Buying A Tamworth Property With An Existing Tenant

Has my Tamworth lodger become my accidential tenant?

My best friend came to visit me nearly three years ago, she stayed on and rented one of my rooms.  With low rent and fully inclusive of all bills, she had a great deal.

After 6 months I went to live with my partner so rented out another room in my house. Shortly after I moved out  my best friends son came to stay and has been there ever since.

When I was  advised recently I had created a HMO, I told my friend that her son had to leave the property, she advised that she would be vacating when he did. I then gave them a polite written notice that I wanted them both the leave.

When the second tenant left  6 weeks ago I locked her room to prevent it being used.

My question is – As nothing was ever put down on paper, Is my friend to be treated as a tenant?

What happens if she decides not to move out voluntarily? And how do I handle her son?

Many thanks

 

game over
game over

 

 

 

 

 

 

 

As they can only be a lodger while you live in the property it looks like you have created a tenancy.

Keep things as pleasant as possible and hope that things do not break down between all parties.  If your friend and her son do decide not to move out, I would recommend that you seek professional advice as soon as possible.

I hope all goes well.

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£174,101 – The Typical Profit Each Tamworth Landlord Could Make in The Next 25 Years

I am of the opinion that buy to let investment in Tamworth, in the long-term, will bring substantial returns for landlords, irrespective of latest regulation and tax changes.

Taking a very conservative (with a small ‘c’) view, I believe landlords will see a projected net profit of £295,588 per property over the next 25 years through capital gains and rental. When inflation is taken into account that works out at £174,101 (in today’s money) or around £6,964 per year. The breakdown applies to a basic tax-paying landlord placing a characteristic 25% deposit on a £151,000 terraced/town house property.

Capital gains make up a substantial part of a landlord’s returns. Again, being conservative, I have assumed that Tamworth house prices over the next quarter century (between 2018 and 2043) will rise at half the rate they did between 1993 and 2018 (the preceding 25 years), therefore the example Tamworth property in the previous paragraph would grow in value to £342,921, providing gross capital gains of £191,921.

A typical Tamworth landlord receives, on average, rent of £7,980 per annum per terraced/town house property and so, over a 25-year period, that example property would generate a total rental income of £305,036 (again – very conservatively assuming a compound annual growth rate in the rent of 1.71% per annum).

Nevertheless, there are costs to running a buy to let property (mortgages, void periods, repairs, agents fees etc) .. and over those same 25 years, I have estimated that to be £201,369  .. giving the net profit levels mentioned in the second paragraph.

Now of course I have had to make assumptions to reach these figures, yet I hope you would agree, I have been very unadventurous with my assumptions.

The Tamworth (and UK as a whole) buy to let property market is experiencing a massive sea of change. Regulation and tax changes have altered the dynamic in the property market, diminishing its appeal to inexperienced and amateur landlords, and these new tax changes mean higher tax bills for higher rate tax landlords. Yet, despite these rising costs, there are still healthy returns to be found in Tamworth buy to let investment for knowledgeable and steadfast landlords. Nonetheless, the days of anything making money and idle speculation are long gone.

Buy to let is a long-term business undertaking, necessitating commitment and expertise. Don’t put your head in the sand and think it doesn’t affect you. Tamworth buy to let landlords must be equipped to start business and tax planning, take portfolio management advice to ensure their investments will meet their investment goals, appreciate the risks as well as the rewards, and, most crucially, the obligations they have towards their tenants.

If you are a Tamworth landlord, irrespective of whether you are a client of mine or another agent in Tamworth (or even you do it yourself), feel free to drop me a line or pop into the office for an informal chat on the future direction of the Tamworth rental market and where opportunities may lie.

If you are thinking of getting into the property rental market and don’t know where to start, speak to us for impartial advice and guidance to get the best return on your investment. For more information about other potential investment properties that we could introduce you to, or to ask about our thoughts on your own investment choices, call us now on 01827 425195, you can always email me on Lorraine@hallandthompson.co.uk

Don’t forget to visit the links below to view back dated deals and Tamworth Property News.

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Additional 1,414 Tamworth Rented Homes Required by 2027

I have been doing some research, looking both at National and Regional reports on the demand and supply of property and people together with future projections on the economy, population and family demographics with some interesting results.  According to the Office of National Statistics, in the last financial year nationally, private renting grew by 74,000 households, whilst the owner occupied dwelling stock increased by 101,000 and social (aka council and housing association) stock increased by 12,000 dwellings.

It was the private rental figures that caught my eye.  With eight or nine years of recovery since the Credit Crunch, economic recovery and continuing low interest rates have done little to setback the mounting need for rented housing.  In fact, with house price inflation pushing upwards much quicker than wage growth, this has meant to make owning one’s home even more out of reach for many Millennials, all at a time when the number of council/social housing has shrunk by just over 2.5% since 2003, making more households move into private renting.

