Tuesday, 17 October 2017

Edinburgh private rented properties and energy efficiency – dull but important stuff!

As some of you will no doubt be aware the Scottish Government is conducting a consultation regarding energy efficiency and condition standards in private rented housing.  Details of which can be found by clicking here

The Scottish Association of Landlords has submitted its ‘generic’ response to the consultation.  Details of this can be found by clicking here.  I have submitted my own as a landlord/letting agent.

We are all busy people but I would encourage you to have a look at what is proposed if you can find the time and possibly respond to the consultation – it is online and not too onerous.

Without boring you to death, the bottom line is that for a variety of reasons including Climate Change and Fuel Poverty, the Scottish Government has put in place a policy that requires all Private Rented Housing in Scotland to meet a certain standard of energy efficiency as measured by the Energy Performance Certificate.

This consultation is not about whether this will happen, but rather how and when.
In its most basic form, all rented properties will need to achieve at least an EPC level E initially and subsequently an EPC level D rating within a timeline that is to be set.

There is no need to panic, I will just repeat that..... Don't Panic.

Worst case, assuming the consultation is adopted wholesale, we have until April 2019 before properties let from that date on ‘new tenancies' need to achieve an EPC rating of E and by end of March 2022 for all properties. After which we have until the end of March 2025 for all properties to achieve an EPC rating level D.
Those of you who are ‘regular’ readers of my blog will notice that I have started mentioning the EPC rating of potential ‘buy to let’ properties where appropriate, this legislation is the reason why.

So having given some background and the bad news, is there any ‘good’ news?
On the plus side, the current proposal does include a cap on the expenditure of £5,000 per property (not massively great news I accept). Most properties, we hope, should be able to meet the requirements at a much lower level of expenditure than this.

Additionally, we have been told that there will be ‘some' funding available (no details as yet) in terms of grants, interest-free loans etc.

I would suggest is that any landlord who has concerns should start exploring alternatives fairly soon.

You might consider the following:
  • Identify if your property needs upgrading to meet the standard.
  • If it does, have a look at the full EPC report as they usually give some guidance on energy efficiency measures. Whilst I suggest that you take this guidance and the projected costs/savings with a truck load of salt, they are a start.
  • Explore all the possibilities for energy efficiency but ensure you get ‘expert’ guidance and written quotes for the different types and their efficiency. The range of insulation, heating, energy efficiency products that are available now is staggering and it’s only getting bigger as ‘energy efficiency’ becomes more and more of a focus.
  • Explore the funding situation to see what's available. Some companies that specialize in ‘energy efficiency' works will assist with this and/or will often have a good handle on what might be available. Additionally, some will throw in a post works EPC (which is required to evidence the improvement in the EPC rating) for free.
  • If you are going to get work done then allow for disruption, discuss it with your tenants and/or try and plan it for when there is a void period. Maybe combine it with other works you may have planned. 

To give you an idea of the kinds of ‘technologies’ that are available here are some examples, with links to some providers. This list is by no means exhaustive and you might try to check out the Energy Savings Trust Scotland website by clicking here.

I would emphasize that these aren't companies I have used and I am merely providing their details as examples. It is for you to decide whose services you employ bearing in mind that, which technologies or improvements will have the greatest impact on any given property, will depend on a variety of factors and so need to be considered on a case-by-case basis.
  • Heating – obviously installing gas central heating is a big improvement but also a sizeable cost and that’s assuming gas is available. However, even if that’s not an option, the range of modern electric heaters that are highly efficient and cost effective is massive. From simple panel heaters to gel, water or oil filled alternatives even modern versions of the venerable storage heaters. I have gel filled in one of my own properties and the tenants are very happy with them and they are a quantum leap up from the old ‘storage heaters’.
  • Insulation – there are numerous options depending on the construction of your property and how much you want to spend. As well as the usual loft and cavity wall insulation there are internal/external cladding systems, sprayable options etc. A couple of examples are: (i) ScotFoam – sprayable insulation and noise reduction, great for getting into spaces that aren’t easily accessible https://www.facebook.com/scotfoam/ and (ii) OVO Energy https://www.ovoenergy.com/guides/energy-guides/the-ultimate-guide-to-solid-wall-insulation.html.
  • Glazing: Ah yes that old standby, you may already have it, but how old is it? If you don’t have it then maybe now is the time, or a cheaper alternative might be secondary double glazing, if the property is listed or in a conservation area.
  • Energy Sources: Assuming your property isn’t a flat then maybe a miniature wind turbine, solar panels etc.
  • But let's not forget the basics that people have known about for years. Draft proofing, new cladding on hot water tanks/pipes, increased loft insulation, programmable thermostats to turn things on/off, modern controls on radiators, energy efficient lighting. Sometimes lots of little changes can add up to one larger one.

