Investment Spot of the Day

 

Grove Place (Picture of Front block - apartment to the rear)

For Sale through Lewis Haughton and Wills at £125,000

Click Link: http://www.rightmove.co.uk/property-for-sale/property-48991160.html

Dip your toe into the world of the investor landlord with a starter investment

Back in 2005 I was involved in selling these apartments and they sold like the proverbial hot cake.

Indeed a few years later I bid and bought one of the water-fronted ones on behalf of my father-in-law at auction. He made a tidy profit selling it on and at the same time enjoying the same very good tenant for 3 years!

The apartment in question is actually situated to the rear of a wonderful Georgian House opposite Events Square. Although it doesn’t have water views itself, you are so close you can smell the sea! The property comprises a lounge/dining area, compact kitchen, bedroom and shower suite.

They make good solid investments because they are in the heart of town. Based on a monthly rent of £550, this should achieve a gross return of £6600 per annum.  This equates to a 5.28% gross return on investment

In the last year the Zoopla House Price God suggests that prices in the immediate postcode have risen by approximately 5%. The property has a registered EPC ‘E’ rating. Those of you that read the earlier blog article Who cares about EPC’s will know that it will be valid for letting under the impending EPC changes after 2018.

 

Legionella Assessment - yet another Bug Bear for Landlords?

 

 

Landlords have to contend with more legislation than ever these days. The trend towards governance and regulation holds no sign of abating. Are these just hoops to jump through, or are they requirements imposed for a reason?

The need for electrical and gas safety, energy performance certificates and Tenants Deposit Protection are all fairly well embedded in the practice of many private landlords. They are well understood since they directly relate to improving either safety or energy efficiency and in the case of the Tenants Deposit, fair play for both landlord and tenant.

Any initiative that helps look after a tenant and their wellbeing and at the same time eradicates the shoddy landlord, the Mr Rigby's of the world are surely a good thing? After all it is the Mr Rigby's that give the rest of us a bad name!

The latest Duty of Care relates to the control of Legionella in water systems would you believe. It is not a new directive as such but one that appeared more relevant for block managers than private landlords. The requirement now is that all Private landlords and agents should be pro-active in preventing the occurrence and spread of the legionella bacteria!

The recommendations from the Health and Safety Executive (HSE) can be found at the link below:

www.hse.gov.uk/legionnaires/

 Very briefly it recommends you:

1.       Carry out a risk assessment of the likely existence of legionella

2.       Manage and control the risk of legionella

3.       Keep records of what you have done in relation to 1 and 2 above.

 

If you have undertaken 1, 2 and 3 above and problem presents itself the intimation is that by virtue of following good practice and being diligent you are going someway to protecting yourself from liability.

Is this another 'bird flu' epidemic hyped out of all proportion I hear you groan? Is this an EU inspired directive which has no sense of balancing the real risk? This view may be valid. Like many directives, duties and legal imperatives they may appear senseless, unless of course you are the unlucky one to be affected by it.

A cousin of mine from Falmouth nearly died as a result of a viral infection following eating seafood a few years back. The moral is tragedy is capable of happening when you least expect it and from the unforeseen. Therefore should we mock what appears to be madness? After all pretty much every year without fail we will hear of, read, experience or bear witness to a hotel, a passenger cruiser, holiday camp which has had serious illness or even death associated with Legionella. So off you jolly well  go and check your showerheads, toilet cisterns, outside toilets, old water tanks and extractor ducting.

 

In all seriousness we intend to review this revised HSE duty of care expected of landlords. It is such a recent revision that our professional bodies are trying to absorb the fallout. It is probably not as onerous in practice that the directive suggests. If you would like to know more as our own thoughts evolve then please contact Paul or I.

 

Please don't worry at this stage since we must get a sense of these things before we change the world. Putting this into perspective one of my more ‘colourful’ landlords, suggested that "Seagulls and pigeons" (described as flying sh** machines) posed a greater risk to his tenants health particularly on bin day around Marlborough Road. I understand his sentiment and suggest that he enlist the help of students in the area looking for a worthwhile PhD subject to study.

Take care Mr Landlord. I’m off to Trescobeas Surgery to get my anti-bacterial jabs and then check out my water tank .  In the meantime beware of Seagulls and Legionella (probably in that order).

 

Investment 'Spot of the Day'

Smart Two Bedroom Maisonette in the Heart of Falmouth

 



The better a property looks the quicker it rents. Consequently when an agent describes the presentation of a property as ‘faultless’ our investment radar begins to gently flicker. 

With two good size bedrooms, central location, modern heating system and very clearly an impeccable presentation by the owner this is worth putting it on your property shortlist to check it out.

For Sale through Laskowski at £139,950.

Click Link below for more details:

http://www.rightmove.co.uk/property-for-sale/property-50390234.html

 

Based on a monthly rental of £675 PCM this should achieve a gross rental of £8100 per annum. This equates to a 5.78% gross return on investment.

In the last years the Zoopla House Price God suggests prices in the immediate postcode have risen by approximately 5.47%. The property has a registered EPC rating of D68. Those of you that read the earlier blog article Who cares about EPC’s will know that it will be valid for letting under the impending EPC changes after 2018.

 

Investment Spot of the Day

This is the first of our investment 'spots'. The purpose of this is to give Landlords and investors an indication of properties that we feel are worthy of further inspection since they are likely to make solid rental investments. The rental figures given are indicative, and are based on extensive experience of valuing thousands of properties over more than a decade locally as well as managing several properties broadly comparable to it.

 

Parkside Beauty, opposite Kimberley Park in Falmouth

For Sale through Miller Countrywide at £168,000

 

Got to link: http://www.rightmove.co.uk/property-for-sale/property-33496831.html

A hop skip and a jump from our offices and right opposite the park, if you bought this you could be one of our near neighbours!