There are 7,711 people living in 3,300 privately rented

properties in Tamworth.

In the next nine years, looking at the future population growth statistics for the Tamworth area and making careful and moderate calculations of what proportion of those extra people due to live in Tamworth will rent as opposed to buy, in the next ten years, 3,305 people (adults and children combined) will require a private rented property to live in.

Therefore, the number of Private Rented homes in Tamworth will need to rise by 1,414 households over the next nine years,

That’s 157 additional Tamworth properties per year that will need to be bought by Tamworth landlords, for the next nine years to meet that demand.

… and remember, I am being conservative (with a small ‘c’) with those calculations, as demand for privately rented homes in Tamworth could still rise more abruptly than I have predicted as I would ask if Theresa May’s policies of building 400,000 affordable homes (which would syphon in this 5-year Parliamentary term is rather optimistic, if not fanciful?

So, one has to ask wonder if it was wise to introduce a buy to let stamp duty surcharge of 3% and the constraint on mortgage tax relief could curtail and hold back the ability of private landlords to expand their portfolios?

Well a lot of landlords are taking on these new hurdles to buy to let and working smarter.  Buying the property at the right price and using an agent to negotiate on your behalf (we do this all the time) … and the 3% stamp duty level isn’t an issue.  Incorporating your property portfolio into a Limited Company is also a way to circumnavigate the issues of mortgage tax relief (although there are other hurdles that need to be navigated on that tack), but just look at the growth of proportion of Buy to Let properties in the Country since the Summer of 2016 … something tells me smart Landlords are seeing these challenges as just that … challenges which can be overcome by working smarter.

I have a steady stream of Tamworth landlords every week asking me my opinion on the future of the Tamworth property market and their individual future strategy and, whether you are a landlord of mine or not, if you ever want to send me an email or pop into my office to chat on how you could navigate these new Buy to Let waters … it will be good to speak to you (because you wouldn’t want other landlords to have an advantage over you – would you?)

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Things to consider when buying a Tamworth Buy-to-let property

If you are thinking of becoming a Buy-to-Let Landlord there are many things to consider when looking for a property. The most important – what exactly are you looking to achieve.

welcome to Tamworth
welcome to Tamworth

It may be income, capital growth or an investment that can be passed down to your children or a combination of all of these.

Not all properties meet each of these criteria to the same degree. As a general rule property with a high yield is more likely to suffer low capital growth and the reverse is also true.

Most landlords try to buy a property that has a sensible growth potential with a yield that will at least cover their costs.

Average yield in Tamworth? 4% to 6%

Generally a two bedroom modern house which is in a good location is the best buy.

Victorian may have lots of character and appeal but the maintenance of these properties tend to be higher.

A flat will usually be leasehold so you have the annual service charges to consider. Flats tend to have a lower capital growth as there are usually quite a few on the market.

A three bedroom house  is a good buy however there will be more wear and tear from a family occupying the property so your maintenance charges are generally higher.

If you are sitting on the fence and contemplating when’s the right time to buy ? well it’s a bit like having  kids – when is the right time to start a family. By procrastinating and never committing, your property journey will never start!

Our property journey started some 10 years ago with at least another 10 years spent hesitating. When we finally did dip our toes into the Buy-to-Let market it was the best thing we ever did, that is apart from starting our family.

Don’t forget …You will have to pay stamp duty for second home purchases,. Details here

There are some advantages  of setting up a limited company to purchase the property, but they are limited unless you are buying several properties. An accountant will be able to advise.

Almost certainly  you will need to pay income tax on the income, but you should take advice from an accountant and you will need to complete tax returns annually.

You will need to pay CGT  (capital Gains Tax) when you sell assuming the profit exceeds your annual allowance and purchasing costs. There are things you can do to mitigate this cost which your accountant can help you with.

So like us, if you are in property for the long haul, you won’t get rich quickly however you will make money in years to come and you may even enjoy being a property landlord!

If you are thinking of getting into the property rental market and don’t know where to start, speak to us for impartial advice and guidance to get the best return on your investment. For more information about other potential investment properties that we could introduce you to, or to ask about our thoughts on your own investment choices, call us now on 01827 425195, you can always email me on Lorraine@hallandthompson.co.uk

Don’t forget to visit the links below to view back dated deals and Tamworth Property News.

Blog  –

http://www.Tamworthpropertyblog.co.uk

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Happy House Hunting

The pros and cons of using accelerated possession to evict a tenant

It is wise to look at the pros and cons of choosing the accelerated possession procedure when evicting tenants. It  can be a faster option but unfortunately cannot be used in all circumstances.

scales of justice
scales of justice

 

 

 

 

 

 

 

Landlords will need to serve notice correctly and then obtain a possession order from the court before they can proceed.

