It is a well-known fact that the roots from trees may cause subsidence in houses. In the battle between nature and the man-made environment where does your allegiance lie? Though most people are likely to say they love to see trees growing, it might be an entirely different situation if it is your own home or let property under threat.

The facts

The latest figures available from the Association of British Insurers (ABI) revealed that more than 18,000 households made claims worth a total of £219 million in 2023 as a result of Summer 2022’s record breaking temperatures. This is the highest expected insurance subsidence bill since 2006. 

The problem

The conflict between trees and property lies mainly in the roots of the former. As they grow – spreading out a considerable distance from the trunk – the roots take up water, causing the soil around them to dry out.

The problems are especially prevalent on clay soils where trees are typically extremely efficient in absorbing moisture and quickly shrinking the clay as it dries out, especially in dry weather and periods of sustained drought.

When there is a particularly dry summer, or a drought, therefore, the soil is likely to collapse and if it is ground supporting the foundations of a building they may be disturbed. Disturbance to the foundations may then cause the building to subside.

Living together

Paradoxically perhaps, trees have a very important role to play in our urban – and rural – environments. Tree planting is widely seen as one of the ways of combatting some of the effects of climate change by helping to regulate the forecast increases in ambient temperatures.

It is widely believed that trees have a very important – and increasing – role to play in safeguarding the environment.

The quest, therefore, is in finding ways that trees and buildings are able to live together. According to a report on the Subsidence Forum, for example, it has been found that not all trees are responsible for causing subsidence. The problem, however, is that it may prove extremely difficult determining which of them might end up causing subsidence problems for nearby buildings.

The Forum mentions advice from certain experts who advise that one of the ways of preventing or limiting the disruptive effect of root growth is to keep trees near buildings regularly pruned. In this way, the reduction in foliage may limit the amount of water taken up from the soil, preventing it from drying out and therefore reducing the risk of collapsing ground and the subsidence of property built upon it.

The future

Most people are likely to find it a much poorer world if city streets were totally denuded of trees because of the potential threat they pose to the buildings on either side.

The damage caused by trees may need to be controlled – and homeowners and buy to let landlords may need to continue to protect their properties with insurance against subsidence – but the longer term solution appears to lie in finding the most appropriate harmonious balance between nature and the demands of the built environment.

Is subsidence covered under my buildings insurance policy?

The answer depends upon who provided your policy.

Unfortunately, not all policies provide cover for subsidence automatically. some providers, including ourselves might not do so, therefore, it would be in your best interests to check your quotation documents and you policy carefully. We are always on hand to explain our cover in detail to you.

Some policyholders occasionally express surprise that subsidence isn’t automatically included in all policies. Here is a little history to explain that position.

At the risk of generalising, at one time cover for subsidence would have been typically included automatically in most if not all property cover. It is a fact though that over recent decades, subsidence claims have soared and they have proven to be a major problem for some sections of the insurance industry.

The reason for the increasing claims is not entirely clear. Some suggest:

• it is due to climate change having a knock-on effect on the geology our properties are built on;
• properties in the past may have been built with scant regard for foundations;
• a greater awareness of what subsidence is may have led to an increased tendency to make claims for problems that previous generations would simply have lived with or not noticed.

Whatever the reality is, some buildings insurance providers no longer consider this to be a standard risk – and that might apply just as much to owner-occupier policies as it does to landlords insurance.

The potentially massive costs associated with subsidence might even be of the magnitude of needing to completely demolish the property and rebuild it from scratch. As a result, it might not be a good idea to take subsidence insurance lightly.

If you are not already clear, it might be advisable to check in the very near future just what your current policy is providing.

My property has a history of subsidence – can you provide cover for it?

Our buildings insurance policies can cater for many historic issues your property may have – typically even, in some cases, subsidence.

Should you require a property insurance quotation from us for a property which has previously suffered from a subsidence claim we will ask you for some additional information including:

• date of claim;
• cost of claim;
• full explanation of the cause of the claim;
• full breakdown of the work undertaken to rectify the problem;
• current/recent surveyors report following the completion of works.

If you are currently going through the progress of making a subsidence claim against your existing insurance we will always suggest you remain with your current insurer as these risks are almost impossible to replace during the early stages of a claim.

We do understand how stressful having had to make a subsidence claim has been for you and we will do our utmost to find you a competitive landlords insurance quote.

Please note that if you are unable to provide us with any of the above information, then we will not be able to provide terms to you.

The team here at Cover4LetProperty are here to help, contact us and ask away as it is our job to deal with your queries and concerns regarding your property insurance.

Homes in Great Britain are designed principally to keep the warmth in when winter’s cold begins to bite. They are not designed as living spaces during very hot weather.

If you are the landlord of let property, that home is unlikely to have been designed with scorching temperatures in mind – so how might you protect your property and your tenants in the heat?

