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July 2019

Jul 30
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eviction notice

How to evict a tenant

By Blog, Landlord

How to properly, and legally evict a tenant will depend entirely on the factors of your current situation; including whether they have broken the tenancy terms and conditions or not and whether you live with them. Each different set of circumstances will come with a different course of action to take ensuring that your eviction is in-keeping with its relative legalities.

It is of the utmost importance that you follow the UK’s rules and regulations for eviction of a tenant, as failure to follow these laws could result in considerable penalties, and will also significantly reduce the chance of the tenant actually being evicted. If you have failed to comply with the UK’s regulations for evicting a tenant, you may be found guilty of such crimes as harassment, resulting in an illegal, and further invalid, eviction.

Through this piece, Magnet Capital will be taking you through the legal process of evicting a tenant.

How to evict a tenant with an assured shorthold tenancy?

There are two different types of assured shorthold tenancies out there, these being as follows:

  • Fixed-term tenancy – as the name suggests, a fixed term date is a tenancy that runs for a set, or “fixed”, period of time.
  • Periodic tenancy – this type of tenancy has no set end, and is ran and renewed every week or every month dependent upon the specified contract.

As with the eviction of any tenants, those who are under an assured shorthold tenancy must be evicted in a set legal process. If you want your tenants to leave after the end of their fixed term, you must provide them with a Section 21 notice. You can use a Section 21 notice on those with any type of assured shorthold tenancy, these being either a fixed-term tenancy or a periodic tenancy.

If a tenant has gone against the terms and conditions of their tenancy, you can also provide the tenant with a Section 8 notice. With this notice, you can give a tenant a time period of anything from two weeks to two months in which to vacate the property. The length of notice given will depend entirely on the extent to which they have broken the terms and conditions of the contract.

How to evict a tenant with an excluded tenancy

An excluded tenancy is a type of tenancy in which the tenant will be living/sharing the same accommodation as the landlord. With this type of tenancy, you will not have to take your tenants to court to legally evict them. You will only have to give your tenant reasonable notice. Reasonable notice is usually measured as period of the routine rental period; e.g. if the tenant pays their rent monthly,  a reasonable notice period would be one month long.

What to do if tenants refuse to leave

If the tenant(s) refuse to leave by the eviction date, the next step should be to apply for a standard possession order. This will also help you to get back any money owed in rent that the tenants have failed to pay. If you tenants still refuse to leave even after a court standard possession order has been implemented, you can then get a warrant for possession.

With a warrant for possessions, bailiffs can legally visit to remove the tenants from the premises of your property. To find out more about warrant for possessions and how to apply, please click here.

So long as you adhere to the rules and regulations of the UK’s laws surrounding tenant eviction, it should be a quick and simply process to evict a tenant if needs be. Follow our site for more tips relating to property management and development finance in the UK.

Jul 22
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money-saving-property-development

How to save money when developing a property

By Blog, Development Finance

There are many different ways that you could save money when developing a property, each one contributing to the overall cost-efficiency of the project. The development of a property of any scale is always still a considerably large undertaking, that can have a significant impact on your finances.

Therefore, whilst saving money in different areas can help with the overall cost, it is still vital to ensure you have more than enough financial security to go through with a project. Through this piece, we will be exploring some effective ways that can help to save you money whilst developing a property.

At Magnet Capital, we aim to help you get the best value for money when developing a property. In addition to offering development finance, we will be able to provide professional advice including ways to manage your costs and cash flow as effectively as possible.

Saving money when developing a property

One of the main areas of this process that you can save money on is through the building of the property. By trying to cut back where you can through the property’s physical development, you can save considerable chunks of money. Below is a list of some of the main areas to the building process you can save money through:

  • Contractors
  • DIY
  • Reuse salvageable materials
  • Sourcing your own materials

These four areas are vital stages to developing a property, and can collectively contribute a sizeable amount to the costs of this developmental process. By knowing where and how to save on these vital areas of construction, you could save a considerable amount of money on the development of a property as a whole.

