They are a property development scheme in Tyneside. The main difference in these to other flats is the responsibilities laid out in the lease. A Tyneside flat appears from the front as a single fronted terraced house. However, there are two or sometimes three flats on top of each other. Each flat has its own separate front and back door and garden areas.
Construction of Tyneside flats started in the late 1800s as low-cost housing for a growing workforce. With separate floors and staircases, there is no relation between the lessees internally or externally. The backyard is divided in half. Originally each garden would have its own coal house and private outside toilets. It was an ingenious solution at the time for affordable housing. Now they make for profitable investments for landlords. The land was often sold on the condition that only properties with no more than two households could be built. Who enforces these rules now is unclear.
There are complications with the legal status of a Tyneside flat and the responsibilities between the landlords. The upper flat shelters the lower flat and the lower flat supports the upper flat. This has led in the past to specific legal schemes known as Tyneside flats cross or crossover lease arrangements. Under the Tyneside flat scheme, each tenant, even if holding the freehold of their own flat, becomes the landlord of the other. This allows the responsibility to be enforced without an external landlord or management company.
This type of flat ownership has come into context recently as part of the recent Law Commission leasehold reform. Another alternative to leasehold being commonhold which has also been considered. It is something to keep an eye on in the future as what will happen.
How to Insure the building
The terms of the lease dictate the insurance arrangements. Previously there have been two methods. These are as follows: –
The first-floor flat owner will insure the freehold interest of the ground floor as the landlord of the flat and vice versa. The lease may grant each flat owner the right to see proof of the current insurance policy. Or both owners may be required to insure the whole of the property in joint names and split the cost equally.
We now have a policy that covers this type of property, therefore, all the above is no longer required. Solicitors have in the past advised to take out a criss-cross lease indemnity that covers either party in the event of the absence of insurance. However, we now have the policy that you need. Speak to us about these properties and how to insure them.
Our policy includes:
• Replacement value of the property following loss or damage by the insured perils
• Tracing and repair of leaking underground pipes drains and cables
• Accidental breakage of fixed glass, double glazing, ceramic hobs, and sanitary fixtures
• Malicious damage by third parties
• Loss of rent or alternative accommodation costs
• Damage to landscaped gardens
• Replacement of keys and lock replacement following a theft
• Accidental loss of metered water
• Emergency access
• Theft of fixed fabric of the property including fixed CCTV equipment and security lighting
• Specified contents cover
Many people think that holiday homes are easy to insure as they aren’t lived in as much. They are however considered very risky by insurers. A holiday home can be vacant for long periods of time which creates further issues. Theft is often more likely in an unoccupied house and visitors to a holiday home do not take as much care as the owners.
Therefore you will need an insurance cover specifically for second homes or holiday homes. A normal landlord insurance policy will not cover you and would not pay out in the event of a claim.
What does holiday home insurance cover?
Most holiday homes cover all risks from a standard policy but include periods where the home is vacant or family and friends are in the premises.
Cover for second homes or holiday homes can vary depending on the insurer. It is important from our point of view to know exactly the cover that you need. Instances that may be covered:-
The policy would include accidental damage by anyone occupying the property.
Home Emergency Cover
Some insurers will include a 24-hour emergency helpline if you need help in a domestic emergency such as a burst pipe.
Loss of Rental Income
If the property is uninhabitable after a flood or fire it is comforting to know that the insurer will cover your loss of income. Most insurers, however, will only look to cover the loss of pre-booked income. They cannot recover income if there were no bookings lost.
Insurers will cover the cost of placing your guests in alternative accommodation if the property is uninhabitable due to unforeseen circumstances.
What should I do with my holiday home to try and reduce the insurance premium?