Prevent burst pipes

• the winter’s scourge of burst pipes is probably the last thing you’d worry about in the summertime;
• but extreme weather could lead to disturbed foundations and structural shifts that damage pipes, the effect of very hot weather heating and distorting the pipes, blocked drains, and the accumulated effects of hard water;
• so check for clogged drains, have a water softener installed, and cover any exposed pipework with insulation to block the extreme rays of the sun;

Check for subsidence

It follows from this warning that you will do well to check for any signs of subsidence – or, indeed, any structural changes your let property might have suffered because of the extremely hot weather.

For more information, please see our blog: Subsidence – what causes it, and what about subsidence insurance?

Fire safety

• ensure electrical systems are not overloaded, as heat can increase the risk of electrical fires;
• keep a fire extinguisher readily accessible and ensure everyone in the household knows how to use it;
• clear dry vegetation and flammable materials from around the property to reduce fire risk;

Keep drains and gutters clear

• the longer the dry weather goes on, the more likely you’re going to forget those gutters and downpipes that make up your rainwater goods;
• indeed, the debris that normally collects in those fittings will have been baked rock hard by the scorching sun – and the first you’ll know of any blockages will be the first outburst of heavy rain;
• pre-empt any problems or emergencies by clearing blocked drains and gutters now – and keeping them clear while you await that first downpour;

Keep cool and carry on

In the heat of the day, it’s going to be much hotter outside than it is inside – it might be worthwhile reminding your tenants how to keep as cool as possible inside their home;

• advise them to try to preserve some of the cooler air by closing windows and curtains to keep the heat of the midday sun away from heating up the indoors;
• install ceiling fans or use portable fans to improve air circulation;
• open windows during the cooler parts of the day to allow fresh air in and close them during the hottest times;
• limit the use of heat-generating appliances such as ovens and stoves during peak heat times;

Mirror, mirror on the wall

• something that might be easy to overlook is the – potentially lethal danger – of reflected light from mirrors in the home;
• with the intensity of the sun’s rays during any heatwave, reflected beams can be strong enough to set fire to anything at all inflammable in the room;
• urge your tenants to remove mirrors from direct sunlight and take them down from the wall during the height of extremely hot and bright weather.

Summary

British homes are not designed for extremely hot weather so you and your tenants may need to take special care to keep as cool as possible during any heatwave – protecting both property and people from the damaging effects of the weather outside.

What are some of the challenges to domestic expenditure in the UK economy at the moment? And how does property news about the present state of the housing market reflect those trends?

Perhaps some of the latest headlines will reveal the answers – let’s take a brief look.

Are landlords facing a crisis? Buy-to-let (BTL) mortgage figures

Alarmed by an almost 124% increase in BTL mortgage arrears in the 12 months since the end of 2022, the Daily Mail recently reported that many landlords have reached a crisis point.

The newspaper points to clear evidence that Britain’s two million or so private sector landlords have been hit hard by rising mortgage interest rates. The impact is reflected in the staggering 55.4% fall in buy-to-let mortgage lending in the final quarter of 2023 compared with the last three months of 2022. During that period, interest rates on those loans went up by 5.7%, compared with an increase of 3.67% the previous year.

As landlords struggle with those rising interest rates, the volume of arrears – and, ultimately, repossessions – also starts to climb.

At the end of 2023, some 13,570 landlords were in arrears with their mortgage repayments. During the final quarter of 2023, 500 buy-to-let properties were repossessed by lenders – as a last resort after other options had failed to clear outstanding arrears. Those repossessions represent an increase of more than 56% on the repossessions made during the final quarter of 2022.

The difficulties have led to a general increase in rents and some landlords – especially those with only one or two let dwellings – have sold up and quit the market. Commentators suggest that bigger landlords, however, are seizing the opportunity to buy up potential investments – looking towards the longer term with a conviction that the private rental sector will deliver favourable returns.

Fresh hope for Brits as household bills fall and discretionary spend rises?

For the many households worried about recent increases in the cost of living, a report by Nationwide on the 23rd of April offers a glimmer of hope.

The building society found that its estimates of “essential costs” for families fell by 4% in March while the expenditure by households remained more or less the same. Those savings in essential costs, however, were perfectly balanced out by a 4% increase in “non-essential costs” – such as expenditure on holidays, eating out, or gardening.

More clement weather of late could account for some of this respective ebb and flow in savings and expenditure.

While glimmers of hope could be detected, the building society warned that mortgages, rents, and supermarket shopping costs remain high.

Average rent in the UK: April 2024

The latest report by the online listings website Zoopla on the 19^th of April reveals that average rents across the UK as a whole have risen by 7.2% during the past 12 months – the equivalent of £960 per annum.