Contractors

A contractor is someone who helps in this development by providing the building equipment, materials, and workers needed to construct a property. As a contractor controls many of the major aspects that go into this physical development of the property, it is important to pick one who not only understands your budget, but will also help you to make the most out of your money.

contractors

It is always good to compare different contractors, helping you to get someone who meets your required standards, understands both your budget and your vision for the property, whilst also working for a great price.

DIY

Whilst contractors are there to help you build up your property, by picking and choosing various tasks to construct yourself, you could help to shave off hundreds, and even thousands of pounds from the overall cost of development. Although this can be quite a long and tedious process, by doing a sizeable portion of the handy work yourself, you can help to save money when developing your property.

diy

Whilst this is a great and effective way to save money, it’s worth mentioning that DIY should only be done when you have full confidence in your abilities for each task. Ensure that all projects done around the property that are DIY are done effectively and with the greatest of care.

Reuse salvageable materials

Some materials your contractor will have to order in, however, when developing a property on land that already has building structures on it, it may be good to inspect these structures and see if any of the materials are salvageable for reuse. This can help to cut the cost down of the amount of materials ordered in for the development of your property, and therefore the overall cost of the property’s development.

Sourcing your own materials

Whilst the contractors will, in some circumstances, know where to get you the best materials for the best prices, doing some digging yourself is only going to improve the cost-efficiency of the project. By helping the contractor to look around on the best deals on all materials and features to the property, you can help to improve the cost-efficiency of your property’s development.

See also, typical costs when developing a property.

Jul 12
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being-a-good-landlord

How to be a good landlord

By Blog, Development Finance

Tips for being a good landlord

If you are renting out a property that you own to people, it should be one of your top priorities to make sure that you are keeping your tenants happy. This is important for a number of reasons. Why? If you keep those who are living in your property satisfied, you can increase tenant retention, reducing the need for you to spend time as well as money finding new tenants to replace the existing ones. Furthermore, being a good landlord also creates mutual respect, increasing the likelihood of your building being kept in good condition.

But how exactly do you keep your tenants happy? As property development finance specialists, we have a lot of experience in this field, so we have created this guide to talk you through the main things you should keep in mind when renting out a property to people.

Give tenants space

One thing that no tenant likes is to feel as if they are being hassled by their landlord. Do not attempt to try and become their friend or neighbour by regularly visiting unannounced to the property. Not only is this likely to annoy your tenants, but it will also leave them feeling on edge. In addition, it is illegal to turn up as a landlord to a rented property unannounced, without providing 24 hours notice beforehand.

Maintain the property

One of the best ways of being a good landlord is to make sure that things that need to be fixed in the house you rent are quickly dealt with, and properly. Making sure that you regularly maintain the property is a surefire way to keep your tenants happy.

Put safety first

If you are a landlord, you are legally obliged to make sure that the property you rent out adheres to health and safety standards. This means making sure that all electrical and gas equipment has been safely installed and checked on an annual basis by a registered engineer.

Furthermore, you should ensure that there are fire alarms and carbon monoxide alarms fitted in the house, and make sure that batteries are regularly replaced.

Not only does this make you a good landlord, but it also helps you too: if you do not comply with health and safety regulations, you run the risk of not only putting your tenants at danger but also invalidating your landlord insurance entirely.

Make sure your tenant’s deposit is protected

An additional one of you rights as a landlord is that you need to keep your tenants’ deposit in an approved deposit scheme so that both you and the tenant are fully protected.

Based on the rights of the agreement, if you fail to choose one of the three main approved deposit schemes in the UK,  then you could face severe financial consequences: you could end up having to face legal proceedings, as well as a potential fine which is the equivalent of three times the amount of the deposit in question.

Don’t do things cheaply

If you have great tenants and want to keep them, don’t try to cut corners by refusing to do things such as upgrade necessary appliances or refusing to repaint when it is needed.  If you fail to reasonably maintain the property for the good tenants you have already, then its worth remembering this work will still be needed to be carried out when you need to replace them.