- Make sure that your policy covers exactly what you want. Some quotes may be cheap but they don’t have the comprehensive coverage you need
- Improve the level of security. Make sure to kit the property with approved security standards such as alarms and window locks
- Look at the excesses. A voluntary excess could reduce the premium. That excess would have to be paid in the event of a claim so it needs to be set to an affordable amount
- Keep the home in good condition. Maintain the home so that it does not fall into disrepair. This will include the insulation of any pipes and tanks to prevent them from freezing in cold weather
- Make sure to have contents insurance to cover personal possessions at the property
A holiday home is more vulnerable than your own home. Mainly due to the risk of multiple vacant periods. It is not a standard risk so you should speak to us regarding what cover you need. Our policies will cover:
- Loss of rent and alternative accommodation
- Costs and expenses to trace and repair the source of damage following an accidental escape of water
- Your legal liability as owner of your home
- Damage to gardens following an insured loss
- Contents in garages and outbuildings if caused by theft
- Contents whilst temporarily removed
- Office equipment
- Property in the open within the boundaries of the home
- Replacement of locks following accidental loss or theft of keys
Request a call back if you would like a quote for your second home or holiday home.
There has been a lot of news and discussions about short term lets recently. The housing charity, Shelter, recently conducted some research on short term living. Their research found that 12% of parents who rent privately feel as though short term lets may leave their children feeling unsettled.
Short term let is the name given to a tenancy agreement of less than six months. Any tenancy agreement less than six months is not governed by the Landlord & Tenant Act 1985 so there is no form of protection for a landlord and/or a tenant. Short term lets are rare as they are only suitable for very specific situations.
Who uses short term lets?
Short term lets are rare as they are only suitable for very specific situations. Someone might be living away from home for a few months due to work commitments. Or they may be waiting for a new house to be built for them to move in to.
Recently there has been a rise in demand for letting on a short term basis. This is mainly through the increased popularity of holiday let websites such as Airbnb. It often works out that it is cheaper to rent a property through an Airbnb than it is to have a hotel, hence their growing popularity. However, often landlords don’t appreciate that their current insurance policy won’t cover this type of let.
What are the benefits for landlords?
There are a lot of benefits to tenants but what are the benefits to landlords? Well they give landlords another option when thinking about selling or reletting. The landlord can let the property on a short term basis while they make their mind up. Then also short term let while the property is on the market and the sale is progressing. Having an empty property is usually not an attractive prospect to landlords so a short term tenancy provides an income in the interim.
What are the issues with Short Term Letting?
There is no legal backing for landlords with short term lets. Also if the tenants then refuse to leave the property getting them out can be tricky as there is no legal process or contract. It may be that a longer term let is more preferable for the landlord. People often don’t appreciate that short term lets are completely different from a typical long term tenancy. This is because the Landlord and Tenant Act 1985 governs all tenancy’s over six months long.
You also have to ensure that you have the right insurance in place. A typical landlord insurance policy is unlikely to cover the potential risks that short term lets create. These can include malicious damage by tenants and other risks. Whilst you might potentially get a higher income it is very important to understand your responsibilities.
Two big issues for landlords with short term lets are void periods and wear and tear. Short term lets may bring flexibility but they also bring uncertainty as to when the property will be relet. It is the nature of the beast.
There will also be additional costs for wear and tear due to the endless stream of tenants coming and going. With tenants staying for short periods they are unlikely to take as good care of the property as long standing tenants.
Lastly, the landlord will need to cover the costs in a short term let that would otherwise be paid by the tenant in a long term let. These include utility bills, internet, TV license, and council tax. The property would need to be fully furnished and well equipped. These all need to be considered when looking at short term lets.
People often get confused about what exactly the loss of rent policy covers in their insurance. To put it simply, there is a loss of rent cover and a rent guarantee policy. They are two completely different things but we will look at both of these in detail.
Loss of Rent Cover
Loss of rent cover relates to the rent lost due to the property being uninhabitable after an insured peril. It has nothing to do with the tenants not paying their rent. The policy would cover the rent payable by the tenants while they are in alternative accommodation. The policy would also cover the fees for alternative accommodation. As an example, if a water pipe burst and the property flooded the landlord would rehouse the tenants until the property was liveable again. The tenants would not have to pay the rent at that time as they are not living in their own home. Instead, the insurer would pay the rent for that period as long as the policy covered the incident. Another example would be a damaged roof after a storm. The property is uninhabitable for a period of time. The tenants would be placed in temporary accommodation whilst the roof repair and replacement is ongoing. The insurance would cover the rent lost and any amount paid for alternative accommodation. This would come under your landlord building and contents insurance.
What is Rent Guarantee cover?
