The £9,409,187 Ticking Time Bomb for Stoke-on-Trent Landlords

“I just love looking over and keeping up to date the 108 pieces of legislation that govern the rental of residential property in the UK”  

...No Stoke-on-Trent Landlord, ever

If you are one of the 6,248 Stoke-on-Trent landlord’s that manages your own property, would it surprise you to know that there are 108 separate pieces of legislation that govern the rental of private houses to tenants. Oh, and on top of the 108 pieces of law, there are further 300+ regulations in the mix. Whilst Stoke-on-Trent landlords may once have preferred to manage their Stoke-on-Trent buy-to-let properties themselves to boost their profits, many Stoke-on-Trent landlords are starting to see this as a false economy.

In the last four years, an additional 2,403 landlords in Stoke-on-Trent have converted from self-managed to having their property managed by a letting agent in Stoke-on-Trent, taking the total number of properties under management in Stoke-on-Trent to 9,772 (out of a total of 16,020 private rental properties in Stoke-on-Trent).

Now, don’t get me wrong, self-managing your Stoke-on-Trent rental property can be a very fulfilling experience, allowing you, as a Stoke-on-Trent landlord, to build a deep relationship with your tenant and your emergency 24 hour plumber, builder (happy to do small jobs at a drop of a hat), decorators, first name terms with their deposit provider, lawyer and EPC provider to name but a few. (Wow!)

Also, did you know if your tenants deposit isn’t registered, or doesn’t continue to be registered after the end the periodic tenancy upon renewal ... you could be fined up to three times your deposit? With the average rental deposit in Stoke-on-Trent being £502, each self-managed landlord in Stoke-on-Trent could be fined £1,506 per tenancy if the deposit isn’t currently registered. Therefore...

...if every deposit of every Stoke-on-Trent self-managed landlord’s property wasn’t registered, the total fines would amount to £9,409,187

Now of course, I am not suggesting for one minute all the self-managed landlords of Stoke-on-Trent haven’t registered their deposits, yet almost on a daily basis, I come across horror stories to that effect. Another two (but by no means all) hot issues that the Courts are cracking down on, are doing immigration ‘Right To Rent’ checks on all tenants (yes all tenants) and confirmation proving the tenant received the ‘How to Rent’ guide. If that second issue cannot be proved (a ‘sent’ email won’t suffice), the landlord cannot serve the section 21 Notice, meaning the tenant cannot be served notice to vacate the property.

To many, it’s really a case of DIY or getting a qualified professional in … as those additional Stoke-on-Trent landlords mentioned above have done since 2014. You might say, “Of course you are going to say all this – you are a Letting Agent”. Well the choice really comes down to your time and your knowledge. If a Stoke-on-Trent landlord is not equipped, or able, to devote time keeping up-to-date of legislation and law nor doesn’t want to be bothered 24/7/365 about a blown light bulb, dripping taps, have that confrontational conversation with their tenants about missing rental payments, or arbitrate arguments and disagreements between your tenant and the neighbours, it is perhaps better to pass this accountability/responsibility onto a letting agent.

One thing I would say is all letting agents aren’t the same. Would it surprise you to know that letting agents aren’t regulated?

Stoke-on-Trent landlords that do use a letting agent should not forget that passing over management to a letting agent doesn’t mean they can disregard legislation and they are still responsible for deposit/rent repayment legal directives, civil fines or action if the letting agent makes a mistake. Therefore, it’s important to pick a respectable letting agent from the start.

Nevertheless, for those Stoke-on-Trent landlords that see their job as a professional landlord and want to be intricately involved in the day to day administration of their rental properties, it can be worthy pursuit.

If you are a self-managed landlord in Stoke-on-Trent, and want to know if your paperwork is in order please feel free to drop me a line and I am more than happy to do an ‘MOT’ on it to ensure you are the right side of the law.

Stoke on Trent First Time Buyers Need 4.0 Times Annual Salary to Get on Housing Ladder

What is it to be British? Our stubbornness, long-suffering stoicism, our vexation at injustice, our obsession with football and rugby, we are weather obsessed external awkward noncommittal modest people whilst underneath seething like a volcano because someone jumped the queue….. and our No.1 obsession is with the property ladder.

This ‘love affair’ with owning our own home has been both good and bad for the UK as a whole; giving people financial freedom in their later years whilst also reducing the quantity (and quality) of housing provision whilst adding the extra pressure of a ‘them and us’ society. Strong words I know .. but let me explain more.

 

I honestly believe that most Governments since the end of the 1970’s, Conservative and Labour, have attempted to nourish our addiction to home ownership (to keep the housing market on track) with the Council House Right to Buy sell off in the 1980’s, tax relief of mortgages, relaxation of the mortgage rules in the late 1990’s/early 2000’s and most recently, the Help to Buy scheme.

But the Brits haven’t always had this obsession.

Roll the clock back 100 years and, in 1918, just under a quarter of all Brits owned their own homes and the other 77% rented. Go back 50 years to 1968, and only 46% of people owned their own home, the rest rented. This homeownership thing is quite a recent phenomenon.

According to my research, anyone looking to get a foot onto the property ladder as a first-time buyer in Stoke on Trent today, AS A SINGLE PERSON, would need to spend 4.0 times their earnings on a Stoke on Trent first time buyer property.

         

Using the numbers from the Office of National Statistics (ONS), the average value of a first-time buyer property in Stoke on Trent today is £75,000, compared to £69,000 in 2007. If we divide those property values by the average annual earnings of first time buyers - in 2007, that was £15,130 pa and that has risen to £18,811 pa .. giving us the ratio of 4.0 to 1.

However, what must be remembered is that these are raw statistics from the ONS and don’t take into account other factors, like most people buy their first home as a couple. Also, mortgage rates are at an all-time low and who can remember mortgage rates of 15%+ in the 1990’s, meaning borrowing today is relatively cheap. Also, 95% Loan to Value first time buyer mortgages have been available since the end of 2009  (i.e. you only need to save a 5% deposit) and first time buyer rates of 2.19% fixed for 5 years can be obtained (correct at time of writing this article)… it is cheaper to buy than rent .. fact!

I believe there has been a mind-set change to owning a home. Home ownership was the goal of the youngsters in the latter half of the 20^th century. Britain is changing to a more European model of homeownership, where people rent in early to mid-life, wait to inherit the money from their parents when in their 50’s and then buy.. thus continuing the circle - albeit in a different way to the last Century.

This means the demand for privately rented accommodation will, in the long term, only continue to grow. If you would like to know more about where the hot spots are for that growth in Stoke on Trent, then one place would be my property blog http://stokeontrentproperty.blogspot.com/ or if you want to drop me an email or telephone call, feel free to pick my brain on the best places to buy (and not to buy) in Stoke on Trent to ensure your rental investment gets you want you want. The choice is yours!