Think carefully about raising the rent

Another thing you should think very carefully about is increasing the rent, as you could run the risk of your tenants upping sticks and leaving completely. It is worth remembering that change-overs can be considerably expensive if they do decide to leave when you think about the cost and the inconvenience of arranging new tenancy agreements, viewings and credit checks.

Be easily contactable

There is nothing worse for many tenants of finding it almost impossible to contact their landlords when they need to, therefore, making sure you give them your mobile number and an email address so that your tenants can contact you if required. It is worth noting that tenants are only likely to contact you in an emergency only.

Do an inventory

Whilst writing up an inventory can take a long time, it is absolutely worth doing it if you want to be a good landlord. This is because it provides you with details of the contents and condition of the property on the day the tenants move in, meaning that in the event that there are disagreements regarding damage during the tenancy, you have evidence to fall back on. You should make sure that the inventory is as thorough as possible.

See also Gov.uk for more information being a landlord.

Jul 09
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funding-property-development.

A Guide: What are the alternatives to mortgages?

By Blog, Development Finance, Lending

Are you looking to buy a home and get on the property ladder? Or alternatively, are you a property developer looking to purchase a building in order to renovate and sell on? You might be immediately considering to get a mortgage in order to buy a property, but did you know that there are other options available to you too? We take a look at some of the most popular alternatives to traditional mortgages.

Cash buyers

A cash buyer refers to someone who has the cash available upfront in order to purchase a property without needing to get a mortgage. It is possible that this can be done on an individual basis, or by a firm. Choosing a cash buyer in order to finance your mortgage can have a number of benefits, including helping to make the house sale process quicker, and it is also possible that it can help prevent a chain-forming beyond the purchaser.

Cash buyers are commonly homeowners who have already sold their home or simply have a lot of disposable money available and do not need a mortgage.

If you decide to use a cash buyer instead of getting a mortgage, you will typically be given a cash offer after a formal valuation of the chosen property. If you accept the offer, it is possible to complete the sale then within a timeframe that best suits your needs.

Development finance

Another option available to you is development finance when purchasing property, especially if you are a property developer. This type of finance is primarily aimed at those who intend to renovate, build up or extend a new property from a plot of land.

One of the main reasons why development finance best suits buyers who intend to develop a property is that the loan values are broken down into construction costs and for also purchasing the land too.

All funds are provided to you in stages during the construction project after a valuation from a surveyor. As a result, this type of property finance can help you to budget carefully during the project, maintain positive cash flow and ultimately avoid overspending.

Bridging loans

Bridging loans are aimed at those who are looking to complete properties on a fairly strict deadline. This includes buyers who are intending to complete on an apartment or building within a 2-to-4 week period.

One of the main reasons that bridging loans are so popular as an alternative form of property finance is that the loan can be sorted out far quicker than is standard with a traditional mortgage, which can take months to go through.

Types of buyers that commonly use bridging loans to buy property including homeowners intend to move but have yet to sell their existing property, those looking to raise finance for business purposes or investments, and homebuyers who have bought a property at auction. Your security is at risk so if you do not keep up with repayments, your property is at risk of repossession from the lender.

Help-to-Buy equity loan

Help to Buy equity loans are also a viable alternative to standard mortgages. This government loan is available in England and Wales and helps people to put down a deposit for a house at a quicker rate, and it is low in interest.

alternatives-mortgages

Mortgages are not the only form of funding available to purchase property.

In terms of eligibility criteria, the house you intend to buy will need to be a new build registered with the Help to Buy Scheme. The purchase price can be up to £600,000 in England or £300,000 in Wales, and it can be the only property that you own.

It is also worth keeping in mind that you will need a 5% deposit in the first place, with the Help to Buy loan then lending to you an additional 20% (or 40% in London) and additional funding will be needed through other forms of finance.

This is designed to help first time buyers or those looking for assistance when getting on the property ladder.