While average rents in the northeast of England are £695 a month and £2,121 in London, Scotland is where rent levels are rising at the fastest rate (despite the rent controls there).

The analysts at Zoopla predict that rent rises will slow down during the remainder of 2024 as the affordability for tenants restricts further growth in demand.

Housing market bounce pushes prices close to new record

Another online listings website Rightmove in a posting dated the 22^nd of April revealed that the average advertised price of a home for sale in the UK now stands at £372,324 – an increase of 1.1% since March alone.

Although this is in line with the increase in prices typically recorded at this time of the year, Rightmove detects a bounce in the market. It has pushed average prices just £570 short of the all-time record high that was reached in May last year.

Unsurprisingly perhaps the market bounce is driven by the increase in asking prices for higher-value, large, detached homes with five bedrooms or more.

Many property owners continue to struggle with the rising costs of energy bills. Energy consumption takes many different forms, of course, but a major expense comes from the simple need to heat your water.

Can solar panels help to cut those water heating costs – and, if so, how?

What is solar hot water?

Just as the term suggests, solar hot water makes use of the solar energy from the sun to heat water. It can do this in one of two ways:

• solar thermal panels are installed to directly employ energy from the sun for hot water and heating; and

• solar photovoltaic (PV) panels that convert energy from the sun into electricity – that can be used for heating and hot water.

Either way, it is the solar energy from the sun that is used to heat your water but for this article, we are looking at solar thermal panels only

What are the benefits of solar water healing?

The immediate, obvious benefit of solar water heating comes from the fact that you pay nothing for the sun to shine – solar energy is a free resource.

But that’s not the only saving Landlord Today reminded us on the 13^th of April 2024 – harness the sun’s rays and you’ll not only save money but also reduce your carbon footprint. So, you’ll be doing the world a favour by switching to a thoroughly sustainable heat source while also saving a fair packet in your pocket.

Not only is the sun free, but you’ll also be protecting yourself against future price rises and potential fuel shortages. You might consider it priceless to safeguard your future energy needs in this way.

What are the cost savings?

Of course, there will be an initial outlay to get the panels installed, so this will need to be factored in, overall. But that aside, the cost savings will be variable. These include your geographical location (how many hours of sunshine you can typically expect), the volume of hot water you use, how efficiently your solar heating system works, the cost of the fuel you would otherwise consume (electricity, oil, or natural gas), and your options for finance and any financial incentives currently available.

Green energy consultants GreenMatch estimate that these savings could represent up to £475 a year for the average consumer.

How do they work?

Solar thermal systems – or solar water heating systems – take the energy directly from the sun to heat the water you can then store in a thermal store or hot water cylinder.

The system relies on “solar collectors” which are tubes or panels used to gather the energy from the sun. The tubes are filled with a mixture of glycol and water, enabling the solar collectors to convert the infrared spectrum of visible light into heat. The water and glycol mixture is then pumped around a circuit that includes the hot water cylinder.

Given the UK climate, the amount of solar energy available to you varies throughout the year. The Energy Saving Trust explains that the typical solar thermal system installed in most residential situations will not meet all your hot water needs the whole year around. Instead, you will need to back up the solar supply with a conventional electric immersion heater or continue to rely on a central heating boiler.

The installed system can be expected to meet your hot water needs for taking a shower, bath, or running the hot taps.

What if I already have solar panels?

If you already have solar panels, Landlord Today suggests that you consider installing an Immersion Power Diverter so that any additional energy you are generating can go towards heating the hot water cylinder.

There is an initial installation cost, of course, but Landlord Today estimates that your savings on energy bills could effectively cover that cost within just two years.

Please note, this blog is based on current research and any figures and information supplied are based on this research as of May 2024. If you are interested in solar panels, please consult a professional.

If you have joined the ranks of an estimated 2.8m buy to let landlords in the UK, your property is an investment – probably one of the most valuable investments you are likely to make.

It makes sense, therefore, to protect that investment with one of the wide range of products designed to provide the safeguards you need, according to the changing circumstances of your property holding.

But before we actually look at some of the principal ways in which landlord insurance may continue to protect your property, let’s take a look at the different types of landlord there are in the UK. This is important as, typically, different types of property insurance will be required depending on the type of landlord and letting situation.

The different types of UK landlords

In the UK, there are several types of landlords who own and rent out properties:

1. Private landlords: These are individuals who own one or more properties and rent them out to tenants. They can range from individual property owners to those who own multiple rental properties as part of their investment portfolio.
2. Corporate landlords: These are companies or organisations that own and manage rental properties on a larger scale. They may own residential properties, commercial properties, or a combination of both.
3. Social landlords: Also known as housing associations or registered providers, social landlords are designed to provide affordable housing to people in need. They often receive funding from the government and may specialise in housing for specific groups, such as low-income families, the elderly, or individuals with disabilities.
4. Local authorities: Local councils or government authorities in the UK also act as landlords by providing social housing to residents. They own and manage properties within their jurisdiction and allocate them to eligible tenants based on housing needs and criteria.
5. Institutional investors: These are institutional investors such as pension funds, insurance companies, and private equity firms that invest in the UK property market. These investors may own large portfolios of rental properties either directly or through investment vehicles.