This is a policy that specifically covers the tenants defaulting on their rent payments. There are many instances where this could happen. Perhaps the tenant has lost their job and cannot afford the rent. Maybe they have left the property and stopped their direct debit. If the tenants are still in the property and are not paying the rent the landlord may have to evict the tenants in order to relet the property.
Before buying a rent guarantee policy the tenants need to have passed a recent credit check and meet certain affordability criteria. The cover has to be in place before the tenants’ default, it will not cover existing payment issues. It is best to take the policy out when a new tenancy agreement starts so the landlord can complete all the referencing and checks before accepting the new tenants. We can provide a policy that covers the unpaid rent plus the fees involved in evicting tenants and recovering tenant property damage.
You will see therefore that the above are two very different types of policies. It is possible to have both items insured at the same time through different policies or combined in the same policy. Contact us first if you are thinking about taking out a rent guarantee policy.
Every landlord association is different but they will all be able to offer you benefits that you cannot get on your own
. For instance, the British Landlords Association offer a free advice line for members to speak directly to lawyers
. The BLA advice line is managed by consultants who have a wealth of experience in dealing with bad tenants
. The law relating to the letting industry can be extremely
complex. Over 126 new laws have passed within the last 5 years and many landlords feel overwhelmed with the compliance rules and regulations
. It is, therefore, a great benefit for landlords to have such advice. Further benefits that associations can provide are below.
Assured Shorthold Tenancy Agreements
You will find that a lot of associations have assured shorthold tenancy agreements that landlords can use. These are legal documents between a landlord and their tenants which set out a huge amount of legal terms and conditions for tenancies. It is so important that these documents are correct.
Courses for Landlords
Some associations offer you courses that you can go on to improve your own knowledge.
Often associations have case law to reference for their members. You can refer to these if you have a problem with a tenant.
A lot of associations provide a newsletter such as the British Landlord Association. They send theirs out daily and can provide you with interesting articles that you may not even know about.
Up to Date Law
Associations might communicate changes to the law in newsletters or on their websites. These are not always advertised immediately by the government and may be hidden in Acts that don’t necessarily relate to properties.
Often landlords associations have forums where you can talk to other landlords to ask for any advice or questions.
Many landlord associations have their own portals not only for potential sales but also rentals to help you market your property.
Legal Documentation (EPCs, gas safety’s etc)
Many associations will have details on what documentation you will need to provide to tenants. They will also explain how to provide the paperwork, what to do with it and the deadlines for when they are due.
Some associations offer discounts on anything from trade magazines to contractors.
Paying a fee to be part of a landlord association might seem hard to justify when trying to make a profit from your rental property. However, they do provide a great number of resources for landlords. Landlords associations can voice concerns on your behalf about issues affecting landlords. These associations represent all landlords on all kinds of issues. Local to national, tenant disputes to government acts.
Do landlord associations have accredited courses? Yes, many landlords associations provide certifications. These help landlords prove that their property and service meet certain standards. For this reason, accredited landlords are acknowledged as more trustworthy than non-accredited landlords. As a member of a landlords association, you will be able to become accredited by taking a recognised course through the association.
There are many benefits of joining a landlord association and for such a small fee it can save you a substantial amount of money in the future.
You may ask yourself, what is best, buying insurance through a comparison website or purchasing from a broker?
In recent years online comparison sites have become ever more popular. Likewise, the way we buy building insurance has changed dramatically. There are now many comparison websites that are becoming more popular. It means that consumers can easily compare the price of hundreds of insurance products from the comfort of their own home. But is it the best way to buy insurance? Do you get what you pay for?
Why have comparison sites become so popular and are they really the better option?
It may seem that comparison sites seem an easy option when looking for a better deal on insurance. It’s simple and easy to fill out the details and then have a wealth of quotes to choose from. They are usually ranked from cheapest to most expensive. It seems ideal for those of us that have a busy lifestyle who want the opportunity to shop around for the cheapest deal in the simplest way. However, cheap insurance is also likely to provide a very limited level of cover. The rise of comparison sites has brought about a rise in competition among insurers. They know they need to be at the top of any search results to be in with a chance of winning the sale. This has led to stripped down cover and high excesses.
You might feel that you have bagged yourself a bargain after using a comparison site. But you may run into further costs if you have to make a claim and find that you don’t have sufficient cover. Obviously, you take out insurance to make sure that you are actually covered when you need to claim. What you don’t want is to make a claim and suddenly find that your insurance doesn’t cover it.
