to supported living providers,  and providers struggled to find properties to let. So she came up with the idea to set up her Supported Living Property Network to provides training and a place for providers and property investors to connect.  Lisa also has a successful podcast (on Apple and on Spotify), plus a YouTube channel.

Lisa Brown defines supported living as arrangement for accommodation for a tenant who has a support need.

The support need may be long term. For instance, someone who has learning disabilities, autism, complex mental health, or maybe with physical disabilities, somebody for their for their whole lifetime is gonna require that level of support and input.

It can also include people with support needs for a shorter term, for a few months or a few years. This may e people who are homeless, veterans with PTSD, people fleeing domestic abuse, or teenagers transitioning from the care service. There’s a whole range of different people who need support in the short term. It’s for people who need time to be able to support someone till they can move on and take their own tenancy.  

There are people with support needs in every community, from small rural communities to big cities, across the country.  As there’s a higher concentration of people in cities, demand is greater, but there are often requests for properties in a smaller towns and communities. y.

With supported living, the owner of a property enters into a lease with a supported living provider, which may be a housing association, community interest organisation, local authority, charity or care provider. That organisation either grants a tenancy or a licence to the people who will live in the property.

The supported living provider provides accommodation to people with support needs ranging from a few hours support a week to members of staff on-site twenty four hours a day helping them access every part of their their life that they need the support for.

Where the provider specialises in people with short term needs, they usually proved the support as well as the accommodation. For people with long term needs, the support can be provided separately.

There is no specific type of property that is suitable for supported living, as such, as it depends on the provider.

Providers look for a range of different properties. Detached properties are very desirable, particularly bungalows, small bungalows, or small detached houses. However, others look for one or two bed flats, small houses with two or three bedrooms, small HMOs, and small blocks of flats with up to 12 one bedroomed flats.

Large HMOs are not usually popular with providers, due to compatibility issues and challenges with a large group sharing accommodation.

Sometimes particular needs require adaptations to be made to a property. Lisa advises that most grants for adaptations are only available when there is a specific person in mind.

Some landlords pay for the adaptations themselves at the refurbishment stage, which enables them to charge higher rent.

When a landlord signs a lease with a supported living provider, the provider becomes responsible for the rent and often repairs for the term of the lease, which is often 5 years. It makes the investment almost “hands off”.

During this period, the provider will pay rent to the landlord regardless of whether anyone is living there. The landlord will have no voids, no fees to letting agents, very little administration, and none of the costs associated with the changeover of tenants.

The biggest risk for the landlord is that the supported living partner won’t hold up their end of the bargain, look after the property and the people living there.

It’s important for the landlord to do due diligence to make sure the supported living provider is a reputable company which is financially sound, and will look after the tenants and the property.

This will be even more important when the Renters’ Rights Bill comes into force as it’s likely that the Bill will contain the same or similar wording that was in the Renters Reform Bill that will give judges the right to make landlords liable for Rent Repayment Orders, and not just the intermediaries such as rent-to-renters or supported living providers.

Music: “Paradise Found” by Kevin MacLeod of Incompetech. Licensed under Creative Commons: Attribution 4.0 License.

In the second of four summer special episodes, Richard Jackson and Suzanne Smith speak to Bushra Mohammed, who guides us through how to buy and sell properties successfully at auction.

Not only is Bushra a property solicitor with particular expertise advising clients who buy and sell at auction, but she is also a property developer and landlord. This enables her to understand the perspective of property investors, and what the key issues are to look out for.

Suzanne first met Bushra after following her Instagram account @bushra_propertyinterest. You can also connect with Bushra on LinkedIn and find out more information on her website.

>> Ask a question: Click here for question form

People usually decide to sell a property at auction, instead of the usual “private treaty” are usually looking for speed and/or certainty, With speed, the seller knows they will have a legally binding exchange, which is highly likely to complete within two weeks or 28 days. The certainty comes from knowing that the winning bidder will exchange on the day of the auction and will pay a 10% deposit, which they will lose if they don’t complete on the purchase.

