EPC – benefits for tenants

Having reported on Energy Performance Certificates (EPC’s) and the Green Deal in previous blogs we thought we should comment on what impact this has for tenants of private rented property.

In May 2012 The Royal Institute of Chartered Surveyors (RICS) released research on energy consumption in the home – The changing effects on domestic energy expenditure from housing characteristics and the recent rapid energy price movements. This follows implementation of legislation obliging all property vendors and landlords to have an Energy Performance Certificate (EPC) issued for their property  and the government’s impending Green Deal.

What the report showed was that the majority of private rented property tenants are paying rather more for their energy than owner occupiers. Private tenants paid on average an extra £31 per year than owner occupiers. Tenants in council housing were the best off with savings of nearly £60 per year compared to owner occupiers.

These savings are being seen as a result of owner occupiers and social housing landlords taking a longer-term view of insulating property and modernising heating systems, which in turn will reduce energy consumption and bills.

The RICS report,  states that the single most significant factor in these higher bills is electric heating which can result in bills of between £196-£898 more per year than homes with gas central heating

Jeremy Blackburn, RICS Head of UK Policy, said “Those renting privately should expect the same standards in insulation and heating as homeowners and those in social housing. More needs to be done to ensure private rental property is fit for purpose and energy efficient. It is important that the Green Deal effectively addresses this at a time when tenants across the country are struggling with high fuel bills and increasing rents”.

The EPC allows tenants to see at a glance how energy efficient their new home will be when they are searching for property.

See more about EPC’s

See more about Green Deal

Click on the image to find out more about EPC’s

Tenants are more likely to choose properties with a more favourable energy rating, where other factors are equal, and so landlords with properties that are not energy efficient will start to notice void periods between tenancies as they become less desirable in the marketplace. As Bruce Marshall of Riley Marshall explains “While it is likely that further government legislation will come into force to oblige landlords to improve the energy efficiency of their property, market forces will soon begin to apply pressure”.


What is an inventory?

What is the difference between an inventory and schedule of condition?
In our recent blog about deposits we mentioned inventories as a way of ensuring that a deposit can be properly utilised by landlords, should they need to claim for damages against a tenant’s deposit. Here we explore the terminology, as well as examining why an inventory is such a useful legal tool in protecting a landlord’s property.

An Inventory is basically a list of the contents of a rental property, and a Schedule of Condition is the description of the condition of these contents, as well as a record of the condition of the fittings, flooring, décor, and exterior space if any. In rental terminology they are usually combined, together with a photographic record, and referred to simply as an inventory. For the purposes of this article that is what we mean when we use the word inventory.

Inventory and schedule of condition

When to check it
The inventory should be prepared following any preparatory improvements to the property and before the tenant actually takes possession of the keys. In some cases landlords give the tenants the document and ask them to agree the contents during the first week/month of the tenancy, but this can make it difficult to prove the original condition of the contents if the tenant disputes the inventory.

We have noticed some online sources recommending checking the inventory every 3/6 months, along with a routine inspection of the property. This is hardly feasible as the tenants will have their own belongings in the property and may feel uncomfortable to have their cupboards rifled through to check if your teaspoons are still in situ. Even if the property is let unfurnished you will not be able to tell the full condition of décor and carpets with the tenant’s own belongings in place.

The only meaningful time to carry out a full inventory check is when the tenant has moved out and is ready to hand over the keys. Having said that, it is still possible to make use of the inventory during the tenancy if queries or problems arise. For instance it can be referred to if changes are noticed during a routine visit to check on the property.

So ideally the inventory is checked and agreed by both parties at the beginning of the tenancy and again at the end. At this final check any changes can be noted, and then a plan of action can be drawn up to deal with any discrepancies.

recording damage and previous condition is vital

Recording previous condition is vital so that responsibility for damage can be proved

Using the inventory as a record and reminder
If there are only minor changes, and they could be described as fair ‘wear and tear’, no further action should be taken by the landlord. If items are missing or damaged it should be agreed whether these will be replaced by the tenant (within an agreed timescale), or replaced by the landlord and billed to the tenant’s deposit. If cleaning is required the landlord can appoint professional cleaners and charge the tenant.

As some tenancies last for years it is very helpful to be able to remember the contents and their condition at the beginning. We can all forget, but if everything is documented it is easier to prove (and harder to dispute) if something has changed.

Settling Disputes
If the landlord and tenant cannot agree on the way in which a deposit is going to be used then the case can be referred to a Dispute Resolution Service and the inventory will form a very important part of the landlord’s evidence especially if there are photographs to back up the written evidence.

Perhaps more importantly if there is this type of careful written record a tenant is less likely to argue. This can save a lot of time and expense haggling over what should be done at the end of the tenancy.

Inventories should be checked and signed by both parties

It is important that the inventory is agreed and signed by Landlord and tenant at the beginning of the tenancy

How to prepare it
The preparation of inventories is the subject of another article entirely. However if you use a reputable agent they are likely to employ an inventory clerk, either in-house or as a specialist service, who will be experienced in writing these documents in order to be most effective for the landlord.

