Bexhill-to-Let

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Understanding tenancy agreements for renting a house

Tenancy agreements are often misunderstood between tenants and landlords, but they are simply an agreement between two parties on what you can and can't do while living in the property.  The key premise is a mutual agreement of understanding regarding the terms of living in the property. Tenancy agreements will outline the duration of the tenancy and payment terms, but also some other covenants that are often not read by tenants.  Likewise, landlords will use tenancy agreements that make no sense and are outdated, so no wonder tenant's don't bother to read them, but tenants should, and ask for clarification if parts of the agreement don't make sense.

So what does a good tenancy agreement look like and what should you be concerned about?  All rental properties must adhere to government regulation under the UK Housing Acts and must be considered an "Assured Shorthold Tenancy" (AST).  Newly written Long Lease Agreements are of course different, typically written by a solicitor, and can range anywhere from 999 years to 125 years.  

Here are a few key points that must be mentioned in an Assured Shorthold Agreement:

Tenancy duration (typically less than 12 months)

Payment terms (weekly, monthly, six months in advance, etc)

Tenant's name and all "permitted occupiers" of the property

Name of the landlord and their agents (if stated)

Description of the Premises (including use garden or shed if allocated)

Amount of Deposit (must be stored in a government ran Deposit Protection Scheme - DPS)

Inventory checklist (photos of the property when received)

The basics are what most tenants and landlords tend to focus on but there are other covenant that are of importance.  Below are some points that tenants should make sure they understand and don't overlook.

Interest on late payments

When can rent increases arise?

How and when is money collected for damage to the property?

Right of access and notice given for the landlord to enter

Are pets allowed in the property?

What is normal wear and tear?

Garden maintenance required

Who pays council tax, services, tv licence, etc.?

Decorating or painting the interior walls

Can you hang TVs or pictures on the walls?

Loss of keys and changing the locks

Is smoking in the house permitted?

These are just a few things to seek clarity on in a tenancy agreement with your landlord.  There are rights for tenants and advice can be provided by Citizen's Advice or a solicitor.  Tenancy agreements must not restrict tenants from the "right to pleasure and enjoyment of the property". Tenant have further rights that try to stop landlords from discrimination.  But in the end, if challenges arise it's important for both parties to work together to reach an agreement that may not be clearly outlined in the tenancy agreement.  Early communication is key for all (business) relationships!

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Tips for renting a house in Bexhill

Renting a flat or house is often a necessary part of life as housing remains so expensive in the UK.  One important aspect of renting is to remember to keep your monthly expenses low.  Here are 5 living expenses to focus on when renting:

1) Energy Costs - Boiler & Radiators

Look at the age of the boiler and radiators in the property and assess if they have been installed/updated in the last 5 years.  All new boilers are condensing boilers, but some are combi boilers that heat on demand both the water and radiators, while other heating systems will have a hot water tank that is separate for water but still heats the radiators. The combi boilers claim to be more efficient (I personally like a hot water tank), but the most important aspect is the age of the system.  Look for boilers that have a GreenStar!  (Worcester)!

2) Windows

While original period sash windows are lovely in a property, these types of windows lose an enormous amount of heat.  Find a property that has PVC windows, double glazed.  The new double glazes windows can be up to 10mm thick so pay attention to the windows, some older double glazed windows will not be as efficient but will still hold heat better than single pane sash windows.  If the property as the period sash windows, then put some clear plastic double glazing on the windows.  Wickes sells a double glazing kit for £7.99 and comes with tape and clear plastic film that is nearly unnoticeable.

3) Location to work

Transportation expenses can really eat into your monthly budget so consider what your fuel costs will be to and from your place of work. While you may believe you're saving a few quid living further away from work, the cost of fuel and maintenance costs associated to your car may cost you more in the long run. If possible, try to rent a flat that has free parking.  Again, paying for a parking permit is expensive and its also annoying for guests who come to visit.

4) Age of property - Insulation

As much as the windows are important the the amount of insulation in the loft will make a significant difference to your energy costs.  Insulation is now put in the cavity walls and in the floors on new build properties, but the older period properties may not have an insulation at all. All properties are required to have an EPC which details the inefficiencies in the insulation.

5) Lights!!

Many tenants forget about the lights and underestimate the potential cost savings of converting to low energy lights or LEDs. This may be the easiest thing to do which will offer the biggest savings.  Low energy lights have come down in price and are now very affordable and some energy suppliers give discounts towards buying low energy bulbs! If standard 60-watt bulbs are used in the flat or house you plan to rent, then you will want to keep those bulbs in storage (reinstate when you leave) and replace with your own energy efficient light bulbs.