Typically the sellers are those who wish to sell quickly and efficiently, eg to raise money to pay debts, a probate sale when the owner has died or the property may have structural issues.

Bushra advises that it is important for potential bidders to find out the reason for the sale, and then decide whether the circumstances pose a risk for them as bidders, and what they can do to mitigate the risk.

Programmes such as Homes under the Hammer have taken some of the mystery out of buying property at auction, and increased its popularity.

Property investors usually decide to buy at auction in the hope they will be able to buy a property below market value. If they the highest bid, they have the certainty that purchase will complete. There will be no gazumping and no stressful chains.

Whereas with a normal sale by private treaty (buyer makes offer, does searches, exchanges and then completes), when a bid wins at auction, the bidder is legally obliged to pay the deposit, with contracts “exchanging” straight away.

There is no cooling off period and the bidder will lose the deposit if they con’t complete the purchase within the specified time period, ie 2 weeks or 28 days.

This means that someone buying a property at auction needs to do all of their searches and due diligence before the auction. Unlike a purchase by private treaty, they cannot pull out once the bid is accepted.

As bidders need to do their due diligence up front, it’s really important to study the auction legal pack carefully to make sure there is nothing noted that might affect your decision to buy the property. Bushra advises instructing a solicitor to review it so that they can flag any risks and ask for further information.

If the seller provides more information in response to a question, that will potentially put a bidder in a better position as the seller won’t automatically send information to all bidders, as is the case with public procurement.

>> Blog post: 7 ways to screen your property investments

Bushra gives the following tips to help investors buy property successfully at auction:

>> Blog post: Guide to buying and selling property at auction

>> Blog post: 10 problems to look for when viewing investment properties

Here are Bushra’s tips for selling a property successfully at auction:

>> Blog post: How to sell your buy to let

The first golden nugget is to take time to study the legal pack.

The second is to always have a Plan B, eg if you can’t get the finance, if your builder isn’t available and if your solicitor is on holiday. Always have a back up.

Music: “Paradise Found” by Kevin MacLeod of Incompetech. Licensed under Creative Commons: Attribution 4.0 License.

For our first summer special episode of Good Landlording, Richard Jackson and Suzanne Smith pick the brain of landlord and interior designer, Charlotte Richardson, about how good interior design can benefit both landlords and renters alike.

As always, it’s a practical episode, with lots of actionable tips to help landlords use interior design to help them attract and keep good tenants.

>> Ask a question: Click here for question form

Our guest for this “summer special” episode on interior design for landlords is Charlotte Richardson, Co-founder and Creative Director of roost, the interior design company that specialises in helping landlords and property developers maximise returns and make tenants feel great in their homes.

As well as being an interior designer, Charlotte is a landlord and a property investor, and a graphic designer by profession. She has a fantastic blog called the roost interior design blog on her website with lots of great tips. You can follower her account _roost_ on Instagram.

Charlotte recommends that landlords ask at the start of the project for the interior designer to provide realistic CGI rendering of what the space will look like after the project is complete. CGI rendering is a computer generated 3D visualisation which can help the property investor and the contractor visualise what the space will look like, and avoid costly mistakes before any work is done.

It sets the scene for how this project is going to develop. They can see it in a 3D model and ‘walk’ around the house of flat before anything is done. It’s a lot easier to make changes to the layout and even the colour palette at this stage than later on.

Realistic 3D visualisations can also help contractors avoid costly mistakes, as they can see what the vision is for the property, plan, and know what’s expected. It can also help investors pre-sell the rooms and market the property before the work is finished.

It’s important for landlords to understand their target market.  This can help landlords make interior design decisions and take care about what the tenants need and value. It will reduce voids and help landlords obtain a good rent.

For HMO landlords, the needs of NHS workers are different from administrative staff who like to work from home, manual workers or students. It affects how much communal space that they need, how much space people have in their rooms, what facilities they value. It’s also really important to make sure the layout works.

