Jonathan Webb & Co
Since 1993
Landlord Letting & Management Information
INDEX
Due to the recent buy to let trend the market place is now infested with new, inexperienced and unscrupulous agencies intent on exploiting unsuspecting landlords and tenants alike. Unfortunately, there is no legislation governing letting agents, which is a real concern when one considers the huge responsibility of handling client money and the number of agencies that have closed down or gone into receivership owing landlords thousands of pounds.
Jonathan Webb & Co are accredited to the National Approved Letting Scheme, which ensures that: we have professional indemnity insurance in place, that clients’ money is protected (see relevant certificates) and that business is conducted in a satisfactory manner.
Under new legislation you may be required to obtain a property licence for the residential accommodation that you currently let.
To find out if your property qualifies for a licence please log on to www.propertylicence.gov.uk.
Your failure to apply for a property licence could result in the imposition of a £20,000 fine. In the absence of a property licence the tenants are at liberty to make an application for a refund of rent paid up to the date of your application for a licence. We suggest you give this matter your urgent attention to avoid incurring any penalties.
To date our enquiries, on behalf of our clients, reveal that the majority of houses are considered an HMO but seldom require a licence.
Property licence criteria does vary from borough to borough and we suggest that you contact the relevant council as to avoid incurring any penalties.
Newham Council 0208 430 2000 extn 25238.
A five-year property licence costs £150.00 per habitable room.
Tower Hamlets 0207 364 5000
A three-year licence is £350.00 per property plus £25.00 per habitable room. e-mail jonathan.baston@towerhamlets.co.uk.
Waltham Forest 0208 527 5544 – HMO prop. licence call centre
A two-five year licence (subject to inspection and risk assessment) will cost
£800.00. Renewals £350.00.
LAS members qualify for a discount.
The accommodation must, above all, be safe prior to letting.
Gas
It is a legal requirement that accommodation with a gas supply and gas appliances is subject to an annual gas safety inspection and a certificate must be presented to the tenants before they take up occupation.
Electric
Currently there is no legal requirement for the provision of an electric test certificate however, should a tenant suffer injury or death due to electrocution or fire as a direct result of faulty wiring the Landlord may, ultimately, be held responsible in the absence of a test certificate.
A 5 yearly NICEIC test certificate proves that the wiring complies with current regulations however, electric appliances, surface wiring, light pendants, sockets and switches ect. can, and frequently do, develop faults or suffer damage during tenancies, accidentally or otherwise. An annual portable appliance test (pat test) and visual inspection will identify such, where undetected by JW, and effect the necessary remedial work.
Furniture
Sofas and armchairs must meet fire regulations and will carry a label as confirmation.
Obviously the quality, condition and extent of furnishings, fixtures and fittings are contributory to the presentation of the property and its subsequent appeal to potential tenants, which is instrumental in achieving a good rent.
Décor
Walls with a finish that can be painted are best for ease of maintenance. We recommend a bright neutral colour for all walls. Magnolia is a good choice. Bathrooms and kitchens should be painted with vinyl silk to combat peeling when exposed to steam & water. Although the sheen of vinyl silk can highlight imperfections, it can be washed down and is resistant to condensation.
Reasonable quality wood laminate flooring is attractive and easily maintained but an expensive option. Dark coloured carpet, grey or blue, is a much cheaper option and more appropriate in most properties.
Fire Precautions
A smoke alarm should be fitted to all accommodation and a fire blanket secured in all kitchens.
Tenant Deposit Legislation
Failure to protect a deposit with a government-authorised tenancy deposit scheme carries penalties for the landlord:
* The landlord will be unable to use ‘notice-only grounds’ to regain possession of the property (under Section 21 of the Housing Act 1988)
* The tenant can apply for a court order requiring the deposit to be protected and confirmation provided to you.
* If the landlord fails to comply with these requirements, or if the deposit is not protected by an authorised scheme, the court will order the landlord to repay the deposit to the tenant or to pay the deposit into an authorised scheme.
* The court will also order the landlord to pay the tenant compensation of three times the deposit amount, payable within 14 days.
