Fontana Property Group Ltd. July 2023 Newsletter
Paul Wilson
Providing Property Investors and Developers with specialised Finance for their projects, with over 30 years experience in finance. Buy to Let, Bridging, Commercial to Residential, Titlesplit, and many more.
Kent pin Meeting Updates
Yet again we had a fantastic June pin meeting in Kent. We had so many guests that we almost moved into the corridor! The networking was fantastic with the speakers Ben Reynolds and Get Savvy Club's Anna and Anita engaged with all the guests, and everyone left so happy.
In July we are looking forward to an even bigger and better meeting. In May, we were in the top 5 for the increase in number of attendees. We know we had a lot more people in June so let's see if we can set more records in July.
Come along to the Holiday Inn Maidstone on the 6th of July 2023, and meet Paul and Jan, the fabulous pin helper team, our Lifeboat Lettings partners whom this month will have Rick Walton speaking. Please come and meet our NEW Mortgage Advisor, Martin Smedley from Prosperous Finance. Join us and our two guest speakers: Yogesh Patal, who will tell you about how he grew a property business while working as a full-time GP with a young family and no time. If he can do this, surely you can. Mark Fitzgerald , who will share the property investors' blueprint with us. Paul and Jan have been to many events with Mark, and it is safe to say that you will not want to miss this presentation.
Let's fill the room with property-minded colleagues and make this the biggest Kent pin event yet! Click here to book your seats.
Win a Silver Ticket to Simon Zutshi's Live 2023
Book early for your seat at this event. Register before 18:00 on 3rd July and you will be entered into the prize draw and get a chance to win a fantastic prize of a silver ticket (value of ￡997) to the 3-day event PROPERTY MAGIC LIVE of Simon Zutshi.
Exclusive Updates From Paul and Janet
Company Updates
Paul has studied for the first part of his CeMap qualification and will be booking his Phase 1 exam in the near future. Let's all wish him luck! This will be another string to the Fontana label, which means the company is CERTAINLY GROWING!
At the same time as Paul’s studies, Janet has been busy launching a marketing agency and has already signed new clients to that business. Check out Keen4Marketing on Instagram and Facebook for more info!
Coaching Sessions
Paul’s coaching business is also growing. Paul is able to help you become your better self. if you are interested in speaking to Paul about his coaching either for PROPERTY or MINDSET, book a call for a FREE 30-minute consultation.
Catching Up With Paul
At our June pin meeting, we had a special guest, currently a Miss Kent Finalist 2023 Pragati Giri. She's using her platform to empower young girls in the engineering and construction industry. She's speaking at primary schools to inspire the next generation of leaders. I and the team wish Pragati every success with this and hope that she is successful in everything she does.
Well for at least a month now, we’ve had a break in the interest rate rises which is nice. However, there are still a lot of landlords out there who are having trouble with a current strategy…..is what I was going to write. So on the 22nd May 2023 the Bank of England raised the base interest rate to 5%. This is obviously going to have a knock on effect to landlords and home owners alike. On the 23rd May the government announced they will be meeting with Mortgage lenders to see what can be done to help people who are struggling. It is however, still important at all times to make sure that you are on the right strategy or are able to ride out the state of uncertainty with your strategy of choice. We ourselves will look into the future in new ways. Janet will still be concentrating on Keen Living SA , expanding her serviced accommodation units. Alongside this, she will be starting a new journey with Keen4Marketing whereby she will help customers with their marketing strategies and help them gain more business. For the time being, Paul will be concentrating on his CeMap exams, and also the expansion of his coaching academy. Most of Paul's time at the moment is to be taken up by his coaching business whereby he will help people in business, in property, and help them to be their better self. This new platform will allow Paul to help people remain positive, achieve their goals, and live life much happier and more successful.
Exciting Plans for July
For the first week, we are preparing with full excitement for the next Kent pin. Along with a meeting for all other pin hosts, it will be great to meet them all as some have only been seen on zoom links. Paul will be carrying on with his coaching training to ensure he is giving the best service to his clients. Paul and Janet will both be going to Birmingham for more training on their business development. They are also looking to get their children on the Financial awareness course for young adults, the prize from last month’s pin meeting. This along with other pin meetings and other networking meetings will certainly fill up the month.
PIN Annual Dinner
We are very much looking forward to this year's pin dinner, which will be held at the Hilton Hotel at the World Resorts Centre in Birmingham on the 19th of November 2023. This year marks the 20th anniversary of the pin network, and we look forward to celebrating Simon Zutshi‘s success with him on what will be a monumental day. Get your tickets here. We look forward to seeing you there!