To use the accelerated possession procedure, the following must apply:

  • The tenant is on an assured shorthold tenancy
  • You have given the tenants at least 2 months written notice to quit under section 21 and they have not vacated by the date specified
  • The tenant moved into the property after 15th January 1989
  • If you took a deposit, it must have been put in one of the government deposit protection schemes
  • You are not claiming rent arrears

When you apply to court for accelerated possession, the court will send your tenants a copy of the application and they will have 14 days from the date of receipt to contest it.

A judge will review the application and decide whether or not to grant the possession order without it going to a hearing. Should the tenant challenge the application, the judge may well decide that a court hearing is needed. Once that has taken place, the judge will decide on the possession order.

Should a possession order be awarded, the judge will normally give the tenants up to  28 days to leave the property.

The pros

Accelerated possession  can be a faster way of recovering your property.

The court fee for standard possession and accelerated possession is currently £355.00.

The cons

As you cannot claim for rent arrears and  should you wish to try to recover any,  you will need to either use the standard possession procedure or make a separate court claim for the arrears. If your tenants are having financial difficulties you may find there is no chance of recouping any of the monies owed!

If your tenants are on a fixed term tenancy, you cannot evict them until the fixed term has ended.  On a periodic tenancy, the procedure can only be used after the first six months have passed. So the whole notice period could be longer than two months.

If you make any mistakes with either the section 21 notice or the application to the court, your application will probably be thrown out and you would either have to ask for a hearing or start the process all over again.

It has been known for judges to give tenants up to 6 weeks to leave a property in exceptionally difficult circumstances.

Enforcement

If tenants do not leave after the date provided on the possession order, you will then need to decide what action to  take to evict the tenants. You can either use the County Court bailiffs or request leave to use a High Court Enforcement Officer.

You can apply under section 42 of the County Courts Act 1984 for permission to transfer the possession order to the High Court for enforcement by an High Court Enforcement Officer. The best time to apply for permission is when making the initial application for the possession order.

County Court bailiffs will be cheaper however as the courts are very busy, you may find that you wait up to 6 weeks for an appointment for the eviction.

High Court Enforcement Officer’s are usually able to obtain a writ within a few days and carry out the eviction shortly after.

It is always unpleasant to evict tenants however you are running a business and not a charity. So whichever route of possession you decide upon, if you are unsure I would recommend seeking professional advice.

Until next time

 

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More Than Eighteen Babies Born for Every New Home Built in the Past Five Years in Tamworth

More than 18 babies have been born for every new home that has been built in Tamworth since 2012, deepening the Tamworth housing shortage.

This discovery is an important foundation for my concerns about the future of the Tamworth property market – when you consider the battle that todays twenty and thirty somethings face in order to buy their first home and get on the Tamworth property ladder. This is particularly ironic as these Tamworth youngsters’ are being born in an age when the number of new babies born to new homes was far lower.

This will mean the babies being born now, who will become the next generation’s first-time buyers will come up against even bigger competition from a greater number of their peers unless we move to long term fixes to the housing market, instead of the short term fixes that successive Governments have done since the 1980’s.

Looking at the most up to date data for the area covered by Tamworth Council, the numbers of properties-built versus the number of babies born together with the corresponding ratio of the two metrics …

 

It can be seen that in 2016, 7.68 babies had been born in Tamworth for every home that had been built in the five years to the end of 2016 (the most up to date data). Interestingly, that ratio nationally was 2.9 babies to every home built in the ‘50s and 2.4 in the ‘70s. I have seen the unaudited 2017 statistics and the picture isn’t any better! (I will share those when they are released later in the year).

Our children, and their children, will be placed in an unprecedented and unbelievably difficult position when wanting to buy their first home unless decisive action is taken. You see it doesn’t help that with life expectancy growing year on year, this too is also placing excessive pressure on homes to live in availability, with normal population growth nationally (the number of babies born less the number of people passing away) accumulative by two people for every one home that was built since the start of this decade.

Owning one’s home is a measure many Brits to aspire to. The only long-term measure that will help is the building of more new homes on a scale not seen since the 50’s and 60’s, which means we would need to aim to at least double the number of homes we build annually.

In the meantime, what does this mean for Tamworth landlords and homeowners? Well the demand for rental properties in Tamworth in the short term will remain high and until the rate of building grows substantially, this means rents will remain strong and correspondingly, property values will remain robust.

If you are thinking of getting into the property rental market and don’t know where to start, speak to us for impartial advice and guidance to get the best return on your investment. For more information about other potential investment properties that we could introduce you to, or to ask about our thoughts on your own investment choices, call us now on 01827 425195, you can always email me on  Lorraine@hallandthompson.co.uk

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Ask Lorraine – I am a Tamworth landlord with an EPC dilema!