A few final points:
  • Firstly, there is plenty of time.
  • Bear in mind is that the areas of improvement with the highest EPC impact (in general terms) are insulation and heating.
  • Beware of false economies by which I mean by this is don’t do this on the ‘cheap’ and get caught out, don’t pay money to move from an EPC G to an E and then several years later have to get more work done to get to EPC D. Look at the costings and, if it's viable, carry out the work in one hit.
  • I can’t promise you the government won't ‘move the goal posts’ (there has been some talk of trying to get to EPC C, however, I think this is unrealistic given the age/type of some of the housing stock and that even some new builds struggle with this).
  • There is lots of information and guidance available out there so take your time and do your research.

Watch out for further information on this in future posts on The Edinburgh Property Blog.

#edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector 

Tuesday, 3 October 2017

Edinburgh Property - Do you know the Facts and Figures?

Here at The Key Place, we can guide you to the right places to identify property values and yields in Edinburgh and, as well as that, we can provide you with other useful property related information so you can make sure you know all you need to know before making your future investments.

I was reminded of this the other day when I was chatting to a landlord of mine and he said that I was a font of useful information about the Edinburgh property market ..... at least I think he said useful! 

This got me thinking that others may be interested in some ‘useful’ property facts about our City of Edinburgh ....

There are 4,264 streets in Edinburgh with 215,822 households, and just over 35% of those houses (78,387 to be precise) have changed hands in the last 10 years.

Compared to the national average, Edinburgh has far, far more flats and far far less houses – it 79% more flats compared to the national average and 54% less detached houses, 45% less semi detached houses and 34% less terraced houses. This ties in with Edinburgh having many, many tenements and having significantly higher single person property occupancy compared to the national average (40% vs 35%) and correspondingly more 2 person + households.

Edinburgh has less owned properties than the national average (59% vs 62%) and less Council/social renting than nationally (17% vs 24%).  Overall this means that 24% of properties in Edinburgh are privately rented which is much higher than the national average of 14%.

We also have information at our fingertips on seemingly daft things which can turn out to be quite important.  For example, 81% of properties in Edinburgh have gas central heating which is much higher than the national average of 74%.  This is really useful to know when refurbishing a flat and considering whether you can ‘get away’ with electrical heating ..... it is less likely that you can in Edinburgh

I could go on but I better not!

If you would like more useful facts and figures call us (0131 603 4570) or email us (edinburgh@thekeyplace.co.uk).

#edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #prs #privaterentedsector

Tuesday, 26 September 2017

Paws for Thought… Should Edinburgh Landlords Accept Pets?

Tenants with pets are often dismissed out of hand by landlords who are worried about potential damage to their property.

This is very understandable.

However, opening up your property to tenants with pets may help maximise its rental potential and, by excluding pet owners, you may be missing out on a huge part of the rental market.

In some circumstances it’s a definite ‘No’!  Your title deeds may state that pets are not allowed – more likely in blocks of flats. Also, consideration should also be given to the type of property in question.  Does its age and size accommodate pets properly – a large dog in a brand new, fully furnished property is probably not a good idea.

Almost half of the UK population owns a pet and accepting pets into your property may well be advantageous.


Increase demand for your property. With so few pet friendly properties out there, they are much sought after and may command higher than usual rents.

Encourage tenants to stay longer. Pet owners know how difficult it can be to find pet friendly rental properties and are more likely to have a longer tenancy.

Attract responsible tenants. Pet owners often take much more care of their home so not to jeopardise their tenancy making them ideal tenants!
So why is it that many landlords instinctively say they do not want pets due to the possibility of damage or noise? Landlords instantly reject tenants with pets when they apply for property. Is it really a sensible approach?

Steps To Take

If you do wish to accept pets into your property, there are a number of things you can do to further increase your protection:
  • Insert a Pet Clause into the Tenancy Agreement setting out the responsibilities of the pet owner ie the tenant.
  • Take a higher deposit to allow for any additional work that may be required at the end of the tenancy.
  • Insist that the tenants pay for a professional clean at the end of the tenancy.

A landlord can look at each case on its own merits. You may accept a small Terrier but not accept a large Alsatian. Every application can be treated individually.

#edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #prs #privaterentedsector

Tuesday, 19 September 2017

Tax has got more taxing for Edinburgh landlords

The new year started a few months ago on 6 April 2017. This one will be particularly significant for existing landlords as the mortgage interest relief changes start to come into play.

Previously, finance costs would be deducted from a landlord’s income to calculate their profit, just like any other business. They would then pay tax on this profit at the appropriate rate.

Let’s say a landlord has rental income of £30,000 per year with mortgage interest of £25,000. Currently this would mean a £5,000 profit, which the landlord would pay tax on at their normal rate i.e.