A-levels
It is with great pride by our daughter Mia has now completed her A-levels, along with many other students in the UK. Mia will now be going to university to study Criminology and Forensic Psychology. We would like to wish her and all other A-level students, the best of luck in the future in whatever they may be studying. I am sure that there are plenty of landlords, developers, and investors who all have young ones moving into university this September.
Strategy Focus
Buy-2-Let is a strategy whereby a person buys a house with the intent of renting it out to a long-term tenant. This is a long-term strategy because the monthly income generated between the difference of the mortgage payment which will be interest only and the rent coming in is usually between ￡200 to ￡400 a month. At the moment the strategy is hard to make work due to the interest rates being so high at the moment and Mortgage Lenders will usually test this strategy at 125% or 145% x of the annual interest. The strategy works well when interest rates are low and properties can be purchased for a reasonable monthly mortgage payment. The other benefit of the strategy, as it is long-term, is the increase in the house price itself over a 10-year period.
If you feel that this might be the strategy for you, then book a call here.
IT Feature
This month we would like to create a new section of the newsletter with an IT feature. The first feature is a fairly new platform called Property Filter by Guillaume Black. If you haven’t seen this software before, you will be amazed by its ease of use and depth of information within the system. The system can track the history of a property. It also highlights properties that may be good for certain strategies, such as buy-to-let, rent-to-rent, blocks, flats, and many, many more.
Catching Up With Janet
As mentioned above, along with the Keen Living Serviced Accommodation side of the business, Janet is launching her own Keen4Marketing agency. This is to help businesses improve their advertising, should that be through social media, email, or even leaflet drop to name just a few. We can help with any of your business requirements. Janet has obviously, set up all of the Fontana and Keen Living own media and has now signed on more clients whom we are helping to increase their media presence. Jan is attending lots of marketing and sales training to ensure all of her systems and knowledge is up to date to help all existing and potential new clients in the correct way.
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Industry News
Our Guide to The Renters (Reform) Bill
The government has published its Renters’ (Reform) Bill, through which they have promised to deliver a fairer lettings system for tenants and landlords in England. Considered by many as a “once-in-a-generation overhaul of housing laws”, landlords have been keeping a close eye on the contents of the bill. At a high level the bill promises to:
As both landlords and letting agents, we are advising our clients not to panic but to take a pragmatic approach and digest the contents of this bill before making significant financial decisions. So, in this article, we will look in detail at the contents of the bill and what the potential implications will be.
Firstly, a recap – what is the Renters’ (Reform) Bill?
The Renters’ (Reform) Bill was first introduced as a concept in 2019 by then-Prime Minister Theresa May. However, subsequently, it faced a number of delays due to the Covid-19 pandemic. Its main purpose is to address what has been described by many stakeholders as an ‘imbalance’ between tenants and landlords. It is hoped that this will provide more security for tenants and improve standards in the Private Rented Sector. Whether it achieves this aim of course is the key thing that everyone will be looking for over the coming months and years.
What are the timelines?
The timings of when this Bill will become law are still unclear. It is however understood that the Bill will be carried over to the King’s speech with the aim of it getting Royal Assent in Spring 2024.
After this stage, there will need to be a transitory period for the contents of the Bill and the new laws to be applied to existing and new tenancies. It is understood that there would be a lead-in time of 6 months for new tenancies and a further year to apply the laws to existing tenancies.
How will the Bill impact landlords?
The Renters’ (Reform) Bill contains several important elements that will affect how landlords let their properties and manage their tenancies:
We will now go through each of theses key areas in more detail:
The Abolition of Section 21
This is the single biggest change in the Bill and is the one which is causing landlords the most concern. In future, all repossessions will need to be based on an approved reason provided by the landlord through a notice under Section 8 of the Housing Act 1988. A Landlord cannot simply just decide that they no longer want to let out the property to that individual – taking away a basic freedom. The Section 8 structure remains largely the same, although the various grounds for possession in Schedule 2 of the 1988 Act have been extensively re-worked.
So why make the change?
The abolition of Section 21 route to possession is, in the government’s own words, designed to “empower renters to challenge poor landlords without fear of losing their home.” This means tenancies will only end if the tenant decides to end them, or if the landlord has grounds for possession under Section 8.
What will the likely impact be for landlords?
It is too early to say what the exact impact will be for landlords, but certainly, many landlords are extremely concerned about the loss of this fundamental tool to regain their properties without the need to give a reason. However, data shows that currently only around 6% of tenants are evicted this way, so in theory, this shouldn’t have too much of an impact on landlords – superficially at least. Further, the Bill promises to strengthen grounds for possession under Section 8 and improve court processes, so landlords have been promised that they can quickly and effectively regain access to their properties when a tenant fails to meet their obligations or is in breach of contract. As always though, the devil is in the detail of whether all these elements come together effectively. So, the jury is currently out.