As the landlords agent Riley Marshall would always recommend the preparation of a professional inventory for each tenancy, and we can make all the arrangements for this. In our own portfolio of properties we would no more let a property without an inventory than we would without Building’s Insurance or a Tenancy Agreement.


Trends in the Rental Market

After fluctuations in house prices over the first half of the year are we settling down into a steadier market?

fluctuating chart

It turns out that depends on how you collect your figures. For instance Halifax announced an increase in house prices in June 2012 of 1% while Nationwide reported a 1.5% drop in the same period.

While this may seem at first glance to suggest that one provider is doing better than the other the truth is more complex. Nationwide directly compare figures for June 2012 against June 2011, Halifax take a 3 month period and average out a monthly figure over a full quarter. This ‘smoothing’ of the market effects perhaps shows the underlying trend more accurately than a direct monthly comparison, especially when the monthly figures are somewhat volatile.

The NAEA (National Association of Estate Agents) commented on their blog last week that if the market dips any further there may be terms such as slump, recession or even depression and you can see their comments here.

Buy to Let Mortgage Provider Paragon reported an increase in rental yields* on rental property from 6.1% in the first quarter of 2012 to 6.5% in the second quarter. Professional landlords reached achieved slightly better returns with an average of 6.9%.

John Heron, managing director of Paragon Mortgages, said: “Strong tenant demand has continued to place upward pressure on rents and we have as a result seen yields strengthen despite the pressure on consumers. It is no surprise to see that more experienced landlords achieve better yields with this being driven by their choice of property type and their approach to management.”

If you need buy to let information from specialist letting agents in South East London feel free to contact us to discuss your requirements info@rileymarshall.co.uk.


*Rental yield is defined as a property portfolio’s annual rental income as a percentage of its total value.

Thank you to Paragon for the information and quotes http://www.paragon-mortgages.co.uk

How secure is your Deposit?

Some Landlords and Tenants are not aware of the correct procedure for dealing with a security deposit for rental property. So we thought it worth exploring what a deposit is, what it is for, and what is a Tenancy Deposit Scheme?

Tenants deposit

What is a deposit and what is it for?

At the risk of stating the obvious a deposit is an amount of money paid by a tenant at the beginning of a tenancy to ensure their intention to respect and look after the fixtures, fittings and belongings supplied in a rental property.

While this seems self-evident it is worth explaining that the money belongs to the tenant, unless by failing to carry out their legal obligations they cost the landlord money. In effect it is being held in trust in case it is needed to pay for any costs that are a direct fault of the tenant. If this happens the landlord can claim against the deposit for damage or loss when the tenancy ends.

Damage does not include the expected fair ‘wear and tear’ that could be expected from the length of term of the tenancy. For instance if a tenant is in place for a number years it is reasonable to expect the landlord to redecorate, whereas if a tenant has allowed the garden to become a jungle in that time the landlord could legitimately charge the tenant the cost of restoring the garden to its original condition.

Riley Marshall recommends having a professional inventory prepared and agreed at the beginning of the let. It should include a detailed written Schedule of Condition and adequate photographic evidence of the condition of the property. Their Letting Manager Zelda Austin explains “it is so important to be able to prove the validity of your claim against a tenant, the fact that we have such detailed records to refer to usually avoids any problems, because the inventory reminds tenants what the property was like when they moved in and they know we have the evidence to charge their deposits if they have caused any damage or loss”

Deposits must be protected in one of the government-approved tenancy deposit schemes. Many agents can provide this but Landlords and Tenants should check what provisions are made to safeguard the money during the tenancy.

The terms of holding the deposit should be clearly laid out for the tenant in the tenancy agreement and the tenant should be issues with the Proscibed Information required by the legislation which advises the tenant of where their deposit is held and the process involved in getting it back at the end of the tenancy.

The importance of having a thorough inventory of the property cannot be stressed too strongly, and to read more about what an inventory is and why it is important to landlords and tenants click through to our blog post ‘What is an inventory’?

Bucking the trend of slating the ‘Olympic Landlord’

The positive side of The Olympics and the  rental market in London

While many landlords and agents have come under fire from the media because of the higher rents they are charging over the Olympic period, bear in mind that without residents offering this facility we would not be able to house all the extra visitors the Games will generate, because our hotels would be filled beyond capacity.

It may seem that some of the properties are expensive, however take an example of a three-bed house in Greenwich sleeping eight people, which is being rented for £11,000 during the Olympic Games period – including the opening and closing ceremonies. So sixteen nights’ accommodation for £85 per person per night, which sounds much more reasonable, especially when you take into account the owners higher risk and depreciation, not to mention the higher demands being made for this type of tenant who is expecting hotel-like service.

Also while these temporary tenants are staying in the community they will be spending money in local shops, cafes, restaurants and bars. This could well be happening in areas that don’t traditionally benefit from tourism.

This is not to excuse the behaviour of property owners who have treated their long-term tenants badly but, as always, this is a minority of people in a sector of the industry that has risen to the challenge of accommodating extra visitors in a creative and flexible way. Most landlords have taken the view that if their long term tenants are settled they will not try to ‘cash in’ on the Olympics, but where their property is naturally available they have tried to maximise their assets.