Families benefit from flexible living space as their children grow up, and lots of storage.

>> Related episode: #1: What makes a good tenant?

Having the property in good condition is key. This means choosing quality items that will wear well and last longer. For instance, use large tiles in the shower, which don’t need as much grouting as smaller tiles, and will wear better.

An interior designer can help landlords use the space effectively with an excellent layout.

The choice of flooring is important as it’s expensive to replace a bad decision.

Charlotte recommends tiles in the bathroom and LVT (Luxury vinyl tiles) in the communal areas as it’s hard wearing and is good in areas where there is water, like a kitchen, as it’s waterproof. They can be scratch resistant too.

Lighting can make a big difference for a small cost.

Sometimes upgrading small fittings can make a big difference, for instance changing light switches, and handles on cupboards and doors.

An inexpensive way to update a kitchen is to use hard-wearing wrapping, which can make a kitchen that is still sound but a bit dated look more contemporary.

Instead of the ubiquitous white and grey, Charlotte recommends muted, natural colours in green and blue for timeless and high quality interior design choices for landlords.

Colour “drenching” can also be effective for landlords. This is when the same colour is on the ceiling, walls and woodwork. It saves time on cutting in and can give a “cocoon” effect. It’s particularly effective in rooms that don’t have a lot of natural light.

It can be quite daunting for landlords to choose someone to assist with interior design.

Charlotte advises asking for a short list to show you previous projects, with the drawings and 3D models that they deliver. Ask them to take you through their process and what they expect to deliver to you. 

For landlords, choose someone you can trust with keeping within your budget. Quiz them to ask how they deliver on budget for commercial clients. Ask for examples.

Charlotte advises against trying to appeal to everyone, as that just means you blend in with everyone. Instead, she recommends that landlords use interior design to help them “niche down” to what the target tenants need. This means you need to understand what they need and incorporate this into the interior design for your rental property.

Music: “Paradise Found” by Kevin MacLeod of Incompetech. Licensed under Creative Commons: Attribution 4.0 License.

This episode of Good Landlording is the rental market update for mid-2024, and has the latest Q2 data for rent in England in the 12 months to June 2024.

Richard and Suzanne also discuss inflation, the likely impact of population growth on demand, and prospects for future growth.

As well as referring to data from ONS and Rightmove, they also talk about the findings in recent reports by Paragon Bank’s Next Generation Landlord Report 2024 and Savills’ UK Build to Rent Market Update – Q2 2024.

For August, the Good Landlording podcast will have “summer specials” which will feature special guests on topics ranging from interior design to HMOs, supported living and buying at auction. It’ll give us all a welcome break from politics, as well as introducing us to new ideas.

>> Ask a question: Click here for question form

According to the ONS, the Consumer Prices Index increased by 2.0% in the 12 months to June 2024, the same as the 12 months to May 2024.

However, when it comes to landlords, the Consumer Prices Index including owner occupiers’ housing costs (CPIH) is more relevant. That rose by 2.8% in the 12 months to June 2024, unchanged from 12 months to May 2024.

CPIH is more likely to reflect our costs as landlords, whereas CPI is what the tenant is feeling.

ONS figures say that the annual growth in employees’ average regular earnings (excluding bonuses) was 5.7% in the 12 months to May 2024. This is an increase in real terms of 2.5%.

However, this is just an average as wage inflation has been stronger in the public sector (6.4%) than the private sector (5.6%).

Within the private sector, the finance and business services sector saw the largest annual regular growth rate at 6.7%; while the construction sector saw the smallest annual regular growth rate at 3.0%.

Suzanne usually increase rents by the lower of CPIH and wage inflation, which she believes is a good compromise.

>> Related episode: #6: What landlords need to know about rent

It can be difficult to figure out exactly what is happening to rent as the data is conflicting. However, rent is now no longer in double digit territory, and the rate of increase has been slowing down.