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Bexhill new housing development - Ambers Rise near Ravenside

There are a lot of different views about the new Marks & Spencers currently being built at Ravenside Retail Park and how it may affect the local small businesses on the high street in Bexhill.  

I personally do not believe Marks & Spencers (M&S) will affect the trade on the high street as I'm not aware of any small business that sells ready-made meals and expensive food on the high street.  The only trader who will need to be vigilant on the high street is M&Co as Marks & Spencers sell similar types of clothes, but people will still have to drive to Ravenside.  The cost of fuel and the age demographics on the Bexhill high street should leave M&Co in a good position.  I did receive a tweet (follow me @JwLay) from a gentleman stating that M&S also sell soft furnishings and gifts which many of the shops on the high street sell.  Maybe so, but Tesco also sell similar products to a degree so it a difficult argument. 

Regardless I do not believe the Bexhill high street should be concerned about M&S.  A key driver for M&S moving to Bexhill is because of the new Ambers Rise development by Barratt Homes.  I am actually pro-new build, even though additional housing could drive down the value of existing properties in the area.  My view is that I fundamentally believe that people need to have the opportunity to own their home.

After reviewing the indicative plan published by Barrett Homes for the Ambers Rise development it appears that 65 new homes will be built in Bexhill.  You can see the development very clearly on the north side if you ride the train from St. Leonard's to Bexhill.  

There are a variety of houses in this development from affordable housing to large 4 bed detached family homes but the location is very close to Ravenside Retail Park.  Residents will be able to walk to either Ravenside or the high street, although Ravenside might be marginally closer.  

This development is being fueled in part by the current government scheme "Help to Buy" and looks fairly attractive. This is one of ways the Chancellor plans to turn the economy around. Barrett's website states:

Help to Buy is the brand new Government-backed scheme, launched in the recent budget. Those looking to buy a new home (whether first time buyers or existing home owners) only need a 4% deposit to buy a new Barratt home, up to £600,000 in value, and qualify for some of the best mortgage rates available.

These incentives are driving home builders to take more risks in hopes that people will be able to purchase new homes; although, the concern still remains that stunted wages and high inflation continue to plague economic growth.  So would the housing market be active otherwise without government stimulation? Probably not.

As for the impact of Marks & Spencers to the high street shops, it can be seen as a win-win as some of the new residents of Ambers Rise will come to the town centre. Shopkeepers will have the opportunity to grow their business too.   I hope that Bexhill continues to progress through developments and regeneration projects but our high street businesses will need to focus on customer service and retention.  Its not just about price and big discounts but the personal service that shopkeepers provide to customers.

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Property Development Tips:

Sarah Beeny discusses some of the pitfalls property developers make when renovating.  She mentions two interesting aspects that I had not always considered when selling to letting to tenants, the garden and the outside appearance.  While I don't believe these are show stoppers for letting or selling a property, I do think they make the property more attractive and easier to sell or let to tenants.  

How to develop a property with TV's Sarah Beeny - www.bizzibox.com (by Bizzibox)

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Property Letting Renovations

Many property investors get carried away with renovations and lose sight of ensuring they are actually increasing the property value.  Yet, I am not suggesting to go for the cheapest renovation materials as there are times the more expensive materials will last longer and perform better under heavy usage (no different than your own home). Here's a clip from Martin Roberts - Property Renovation Advice (by martinroberts1)

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Finding a Bargain Property Advice

This clip includes the TV presenter Martin Roberts who touches on researching property comparables that are in the same area and have recently sold.  This can be good information to provide to an estate agent and seller; it rationalises your offer on the property.  Martin Roberts: Finding a Bargain Property Advice (by martinroberts1)

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This is a good point on pensions verses property investing and letting.  As with most sound investments the long term view should be used to weather through any market downturns.  Property is not a always considered a safe bet but in many ways seen a less risky investment.    (by RealisticProperty)

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1066 Country Houses - how do you value them?

We moved to our current house in Battle in 2012 and it suits us just fine for the time being but at some point we want to move to larger house with land.  Country houses are very popular right now with the T.V. series Location, Location, Location, but I struggle with the sticker price of these properties - the asking price is much larger than your typical home in Britain.  I'm concerned that I would over pay and get suck in a position that doesn't bode well for selling in the future.