The role of the Agent is always to find the best (highest) rent that the market will bear for their clients property and while some Agents may have been very bullish about the market it is always easy to criticise this attitude in retrospect. Landlords were expecting high prices, tenants were expecting high prices, no one knew what the supply and demand figures would actually be and so agents had to test the market to ensure they didn’t let property too cheaply. It is worth noting that Estate Agents would have been criticised for this action as they are for charging high rents.

There are many local people who do not fancy trying to live their normal lives with the disruption of the Games going on who will be away for the duration and for them the chance to let out their property allows them to take a comfortable holiday and make a little extra money too.

Anyway with the Games almost upon us perhaps it is time to draw a line under this argument? There are unlikely to be any visitors that have left it this late to rent accommodation.

You can see out other blog on Olympic letting here.

Green Deal – energy improvements ‘for free’

The Government’s latest initiative to comply with Carbon Emission reduction is the Green Deal which will be launched in October 2012, but with 32% of the housing market being in rented accommodation how will this affect the rental market?

The scheme will allow homeowners and tenants to take out a loan through their energy supplier to carry out work that improves the energy efficiency of their home. Click here for more information. This loan will then be recovered in instalments by increasing the electricity bill for the property. There is no obligation for anyone to carry out this work but it will improve the EPC rating on the property which may be a useful marketing tool in the future. See our blog on EPC.

By 2018 Landlords must ensure their property has an energy rating of at least E so it may be in a landlords interest to encourage the tenant to have energy rating improvement work done. As the tenant will benefit from lower bills it is in their interest to have the work done too, providing they are medium to long term tenants. The Green Deal could be the most equitable way to meet these costs.

In a nutshell the energy provider for the property will become the Green Deal Provider, and they must be sure that it conforms to the ‘Golden Rule’ which means that any repayments must be less than the savings they will make by having the done work. The loan will belong to the property, and will stay in place if the occupier changes. The work will be underwritten by the agreed contractor for the entire period of the loan.

This allows people to afford to make energy-saving improvements to their home without having to find the money up-front. There will be practical issues about what work will be covered by the scheme, how landlords and tenants would negotiate how to carry out such works (particularly where the tenant is likely to move on fairly quickly), what property purchasers will feel about taking on a Green Deal loan initiated by the previous owner, and which contractors will be eligible to carry out work.

The work most likely to qualify under the Green Deal is to increase insulation. This will have an immediate and ongoing benefit to the occupier of the house, but the landlord would have to give permission for the work to be carried out, and if the tenants are not going to stay long enough to pay off the loan then it would need careful legal handling to ensure that the resultant increase in bills did not make it more difficult for the landlords to relet their property.

We will update our blog with more information about the Green Deal as it becomes available from the government and Green Deal Providers.

If you live in London and you don’t know your ORN from your TDM then read on.

The infrastructure for the Olympics and Paralympics is nearly complete and so the next greatest challenge is moving people around during the Games.

This is a glossary of the acronyms that are used most frequently around this subject .

ORN – Olympic Route Network

PRN – Paralympic Route Network

TDM – Travel Demand Management

ODA – Olympic Delivery Authority

TfL – Transport For London

Roads affected by the Olympic and Paralympic games.

Map of roads affected by the Olympic and Paralympic games

If you need to get around London during July and August start by looking at this map showing the routes that will be affected http://www.tfl.gov.uk/assets/downloads/corporate/london-2012-olympic-route-network.pdf

For more localised information you can click on the area you are interested in on this map http://www.tfl.gov.uk/corporate/projectsandschemes/22313.aspx

ORN (Olympic Route Network)
This is the group of roads that will be used as official routes for the Olympic vehicles (which will be known as ‘games family vehicles’), between the Olympic Park in Statford and Central London. There will also be routes for use during the Paralympic Games which will be known as PRN.

Roadworks will be suspended on this route during the Games, and there will also be some banned turns, and closed pedestrian crossings, there will also be some Games Lanes which are for use as and when necessary. These will operate in a similar way to bus lanes and like bus lanes you should avoid using them when they are operational or you will be fined.

Businesses facing these routes may have delivery times restricted.

TfL (Transport for London)
Have a section on their site with lots of useful information http://www.tfl.gov.uk/gettingaround/london2012/21677.aspx and they have launched a site called ‘get ahead of the games’ which has useful information about the predicted impact of the increased flow of people on the rail, road and underground network http://www.getaheadofthegames.com. It also has advice on road changes and tips on how best to travel around. Users can put in the postcode of their destination to get further localised information.

TDM (Travel Demand Management)
Travel demand management is aiming to reduce the usual flow of traffic around the City.

Businesses are being given tips on how to help ease congestion by encouraging home working, timing journeys and deliveries to avoid the busiest times, and getting employees to change to walking and cycling rather than driving during the games.

Weddings are being suspended by Newham Council, so that they do not block the roads with ‘unnecessary’ traffic.

They are also asking residents to stock up on essentials to avoid the need for shopping trips, and deliveries.

On-street parking restrictions are being implemented and these are covered further in our blog ‘Street Parking’.