You may also find that to keep prices low some insurers have now increased the excess or added a voluntary excess. This means that if you have a £1,000 claim you might end up paying for the first £750.00.
If you have ever used a comparison website, you may have seen that you are asked to state the amount of excess to pay on your policy. , this is usually the voluntary excess and, this is then added to any compulsory excess. So in the event of a claim, you could have to pay a much higher sum than first thought.
Did you know that insurers pay to be at the top of the list on any comparison site? Insurance companies choose to pay for preferential comparison site listings instead of advertising by other means. For them, it is a better use of their money. For the end user though it can result in a confusing and misleading sales journey. The quote at the top of the listing may not be the highest level of cover.
Why use a Broker?
Brokers such as us will work with a panel of insurers and so will have access to the whole market. Often brokers have access to insurance products that cannot be bought on a comparison website. Buying your building insurance from a broker can give you access to expert advice and help you gain the most suitable insurance.
We will, for instance, talk to you over the phone and go through what cover you actually need. Also, discuss the property in detail and your personal circumstances. We can check what cover you already have on your current policy and then match it or increase it. You may not appreciate that a lot of insurance companies offer insurance products with low levels of cover on comparison sites. Yet brokers have policies that cover a substantial amount of items such as:-
Property owner’s liabilities in case tenants injure themselves
Loss of rent cover and alternative accommodation when the property is uninhabitable.
Theft by the tenant (often excluded by many insurers)
Trace and access for damage to the property when finding a cause of a leak
No reduction in cover for up to 30 days when vacant
Eviction of squatters
We would be able to provide you with fantastic personal service and you won’t just be another number in a computer. We can identify what you need in relation to any specialist cover.
One of the major benefits in purchasing through a broker is to ensure that we are able to help you when you have a claim on your policy. You will often find that claims can be quite arduous and difficult to deal with.
What to do next?
If you decide to purchase from a comparable website it may be an idea to check the policy wording. This is to ensure that your property and possessions are adequately covered and you are aware of what is not covered should you make a claim.
We will be able to provide you with added benefits and look at the small print.
Please do not hesitate to contact us in this regard.
Being a leaseholder and a shareholder or a member of an RMC is not the same thing, although it is possible to be both. RMC Directors need to keep a clear distinction between the two roles when making decisions.
What are the differences between shareholders and leaseholders?
There are both legal and practical reasons why being a shareholder and a leaseholder is completely different. You are more than likely to be both in an RMC though.
A shareholder or member can still take part in decision making. Although there is normally a restriction to voting on a Board of Directors. A meeting normally takes place once a year. In that meeting, you can then either remove the Board of Directors or vote them back in. It depends on whether you think they are doing a good job.
This is totally different from being a leaseholder. A leaseholder is contractually bound under the terms of the lease. This includes paying service charges and adhering to covenants. Most lessees often believe that once you are a shareholder of the RMC the lease doesn’t exist which is not the case. An RMC board have no legal right to take a decision against the terms of the Lease for a block even if agreed by the shareholder. The terms of the lease must still guide the shareholders.
RMC’s duties to Leaseholders
The duties that RMCs have towards leaseholders are set out in the leases and can take two forms. Either the RMC is a party to the leases with its covenants set out expressly. Or the RMC is directly responsible for performing the landlord covenants and managing the building.
The fact that leaseholders are also shareholders or members of the RMC means that the RMC has no excuse for failing to perform its obligations. Contractual duties such as repairs, maintenance, insurance and service charges combine with statutory duties. These include restricting service charges to a reasonable amount and consulting on major works. The leaseholders are allowed a duty of care from the RMC.
It is essential that RMC Directors have reliable advisers. They should be up to date with Landlord and Tenant legislation as well as various Companies Acts. We would suggest in this instance that you take out Directors and Officers insurance to cover the directors’ liability against errors. The RMC has a Board of Directors who then either employ managing agents or carry out the works on behalf of the lessees themselves.
Should we place the maintenance money and the company money in the same account?