This property has a pretty and distinctive façade. With gas fired central heating system modern bathroom and kitchen, 3 bedrooms and view over the garden towards the park as an investment property it has much to praise it.

I am pretty sure I saw this property many years ago before the improvements were made. Indeed I recall recommending the kitchen fitter who disappeared from finishing my kitchen to start on this. A story for another day perhaps!

We would need to view the property to nail down an exact rental figure but given the dimensions, park location and bedrooms we feel you should achieve in excess of £725 PCM

Assuming a conservative rental return of circa £725 PCM, this should achieve a gross return of £8700 Per annum. This equates to a gross return of 5.1% on investment.

Most observers would regard Kimberley Park Road as a good street to live. With average prices around this immediate area comfortably in excess of £300,000 this certainly bears this out. They say it is always a good idea to invest in one of the cheaper properties on the street since you tag along the coat tails of the more expensive ones. Certainly worth a look?

Why should Landlord care about Energy Performance Certificates? 

What is an Energy Performance Certificate (EPC)?

In basic terms an EPC contains information about a property’s energy use and typical annual energy costs.

Included within the Energy Report that accompanies it, are recommendations about how to reduce energy and save money. Displayed in a colour-coded graph an EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient).

Critically EPC are required by Landlords and Estate and Letting Agents before they market a property. They are compiled by a qualified Energy Assessor and typically cost around £50 to £75 to commission.

A relic of the much maligned Home Information Sellers Pack, you mention the need for an Energy Performance Certificate to your average landlord and he will most likely groan loudly and will bemoan yet another government ‘gimmick’. I heard one recently call it a ‘stealth tax’ on landlords. Stealth tax, gimmick or not it is here to stay.

Why fuss about EPC’s?

The carrot of a positive EPC rating

 

In housing terms energy costs are no longer a small add-on to the cost of renting or mortgage.  As a consequence for most ordinary people on limited budgets energy costs are a significant factor when choosing a home. Given a choice and all other attributes of a house being broadly the same, it is a fact that tenants will choose a property with a good energy rating over a poor one every day of the week.

The carrot for a landlord is the more energy efficient a house is, the greater the demand there will be for it. The fewer void periods they will have and the less money they will have to spend on recruiting new tenants.

 

The stick of a negative EPC rating.

Anything that ‘hits the wallet’ of a landlord is likely to focus his attention. An energy inefficient home could mean grumpy tenants who fall out of love with it. A harsh winter followed by a hefty fuel bill are incentive enough for them to seek alternative accommodation. Landlords faced with an empty flat will see a poorer return on their investment.

Currently there is a healthy demand for property locally and a relative housing shortage. Hence the balance of power in the housing market locally is still stacked in the landlords favour. 

From April 2018 the government however is intending to legislate against properties with the poorest rating.  The indications are that those with an F & G rating (currently 18% of housing stock) will not be allowed to let out their homes from April 2018. While there could be exemptions including for those that have made all reasonable steps to improve the energy efficiency, the long-term view is that the legislation will become tougher. With a further 20% of the housing stock nationally reckoned to be an ‘E’ rating this will encompass many Victorian, Edwardian and pre-war properties. This is a significant slice of the housing market locally, which we should care about. 

The carrot and the stick for Landlord is clear. A property’s energy performance can affect their bottom line investment and earning potential. Fundamentally it could affect their decision making on what investment property to buy or indeed which property in their portfolio to sell or improve.

With legislation on the horizon  and one in five of the population renting locally and this set to rise perhaps it is time to take notice and care about EPC’s?

Landlords don't let Property Inspections Trip you up!

Landlords don’t let Property Inspections trip you up!

The need for thorough property inspections should be obvious. It is a fundamental part of ensuring an owners property asset is being cared for, and their tenants are playing their part in that care. It is also an important part in ensuring  tenants are safe and that the property remains legally compliant.

“Mr Smith I am pleased to report your property is tidy and being well cared for” are welcome words for any landlord. However this prompts the question of how thorough the inspection was, that lead to this observation.

A recent judgement made by the Court of Appeal in the case of Edwards v Kumarasamy provides a salutary and perhaps surprising lesson for landlords.

Briefly the Court of Appeal upheld the tenant Mr Edwards claim for significant personal injury damages against their landlord Mr Kumarasamy after he tripped up on the way to the bin stores! Although the bin stores were within the communal area, The Court found that it was the landlords’ responsibility for his own tenants’ safety even beyond the boundaries of the apartment itself. 

The lesson is important one for private landlords as well as those with an agent.

Firstly inspections need to be thorough and should cover the communal parts as well as the property itself.

Secondly it is important that landlords check the detail of any personal insurance policy as well as any block insurance, particularly in relation to the communal parts. They say the ‘devil is always in the detail’. In this instance what are you covered for and where does it physically extend? Grill your insurance company if necessary.

Thirdly If you are a private landlord and you miss something you only have yourself to blame. Where landlords employ either a Lettings Agent or a Management Company, they should be satisfied that both have thorough inspection regimes. How experienced is the agent? What qualifies them to undertake a property inspection?

To miss hazards, issues or potential problems is a human trait that we are all capable of. However in the eyes of the law, there appears to be no excuse if the risk both within the property and in the communal parts are ‘obvious and or foreseeable’ ones.

It follows that cynical as it may be, communication from agents along the lines of “Mr Smith I am pleased to report your property is tidy and being well cared for” should be treated with caution.

If you are a Private landlord, or indeed one with an agent, if you would like further advice on how and what to check within your rented property please feel free to speak without obligation to Garrin Webb or Paul Beevers at Rainbow Property. Unlucky or not, it is better to be prepared!