Each type of landlord may have different motivations, responsibilities, and regulatory obligations when it comes to renting out properties in the UK.

For the purpose of this article, the focus is on private and corporate landlords.

Insurance for landlords

There are several insurances that landlords need to consider, depending on their circumstances.

Landlord insurance

UK landlord insurance is a specialised type of insurance designed to provide cover for individuals who own properties that they rent out to tenants. This insurance typically goes beyond standard home insurance to address the unique risks and liabilities associated with being a landlord.

Landlord insurance typically includes cover for the building structure, as well as optional cover for any contents owned by the landlord that are included with the rental property. Additionally, it may offer liability cover in case a tenant or visitor is injured on the property.

Depending on the policy, landlord insurance may also provide cover for loss of rental income if the property becomes uninhabitable due to an insured event, such as fire or flood. It may also include cover for malicious damage caused by tenants, legal expenses, and alternative accommodation costs for tenants if the property becomes uninhabitable.

Overall, UK landlord insurance is tailored to meet the specific needs and risks faced by property owners who rent out their properties to tenants.

Recap:

• let property insurance typically provides cover for the structure and fabric of your let property, and if required, any contents which you own within the premises;
• as with any property insurance, the worst case scenario needs to be envisaged, so that the total building sum insured covers the estimated cost of completely reconstructing the premises, clearing the area and legal and professional fees;
• but landlord insurance may also cover much more than the physical risks and perils to your let property;
• your liabilities for the health, safety and well-being of your tenants, for instance, might be looked after thanks to the cover provided to indemnify you against claims of negligence in your duty of care as a landlord;
• landlord insurance may also ensure that your anticipated rental income is just about maintained even after a major insured event has rendered your let property temporarily unfit for letting.

HMO insurance

If you own an HMO (House in Multiple Occupation) then you will require HMO insurance. This is a specialised type of insurance designed to provide cover for landlords who rent out a property to multiple tenants who are not part of the same household.

HMO insurance typically offers protection beyond standard landlord insurance to address the unique risks associated with HMO properties. Cover may include protection for the structure of the building, liability cover in case a tenant or visitor is injured on the property, cover for loss of rental income in case the property becomes uninhabitable due to an insured event, and optional cover for contents owned by the landlord.

HMO insurance may also provide additional features such as cover for malicious damage caused by tenants, cover for properties with a high number of tenants, and cover for specific tenant types such as students or individuals receiving housing benefits. Read more: A landlord’s guide to HMOs.

Commercial property insurance

With similar emphasis on safeguarding the structure and fabric of your let property, commercial landlord insurance also recognises the particular needs and requirements of those owning property that is let for business purposes.

Whether the premises are let as a shop, a workshop, a salon, a bed and breakfast business, a pub, bar or restaurant, commercial landlord insurance is tailored to safeguard the particular business operations of the enterprise.

In addition to the security generally provided by landlord insurance, therefore, this specialist cover also focuses on the provision of compensation for business disruption in the event of an insured incident.

If the commercial property is unoccupied, then unoccupied commercial insurance will be required.

Portfolio insurance

In the context of property investment, portfolio insurance typically applies to landlords or property investors who own multiple rental properties.

Just as the name suggests, it is possible to arrange insurance not only for a single let property but for a whole portfolio of such premises – typically earning the landlord attractive discounts on the cost of insuring premises versus on a case by case basis.

Portfolios insurance has the added advantage of keeping all of your buy to let properties under a single insurance policy, with just one annual renewal date to manage.

This type of insurance typically offers comprehensive cover for the entire property portfolio, providing protection against various risks such as damage to the properties, loss of rental income, liability claims, and legal expenses. It may also include cover for contents within the properties and additional features tailored to the specific needs of property investors.

Portfolio insurance is essential for landlords or property investors who want to safeguard their investment portfolio against unexpected events that could potentially result in financial loss or legal liabilities. It helps to mitigate risks and provides peace of mind, allowing property owners to focus on managing and growing their investment portfolio effectively.

Unoccupied property insurance

With the best will and the greatest care in the world, you are unlikely to avoid vacancies in tenancies – whether through incoming and outgoing tenants or your decision to refurbish the premises themselves. In either event, there is every possibility of your let property lying empty for more than a few months.