The Government awarded contracts to three companies to run the tenancy deposit protection schemes as follows:
Tenancy Deposit Solutions Ltd
www.mydeposit.co.uk
An insurance backed scheme where the deposit can be held by the landlord or the landlord’s agent for the term of the let.
The Tenancy Deposit Scheme (TDS)
www.thedisputeservice.co.uk
Also an insurance backed scheme for landlords and agents.
The Deposit Protection Service (The DPS)
www.depositprotection.com
A free custodial scheme – the deposit is held by the scheme for the term of the tenancy.
However, if the tenant unlawfully offsets the last months rent against the deposit and subsequently disappears without authorising release of the deposit a court order will be necessary to do so, for which an application will take months to obtain and incur costs.
Dispute
Landlords can no longer make deductions from the tenancy deposit without the tenant’s agreement.
If both the landlord/agent and the tenant agree to use the scheme providers’ free resolution service then they agree to be bound by its decision.
Alternatively, one can opt to submit an application to the small claims court where a judge will make a decision.
To avoid a dispute in the first place we recommend that all tenancies be subject to a detailed inventory. In the absence of an inventory a landlord’s claim of excessive wear and tear, cleaning or minor damage is extremely thin and, from experience, likely to be dismissed particularly in the small claims court.
Be warned! This new legislation will encourage tenants to dispute the smallest of deductions. In the absence of an inventory,
“It was like that when we moved in”
will become the tenants’ new catch phrase.
An inventory is a list of the contents and a detailed report of the exact condition of these contents, the décor and the accommodation generally, with photographs, which is checked and agreed by the tenants at commencement of a tenancy. A good inventory is therefore conclusive evidence of any excessive wear and tear or damage. In the absence of an inventory the landlord has very little prospect of winning a dilapidations dispute.
Fees
The old saying; "you get what you pay for," could not be more pertinent when looking for an agent.
Invariably, those agents charging very low rates must have very low outgoings and therefore cannot afford the advertising and competent staff necessary to let your property quickly and efficiently and deliver a satisfactory managment service.
You may think that you are saving money but in fact the saving made is very quickly lost, and in many instances exceeded, due to a lack of rent when the agent fails to let the accommodation promtly.
The rental income will depend upon:
(1) supply and demand at the time
More tenants searching for accommodation than is available will squeeze rents and vice versa. The prudent landlord will heed the advice of our representative and agree to adjust the rent to accommodate the prevailing market conditions. Our standard 12
month tenancy agreement facilitates a rent review after six months. Time is money and it makes no economical sense to turn away a suitable tenant for the sake of £5 or £10 and risk a further 2 or 3 weeks to pass at a greater loss.
For example: £150pw v £160pw
£10pw over 6 months = £260
£150pw x 2 weeks = £300
Makes sense? Many stubborn landlords will allow 5-8 weeks to pass for the sake of £10pw. Don’t be one of them!
(2) location
The closer the accommodation to a tube station, the more tenants it will appeal to. Therefore, the greater the demand the higher the rent. Other factors increasing demand: within zone 3, Central line is most popular, nearby shopping, max 10 mins walk to the tube, proximity to central London, Canary Wharf or The City.
(3) size
Multiple bedroom accommodation usually attracts a group of tenants who are known to each other. Therefore, accommodation with larger bedrooms will command a higher rent. No one in the group wants a single room unless, of course, their budget dictates such a compromise.
(4) condition of the accommodation.
The better the condition of the accommodation and the furnishings, the higher the rent, however there is a limit to the rental income of a property, which is governed by the area in which it is situated. Therefore, one must consider carefully the cost of any refurbishment works against the potential increase in the rent. Jonathan Webb’s experienced staff are at hand to advise.
U.K. resident landlords are responsible for declaring their rental income to the Inland Revenue.
Non-U.K. Resident Landlords
Jonathan Webb & Co, where managing the accommodation are responsible for deducting the non-resident tax liability, at the prevailing rate, and filing a return to the Inland Revenue as per government legislation, unless presented with an exemption certificate.
