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Advice for landlords
Attracting the right tenants,
achieving high occupancy rates and good capital growth are the keys to being a
successful landlord. We offer a no let, no fee, turnkey service that has let
over 200 properties since we opened in 2004.
Using the right letting agent
is very important. You can lose more than £5,000 a year by having a property
empty through rent loss, council tax payments, insurance, dilapidation and
security measures. There is also the risk of vandalism and squatting.
As a landlord, you should not
expect your letting agency to charge you a "marketing" or
"registration" fee. This is normally around £50. At Morfitt Shaw we
make no charge to place your property on the market.
Most letting agencies will try
to tell you that they will not enter into multi-agency agreements. In practice,
when pushed, they do market properties whilst they are also being marketed by
other agencies. Of course, it is in your interest to have your property as
widely circulated as possible. At Morfitt Shaw we will always allow multiple
listings of your accommodation.
Many letting agents are in fact
extensions of major landlords' own property operations. They often have a
portfolio of their own properties available which receive priority treatment to
ensure they are let more quickly than yours. We can confirm that Morfitt Shaw do
not own any properties available to let - there is no conflict of interest.
Our minimum fee is just £250
plus VAT. As far as we are aware, this is the lowest commission in north Leeds.
Property management agencies
– did you know?
We provide a ‘let only’ or
‘tenant find’ service only. We do not perform property management.
Property managers often receive
commissions from their panel of tradesmen. So, not only do you pay the agency
far more to have your property managed, but you may also receive unrealistic
charges for repair and maintenance work, on which the agency is itself
commissioned by the tradesman.
Many agencies produce
statements one month in arrears, and similarly, payments are made to you a month
H.M. Inspector of Taxes
requires a return of all managed properties from property management companies.
Property management agencies
require written confirmation of the lender’s authorisation to let your
When a tenant extends their
initial fixed term or rolls into a statutory periodic tenancy, the property
manager still receives commission on this extension. With our tenant finding
service there is no further commission to pay beyond that paid for the initial
How we find you a tenant
Appraisal, advice and guidance
We will conduct an initial, no
obligation valuation and assessment of your property. We offer comparable
evidence to substantiate our valuations. If required, we can also advise on
changes which may be desirable, in order to improve the presentation of the
property and obtain a better rent or a speedier let.
We give advice on whether to
market as furnished or unfurnished, and information on the legal requirements
for furnishing, gas & electric safety checks, etc.
We gather all relevant
information to advertise your property including availability, whether you will
accept smokers, pets or children, storey, number of bedrooms, parking or
garaging, viewing arrangements, and whether utility bills, council tax and / or
the TV licence is included in the rent.
Free advertising of your
property in the local press
High profile, up to date
Post based mailing lists
Database of over 500 active
searchers derived from hundreds of recent inbound calls and emails
Regular email broadcasts to our
Full colour rental lists given
out to all prospective tenants
Internet advertising on over
twenty internet lettings portals
24 hour fax facility
Distinctive ‘TO LET’ board
We offer accompanied viewings
with a skilled professional. We advise you immediately of any tenancy
Excellent relations and
approved status with Leeds’ largest employers, relocation agencies,
accommodation bureaus. We mail their key contacts regularly.
Office open seven days a week,
including 9.00-5.30 on Saturday, and 1.00-3.00 on Sunday, so we can service all
enquiries for your property, whether your prospective tenant lives locally or is
just visiting Leeds for the weekend.
Landlords expect to be able to
reach their agents when they need to. We respond quickly to queries and always
return calls as promptly as possible.
There is NO additional charge
to clients for this advertising as the costs are included within our fees.
Stringent referencing and credit checks
We use an independent credit
reference agency, Homelet to conduct our credit checks. We vet candidates by
interviewing for suitability, and assess and credit search guarantors when
Several references are taken up
including previous landlords, employers, college tutors, electoral roll, etc. We
take the tenants’ national insurance numbers. We photocopy the tenants’
photo ID ie. driving licence or passport, to verify their identity, and obtain
copies of proof of address and a recent payslip.
We prepare the Assured
Shorthold Tenancy (AST) agreement in line with current legislation, commencing
with a minimum six month and maximum three
year term. This contract can be tailored to meet your individual needs and
All listed tenants over 18
years of age sign the document. We sign on your behalf.