The End of Fixed Term Tenancies
The Renters’ (Reform) Bill will abolish all fixed term tenancies, instead all agreements will be periodic from day one. Tenants will need to give the landlord a notice period of two months to exit their tenancy under the new periodic tenancy rules and notice periods of longer than two months will be banned.
So why make the change?
The idea is that the abolition of fixed term tenancies will leave tenants free to give notice at any stage during their tenancy, awarding them far more freedom than they currently have.
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What will the likely impact be for landlords?
Landlords will be able to give their tenants two months’ notice if they wish to sell or move into their rental property, with notice periods for other grounds (such as anti-social behaviour or rent arrears) varying. Landlords will be forbidden from creating – or trying to create – fixed term tenancies.
Again, it is not clear what the likely impact on landlords will be, but evidence from the introduction of this law in Scotland would indicate that it had very little effect on landlords. The reason cited for this is the complexity involved for the tenant in moving, with tenants having to find another deposit and set up utility accounts again. However, this may be less of a deterrent for tenants in HMOs, where there could be a risk of increase ‘turnover’ of tenants and hence running costs for the landlord.
A note on holiday lets and periodic tenancies
It is common practice for landlords who let their properties as short term or holiday lets over the Summer months, to then let on an assured shorthold tenancy (AST) over the Winter.
Under the new Bill, a landlord will have no grounds to obtain possession nor certainty that the property will be available for the holiday season. This could reduce longer term accommodation availability, with holiday let owners keeping their properties vacant in the off season.
Changes to Section 8: Landlord Grounds for Possession
To protect responsible landlords, the Renters’ (Reform) Bill will overhaul the Section 8 grounds for possession. This means a landlord will be able to:
Many grounds will become mandatory, meaning a landlord will have more certainty in court. Let’s look at some of these grounds in more detail:
Landlord moving into rental property.
Current rules state that a Section 8 notice can be served if the landlord wants to move into their rental property and live in it as their main home. However, this doesn’t extend to their children or other family members. As part of the Renters’ (Reform) Bill, a new Section 8 ground will be introduced which will allow a landlord and close members of their family to move in. This ground can’t be used in the first six months of the tenancy and tenants would need to be given two months’ notice.
Rental arrears ground amendments.
Under new Section 8 rules regarding rental arrears, a landlord will be able to use a new mandatory ground for persistent and recurring rent arrears, if their tenant has been in at least two months of arrears on at least three occasions in the past three years. This will apply even if the tenant is not currently in two months of arrears when the hearing reaches court. If this ground is proven, the landlord will only need to give their tenant four weeks’ notice to leave the property.
Selling your property.
If a landlord wishes to sell their property, they will be able to do so using a Section 8 ground under the new legislation. The current mortgage repossession ground will remain, with new grounds created for other circumstances where they wish to sell.
For the first six months of a tenancy, however, these grounds can’t be used, while tenants will also require two months’ notice of their intention to sell.
Anti-social behaviour ground amendments.
In the case of serious anti-social or criminal behaviour from a tenant, notice periods will be reduced to two weeks. Landlords will still need to provide proof of this behaviour, which may hold up proceedings. However, for evictions that end up in the courts, the government has promised to digitise the process, with the aim of reducing delays.
Renting to Tenants with Pets.
It will be illegal to advertise a ‘blanket ban’ on letting properties to tenants with pets. All tenants will therefore be allowed to keep a pet, but only if the landlord consents. This consent cannot be unreasonably refused or withheld. Refusal or consent must be given within 42 days of permission being sought by the tenant.
So why make the change?
In a bid to empower tenants, the Renters’ (Reform) Bill pledges to ensure landlords do not unreasonably withhold consent when a tenant requests to keep a pet. Tenants will also be able to challenge refusals.
What will the likely impact be for landlords?
In a change to the Tenant Fees Act 2019, landlords can insist that the tenant obtains pet insurance. Landlords are also not automatically compelled to allow a pet. This is good news for landlords. However, more detail on this element of the Bill is needed, especially when it comes to properties where pets are banned in the headlease, or Houses in Multiple Occupation (HMOs) where the needs of other tenants will need to be considered.
The Decent Homes Standard.
It’s estimated around 12% of rental properties in the UK “pose an imminent risk to the health and safety of tenants” according to the original white paper for this Bill. Under any new legislation, the Decent Homes Standard would be applied to the Private Rented Sector for the first time.
So why make the change?
According to Housing Secretary Michael Gove, “Too many renters are living in damp, unsafe, cold homes, powerless to put things right, and with the threat of sudden eviction hanging over them.”
