Brexit and Your Rental Property

By Chris Chambers

Chris is the owner of Proudhouse Property Management and Lettings based in Yeovil. Proudhouse provide dedicated lettings and property mangement services in South Somerset and Dorset. Proudhouse are based at Park House, The Park, Yeovil and are your alternative to the typical High Street Lettings service that many landlords have become used to. 

Chris is a landlord himself and has rental properties (flats, houses and HMOs) in Cardiff and Yeovil. 

This text was originally written and sent to all my landlord clients - I have now published it for general interest. Please don't plagiarise but feel free to repost and share (or reference this text with the line "Chris Chambers, Proudhouse Property Management").  

Dear Landlords,

I thought I would take this opportunity to give you our thoughts on Brexit and some considerations for your rental properties. I am not an economist nor do I have any crystal balls! I simply want to pass on some industry advice and also provide a brief opinion of my own.
Brexit could be a storm in a tea cup... or a cataclysmic demise of the UK... but probably somewhere in between. It will affect many areas and many people will be concerned about the housing market.

Interest Rates
Interest rates are unlikely to increase for the time being. This means that the cost of your borrowing should not dramatically alter in the short term - in fact, consumer wariness combined with recent tax changes might even generate better deals among mortgage providers to entice new business - so re-mortgaging might be an option. We're more than happy to arrange access for valuers if your property is managed by us.

Rental Demand
ARLA expect demand to remain the same or initially increase in the short-term. There is a shortage of homes (and slow rate of supply) in the UK and this will not change significantly in the near future. So rentals will be a safe investment. Furthermore, tenants planning to buy this year may now be put off and wish to remain renting as tenants.

Rental Values
These are almost certainly going to increase. This is not good news for tenants - let us not underestimate the effect this will have on the national mood. There are 5.7 million homes in the Private Rented Sector - increased costs to landlords (tax etc) are almost certainly going to cause an increase in rental prices. However, from a landlord's perspective, rental yields could increase slightly.

House Prices
Probably not a good outlook - but Proudhouse does not do sales and I don't want to speculate on this subject too much.

Tenant Fees
These continue to be a contentious subject and there are some legal cases taking place against some high-profile agents in the South East. Capped, or a ban on, tenant fees in the future is not unforeseeable - this could have a major impact on and knock-on for agents nationally - agents who have built their businesses around these revenue streams could feel the pinch and would be left with no alternative but to increase and transfer costs to landlords. Our fees are low (we've foreseen this issue since we started trading) and we operate with lean overheads. I don't see our management fees increasing for the foreseeable future.

How is Proudhouse affected?
So far it is very much business as usual - we have lost one potential client who was acquiring a rental property (and also in the early stages of using our services) but has now withdrawn their offer - they cited Brexit as their reason. Otherwise we've had 2 new clients this week and continue very much as normal so far.

What am I doing with my own personal portfolio?
I have rentals and HMOs in Cardiff and Yeovil and I own these with a business partner. Our aim is to secure good quality tenants on a long-term basis. To that end I am considering renewing tenancy agreements and considering 12 month fixed terms in order to help generate stable rental income and cash-flow. As with my advice to Proudhouse clients, I'm keeping rental asking prices "middle of the road" and reasonable and keeping tenant application fees low - this generates high levels of interest/enquiries and greatest choice of tenants. I'm building good relationships with tenants and aiming to provide them with a good service and stability - in return, I believe this builds loyalty and cooperation which is crucial when needing to inspect and maintain the properties. Voids (vacant periods) are expensive and avoiding these are a priority - the property ladder may become more accessible for some tenants if house prices stagnate, alternatively, tenants might be wary of buying in a falling market... either way, keeping my best tenants happy and in my properties is my aim!

Summary.
Keep calm and carry on.





I hope this is useful. If you have any queries then please do not hesitate to contact me.