Tenants who apply for accommodation from Jonathan Webb & Co must be in permanent employment, resident in the U.K. for 6 months and be able to provide relevant references. A clean credit history, photo identification and proof of their current address are also required.
Students or tenants unable to satisfy these criteria must provide a guarantor who can
We strongly recommend that all Landlords take out a rent guarantee policy, which will cover rent arrears should the tenant/s default on rent payments.
We do not accept benefit claimants even if they have a deposit. Where a
tenant is found to be in receipt of benefit mid tenancy, we advise termination of the tenancy at the first opportunity. There are a number of disadvantages with a benefit claimant. Consider just three:
1) The council will very rarely pay the full amount of the rent. The tenant is therefore required to pay the short full. May be £10 - £25 per week. In our experience it can prove difficult to collect this from the tenant.
2) Once served with a 2-month notice of termination of the tenancy, the tenant invariable turns to the council for advice, which is to remain in occupation until in receipt of an eviction notice. Should the tenant voluntarily vacate before, they will not receive future benefit on the grounds that they intentionally made themselves homeless. It takes up to 6 months to obtain and enforce a possession order, under “Sec 21 Accelerated Possession,” from the county court at a cost of £250 in court fees.
3) Where a benefit claimant is discovered not to have declared a source of income, benefit payments will cease or be reduced dramatically whilst the tenant repays the benefit fraudulently claimed. If benefit is paid directly to the Landlord or his agent by the council then the landlord must return the sum fraudulently claimed and commence possession proceedings to evict the tenant.
The JW standard contract is for a term of twelve months with a six-month break clause. The break clause gives either party the option to give two months notice of termination of the tenancy, but not before 4 months. This is particularly useful where tenants have proved to be unsuitable or do not agree to a rent increase mid tenancy.
It is the tenants’ responsibility to ensure that JW are in receipt of rent payments by the due date. To assist tenants we recommend that they pay by standing order dated 4 days before the rent due date to allow for clearance through the banking system and to avoid our late rent payment administration charges.
JW aim to pay out Landlords within 5 working days of rent payments clearing our account. We request that Landlords allow up to 10 working days. Bank holidays etc. will delay collection and payout of rents.
Many tenants insist on making manual payments directly into the JW account. They are given specific instructions and directed to include the accommodation address as a reference to facilitate our identification and subsequent allocation of the funds. When tenants fail to follow this simple procedure payments can remain unidentified until we are chasing non-payment of rent. This will, in turn, delay your receipt of the rent.
The JW management system flags up late rent payments, which are chased immediately with a letter and a telephone call. Where arrears are not cleared within 10-14 days we initiate a claim against the rent guarantee policy, if in place. A continued lack of contact from the tenant prompts a visit, by our representative, to the premises to check if the tenant is still in occupation.
Where a tenant continues to make erratic rent payments or fails to clear rent arrears, JW can issue a notice of termination of the tenancy, which includes the service of a new Section 21 Notice (a legal requirement) if the original has not expired.
Unfortunately, possession proceedings under a rent guarantee policy will not commence until there exists a minimum of 2 months arrears to satisfy the criteria for an application to the court under ground 8, the policy’s preferred method of possession. Should the tenant reduce the arrears to within 2 months prior to the court hearing, mandatory under ground 8, or persuade the court that any arrears are due to neglected maintenance issues, the order for possession will be suspended and where appropriate the hearing will be adjourned to dispute the arrears at a later date.
Only a tiny percentage of applications for possession under ground 8 actually progress to a court hearing and of this small percentage the majority of cases are where the tenant is a benefit claimant.
In our experience it is often prudent to submit an application for possession under Section 21 Accelerated Possession, which is mandatory and does not involve a hearing or revolve around rent arrears. This application can run concurrently with an application under ground 8 submitted by the rent guarantee policy.
JW will charge the landlord to administer possession proceedings, under sec 21, unless this service is included in the management fee agreed at outset.
Failure to deal with reported maintenance issues promptly will alienate a tenant and, depending on the exact nature of the problem, can result in: rent being withheld, the tenant arranging remedial work and deducting the cost from future rent payments, the tenant vacating without notice, a report to environmental health or consultation with the Citizens Advise Bureau, who may advise the tenant to take up temporary accommodation, at the landlords expense, until remedial works are complete.
JW maintenance procedure, as per the terms and conditions of business, is designed to uphold “duty of care” on behalf of the landlord and prevent any disputes arising.
Jonathan Webb & Co’s search for suitable tenants is relentless. Internet advertising, on several sites, is updated daily and news paper/magazine adverts published weekly or fortnightly. Publications include: The Newham Recorder, Property Mart, The Guardian Gazzette, Loot, Hot Property, The Evening Standard.
The East London area covered by JW is littered with Jonathan Webb & Co advertising boards providing a very real presence, which is difficult to ignore.
Tenants details are stored in a database until they find suitable accommodation.
Viewings are very immediate, which is typical of the letting market. The majority of enquiries result in a viewing particularly with walk in custom. It is therefore essential that we are holding keys for immediate access.
Where viewings are pre-arranged, tenants are always, with few exceptions, instructed to rendezvous at the JW offices because of they are frequently late and often they do not show at all, regardless of our efforts to confirm all appointments.
Where existing tenants are in occupation we are experienced in arranging viewings with potential replacement tenants prior to expiry of the tenancy, however if the accommodation is kept in an untidy and dirty state it will hamper re-letting until after possession and cleaning. First impressions etc.
Those Landlords not prepared to release keys are inviting great inconvenience and restricting progress unless, of course, at the premises from 9am-6pm Mon to Fri. and all day Sat, which we know is impractical. Frankly, in our experience, landlords who restrict our access are usually reluctant to employ an agent in the first place and harbour an ulterior motive. In these circumstances experience proves that we are merely a last resort in an attempt to achieve an unrealistic rent or a tool to hedge their bets, which is only evident after wasting our time and resources. We do not want this business!
There are a number of insurance products available to guarantee the rental income and cover your contents in the event of damage, whether accidental or malicious. The company that we prefer to use is Homelet and, whom we find most user friendly and cost effective. In our experience the company has an excellent track record. The following comprehensive information is based on the products provided by this company only.
Rent Guarantee:
A basic low cost 12-month rent guarantee policy, “Homelet Express,” carries an excess equal to one months rent.
In the event of a claim the excess will be applied to the first month of arrears. The deposit paid at commencement of the tenancy will be off set against the second month of arrears. A third month of arrears will generate a payout at the end of that month and so on until vacant possession or expiry of the policy.
Invoices for remedial works due to dilapidations, not exceeding the amount of the deposit, can be submitted for payment.
The cost of a legal eviction, if necessary, is covered and a team provided.
Policies with a higher level of cover are available, but cost more – 2% - 3.5% of the contractual rent.
Extra cover includes:
*Min excess £135
*After vacant possession 75% of rent until re-let or expiry of the policy
*Policy can be renewed whilst a claim is in progress
Landlord Contents:
What is covered?
Accidental or malicious damage is covered.
If, for example, a tenant has to vacate the accommodation due to a leak from a flat above, which has also caused a ceiling to collapse and rendered the accommodation uninhabitable, the landlord is responsible for covering the cost of any alternative accommodation for the tenant, the remedial work, damage to possessions, loss of rent, re-letting fees if the tenant vacates and is liable in the event of injury.
Some of these costs may be covered by a buildings insurance policy if you have disclosed that the premises are let.
Have you checked!
The following postcodes are in the highest risk band 5: E13- E15, E6, E17. Band 4: E12, E16. Band 3: E7, E10, E11.
Typically (to be read in conjunction with the Homelet brochure)
Band 5 annual premium for cover (£250 excess) £ 125 p.a. min £10,000 cover
Band 4 £105 p.a.
Band 3 £ 95 p.a.
No excess £ 25 p.a.
Malicious/Accidental damage by tenant £ 45 p.a.
Premiums are subject to a 5% tax and an admin charge for monthly payments
For further details or a quotation please contact our office.