“This government is determined to tackle these injustices by offering a ‘New Deal’ to those living in the Private Rented Sector; one with quality, affordability, and fairness at its heart.”
What will the likely impact be for landlords?
Local council departments will be given greater powers to enforce the Decent Homes Standard and deal with landlords who don’t comply.
Ahead of this bill, several steps to raise property standards have already been taken, including the requirement for smoke and CO2 detectors and the implementation of the Homes (Fitness for Human Habitation) Act 2018 and Minimum Energy Efficiency Standards (MEES) in private rented homes.
We will be watching how this area of the Bill is implemented very closely. Ultimately, whilst most decent landlords will be keen to comply, the implementation of any necessary property improvements will come down to economic viability. We suspect that for some properties landlords will be left with no choice but to sell the property or raise rents significantly. Either way, there will be a natural upward pressure on rents as the market adjusts to any reduction in supply or improvement in quality and costs of provision of the product.
Landlord Portal and Ombudsman.
So why make the change?
The aim of the portal is to give tenants more transparent information on the standard of the property they wish to rent and local councils more details if or when problems arise at a property.
The portal will list landlords’ obligations and help tenants make better decisions when signing a new tenancy agreement.
What will the likely impact be for landlords?
It will be mandatory for all landlords to join the Ombudsman. However, landlords using a letting agent to manage their properties already benefit from those agents being part of mandatory redress schemes, so this is not a big departure from this situation. Importantly though, it is not currently clear what additional costs with fall on landlords as a consequence.
Rent Reviews and Increased Notice Periods.
Rent increases would be limited to once per year under the Bill, with the notice period required to inform tenants of a rise in rent, increased to two months from the current one month.
So why make the change?
In order to give more power to tenants, changes have been made to prevent landlords from making sudden and considerable increases to rent.
Tenants will now be able to challenge a rent increase that they feel is unfair. This will be reviewed to check that it is in line with market rents. In addition to this, rent review clauses that lock tenants into rises will be banned from tenancy agreements.
What will the likely impact be for landlords?
Landlords will no longer be able to include rent increase clauses in the tenancy agreement. They will only be able to increase rents using the Section 13 notice procedure, which can then be challenged by tenants.
In effect, the appeals process will then ensure the proposed rent increase is ‘in line with the market’.
This is another area of the Bill we will be watching closely. A naturally operating and unfettered ‘free market’ is exactly what it says – free – and it should therefore be self-managing and limiting if it is operating correctly and without intervention. Superficially, this proposal isn’t very different from the current system, and on paper, the changes are meant to make access to the appeals process easier. However, it may represent an unnecessary intervention in the free market. One potential unintended consequence is that Landlords who may previously have kept their rent levels below market rent, will now be forced to routinely increase their rents in line with the market on a yearly basis, so as not to trigger an appeal due to an apparently unnecessarily large increase.
Other Changes Included in the Renters’ (Reform) Bill.
No more blanket bans.
It will now become illegal for landlords and letting agents to apply blanket bans on renting to tenants with children or those on benefits.
Modifications to rental properties by tenants.
Although no exact details have been given in the Renters’ (Reform) Bill, tenants would be permitted to ‘modify’ rental properties, on the understanding that the properties are returned to their original condition at the end of a tenancy.
Lifetime deposits.
Although the plan for lifetime deposits was originally a focal point of the Renters’ (Reform) Bill’s early news coverage, it now appears to have been largely dropped from the Bill going forwards. Tenants would have had a deposit that travelled with them between rental properties under the original proposals.
Conclusion
The Renters (Reform) Bill has understandably caused much debate amongst property professionals and significant disturbance to the operation of the rental market in England. In the years since its initial announcement, there has been a significant reduction in the number of rental properties being advertised in the Private Rental Sector and consequential increase in rents nationwide based on simple free market economics. This has accelerated since the end of the COVID pandemic, due to other factors, such as rising costs for landlords – including but not limited to financial costs – set against a backdrop of ten plus years of increasing legislation and ‘meddling’ in the market by successive governments. The aims of the Bill – and previous efforts – are laudable, but it remains to be seen whether this will result in greater fairness, security, choice and lower costs for tenants. The evidence so far is that the opposite will be true. Governments need to recognise that ultimately letting property needs to be financially viable and
attractive to the property owner and it will be this – not laws – that govern the availability – and thus security – of accommodation for the end customer – the tenant.
written by Richard Poynter from Lifeboat Lettings and The Property Lifeboat
For more info about our lettings management please either call for a chat on 01233 802803 or email your queries to [email protected]
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1 年Thanks for the updates on, The Monthly Newsletter ?? ?? ?? ??.