Given the particular risks and perils to which an empty property may be exposed – whether through unattended maintenance problems or the unwanted attentions of burglars and vandals – purpose designed empty property insurance is necessary to maintain the level of cover and security demanded by the typical landlord. Read more here: Guide to unoccupied property.

Renovation insurance/property undergoing works

You might have bought it with the express intention of refurbishment or decided to revamp a property you already own, but there is likely to be a place for landlord’s renovation insurance in your plans.

Renovation insurance may be the key to ensuring the protection not only of the existing structure and fabric of the property you own, but also the works in progress and the final extension, reconfiguration or remodelling itself.

All the while, your property owner’s liabilities may also be safely protected with indemnities likely to start at a minimum of £2m

During the course of any renovation building works you are also likely to want cover for the plant, machinery, tools and materials employed in the project. Read more here with our Guide to renovating.

UK holiday home insurance

This is aimed at individuals who own a second home or a holiday property that they rent out in the UK and is, in many ways, a blend of both standard home insurance and landlord insurance. Here’s why:

• ownership and occasional occupancy: You own the property and likely use it intermittently as your holiday getaway;
• potential for rental income: Since you don’t occupy it year-round, your holiday home has the potential to generate extra income by renting it out to paying guests. In this scenario, you assume the role of a landlord to short-term tenants.

The unique, almost hybrid, nature of holiday home insurance sets it apart from both standard home insurance and landlord insurance.

For further insight into the necessity of holiday home insurance, refer to our Guide to UK Holiday Homes.

Summary

As may be clear, therefore, owning your buy to let property might not just call for a basic, all-purpose landlord insurance policy, but one that is specially tailored to meet the diverse and changing needs and circumstances of the typical landlord.

Ensuring that you are prepared to meet some or all of these changing demands, you might want to consider the expertise and experience that a specialist insurance provider such as ourselves may bring.

Please contact us today on 01702 606 301 to see how we can help.

Last month’s Spring Budget was billed by the Chancellor of the Exchequer as a “Budget for Long Term Growth”. Only time will tell whether it achieves that aim but, in the meantime, let’s look at just what the budget holds in store for landlords.

Please note that this is based on the author’s current understanding and research and therefore should not be deemed as professional advice.

Holiday lets

Recent years have seen quite widespread criticism of the growing number of short-term holiday lets – especially in tourist hotspots. Some might argue that the favourable tax regime granted to landlords of furnished holiday lets – tax-free mortgage interest repayments – has unduly encouraged such growth.

The Spring Budget, therefore, proposed the abolition of those tax advantages – arguing that the loss of this and other benefits will encourage owners into much-needed longer-term tenancies. On the other hand, some of those landlords of holiday lets might simply choose to sell up and quit the buy to let market altogether.

An estimated 127,000 dwellings currently benefit from the furnished holiday lets regime and its abolition is expected to raise an additional £300 million for the Treasury (according to an estimate calculated by Landlord Zone on the 20^th of March).

The budget includes further blows to the holiday let market by abolishing the right of landlords to deduct the costs of fittings and fixtures from their taxable income, the removal of tax privileges for pension contributions, and the loss of the option to pay a 10% business rate instead of the full capital gains tax (CGT) whenever a property is sold.

Capital Gains Tax (CGT)

On a brighter note, higher-rate taxpayers will welcome the reduction – with effect from the coming tax year – from the current 28% rate of CGT to 24%. There is no change to the basic rate of CGT which remains at 18%. Landlords are affected by the changing rates of CGT, which is a tax applied when temporary residences such as second homes, holiday lets, and but to let rental property is sold.

Even at 24%, CGT is more onerous for higher rate payers than the tax on other assets such as stocks and shares, where the rate is 20%.

Stamp Duty: Multiple Dwellings Relief

Landlords looking to increase the size of their buy to let portfolios will be hit by the abolition of Multiple Dwellings Relief (MDR) from Stamp Duty Land Tax (SDLT) on purchases of residential property in England and Northern Ireland with effect from the 1^st of June 2024.

MDR has served as a tax break for landlords investing in multiple properties. It has reduced the amount of tax payable on the purchase of one dwelling calculated according to the average price paid for multiple dwellings. The Chancellor argued that MDR no longer fulfils its original intention of incentivising investment in rental properties.

The saving to the Treasury from the abolition of MDR is estimated to be £700 million annually.

Empty Property Relief

With the imminent start of the new tax year, there will be a “resetting” of the current Empty Property Relief (EPR) arrangements.

Commercial landlords can apply for empty property relief and avoid paying business rates for the first three months from which premises become empty. Up until now, there has been an obligatory 6-week waiting time after the end of one period of relief and the start of any new period of vacancy.

That “resetting” period has now been extended to 13 weeks. The Government website explains: “The current 6 week reset period requirement will therefore still apply where that period started before 1 April 2024 and ends on or after that date. If a previously empty property is reoccupied on or after 1 April 2024, it must be occupied continuously for 13 weeks before it can benefit from a further period of empty property rate relief.”