No, RMCs need to have two separate funds. One that the service charge is in and the other has the companies own money. The RMC holds service charge funds on trust for the lessees as these are not the companies’ money. We often speak to people who have mixed up their management accounts with the company accounts and end up paying tax for no particular reason. Most management companies are known as “Dormant Companies”. This means that they only have to do a very simple form once a year to maintain the company at Companies House and for Inland Revenue purposes.
Company funds often derive from subscriptions or payments from members. If it owns the freehold they may charge ground rent but if all the lessees are shareholders it is unlikely that they will change this.
Leaseholders all contribute fairly to the service charge fund in accordance with the terms of their lease. The RMC is a statutory trustee for these contributions and the beneficiaries under the trust are the leaseholders.
It is a fundamental duty of a trustee to cover all funds received and spent. Service charge money is not owned by the RMC and so will not count as an asset of the Company. The leases normally set out clear service charge money payments which are contractual.
Preparing annual accounts
If the company receives no income and pays no money out then it is known as a dormant company for tax purposes and accounts are often not required.
Administration costs for running the RMC
Any payments made by the company for the company have to come from the shareholders’ funds or money paid in by shareholders. It is important to understand for instance that the company should pay the Directors and Officer’s liability insurance. Not the maintenance fund.
Can the RMC carry out major work and long term agreements?
Under Section 20 of the Landlord & Tenant Act 1995, the landlords must consult with leaseholders if proposed work to their block is likely to cost any one leaseholder £250.00 or above. The same applies if they intend to enter a long term agreement with a contractor to provide services over one year. RMCs and RTMs have the duty of this requirement to consult lessees even if they own their own freehold.
Don’t fall into the trap thinking that Section 20 doesn’t apply just because everybody who is a member of your block is a member of the RMC. Even if residents reach a unanimous decision at the residents meeting to go ahead with the work a Section 20 Consultation is required by law. It is not acceptable if shareholder committee members or Directors have taken a decision, and ignored the law. For instance, if you don’t consult properly you may be subject to a penalty, or not be able to recover the funds. It is important that you have the right insurance for your block or building. Don’t hesitate to contact us on this or look at our other article on Directors and Officer’s liability insurance.
There is more choice for Buy to Let mortgages now than there has been for the twelve previous years. Figures from moneyfacts.co.uk show that Buy to Let mortgage products have reached their highest level in twelve years. The total number of products has increased to over 397 within the last twelve months and products in this area amount to more than 2000.
This is despite the ongoing uncertainty of the property market. Providers are not yet shying away from offering landlords a greater choice of products.
Many property owners have found over the past couple of years with Brexit looming that it has been very difficult to sell their properties. They have therefore turned to try to let their property out. However, they have in some cases failed to change their mortgage over. They have also fallen into the trap of thinking that their standard home insurance will cover the property even though it’s rented out.
When you rent a property out having the correct insurance is absolutely critical for any landlord. A standard home insurance policy will not cover damage created by tenants. Letting out the property could even invalidate the home insurance altogether.
There are so many additional items included in a landlord insurance policy in comparison to home insurance. It can be quite scary for landlords so it is always best to look into having correct insurance.
If you accidentally become a landlord you need to look at the market to ensure that you are letting your property correctly.
Our tips for renting out property are below:-
1. Thoroughly research the rental market in your area to ensure that you are charging the right level of rent.
2. Marketing the property is always very important as you do not wish to leave it empty for a period of time known. This is known as a void period.
3. We recommend you use a letting agent or somebody who has professional qualifications to rent out your property. Did you know that the rental market has had over 127 different types of law within the last 5 years?
4. Always communicate with your tenant if there are any problems with the property.
5. You should always carry out proper checks at the property roughly every three months.
8. Make sure you draw up an inventory at the beginning of every tenancy so you know exactly what the state of the property is before you let it out.
If you have become an accidental landlord and you haven’t changed your mortgage you may wish to consider this. With the withdrawal of the relief on tax you may find that shopping around gives you a better mortgage rate than what you are currently paying. When changing the mortgage it is always best to contact your financial advisor or bank to look for the best rate possible.
You can also look to join a Landlord Association. We deal with The BLA who may be able to help you and give special discounts on various services that may be of help to you.
What is the difference between a Leasehold and a Freehold?
Freeholds are where a person or organization owns the property outright including the land it sits on.