Shared Ownership

In the UK, it is also possible for you to buy a home via the shared ownership scheme, and it is also possible to do this with a housing association or council property.

The scheme enables you to buy between 25% and 75% share of a leasehold property, and then you pay off the remainder as rent. To be able to apply for shared ownership, you need to earn less than £80,000 a year, and fall into one of the following categories:

  • You are a first-time buyer
  • You are an existing shared owner
  • You used to own a home, but it is no longer possible for you to purchase one as you can’t afford to.
Jul 08
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development-finance

A Guide: What is development finance used for?

By Blog, Development Finance, Lending

What is development finance?

Development finance offers finance used for developing, refurbishing or constructing a property. The end goal can be to rent out the property to tenants or sell it for a higher price once completed. It is a type of specialist finance commonly used in order to develop residential and commercial properties.

The uses for development finance

There are a number of different reasons why someone may opt for development finance such as:

  • To help assist with the funding of a large development project, such as conversion project or a new build
  • Residential redevelopments involving considerable structural work
  • Smaller development works
  • Quick access than applying for a mortgage
  • Avoid traditional property chains
  • More specialist for buying land and developing it

Properties include:

houses, flats, flats, barns, farmhouses, garages, warehouses, offices, storefronts and more.

Development finance lending criteria

When looking at applying for a development finance loan, you should keep in mind the following, as most lenders will assess you against the following eligibility criteria:

  • Terms of the loan: this is typically between 6 and 15 months, but depending on the lender it can be more than this
  • Feasibility of the project: if the lender has too many concerns about your development project, the application may be declined
  • Security: the level of security for the site or building should be of a good standard
  • Level of experience: the applicant should have a good commercial background or experience in property
  • Location: this will also be taken into consideration by a property finance specialist.
  • Loan to value maximum: the lender will usually provide in the region of 55% of GDV

How can I apply for development finance?

If you are applying for development finance, keep in mind that it does not work in the same way as standard mortgage applications.

In most cases, property development specialists will assess the value of the property, and determine what the loan amount will be based on this assessment, as well as the borrower’s overall eligibility.

property-development

Development finance can help to realise your dreams of carrying out a renovation project.

At some point, you may need to provide details such as:

  • Development costs
  • Development appraisal
  • Planning permission details
  • Details of the building or site, such as the price of the site/property as well as the location and value
  • Gross Development Value details
  • Company structure
  • Details of all applicants involved
  • Asset and liability statement for applicants involved
  • Details of the main contractor
  • Details of the project manager for the development project

You may also need to provide paperwork to apply, which can include the following:

  • All drawings and designs of the development project
  • A detailed breakdown of all costs
  • A complete schedule of works that will be carried out
  • A planned exit strategy
  • A completed Asset, Liability, Income and Expenditure Summary (ALIE)

How are development finance funds transferred?

If you are successful with your development finance application, you will receive your loan in stages by Magnet Capital.

There are a couple of reasons why this happens: first of all, payments are given in stages to ensure that the money is always proportionate to the overall value of the work that is being carried out in your project.

Initially, as part of the first stage of how development finance works, you will receive a certain amount upfront in order to secure your site or building. The amount you receive will be determined prior to signing the contract.

Payments are released each time current work on your project has been signed off by a surveyor (who is typically instructed by your lender to manage the site and work undertaken). If all current work is approved and it has met the terms and conditions of the loan, further instalments are provided.

Jul 07
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property-finance

A Guide: What is the difference between bridging finance and development finance?

By Blog, Development Finance, Lending

Those looking for property finance will often confuse bridging finance and development finance. Whilst it is true that they do have similarities with each other, such as:

  • They can be used to help fund the purchase of residential and commercial properties
  • They are secured loans
  • They are often used to avoid traditional property chains

They do also have a number of differences. If you are looking at getting specialist property development finance to help you buy a property, it is important to know the difference between the two, so that you can find the right product that you will require.

When is bridging finance used?