By extending the delay before qualifying for relief once again, the Treasury hopes to curb the practice of some landlords who have persistently rolled over successive periods of business rate relief on empty properties they own.

VAT

Most landlords do not have to worry about VAT since residential lettings are exempt from that tax.

The exceptions, however, are holiday lets and self-catering accommodation. If you are the landlord of this type of business and your rental income from such property exceeds the tax thresholds, you must register for VAT.

The Spring Budget raised that VAT threshold from its current £85,000 to £90,000 per annum with effect from the 1^st of April. The threshold for deregistration has been similarly increased from £83,000 to £88,000.

Industry reactions

Although the reaction from the private sector rental industry has been mixed, the overall assessment is probably best summed up by the National Residential Landlords Association (NRLA) in its comments on the 6^th of March.

The Spring Budget represented a “missed opportunity” and a failure to give priority to investment in the provision of new homes to rent, said the NRLA. It accused the Chancellor of “tinkering” with marginal issues for short-term electoral gain rather than giving support for longer-term investment in a high-quality private rented sector. By way of illustration, the NRLA considered that increased taxation of holiday lets and bigger allowances on CGT would make little difference to the long-term investment in this sector of the housing market.

There had been a failure to address the current high demand for and low supply of affordable, quality rented accommodation, complained the NRLA.

The National Residential Landlords Association (NRLA) branded the Spring Budget delivered by the Chancellor of the Exchequer in March a “missed opportunity” for the housing sector. Let’s see whether the latest UK property news headlines paint a rosier picture.

Renting set to boom as buying is even less affordable

At an average of £290,000 last year, house prices in England have now reached more than eight times the average annual salary, revealed Landlord Today on the 26^th of March.

Yet the Office for National Statistics (ONS) has calculated that a common measure of affordability of housing is just five times a buyer’s annual income.

The discrepancy leads the article to argue that the unaffordable high price of buying heralds a boom in renting.

In support of its argument, Landlord Today points out that:

• unsurprisingly, the London Borough of Kensington and Chelsea is the place where homes are least affordable – more than 34 times average incomes;

• even in the more affordable region of Wales, buyers would need more than six times their annual income to buy a home – again, well above the ONS measure of affordability;

• since 1997, average salaries have doubled – but house prices have shot up by more than four and half times; and

• a first-time buyer in full-time employment would need to spend around 14 times their annual salary to buy their home – yet anyone spending more than a quarter of their take-home pay on the mortgage is judged to be at risk of arrears in repayments.

Huge contribution landlords make to UK economy revealed

In an article on the 25^th of March, the Buy Association cited reports calculating that landlords comprising the private rented sector contribute some £45 billion to the UK economy.

In England and Wales, the biggest part (80%) of that contribution comes from medium and small property owners with fewer than 15 let properties. They account for some 3.8 million dwellings in the private rented sector which comprises a total of some 4.8 million properties.

It is not only a financial contribution since these owners of buy to let property sustain 390,000 jobs – either directly employed or those working in the industry’s supply chain.

Study says: “UK property offers the worst value for money in the developed world”

Citing studies by the Resolution Foundation, the US media channel Bloomberg on the 24^th of March slammed housing in the UK as some of the worst value in the developed world.

It reported that homes in the UK are not only older than those in other parts of the world but are also smaller – even “more cramped” than the average apartment in New York, says the article.

The problem of housing the UK’s population is rising up the political agenda insists the Resolution Foundation because rocketing prices mean that many younger people continue to struggle to get a first foot on the housing ladder.

What’s the average UK energy bill and how can I save money?

In its latest study of domestic energy bills, on the 22^nd of March, the online listings website Rightmove updated the current average costs.

Examples of the findings are as follows:

• 2-bedroomed flat – annual average bills range from £845 for the most energy-efficient dwelling to £4,737 to the least efficient;

• 3-bedroomed semi-detached house – from £1,187 to £6,279;

• 3-bedroomed detached house – from £1,193 to £9,143; and

• 4-bedroomed detached house – from £1,440 to £10,130.

If you are a householder looking to save money on those energy bills you might want to consider measures such as improving the insulation of your home, installing a smart thermostat, adjusting the flow temperature on any combi-boiler, requesting a smart meter from your energy supplier, and remembering to close the curtains or blinds at night.

Further reading: How to save even more money on your energy costs.

Bad debts are the scourge of many a business – and, for landlords of course this takes the shape of rent arrears.

Managing any rent arrears is important for the cashflow of any buy to let business and the bottom line of any profit you expect to make – an especially critical consideration at a time when changes in tax legislation and other government regulations are steadily squeezing your opportunities for running a viable business.