Good luck and best regards
Chris

This email has been sent to every landlord who has enquired about our services at any time. If you have received this by mistake of if you would like to be removed from our list or if this is irrelevant to you then let us know and we will update out records.
This email has been sent to every  landlord who has enquired about our services. If you would like is to remove you from our list or if this is irrelevant to you then let us know and we will update out records.

Rental Valuations - it's a strategy! Find out why less is more...

Your rental valuation strategy should be all about not aiming too high. You don't want to ask for too much monthly rental income. "What?!" I hear you cry. It's true! In this game, less is more. Much more sometimes - possibly several hundred if not a few thousand pounds more over the course of several years. Read on and find out why.

2016 has been a really interesting year so far - and it's only February. But with SDLT changes happening in April we are seeing a flurry of activity and requests for rental valuations of prospective rental properties. Some of these requests are coming from new landlords who are keen to make their first property investment before April. We're also getting a good run of interest from experienced landlords who are reconfiguring their investments and portfolios. Proudhouse Property Management are possibly the leading independent rental specialists in Yeovil and South Somerset. The stats from Zoopla show that for house rentals, Proudhouse is currently 4th with only multiple-office and sales-led businesses taking the top 3 places.

Stats from Zoopla, market share, Feb 2016, Houses, BA20, BA21, DT9 Postcodes

As a dedicated rental specialist it is important to us that we advise our clients fairly, and also correctly manage their expectations. Which is why we're finding it disappointing to engage with a few new landlords whose expectations of rental income have been completely mismanaged - usually because some over-zealous sales agent, or developer, has plucked a sky-high rental figure out of the air as a way of incentivising their buyers. Or sometimes a new landlord has, unfortunately, made some comparisons to other rental properties without factoring in all aspects which has distorted their expectations.

However, there is a big difference between the experienced landlord and the newcomer!  

The experienced landlords all have something in common. They understand one key concept which is really simple: Void periods! (Voids are periods when the property is unoccupied) These landlords will usually say to me, "Chris, I'd rather the house was let than standing empty". Well that sounds like a no-brainer but experienced landlords are willing to drop their price-per-calendar-month expectations - and that is how they secure a better overall income within any given year. Example:

Landlord 1
Has a well presented but average 3 bedroom house which is valued ambitiously at £800pcm. It goes on the market on April 6th 2016. Interest is luke warm as most tenants are looking in the price band £600 - £799. A month later a tenant secures the property, gives one month's notice on their current home, and then moves in at the end of May. This leads to a total of around £8000 paid in the 2016/17 financial year.

Landlord 2
Has an identical house in the same area but has valued it at £725 pcm and it also goes on the market on April 6th 2016. However, this property is valued in the middle of the target price band. It gets lots of interest. Heck, it's even better than some of the more expensive properties. 6 viewings are lined up in the first week and the landlord is spoilt for choice. A couple of the tenants are so keen that they offer to take the property immediately which the landlord agrees to. The house is rented by mid April. The total amount of rent received in the 2016/17 financial year is £8337. That's £337 more than landlord 1!

Now also bear these factors in mind:

1) Many tenancies only last 12 - 18 months so avoiding voids is essential over the years and over the course of several tenancies.

2) Lower asking prices will likely generate more interest and therefore more choice of tenants which in turn means better chances of a good match between tenant and property = happy tenant and happy landlord.

3) Tenants are less likely to leave a property where they think the rent is fair, where they're treated well and with no mandatory renewal fees or other ongoing agency expenses. This means, no void periods caused by needing to re-let.

But my property has a superb, premium, high-end interior? Surely that's worth more?

A great interior - will let your property quicker!

In South Somerset (and unlike a major city area), great interiors with high-end features can command a slightly higher asking price. But only slightly higher. The "going rate" is a powerful market force and the practicalities of space, room size and location are, more often than not, higher up on tenants' lists of priorities than premium fixtures and fittings. However, great interiors can be incorporated into your strategy! A great interior, coupled with an attractive rental value will let your property quicker! Time is money so use your premium property as a mechanism to avoid voids!