Both Rightmove and the ONS agree that the average rent across is now around £1,300. Rightmove says it is £1,314 for new tenancies (an increase of 6.8%) across the UK, and the ONS has the figure as £1,310 in England, an increase of 8.6%. The ONS figure includes rents for exiting tenancies as well as new tenancies.

Rightmove say the average rent in London was £2,661 at the end of Q2 2024, an increase in 4% from a year ago. ONS says that rents increased an average of 9.7% in London.

In the North East, by contrast, the government data says that rent inflation in the 12 months to June 2024 was 5.9%, whereas Rightmove says it is 8.3%.

According to SpareRoom, rents in London are flat (an increase of 1% in the 12 months to June 2024), with room rents in multiple postcodes decreasing. SW14 (Mortlake) saw the biggest drop of 9%, followed by W8 (Holland Park) and NW5 (Kentish Town) where rents decreased by 7%.

Government figures are predicting that the UK’s population will grow from under 68 million now, to 70 million by mid-2026, and almost 74 million by 2036 (12 years away).

The population is therefore projected to grow even more quickly than the government’s rather optimistic pledge to build 1.5 million homes by 2029, even when taking into account that they won’t all be single person households.

It is not yet known the split between homes for social housing, private renting and owner occupiers, but with a growing population, there will still be demand in the private rented sector.

Savills point out in their Q2 2024 report that there are “still 30% fewer homes to rent across the UK compared to the 2018–19 average.”

Savills put this down to the lack of supply, due in part because tenants are staying in their homes for longer, and “partly because Buy-to-Let landlords have reconsidered their portfolios due to high mortgage rates, with some leaving the sector. More rental properties are needed to keep pace with the persistent high demand.”

Demand for rental properties is certainly not going to decrease in the near to medium term.

That said, the heat has now gone out of the market, and Savills say: “the market is returning to its core principles. Locations with good transport links, strong connections to employment hubs and homes priced in line with local incomes, continue to see the strongest rental growth”.

Paragon Bank published a very interesting report on 29 July called Next Generation Landlord 2024, for which they interviewed to 500 landlords with aspirations to develop property portfolio with a mortgage.

Not only does their data show that the average age of those purchasing a new buy-to-let property has reduced from 46 in 2014 to 43 in 2023, but of those who were looking to expand their portfolio, 60% said that the main reason was the long term demand for rental property.

Music: “Paradise Found” by Kevin MacLeod of Incompetech. Licensed under Creative Commons: Attribution 4.0 License.

This episode is on the hot and controversial topic of tenants’ rights to have pets in rental properties, which is on the horizon again with Labour’s new Renters’ Rights Bill.

Richard Jackson and Suzanne Smith discuss what this right to request a pet is likely to look like, specific examples of when it might be reasonable to refuse for both single lets and HMOs, flats and houses. They also coverthe steps that landlords can take to reduce the risk of damage and being left out of pocket when the tenants move out.

>> Ask a question: Click here for question form

The briefing notes to the King’s Speech say that the Renters’ Rights Bill will give “tenants the right to request a pet, which landlords must consider and cannot unreasonably refuse. Landlords will be able to request insurance to cover potential damage from pets if needed”.

This is the same or very similar to the wording in the Renters Reform Bill. 

A poll of a few hundred landlords in The Independent Landlord Community Facebook private group shows there is no consensus in attitudes towards having pets in rental properties. Here are the results:

Of those in the “it depends” camp, some would allow it for tenants who’ve been there for a while and have proven themselves, like a form of probation,  showing they can look after the property.

Others would charge more rent to reflect the increased risk as they can’t ask for a bigger deposit. Bear in mind that the rent should not be above the market rent as that would mean the tenant could potentially successfully challenge a Section 13 rent increase notice in the First-tier Tribunal.

Section 10 of the Renters Reform Bill, (which was abandoned before the election) included the right a tenant for to request permission to keep a pet. The landlord would not be able to refuse to give consent unless they had a good reason.