So, what are some of the steps you might take to reduce the incidence of bad debts and rid yourself of the curse of rent arrears? They fall under two broad headings – prevention and eviction:

Prevention

• prevention, of course, is much better than having to find the cure for rent arrears;
• that means exercising particular care in your selection of tenants by insisting on taking up references and conducting proof of income checks by way of payslips or a certified bank statement on the prospective tenant’s account;
• references from friends of the tenant are obviously less reliable than from, say, their employer or, even better, from a previous landlord;
• when evaluating the references, of course, your main aim is to try and establish that they are indeed able to afford the rent and that their past record suggests they are not going to fall into arrears;
• this takes a fair degree of judgment on your part, which is likely to stand you in better stead the more experienced you are in doing it;
• especially if you are relatively new to the buy to let business, therefore, you might want to use a professional reference checking service – if you are using a Lettings Agency, they can do this on your behalf;
• if any doubts arise during the reference checking process, you might want to insist on the tenant providing a guarantor – preferably a home owner themselves and certainly one with a UK address;
• if you go down this route, make absolutely certain that the guarantor is fully aware of their responsibilities and obligations in that role in the event of your tenant defaulting on rental payments;

Rent guarantee insurance

• as part of your preventive or defence strategy, you might also want to consider the inclusion of rent guarantee insurance in your wider landlord insurance policy;
• just as the name suggests, the cover provides compensation – up to a maximum amount, for a given period – if your tenant defaults on the rent or does a moonlight flit;
• it comes packaged with legal protection insurance – to cover the costs of any legal action you may need to pursue to evict the tenant concerned. IMPORTANT: Please note that to enjoy the benefits of a rent guarantee policy, you must obtain one Credit Agency Reference (from a reputable Credit Reference Agency) and at least one satisfactory written character reference for each tenant. Failure to do so will render any claim invalid;

Eviction

• at the first sign of any rental arrears, it is important that you talk to your tenant about them – and this relies on your having maintained a reasonable channel of communication and a good landlord tenant relationship from the beginning of the tenancy;
• the relevant legislation requires that you give the tenant every opportunity to clear the arrears – by attempting to agree a payment plan, perhaps;
• this might include coming to an agreement that any housing benefit to which the tenant is entitled is paid directly to you;
• it might also be the time for you to contact anyone who has stood as guarantor for the tenant and to put recovery of the outstanding rent into action by that means;
• if your efforts to recover any arrears from your tenant have failed, you are likely to want to take possession of your let property once again by serving one of two notices defined in law, before attempting to recover the outstanding arrears;
• a section 21 notice may be served for any reason and gives you automatic repossession of your property, but may only be used once the fixed term of an assured shorthold tenancy agreement has expired;
• a section 8 notice may be served for any reason given under the relevant legislation – including failure to pay the rent (with arrears that are longer than two months) and anti-social behaviour;
• in all cases you must give your tenant written notice, usually at least 2 months, of your intention to regain possession;
• if the tenant then refuses to leave the property, an order for eviction may need to be given by the courts and, if you served a section 8 notice, the court may also order the tenant to repay any outstanding rent at that time;
• failing that, you may need to consider legal action to recover the arrears, relying upon your legal protection insurance to cover the costs and your rent guarantee protection to compensate for arrears that have not been recovered through the courts.

Rent arrears are a curse for any landlord, but, having done your best to prevent their arising in the first place, rent guarantee and legal protection insurance may help you avoid the full extent of any loss.

Note: This information is based on current law as at April 2024, but may change. Please always seek professional advice.

If you are the landlord of buy to let property, what is likely to be one of your chief worries? If you are like the majority of landlords, this is likely to be a question of your tenants continuing to pay the rent when it falls due.

Payment, after all, is not only a question of the tenancy agreement to which you are both signed up, but rental income is also something on which you are likely to rely in order to meet the costs of running your buy to let business – costs such as the monthly mortgage repayments, the let property insurance you need to protect the property, and the seemingly never-ending requirement for maintenance and upkeep.

Indeed, your entire livelihood may depend on the collection of that rent and there may be many landlords who rely on such income as their pension.

That is why you may wish to consider residential let legal expenses and optional rent protection – you can find out more here.

What recourse might you have, therefore, if your tenants fail to pay their rent and slip into arrears and you don’t have rent guarantee insurance?

Let them know

• it might seem an obvious course of action, since most tenants are going to know full well when they have fallen behind with the rent;

• but it important you let your tenant know that you are aware they are slipping behind with the rent;

• you might want to avoid appearing too threatening at this stage, since there may be any number of reasons why the tenant has temporary difficulties in paying the rent and your aim, after all, is simply to ensure that you are paid what you are due, remaining on the best possible terms with your tenant;

Your records

• similarly important – and something that might seem too obvious to mention – is your need to keep a careful record of when rent is due, when it is paid and when it is not;

• if subsequent action comes down to the wire of your considering legal action to recover outstanding rent, then your written records are clearly going to count for a great deal;

Demand action

• if your tenant has not responded to your letter notifying him that rent is due or has failed to answer your telephone calls, it may be time to up the ante and send a letter by recorded delivery demanding that all rent due is paid;

Is there a guarantor?