You may find this article helpful   https://www.gov.uk/government/publications/energy-performance-certificates-for-the-construction-sale-and-let-of-dwellings

Ask Lorraine ; What Documents do I need for my Tamworth property before renting it out?

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Leaks and Flooding – Is my Tamworth Landlord responsible?

If you live in a flat you may occasionally have an issue with leaks and flooding from neighbouring flats. When this happens tenants tend to look to their landlord to rectify the situation, but it is not that straight forward.

It is a landlords duty to repair structural items such as walls, ceilings and plasterwork in a rental property should a leak occur. A landlord should accept responsibility once they are made aware of the damage. Once informed, the landlord must carry out all repairs in a timely period and to a reasonable standard.

Who is responsible for tenants belongings

Who is responsible for tenants belongings?

Tenant’s possessions may have been damaged due to a leak  and they may assume that the landlord is responsible for replacing these items, this is not necessarily so!

Where the damage has been caused by a leak or flooding from a third party’s flat then the tenant should pursue a claim against the third party.  If the tenant has contents insurance, the tenant is advised to make a claim on that policy and leave it to the insurance company to pursue the third party. Where no contents insurance exists, the tenant is advised to take court action against the third party to recover any money for the damage to their possessions.

A landlord may be liable for his tenants possessions if the leak or flooding has originated because the rented property is in a state of disrepair.

I would recommend that all tenants take out contents insurance if their budget allows them too.

If you are thinking of getting into the property rental market and don’t know where to start, speak to us for impartial advice and guidance to get the best return on your investment. For more information about other potential investment properties that we could introduce you to, or to ask about our thoughts on your own investment choices, call us now on 01827 425195, you can always email me on  Lorraine@hallandthompson.co.uk

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Homeownership Amongst Tamworth’s Young Adults Slumps to 56.9%

The degree to which young Tamworth people are locked out of the Tamworth housing market has been revealed in new statistics.

A Tamworth landlord was asking me the other week to what effect homeownership rates in Tamworth in the early to middle aged adult age range had affected the demand for rental property in Tamworth since the Millennium. I knew anecdotally that it affected the Tamworth rental market, but I wanted some cold hard numbers to back it up. As you know, I like a challenge when it comes to the stats.. so this is what I found out for the landlord, and I’d like to share them with you as well.

As anyone in Tamworth, and most would say those born more recently, are drastically less likely to own their own home at a given age than those born a decade earlier, let’s roll the clock back to the Millennium and compare the figures from then to today.

In the year 2000, 57.6% of Tamworth 28-year olds (born in 1972) owned their own home, whilst a 28 year old today born in 1990) would have a 30.7% chance of owning their own home. Next, let’s look at someone born ten years before that. So, going back to the Millennium, a 38 year Tamworth person (therefore born in 1962) would have an 85.0% chance of owning his or her own home and a 38 year today in Tamworth (born in 1980) would only have a 66.2% chance of owning their own home.

Since the Millennium, overall general homeownership in the 25 to 44 year old age range in Tamworth has reduced from 78.69% to 56.90%

If you look at the graph below, split into the four age ranges of 25 year olds (yo) to 29yo, 30yo to 34yo, 35yo to 39yo and finally 40yo to 44 yo, you will quite clearly see the changes since the Millennium in Tamworth. The fact is the figures in Tamworth show the homeownership rate has proportionally fallen the most for the youngest (25yo to 29yo) age range compared to the other age ranges.

The landlord suggested this deterioration in homeownership in Tamworth across the age groups could be down to the fact that more of those born in the 1980’s and 1990’s (over those born in the 60’s and 70’) are going to University and hence entering the job market at an older age or those young adults are living with their parents longer.

I read some national homeownership statistics of different age groups with the same number of years after they left education (rather than at the same age) and that gave an identical dip to the graph above.  Neither are these drops in homeownership related with a significant increase in the number of young adults living with their parents. Again, nationally, that has hardly changed over the last 20 years as the percentage of 30-year-olds living with Mum and Dad only increased from 22% of those born in the early ‘70s to 23% of those born in the early ‘80s.

So, what does this mean for the rental market in Tamworth?

Only one thing .. with the local authority not building Council houses, Housing Associations strapped for cash to build new properties and the younger generation not buying, there is only one way these youngsters can obtain a roof over their head and have a home of their own .. through the private landlord sector. Now with the new tax rules and up and coming licensing rules, Tamworth landlords will have to work smarter to ensure they make the investment returns they have in the past. If you ever want to pick my brains on the future direction of the Tamworth rental market .. drop me line or pop in next time you are passing my office.

If you want to learn about the Tamworth Property Market , one source for information is the Tamworth Property Blog authored by yours truly at https://www.tamworthpropertyblog.co.uk

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