The tenancy deposit law
Alternatively, to avoid the
paperwork of the deposit schemes, many landlords are making their rents payable
two months in advance to protect the final month’s rent, whilst not taking a
The first two months' rent is
collected before we hand over the keys
to the tenant. We subtract our fees and VAT, and pass the balance to you by
cheque. Rent is
collected monthly in advance by standing order direct to the landlord's account to avoid delays. We would need
your account number, name and sort code to set up the standing order.
General advice on letting your property
It is usual to issue a set of
keys to each tenant signing and listed on the AST.
The majority of houses we deal
with are offered unfurnished, but usually with carpets, curtains, light fixtures
and major kitchen white goods provided. Most flats are fully furnished.
Any soft furnishings (chairs
and beds etc.) that are left in the property, must comply to fire regulations,
and a label clearly stating so should be attached. If not, then the furnishings
must be removed from the property. They cannot be stored at the rented address.
As landlord you are still
responsible for the building and accordingly, the buildings insurance. Please
note that your normal building insurance will not cover you for letting. It will
need to be adapted or a specialist letting policy obtained. We can help you
source a competitive quote.
We can also offer your tenants
competitive insurance via our link with 'HomeLet', a leading national provider
of tenant insurance policies.
If appropriate, you must ensure
BT are aware that you no longer require a service at the property.
It is a legal requirement for
all electrical appliances to be safe. We also recommend that you install a smoke
alarm on each floor of your property, and put a fire blanket in the kitchen.
It is also a legal requirement
that every gas appliance and gas central heating system
be inspected on an annual basis. They have to meet strict conditions and
a safety certificate must be issued.
You can ask British Gas (who
charge per item inspected) or a private gas engineer (some of whom have a flat
rate, regardless of the number of appliances). Remember for an inspection to be
complete, the piping must also be inspected and the person conducting the
inspection MUST be CORGI registered.
If the property you wish to
rent is subject to a mortgage, then the mortgage lender should be informed that
you intend to let the property. This should be done before a tenant moves into
the property. Gaining permission from the building society usually depends upon
the mortgage account not being in arrears. Some lenders do ask to see a copy of
the lease the tenant will be asked to sign. We will happily provide them with
this. The lender may make a small charge to cover administration costs.
If you have a large garden
provide the tenant with tools to help ensure its upkeep.
Assured shorthold tenancies – the basics
You have a guaranteed right to
get your home back after six months if you need to.
You can charge a "market
rate" for rent. This is the going rate for a similar property in the area.
You can get your home back if
your tenant owes you at least two months rent.
You can evict tenants who cause
a nuisance to local people.
You are entitled to end the
tenancy without giving a reason at any time after six months.
You may need a House of
Multiple Occupation (HMO) licence. If you are not sure whether you need an
licence for your property, you should contact Leeds City Council for advice.
You should also be aware of the
Health and Safety Rating System (HHSRS) which can prove very costly to
The sites at the bottom of the page give some excellent free advice for
landlords. Click on the logos.
The rent after deducting allowable expenses will
be subject to income tax at the landlord's highest rate, but with careful
planning and good advice it is possible to minimise tax exposures.
Allowable expenses include:
Ground rent and maintenance charges, if leasehold
Letting and management fees
Buildings, contents, and rental warranty
Council tax whilst vacant
Repair and maintenance of the property and
contents, but not the cost of improvements
Water and sewerage rates unless charged to
Legal expenses, but not those related to the
purchase or sale of the property
Stamp duty on tenancy agreements
And for furnished property...
The inland revenue will allow a deduction if the
property is furnished, which is calculated as: rent minus water rates x 10%
Allowable expenses may only be claimed whilst the
property is let or available to be let.
Property investment is really about one thing and one
thing only, getting the highest capital possible return on the initial capital
invested - in simple terms, making as much money as possible. How you calculate
the potential return on investment is very much open to discussion, but most
investors base their calculations on rental yield.
When initially looking to invest in property, you are
faced with the dilemma of which strategy to follow, cashflow or capital growth.
Whichever you choose to base your investment on is dependent on many factors,
such as age and available investment capital. For instance, you may be retired
with available funds to buy a property outright, thereby aiming to create an
income through the rental alone, or maybe you are in your 20s with just enough
money for a deposit, in which case you would be looking for capital growth over
a long period of time with the rent used to service the loan.
Of course, many people look for a mix of both cashflow and
capital growth, but either way, one common denominator is essential to establish
and that is the rental yield. The rental yield is one indicator of the overall
potential of the investment. It will determine just how much cash flow the
property will generate and therefore give you a clear idea of whether this would
be enough to live on or whether there is enough to keep payments on the mortgage
without having to "feed" the loan with your own money.