The tenant had to make the request in writing and include a description of the pet for. The landlord needed to respond within a certain time period, and could ask the tenant to take out insurance that would cover the risk of pet damage, or require the tenant to pay the landlord’s reasonable cost of maintaining insurance against pet damage.

And if the renter is unhappy with the decision and thought that the landlord didn’t have a good reason for turning down their request, they’d be able to complain to the private rented sector Landlord Ombudsman.

Tenants with pets will usually stay longer in the property, reducing voids. Pets also usually have a positive impact on the well-being and mental health of the tenants and their children.

There is more demand for properties with pets, which makes the property easier to let. The landlord will usually be able to charge slightly more for the property. This would compensate the landlord for the higher wear and tear with pets, given that the maximum deposit is 5 weeks’ rent.

Here are examples of grounds that might be reasonable for a landlord to turn down a tenant’s request to keep a pet. The landlord should document the reasons for refusing the request.

Landlords who are leaseholders would be able to turn down a request if their lease had a clause that prohibited pets, or if the freeholder does not consent to the pet, even though the landlord had taken reasonable steps to obtain that consent but the superior landlord.

The pet is not suitable for the size of the flat,  or if there are common parts and it’s not appropriate to take the pet through the common parts.

It would be reasonable to turn down the request if landlord  or the property manager have pet allergies.

The pet is unsuitable for the property, eg a large dog in a small flat with no outside space. An outdoor cat who needs a cat flap but this would require the landlord to pay for a new door.

Also, whereas one dog might be appropriate for the property, two or three dogs might not be. It’s important to give consent to a named, specific pet, and not just blanket approval.

Genuine concerns about the welfare of the pet and/or the ability of the landlord to look after the pet properly would be reasonable grounds to refuse. For instance, it would be reasonable to turn down approval for a dog if the tenants are out of work all day and would leave the dog by itself.

Generally it would be inappropriate for HMOs to have pets, especially large HMOs or student HMOs. It might be reasonable if there are three sharers on a joint tenancy to have a house cat.

It’s really important to have a pet policy so the tenant understands the landlord’s expectations and conditions. The link below is to Suzanne Smith’s model pet policy.

>> Useful resource from The Independent Landlord: Model Pet Policy for Landlords in England

Good tenants who look after the property are likely to look after their pets. Some landlords will consider pets once a tenant has proven themselves as being a good tenant, who looks after the property, after a form of probation.

Quiz the tenants about how they will look after the pet, and what facilities the pet will have, eg a litter tray and scratch pole for a cat, and a crate and/or proper dog bed for a dog.

Particularly for new tenants, if they have pets, it’s a good idea to have more regular inspections to make sure that the tenants are following the pet policy and that the pet is being looked after properly.

If you’re considering letting to someone with a dog, it’s a good idea to ask them to bring the dog with them so you can assess its suitability for the property. For instance:

No, landlords can’t include a term in the Tenancy Agreement or a Pet Policy that obliges tenants to pay to have the property / carpets cleaned professionally at the end of the tenancy. The Tenant Fees Act 2019 prevents landlords from requiring tenants to meet any conditions that could only be met by paying a fee for a third-party service.

Instead, landlords can require tenants to clean to a “professional standard”, for instance, by hiring a carpet cleaner or doing a deep clean of the property themselves. (See page 21 of the Guidance for Landlords on the Tenant Fees Act 2019 which states: ‘You may request that a property is cleaned to a professional standard”.)

The tenants are required to leave the property in the same state of cleanliness as when they moved into the property. It’s important for landlords to have professional check-in and check-out inventories

Suzanne advises that if landlords have a suitable property with outside space that’s a single let, and they’re not allergic they had might as well become pet friendly. Pets are easier to manage when it’s upfront and you know about it, rather than saying no, only to find that the tenants sneak in a pet.

She encourages landlords to to start thinking about how to adapt, and figure out how to go about doing it. It’s part of tenant selection.

Music: “Paradise Found” by Kevin MacLeod of Incompetech. Licensed under Creative Commons: Attribution 4.0 License.