Generally speaking, bridging loans are linked to completing properties on a tight deadline. This means that most borrowers tend to opt for bridging finance when they need to complete on a flat or buildings within a month, or sometimes as little as two weeks. It can also be a popular option for:

  • Buyers looking to purchase a property at an auction house
  • Homeowners who are moving, but have yet to sell their existing property
  • Those raising finance for business growth

When is development finance used?

Those applying for development finance will use this for property development purposes.  This means that this kind of specialist finance is better suited to those who:

  • Are looking to renovate a new property from a plot of land
  • To cover construction costs
  • To extend or build up a new property

How funds are released with bridging finance

If you decide to go with a bridging loan, this will typically be provided upfront in one lump sum, enabling you to complete the purchase of a property on time. For an auction, this is particularly important, as you need to provide the full funds within 28 days of the gable hitting.

How funds are released with development finance

If you choose development finance, the funding you receive will usually be in instalments, based on different stages of the property development process. Payments will be provided once the current work has been signed off by a surveyor.

funding-property-development.

Before applying for funding, it is important to be aware of the fact the loans are released differently depending on the product you choose.

One of the main reasons that money is released in instalments with this kind of finance is because lenders want to make sure that the loan amount given is proportionate to the value of the work that is being undertaken.

It provides a number of benefits, as it helps to maintain positive cash flow and it makes sure you keep within budget.

Average loan terms

When it comes to both bridging and development finance, they both tend to have very similar loan terms. This is usually anything from 6 months to 15 months in total.

Once the loan term comes to an end for either type of finance, the repayments are rolled up (unless they have been paid on a monthly basis) and then the loan is fully repaid once the sale or completion of a property has gone through.

In the event that the property has not been sold or completed, then the borrower has the option to refinance with the same lender, or choose a different lender. However,  it is important to keep in mind that terms of the loan may not be so favourable to you the second time around with either loan types.

How the amount you borrow is calculated through bridging finance

Your bridging finance loan will be calculated on the loan-to-value (otherwise known as LTV). That means that the borrower needs to pay a deposit, and then the rest is paid by the lender.

How the amount you borrow is calculated with development finance?

Rather than your loan being based on the loan-to-value, a development finance loan is calculated on Gross Development Value (GDV). This refers to the overall value of the loan once all construction and renovations have been complete.

 

Jul 01
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sam-howard-magnet-capital

Quality not quantity for UK housebuilders

By Opinion

Maybe it is because like me, he used to be a lawyer, but I am rather impressed by James Brokenshire, the Secretary of State for Housing, Communities and Local Government. In a relatively short period of time, just over a year, and in a febrile political environment paralysed by BREXIT, he is trying to get to grips with the significant issues facing the Housing Market.

There have been a number of positive steps, including: lifting the council borrowing cap which enables councils to be able to borrow billions of pounds more for housebuilding, changes to the National Planning Policy Framework and the £1bn Housing Delivery Fund to finance small and medium-sized developers to deliver new homes across the country.

He has also pledged to speed up the planning process, which is a quagmire for SME developers who can get tied up for months or even years attempting to get planning. I am not holding my breadth but he wants councils to be able to approve planning applications more quickly under radical new measures to remove bureaucracy from the system. He said that a new accelerated planning green paper, to be published later this year, will dramatically improve the planning process. Let’s wait and see and the reality is that it comes down to ensuring planning authorities have the resources they need to act quickly.

However, it his focus on calling to account the large house builders that has really grabbed my attention, especially on cracking down on poor quality housebuilding and the leasehold scandal.

Last week, he announced that all new-build homes are to be sold as freehold and to reduce ground rents on future leases to zero, in a move to tackle unfair leasehold practices, which has been a shameful exploitation of consumers, with the consequence that their homes will be incredibly difficult to sell in the future.

In terms of housebuilding, the large house builders are able to build large numbers of units at a cost that smaller house builders simply can’t build at, given their economies of scale and the significant preliminary costs involved before construction even starts.