Basic tax-rate payers @ 20% = £1,000
Higher tax-rate payers @ 40% = £2,000
Additional tax-rate payers @ 45% = £2,250

However, in the 2015 Summer budget it was announced that landlords will lose the right to deduct their mortgage interest costs from their income. Instead, the amount you can offset will gradually fall over the next few years, until it is completely replaced from the 2020/21 tax year with a 20% tax ‘credit’.

That same landlord as earlier, with £30,000 in rental income and £25,000 of mortgage interest, will now have to pay tax at their taxable rate on the full £30,000 income before deducting just 20% of the mortgage interest.

This should mean there is no effect to a basic-rate taxpayer, as they would still pay £6,000 of tax (20% of £30,000) before recouping £5,000 (20% of £25,000) as a tax credit. They might, however, find that the significant increase in their taxable income will push them into a higher tax band; which will be affected by the changes.

Higher tax-rate payers will be lumbered with a £12,000 tax bill (40% of £30,000) before recouping that same 20% tax credit ie £5,000; resulting in a net tax bill of £7,000 - more than triple what they would pay now and £2,000 more than they have made in profits!

It gets even worse for additional tax-rate payers, as they would be faced with a tax bill of £8,500 when the new system comes into full force in 2020/21 (nearly four times as much as now!).

Meanwhile those without mortgages won’t be affected and nor will companies, leading many landlords to complain that the wealthy are unaffected by the changes, whilst the already squeezed middle are having their purses raided both unexpectedly and unfairly.

Some landlords have set up a company to eliminate the impact of the new tax system, as companies can still offset all of their finance costs. With corporation tax dropping to 17% by 2020 this could be a smart move for many, but it needs to be weighed up with possible capital gains tax liabilities if transferring existing properties as HMRC deems this to be a ‘sale’ to the company. The same applies if trying to transfer property to a spouse or partner who is in a lower tax-band.

The impact of all this is likely to translate into some landlords selling up, alongside fewer people entering the market. The resulting drop in the supply of rental properties, coupled with landlords needing to earn more to make the venture worthwhile, suggests rents are likely to increase.

It is perhaps more important than ever to get good advice not only in regards to what property to buy but also how to buy it. I’m happy to point you in the right direction in regards to both questions if you’d like to give me a call.

#edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #prs #privaterentedsector

Tuesday, 12 September 2017

Edinburgh – The 20 year Time Bomb on Home Ownership

Many people think the British obsession with owning your own home started with Thatcher in the early 1980’s, when she allowed council tenants to buy their council houses under the right to buy scheme. However, the growth actually started just after the Second World War. Looking at the country as a whole in 1951 30% of residential property was owner occupied then, every ten years that rose incrementally to 39% by 1961; 51% by 1971; 58% by 1981 and 68.1% by 2001 but after that, it dropped to 63.4% by 2011 and continues to drop today.

Young adults tend to start to think about settling down and moving out of the family home in their early-mid twenties.  After a couple of years, they will have a choice of either buying their first house (albeit with a mortgage) or decide to privately rent for the long term (because the Council House waiting list is measured in decades at the moment!). The ratio of people owning a house with a mortgage verses privately renting is an extremely important guide to what people are doing about their housing needs and what their attitude to renting vs buying is.  With that in mind, within the next 20 years, I am predicting there will be more people renting privately in Edinburgh than own a property with a mortgage and that the British love affair of property ownership will fade as the decades roll on.

This is a really important change in the way we live, as I explained to a local Edinburgh landlord the other day, knowing when and where the demand of tenants is going to come from in the coming decade is just as important as knowing the supply side of the buy to let equation, in relation to the number of properties built in the town; Edinburgh property prices and Edinburgh rents.

In the Edinburgh area as a whole there are 48,822 households that are privately rented via a landlord or letting agency verses 64,747 households that are owned with a mortgage, so my prediction appears to be outrageous. However, when we look deeper (as the devil is always in the detail), 30,431 or 47% of those 64,747 households are 35 to 49 year olds and 20,719 or 32% are households of 50 to 64 year olds. I would expect all the 50+ years to be paying their mortgage off as they enter retirement as I would with some of the people in their mid/late 40’s.

Meanwhile, at the other end, in the 25 to 34 age range (the age most people bought their first home in the 1970’s/80’s/90’s) only 12,646 or 36% of the 35,127 households occupied by those 25 to 34 year olds are owner occupiers with mortgages, because of the higher number of properties that are now being rented. This means 36% of 25 to 34 year olds have bought their house (with a mortgage). Twenty years ago, that would have a much higher percentage of homeowners (nearer 60%).

It can be seen that as the older generation pay their mortgages off as they start to get to retirement and the younger generation aren’t jumping on the property ladder like they were 20 or 30 years ago, the private rental sector will take up the slack as more and more people will want a roof over their head, but won’t buy one but rent one instead. With Local Authorities and Housing Associations not building houses anywhere near like the number of houses they were building in the 1950’s, 60’ and 70’s, the private landlord appears to have good demand for their rental properties for many decades to come.