So what exactly is rental yield? In
its simplest form, rental yield is the market rent for property divided by its
price. Quite literally, this means the rental income
generated by letting the property is expressed as a percentage of the purchase
price. On average, in the UK today this figure stands at between 4.7% and 6%. So
a property with a purchase price of £150,000 and an annual rent income of
£7,500 would give a rental yield of 5% (£7,500 ¸ £150,000 x 100 = 5%)
It should be noted, that this figure is the gross
rental yield. Of course, there are other costs associated with property
investments such as service charges and insurances, and when these additional
costs are taken into account you are left with the net rental yield.
However, it is gross rental yield that investors are interested in.
The object of property investment is to maximise profit,
and rental yield is a good way of working out the potential of the investment.
Generally speaking, the higher the rental yield, the better the investment,
although depending on your strategy as an investor (cashflow or capital growth),
you will view this figure in a different way.
With cashflow, rental yield is a direct indicator of the
income that you will expect to receive from the investment. However, a highly
leveraged (i.e., mortgaged) capital growth strategy will be different and you
are more likely to use this figure to establish the rental coverage on the loan
repayments, as long term your profit will be generated by capital growth and not
Rental coverage is an indicator of how well the
rental income will cover the loan repayments on the property. Most lending
institutions like to see a coverage figure of around 125% (based on the maximum
loan value) to make sure that the loan repayments can be met easily. However,
many experienced capital growth investors are more than happy to purchase
property with considerably lower rental coverage than the magic 125% if the
potential exists for considerably stronger capital growth.
This results in a situation of having to "feed"
or "top up" the loan repayments to fill a shortfall in the rental
income. Although this is a higher risk strategy, the returns can be much
greater. This is true of many of the London regions where it is often not
possible to get rental coverage of 125%, but capital growth potential is strong.
Another factor that can have an impact on the rental coverage is just how you
borrow money to start with.
If for example, you purchased your investment property
with a repayment mortgage (where you pay the interest and a portion of the loan
capital each month) your repayments would be higher than if using an interest
only loan (where you repay just the interest each month without repaying any of
the loan capital). This would cause your rental coverage figure to be skewed. So
we can see that rental yield does not necessarily show the overall potential of
the investment property, but it is certainly one indicator, and for this reason
is considered a good starting point when looking at the viability of the
Avoiding Local Housing Benefit Clawbacks
How many landlords have had that sinking feeling when they
have opened a letter from their local council and discovered inside a 'notice of
recovery of overpaid housing benefit'? If you're really, truly out of luck then
it will be for a tenant that's just moved out of one of your properties, leaving
you with no chance of making an arrangement with the tenant to sort it out on an
ongoing basis. Often these overpayment recoveries, or 'clawbacks' as they are
known in local authority parlance, can be for the entire amount of benefit paid
to you for a particular tenant - with sums amounting to thousands of
Once a council's Housing Benefit department has decided to
claw this money back there's nothing you can do except to ask them to review
their decision. Unless you've got some startling new piece of evidence for them
then the review is unlikely to make the slightest difference. You will have to
pay the money or they will take you to court for it. This is especially galling
as it is the tenant who sets up the claim and councils are very quick to point
out that the 'contract' for housing benefit is 'between them and the tenant and
so there's nothing that they can do' if they've accidentally paid Housing
Benefit to the tenant that was due to you and the tenant spends it!
So given that prevention is better than cure, how can you
stop yourself from receiving one of these dreaded letters? Because tenants have
to make the claim, and because tenants that are willing to mislead the council
will likely be willing to mislead you as well, then this is very difficult.
However there is a 'quirk' in the Housing Benefit regulations that can insulate
you against overpayment recoveries - a local authority is NOT allowed to claw
overpaid Housing Benefit back from you if you notified them about it before they
notified you. This means you should contact the council immediately that you
suspect an overpayment has been made rather than just ignoring a suspicious
situation and hoping that it doesn't come to anything.
If you tell them you suspect that there's been an
overpayment and there hasn't been one, then no harm is done. So you should
always do this - especially at the end of a tenancy when the council will often
- for reasons of slack administration or poor communication from you or the
tenant - pay up to their payment cycle date. If you don't tell them, and they
look more closely at the claim, they may well find something worse.
Majesty's Courts Service, Possession Claim Online service
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