However, it is often eye opening to see the lack of quality in these cookie cutter style housing developments, who often leave new build buyers with a nightmare of faults to fix as opposed to their dream house. The supposed remedy of a 10 year warranty, in reality does very little to rectify snagging and can leave buyers badly exposed.

Mr Brokenshire has been a vocal proponent of building better homes and is considering forcing house builders to sign up to a code of conduct if they want to benefit from the Help to Buy scheme, and is pushing ahead with plans for a New Homes Ombudsman to give buyers of new-build properties greater protection.

In my time in the specialist finance industry running development finance companies, we have literally funded SME developers and builders to construct hundreds of houses. I am struck by the care and attention that SME developers take in their building. It is often the exact opposite of the big housebuilders, where our clients see the houses they build as a labour of love rather than just churning out another unit. This tends to lead to the right houses being built in the right areas and happy purchasers. Don’t just take my word for it – an award winning surveyor who has overseen many developments by both SME developers and big housebuilders said that pretty much every time the quality of houses being built by the client’s of Magnet Capital is superior to the big housebuilders.

There has to be an emphasis in the country on not just numbers of properties being built but the right type and quality of houses in the right place. So, you might not have heard much about James Brokenshire but I think he is doing a good job so far.

 

Sam Howard

 

Jul 01
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planning-permission

A Guide: What happens if you are rejected for planning permission?

By Blog, Development Finance

What can you do if you are rejected for planning permission?

If you have recently made a planning application for a building project and had it refused, you may be feeling disappointed, and perhaps wondering what your next step should be.

No need to fret: there are still a variety of options available to you if your application is denied. Read the guide from Magnet Capital below to see what you can do if your planning permission application is refused.

Why has my planning permission application been denied?

There are a number of reasons as to why a planning permission application can be refused by local authorities. The most commonly cited are as follows:

  • Your building project would restrict road access
  • The building overshadows a neighbour, blocking light
  • The project would cause a loss of privacy to other surrounding homes
  • It has a negative impact on highway safety
  • Your property is a listed building
  • The building project impacts on trees
  • The project uses hazardous materials
  • The building projects appearance would be out of character with the existing property

Make changes during the application process

The planning permission process will typically take eight weeks, or 13 weeks at most if it is a more complex project.

In this time, you can make objections to some of your plans and it could potentially determine the outcome of your decision.

If objections are raised, it may be possible to make changes to your current application, providing that they are small and will not require the planning officer to start the process again.

Objections raised during this time, and a willingness from you to make changes could also see the planning office grant you planning permission, based on the condition that you confirm that you will address the objections. You will have to provide evidence to your local authority of having done this, and usually within a certain time frame.

Resubmit your application

If planning permission has been denied, and it was rejected on planning grounds that you believe can be resolved, then it may be worth making changes to your existing application and then to resubmit once more.

In terms of cost, resubmitting a planning permission application may be a little time consuming, but it won’t cost you anything more, providing that you resubmit the planning permission application within a 12 month period, and the overall outcome of the project still remains fairly similar to the originally planned project.

Launch an appeal against the rejection

If you believe that your planning permission application refusal has been unfair, then it could be worth investigating further about an appeal.

If you do decide to make an appeal, you will have to do so within three months (the deadline for homeowners) whilst if you are a developer, major projects will require an appeal within six months.

planning-permission-construction

Making alterations to your planning permission application could make all the difference.

If your planning permission application is rejected, the council will automatically send you further information as to how you can appeal the decision.

When making an appeal that council has to respond to it within a period of six weeks. After you have received a response, you have three weeks in order to comment and provide any supporting evidence.

Get professional advice

If you are unsure as to what your next step should be, and what changes you might need to make, why not look at getting professional advice first before making a decision? This may be particularly worthwhile if you are intending to go through the appeals process, which can tend to be complicated and are used for the intention of being the last resort. As a result, a property finance adviser could help to give you clarity on the next step you should take.