This will create a polarisation in the housing market between those, mostly older, households who own outright and those, mostly younger, households who rent. Our housing market is very much turning into the European model. However, all is not lost; the younger generation will inherit their parents properties, which in turn will enable them to buy, albeit later in life.

If you are a landlord or thinking of become a landlord, why not pop in and see us at our office at 6 Bank Street. 

#edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning

Tuesday, 5 September 2017

Guide to painting Edinburgh rental properties to increase demand

I was having a chat with a ‘do it yourself’ landlord in Edinburgh the other week and she was bemoaning the fact that she was finding it really hard to get one particularly property of hers rented out.  I had to be honest with her and say that we are finding that rental properties are flying off the shelves at the moment which has increased prices – one bed flats are now doing for £715 when last year you were lucky to get £675 for them – so I wondered whether the property that she was renting was the problem rather than the market. 

At this point, she had to confess that she had wondered about getting the property re-decorated as it was looking a bit tired but has hoped that she could get away without doing this .... well, perhaps not I said as politely as I could!

Investing in your rental property is key to maintaining a successful investment, which is why a fresh coat of paint is a great way to increase the tenant demand and rental income.  Here are our tips to help you successfully paint your rental property.

Use Simple Colours

Paint using simple neutral colours like magnolia, cream, beige, grey, and off-white, as these colours don’t outdate and are attractive to most people.  Picking paint colours outside the neutral colour scheme that are on sale or that you personally like runs the risk of you painting colours some tenants may be turned-off by, potentially lowering demand towards your property.

Use Light Colours To Open Up The Room

Keep the colours light and neutral to help open up the rooms.  The tenant’s furniture also has a better chance of fitting into the property’s colour scheme when neutral, bright colours are used continuously throughout the property, helping make your property more attractive.  We see some properties painted white throughout, making them look light and uplifting, and it’s an economic way of redecorating.

Use Good Quality Products and Contractors

Avoid the temptation of buying cheap paint, because this generally chips easily and won’t last as long as good quality paint.  Before long you’ll have to repaint the property, making cheap paint only a short-term solution to increasing demand and rent.  Not only that, the appearance will look increasingly poor, which lowers the appeal, tenant quality and rent.
If you are getting somebody in to paid your property, use a quality contractors that has been recommended to you – they may cost you a wee bit more initially but the job that they do is likely to be better and last for longer saving you money in the long run. 

How To Cover Up Imperfections

If the wall surface is imperfect pick, a paint with a mid or low sheen, as the finish will help hide this.  Paint also offers the opportunity to repair imperfections using ready mix fillers, making paint a good choice if your Edinburgh investment property has damaged walls.

When Not To Paint

To avoid a patchy finish, try not to paint when it’s really hot so the paint doesn’t dry too fast.  Also avoid painting when it’s raining, as the paint won’t be able to cure in wet conditions, causing its longevity to likely be affected.

Careful Masking
Aim for the best quality job.  Ensure areas that aren’t being painted are carefully covered with masking tape to avoid the appearance of a cheap job.  Light and power switches or their covers should be removed, and carpet and flooring should be carefully covered.

I am happy to give you my thoughts on decorating, to recommend a good decorator to you or even to recommend a good type of paint to you!  I can be contacted on 0131 603 4570 or news@thekeyplace.co.uk.

#edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning

Tuesday, 15 August 2017

Generation rent and Edinburgh

The good old days of the 1970’s and 1980’s eh … with such highlights lowlights as 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts … those were the days (not)… but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?

Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Edinburgh (Scottish and UK) housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the Edinburgh property ladder.

However, I would say there has been something else at play other than the issue of raising a deposit – having sufficient income and rising property prices in Edinburgh. Whilst these are important factors and barriers to homeownership, I also believe there has been a generational change in attitudes towards home ownership in Edinburgh (and in fact the rest of the Country).

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Edinburgh population choose to be tenants as it better suits their plans and lifestyle. Local Government in Edinburgh (including the planners – especially the planners), land owners and landlords need an adaptable Edinburgh residential property sector that allows the diverse choices of these Edinburgh 20 and 30 year olds to be met.

This means, if we applied the same percentages to the current 142,872 Edinburgh tenants in their 68,034 private rental properties, 54,863 tenants have no plans to ever buy a property – good news for the landlords of those 26.125 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

.. but does that mean the other third will be buying in Edinburgh in the next 12 months?

Some will, but most won’t … in fact, The Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.  RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations.  So, if we applied this rise to Edinburgh, we will in fact need an additional 29,156 private rental properties over the next eight years (or 3,645 a year) … meaning the number of private rented properties in Edinburgh is projected to rise to an eye watering 97,191 households.

#edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning