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7 Essential Tips for New Landlords

Landlords

Becoming a landlord for the first time is an exciting prospect, with not only the opportunity to bring in some additional income but also the chance to expand your portfolio further and perhaps even start up your own property business. 

However, it can be tricky to know where to start once you have invested in your first property and you don’t want to be making too many costly mistakes. 

Fortunately, you can avoid the most common landlord pitfalls by simply following our seven essential tips for new landlords.

1.   Do your groundwork

Before you start to market your rental property and look for potential tenants, if you haven’t done so already, you first need to research the local area thoroughly. 

Is your property near good local schools? Is it near a university or college? 

This can be helpful in deciding what type of tenants your property will appeal to, for example, families, students or working professionals. 

It is also a good idea to find out how much similar properties in the area are currently renting for, as this can act as a benchmark for your own chosen monthly rental price.

2.   Take out insurance 

Although landlord insurance isn’t a legal requirement for renting out a property, it is highly recommended as it covers everything from accidental damage to structural issues caused by hazards such as fire, snow or strong winds. 

You may also want to take out rent guarantee insurance which protects you if your tenant fails to pay their rent. It can also cover the cost of any legal fees if you need to evict a tenant. 

Your tenants are responsible for taking out their own content insurance to cover their belongings. 

3.   Find reliable tenants 

One of the easiest ways to find good tenants is through word of mouth. Speak to your family, friends and work colleagues to see if they are aware of anyone who is looking to rent a property. You can also advertise for tenants on a variety of reputable websites or use a letting agency. 

To attract the best possible tenants, ensure your listing describes the property in full and includes good quality photographs as well as advertising your property at a competitive market rate. 

You should always check a potential tenant’s rental history and credit score, as well as perform a criminal background check. If the results are preferable, it now comes down to your natural instincts. 

How do you feel about the tenant in question? Do you feel like you can trust them?

If yes, you’ve found your first tenants. Congratulations!

4.   Create a tenancy agreement 

Once you have found your tenants, you now need to draw up a written tenancy agreement which details all the terms and conditions of the tenancy and gives you as the landlord, and your tenants rights.

This is extremely important as it will ensure the protection of your property, set out the obligations of your tenants and help prevent any future disputes.

If you have found your tenants through a professional letting agency, the tenancy agreement can be professionally drawn up through the agent. 

5.   Place the deposit in a TDP scheme

Landlords are now legally required to place their tenant’s deposit in a government-backed tenancy deposit protection scheme. This was created to stop rogue landlords from refusing to give back their tenants’ deposits after they have moved out. 

You must place your tenant’s deposit in a scheme within 14 days of receiving it and you also have to inform your tenants of which scheme you have chosen within 30 days. 

6.   Ensure your property is energy efficient 

You should also strive to improve your property’s Energy Performance Certificate (EPC), to reach the minimum energy efficiency standard (effective April 2020).

Ways in which you can make your property more energy efficient include:

  • Upgrading your boiler 
  • Sealing windows and doors 
  • Installing double glazing
  • Installing loft and wall cavity insulation 
  • Using energy efficient lightbulbs 
  • Installing smart meters 

Since April 2016, tenants have the right to ask their landlords to make their properties more energy efficient, and furthermore, as a landlord, you are legally required to make adequate improvements.

7.   Maintain a good relationship with your tenants 

Arguably one of the most important aspects of becoming a good landlord is ensuring that you are able to build and maintain a healthy relationship with your tenants. Effective communication, on both sides, is crucial if you want to avoid any problems or disputes. 

Try and respond as quickly as possible to any requests from your tenants and listen to any concerns that they may have. Once you find reliable tenants who pay their rent on time and look after your property, you don’t want to lose them!

If you are considering letting your property in Chelmsford call our team at Essex Homes And Lettings on 01245398466 for friendly help and advice on all rental aspects.

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Will Covid-19 change the nature of property valuation?

Valuation

The process of evaluating the value of any given piece of property is often misunderstood.

Buyers and sellers can easily access rough estimates of a property’s value through online platforms. However, these estimates are normally simply derived from previously sold real estate of the same size in the same area. There is little consideration of the individual property’s specific features or quality, let alone broader market analysis.

Depending on the type of valuation, land value, building costs, sales comparisons and income capitalisation are all integral to determining the right market value of a piece of property or land. As such, organisations such as the Royal Institution of Chartered Surveyors (RICS) provide a vital function in giving qualifications to surveyors who understand the complexity of this process.

However, Covid-19 has thrown a proverbial spanner in the works of the surveying industry.

Social distancing requirements have made it increasingly difficult for property professionals to access properties and conduct thorough valuations. Not only has this forced such professionals to rely on “virtual valuations”; but the shifting demands of businesses, renters and buyers during Covid-19 risk impacting the accuracy of valuations conducted pre-pandemic.

The pros and cons of virtual valuations

Virtual valuations have become a necessity in the era of Covid. Research conducted by property listing site Zoopla in June showed that only 2% of buyers and sellers would be happy to have their properties valued in-person. As a result, the number of virtual valuations has increased by 90%.

By the owner giving a real-time tour of their property to an agent or valuer via video call, professionals can determine the general condition and size of the property in question. Though not as precise as in-person valuations, such compromise allows for both agents and lenders to move forward with the necessary tasks involved in a transaction.

However, there are drawbacks. Poor lighting can hide various issues regarding a property’s condition, and camera lenses can distort our perspective of space and size. The onus will also be on the camera operator, who – if they are the owner – may wish to hide certain aspects of their property from the surveyor in order to secure a higher valuation.

Regardless, much of the data that will inform a valuation will still be accessible whatever the outcome of the virtual tour. Through floor plans and analysing the sales of comparable properties in the area, much of the crucial work can be accomplished with little to no information from the seller.

So, in general, there is no reason to doubt the legitimacy of virtual valuations. Although they will never allow for the same level of understanding as in-person valuations; they represent a crucial tool in keeping the UK’s property sector moving throughout the novel coronavirus pandemic. There is good reason to expect them to remain in the years to come, too, when time or logistical constraints render a physical visit difficult.

Changing demands, changing values

As mentioned above, social trends have been radically altered by Covid-19. And in the property sector, shifting demands will have an impact on valuations.

For example, the shift towards remote working and the social distancing issues regarding in-person socialisation mean that people are spending much more time in the homes. As a result, many buyers and renters are now seeking larger, more spacious homes from which to work from.

This was confirmed by estate agents Dexters’ July survey, which asked buyers what their “non-negotiable” demands were when it comes to real estate. The new top requirements in the age of Covid were a spare room that can be converted into a home office and, secondly, outside space such as a balcony, terrace, or garden.

Despite recent positive news regarding Covid-19 vaccine development, it is likely that working from home will remain the norm for a majority of professionals in the years to come. Unshackled from the grind of the daily commute, suburban and rural properties further afield from one’s employer will likely increase in desirability among newly homebound employees.

These trends will undoubtedly affect property valuations. Of course, a key part of the technical training required to be certified in valuing real estate is understanding how the real estate market is constantly shifting, and how this may affect the accurate value of any given piece of land or real estate.

In the face of such notable change, the core traditional training that surveyors must undergo is actually more important than ever. Only those equipped with the knowledge and wisdom needed to adapt to sudden property market shifts can continue to accurately value properties for the foreseeable future.

Original Article from Financial Reporter 25/11/2020

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Boom market to go on into 2021 – but then expect bumps in the road

2021

Zoopla’s research team is anticipating the first quarter of next year will see the current boom continue as 100,000 additional sales try to complete ahead of the stamp duty deadline.

In its latest market snapshot the portal says although demand for housing has now fallen back since its late summer peak, it remains 34 per cent higher than this time last year. 

“Demand levels are set to hold firm for the remainder of the year, and the monthly sales completions estimate suggests the strongest December – and run up to Christmas – for over a decade. We then anticipate a further demand spike in January 2021, as some buyers leave it late to enter the market in an attempt to beat the stamp duty deadline” says the portal.

The volume of new sales agreed is running 38 per cent higher than a year ago, adding to the pipeline of business set to complete in the first quarter of 2021. But it warns that of the new sales agreed in January, just half are likely to beat the stamp duty deadline based on evidence from previous years.

The year is expected to end with house price inflation reaching 4.0 per cent.

Meanwhile next year will see different phases, Zoopla says. 

“Once the stamp duty holiday concludes at the end of March, we anticipate a slowdown in sales completions as the impetus to move amongst buyers motivated by stamp duty savings dissipates” it suggests.

This will have a knock on effect on transaction volumes in the second quarter of the year, which it forecasts will be 20 to 30 per cent below normal levels as stamp duty is reintroduced, before recovering slightly and running 10 per cent below 2019 levels for the second half of the year.

Zoopla’s anticipates house price growth across the country in 2021 – just 1.0 per cent on average – will run within a narrow range from 1.75 per cent in Scotland to just 0.5 per cent in the East of England and the North East.

“Central to our outlook is lower levels of turnover by long-run standards, which over time increases the scarcity of homes for sale. We expect the supply of properties for sale to moderate over 2021, which will restrict choice for consumers” it continues.

Richard Donnell, Director of Research and Insight at Zoopla, says: “It’s been a roller coaster year for the housing market which is ending on a strong note with demand and sales agreed still more than 30 per cent higher than this time last year. House price growth has hit a three-year high and is set to increase further in the short term.”

He continues: “The high volume of sales agreed this autumn will spill over as completed sales in 2021 and this will support the overall number of sales completed in 2021 at 1.1 million. It has been a remarkable turnaround and completed sales look set to fall just six per cent short of last year despite a two-month closure of the market in England.”

Donnell adds that there are obvious Covid-related challenges ahead but he says the impact on the housing market is less than in previous downturns as sales volumes have fallen in recent years and affordability levels are far from over-stretched.

“We expect housing demand to slow further over 2021 and this will ease the upward pressure on prices which we expect to be 1.0 per cent higher by December 2021. Lower sales volumes over the second half of 2021 and a growing scarcity of supply will offset weaker demand and support headline pricing levels.”

Original Article from Estate Agent Today 25/11/2020