Most country houses with land in East Sussex start around £500k and go well north of £2m (some manor houses or estates go even higher).  I largely blame "horse lovers" for the additional inflated cost associated to country houses.  People who love horses will put their animals in accommodation that is potentially much nicer than their own house. A lot of country houses generally have stables that command a higher price - but does it really add that much more value for a barn with cubicals and sliding doors?

Currently on the market is a country house on the way towards Heathfield called Reeve's Cottage, which was previously listed with Campbell's Estate Agents for £799k last year.  The house didn't sell and has now been re-listed with Rush Witt Wilson and put on the market for £735k.  The house has 4 bedrooms, garage, stables, and almost 7 acres of land. It's not grade II listed, which is a plus, and is finished to a high standard but nothing more makes this house outstanding.  Still, this is a really nice property.

Zoopla estimates the house is worth £599k, which may not be that unreasonable, but I did notice the last sold price of £600k in 2010.  When speaking to the estate agent I mentioned the price still seemed a bit high from the last selling price. He replied "the current owners have gutted and remodeled the entire property" but in my view that doesn't add that much to the value unless the owners are adding an extension.  Remodels do how ever make the property more salable.  Our discussion continued and I told him I thought the property was worth, at best, £655k, which accounted for a healthy 3% inflation increase (compounded annually) since it last sold for £600k in 2010. Seems more than fair.

Needless to say, we didn't see eye-to-eye on the value, but the property still hasn't sold yet. There's been lots of viewings and interest, and no one can find any real negatives about the house, so that only leaves one thing left - the price. The estate agents may very well get someone to walk through the door and pay the asking price or close to it, but if buyers would do their homework a bit more they would realise the price is still too high.

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Why pay? When seaside views are free!

Last weekend I went to look at a property along the Bexhill sea front.  My interest in the seafront is growing with the "Next Wave" regeneration programme along the sea front and I'm generally impressed by the caliber of talent that shows up to perform at the De La Warr Pavilion. While the seafront is great, I find myself perplexed by the additional price estate agents and sellers ask for the seaside view -- how much is a seaside view worth and I thought seaside views were free? So the argument has to be a seaside view is a feature of the property that increases the value and if so what are they worth? 

Generally I attempt to value a seaside view the same as a garden, both outdoor features, but yet the garden may actually be worth more because you can use it in a practical manner (bbqs, kids, pets, etc).  If I find a property on the seafront I will check the price online and I look for comparable seafront properties that have recently sold.  I will also look for similar sold properties just a street or two off the seafront.  This will give you a good indication of the seaside market and will highlight what the seaside view might be worth.  Its a bit of a sanity check on the asking price for seaside properties as most estate agents are looking for people fall in love with the view and pay top price.

So what is the value of a seaside view?  Well a good southerly facing well-established garden, with shed, patio area, conservatory that opens to the garden -- I typically think its £10k in my head. It needs to be excellent shape, good pointing on the patio, shed in excellent condition, no loose patio blocks or steps, etc. The same goes for a sea view, maybe £10k, but again I think sea views are free so I'd be over paying!

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Property Investments: Underestimating return on capital (ROC)

The Big Smoke has a whopping 8.1 million inhabitants according to the 2011 census but while working on a project with a colleague in the City I was reminded what a small world we live in.  My colleague had recently purchased a property in the east end of London.  He described the property as a “proper” new build, 2-bed flat, garage parking, gym, concierge, all the turn-key bells and whistles, but the area is considered up-and-coming.  Lots of folks are buying these types of properties in London and more so now with the great London building spree.  As the discussion carried about his new purchase I found out he was actually raised in Bexhill and he asked about the property market down here.

We continued and I realised one of the biggest differences from buying in London, specifically the new developments, is that return on capital is absent for several years after the purchase.  Many buyers would have to sell the new build at a loss for some period after the initial purchase but from an investor point of view who may only be concerned about yield the property will perform well.  

Return on capital should not be overlooked as this is one of the core reasons to make any investment. Good property investments will provide a return on capital of at least 20% in 5 years time (this accounts for inflation and property revenue).  Yield is a number that a lot of people will debate but the industry average is around 5% to 6% from rental income.  Most investors like to see gross yield around 11% and in real terms after accounting for inflation the yield will land somewhere around 8% annually.  This annual return includes all expenses related to the mortgage, building insurance, and maintenance to the property.

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Welcome to our new property Blog!

Much more to come so watch this space!

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Welcome to our new property blog!