Summary
If you're deciding on rental valuation then think "average"! Think "less is more"! Avoid the voids! You will be better off in the long run. Be suspicious of any agent promising gloriously high price-per-calendar-month figures - they're just trying to win your business and are probably setting you up for a disappointment. 

By Chris Chambers
Owner at Proudhouse Property Management

Proudhouse manage properties throughout South Somerset and are are gaining a reputation for excellent customer service through a range of lettings and property services. Proudhouse are dedicated to property rentals and offer a first class personal and professional service. Proudhouse are not a sales office, franchise or part of a corporate chain.

Tenants - get the property you want. 10 top tips!

Tenants - get the property you want!

House hunting for rental properties can be very frustrating; demand is high and often houses are not on the market for very long. We often hear tenants saying they've been "looking for ages", or that the property they like won't accept pets or that agents are useless and never respond to queries etc. Well... some agents are useless actually but for the purposes of this article we'll concentrate on what you, the prospective tenant, can do. Finding your perfect home is a bit like finding your perfect job - in the same way that you need to get noticed by a potential employer then tenants need to get noticed by the agent. Follow these steps to give you the best possible chance of securing that perfect home.  

1) Keep watching the market - login every day and keep an eye on new listings. Use the well known portals such as OnTheMarket.com and Zoopla

 2) Be pro-active - target the properties you want and phone the agent direct - simply sending an email to an agent with some vague requirements will probably not work 

 3) Make sure the property is right for you before viewing! Ask plenty of questions over the phone - and be prepared to answer queries from the agent - the agent should want to know a little bit about you and who will be living in the property.

4) Don't view properties that are outside of your budget!! Understand the market you're  in and make sure you have a reasonable idea of the going rate for the type of property you're after. Also see point 10 below.

 5) Be friendly and easy going! Moving is a stressful situation and a good agent will understand this - furthermore, landlords can also find the prospect of new tenants stressful. A calm, measured, friendly and understanding approach will allow everyone to think clearly and negotiate the various requirements they each have. 

Don't delay - view as soon as you can!

6) View the property as soon as you can - the rental market place is fast-moving and waiting several days to view might mean you miss out. If you do have to wait then ask the agent if there is a deadline; often agents like to take several viewings and present several prospective tenants to the landlord and tenancies might not be offered on a first-come-first-served basis. 

7) At the viewing give feedback to the agent - if you like, love or hate the property then tell the agent, and if you like it, then ensure you know the next steps to take to start securing the property for you.
The best dog on the world.
8) Pets: if you have pets then tell the agent early on! Most landlords would prefer tenants without pets... and most tenants have pets! Every tenant thinks their pet is really well behaved and house-trained; the agent will have heard this a thousand times before! Instead, say that you are prepared to mitigate the risk through paying increased rent or a pet fee or signing a pet agreement etc. Perhaps offer to make professional cleaning of carpets or flea treatment etc a condition of the tenancy. You could also offer to restrict parts of the house (eg upstairs) to your pet.

Know the costs.
9) Money - know what the agent's fees are upfront and make sure they're reasonable. Be prepared to under go a credit check and if you have CCJs or adverse credit then this could seriously affect your chances; again, mitigate your risk - tell the agent early and perhaps offer a guarantor or 6 month's rent up front. 

10) The rental asking price: there is absolutely nothing wrong with making an offer below the listing price. However a good agent should have valued the property accurately relative to other comparable, local properties. Any offers significantly below the asking price are likely to be dismissed by the landlord - remember, there are a queue of tenants lining up to view the best properties! You may even want to offer more than the asking price if you are really keen! However, that is rare and not expected. 

Good Luck! Proudhouse Property Management are always happy to offer free advice to tenants as well as landlords. Feel free to call us 01935 388456.  

By Chris Chambers. Chris is the owner of Proudhouse Property Management and is based in Yeovil, Somerset, UK.