Leasehold is where somebody buys the right to live in the property for a certain period usually 99 or 125 years. The leaseholder can make arrangements to extend their lease, see our articles on enfranchisement. But ownership of the property returns to the freeholder at the end of the term.
If you are a leaseholder and you own a flat within a block of flats, you don’t own the land that it sits on. The freeholder owns the land the property sits on. Leaseholders usually pay some form of ground rent to the freeholder.
What is the difference between a landlord, a residential management company and a residential managing agent?
The landlord/ freeholder owns the building. They have certain responsibilities to the leaseholders. Many buildings also have a residential management company. They are party to the lease and have a legal obligation to the leaseholders to provide certain services.
You will also find in some cases that a landlord and a residential management company will not carry out any services or duties. Instead, they will appoint a residential managing agent to do so on their behalf.
What does a residential managing agent do?
A residential managing agent is a person or company appointed by the landlord or residential management company to manage the building. They are not responsible for the management and repair of a building in the lease. They are often hired to carry out these duties in the building on behalf of the landlord or residential management company. Their role is to ensure that the landlord, residential management company, and leaseholders follow the terms of the lease.
What are service charges and what is reasonable to pay?
These are charges set by landlords to pay for providing services to maintain your building in a block of flats. The services could be; cleaning communal areas, maintaining gardens, lifts and cleaning windows.
The service charge often includes building insurance. However, this does not include the cost of insuring the inside of individual leaseholders flats or homes. Contents Insurance will cover this. The cost of service charges will vary depending on the type of building they are being charged on. The Association of Residential Managing Agents (ARMA) estimates that the average flat owner in London pays between £1800.00 to £2000.00 a year in service charges. Yet, this can be higher or lower depending on the age of the building and how leaseholders divide the service charges.
Service charges are generally variable. This means that they will change from time to time in line with actual costs. In practice, a landlord or management company will set an estimate for the year ahead and charge accordingly. They will then calculate the difference between this and the actual cost when the financial year ends. The difference will be either charged or repaid to the leaseholders. They may set up a reserve fund and transfer any excess to the reserve fund.
Your service charge contributions will be a proportion of the service charge cost. The lease usually states that the leaseholder will pay a reasonable or fair proportion. This could be anything. For example, if there are ten flats in the building you would normally pay a tenth but it depends on the contents of the lease.
All service charges must be in accordance with the terms of the Lease and where reasonable in accordance with the law. The key legal requirement is that these costs must be reasonably incurred and that the service or works must be of a reasonable standard. You can challenge any reasonableness of service charges via a property tribunal.
It is important that you look at the costs of all the amounts charged by the freeholder. If you feel that you are being charged excessively for the building insurance please don’t hesitate to contact us. We will be more than happy to give you a quote for your building. You will need to find out if any claims have occurred within the last three years and what your sum insured will be. We often find that buildings are over-insured. We now have a special tool that will work out the correct amount to insure the building for. Please don’t hesitate to contact us on this.
The Mayor of London has called for new reforms for leaseholders. He also asked ministers to speed up the overhaul of the system for leaseholds for home buyers in the capital. In the recent Law Commission report, there has been a lot of discussion about reverting to a commonhold type of system. There have also been recent reforms to the Right to Manage. We contributed towards the reforms and believe that the law is going in the right direction.
A recent estimate states that a third of London homes and over 90% of new build ownership is on a leasehold basis. Many leaseholders find it a complex and confusing form of home ownership.
We understand that the Mayor has called for a wholesale reform of leasehold. This includes a long term shift towards alternative tenures such as commonhold. The Law Commission is looking into the commonhold question over the next few years and they welcome your views.
In the meantime, we understand that he is working with London’s leaseholders. This is to give them access to high-quality information about their rights and obligations. He has also put together a guide for leasehold property purchasers. The information in the Guide covers a range of subjects. It ranges from the difference between leasehold, freehold and renting as well as advice on buying the freehold on a block of flats. It even covers the pursuit of Tribunal proceedings against the freeholder in an enfranchisement agreement.
We have produced our own guide to this effect, please do not hesitate to read through this on our website.
This all comes after recent studies found that 94% of leaseholders regretted buying leasehold properties. 65% also said they would like more information on their rights, liabilities, and responsibilities.