• the Consumers’ Association’s magazine Which? suggests that you might also follow up your demand for outstanding rent with any rent guarantor – once again, this needs to set out precisely how much rent is due and for what period, explaining some of the consequences for the guarantor if the rent is still not paid;

The two-month milestone

• if your tenant has still not paid the rent within two months of it falling due, you have the legal right to recover possession of your property under Section 8 of the Housing Act 1988;

• this is effectively an eviction notice on the grounds of non-payment of rent and something you might want to keep up your sleeve only as a last resort;

• legal proceedings such as this always involve costs, although these, together with the rent you are due are going to be awarded by the courts if you succeed in your action;

With the best will in the world, even the best tenants may default on their rent from time to time, in the event of their finding it genuinely difficult or impossible to pay. How far you are prepared to press for payment of what is due may call for a fine judgment as to the potential costs and hassle, compared to the actual debt outstanding and your assessment of the tenant’s finally paying.

Instead of pursuing court action, for instance, you might decide to support your tenant through their current financial difficulties on the understanding that the problems are essentially temporary.

You might offer further help by proposing a plan by which the tenant may pay off outstanding rent in instalments, thus spreading the burden of repayment.

Or, you might also want to suggest to your tenant that they consider applying for housing support if their circumstances suggest that meeting their rental obligations is likely to be a longer term problem.

Note: This information is based on current law as at April 2024, but may change. Please always seek professional advice.

If you have decided to sell off your property portfolio, we have put together some quick tips to help you achieve your investment objectives.

Assess your portfolio

Begin by evaluating your entire property portfolio. Determine which properties you wish to sell and consider factors such as location, market value, rental income, and potential for appreciation.

Get help

Seek advice from estate agents – they can provide valuable insights into market conditions, pricing strategies, and the sales process.

How many agents should I use?

This really depends on what you feel comfortable with.

An agent offered a sole agency, for example, may be able to quote a cheaper rate of commission in the property is sold within the term of your contract with them – typically a period of between 8 and 12 weeks. If you make the wrong appointment, however, you are effectively stuck with that agent for the duration of the contract – and if any property in your portfolio is sold by another agent during this period, you still need to pay the sole agent’s commission.

The multi-agency approach allows competition between those agents you choose to instruct and the commission is paid only to the agent who successfully sells your property – so rates of commission tend to be higher.

You might want to beware of instructing too many agents, however, since a proliferation of marketing attempts for the same property may give buyers the impression that you are desperate to sell – and the offers you receive are likely to reflect that impression.

Prepare your properties

Prepare your properties for sale by ensuring they are in good condition and making any necessary repairs or upgrades to enhance their appeal to potential buyers. Consider staging the properties to showcase their full potential.

Set a competitive price

Determine the asking price for each property based on its market value, comparable sales in the area, and your financial goals. Price your properties competitively to attract potential buyers and maximise your return on investment.

Viewings

• if you have a whole portfolio of properties on the market, you are unlikely to want – or even have the time for – managing viewings entirely on your own;

• indeed, this is a valuable part of the service likely to be offered by any estate agent worth his salt;

• nevertheless, remember that you still have an interest in making the agent’s job as easy as possible and granting viewings to suit their schedule rather than your own – the agent still needs to be able to communicate with you;

Offers

• one point that is especially relevant, of course, once offers start to come in;

• the agent’s job involves rather more than simply receiving an offer and passing it on to you – there is a lot of information, relevant to the buyer’s ability to pay and when the sale might be completed, which you need the agent to collect on your behalf;

• although you may reasonably expect your estate agent to play an active part in negotiating with potential buyers, beware of granting any permission for the agent to reveal how much you might be prepared to accept as a purchase price – it is likely to be used by the buyer as the new negotiating price;

Manage the sales process

Throughout the sales process, stay organised and proactive in managing the sale of your property portfolio. Keep track of important deadlines, paperwork, and communication with buyers, agents, and other parties involved in the transaction.

Scruples

• one final decision might be seen as testing your scruples as a property dealer;

• once an offer has been made and accepted, do you then withdraw the property or properties from the market or stand by the principle that nothing is certain until contracts have been exchanged in the hope of receiving a higher bid? The choice is yours of course.

The sale of a property portfolio is not something you are likely to want – or are capable of – taking on by yourself. If you intend seeking the relevant professional help of an estate agent or agents, you might want to keep in mind some of these tips and suggestions.