Friday 30 November 2018

Tenancy deposits ..... what to do



Welcome to the next instalment of The Key Place’s regular Scottish Private Rented Sector regulation updates ..... as there are over 150 laws that apply to renting out a property in Scotland, there is a lot to know to ensure that we are doing thing right.

Today we are discussing tenancy deposits. 

It has been six years since the Scottish Government introduced rules that require all deposits to be held by an independent third party tenancy deposit scheme.  I believe that this was been a huge step forward in introducing some trust into the sector.  At the time, people were saying that it won’t make any difference as all landlords and letting agents were, of course, managing deposits in the correct manner ..... but clearly this was not the case as you only have to look at the number of letting agents that were sold around the time of the introduction of these new rules to think that some of their deposit accounts may not have been full!

Legally, anybody who takes a deposit for a Private Rented Sector property needs to lodge it with a third party Tenancy Deposit Scheme within 30 days of a tenancy starting.  There are three Tenancy Deposit Schemes:
  • Safedeposits Scotland.
  • my deposits scotland.
  • Letting Protection Scotland.

A key point to note is that a deposit is a tenant’s unless the landlord/letting agent prove that the landlord should get some/all of the deposit at the end of a tenancy ..... this can only be done at the end of a tenancy.
At the start of a tenancy, you need to do the following:
  • Take the deposit.
  • Lodge it with a Tenancy Deposit Scheme.
  • Formally tell the tenant you have done this (there is a prescribed form to do this).

During a tenancy, the deposit stays in the Tenancy Deposit Scheme.
At the end of a tenancy, you need to do the following:
  • The landlord/letting agent and the tenant should seek to agree the split of the deposit.
  • If both agree, ask the Tenancy Deposit Scheme to pay out on the basis of the agreed split.
  • If both the tenant and the landlord/letting agent do not agree, then the fun starts .....

If the landlord/letting agent and the tenant do not agree how the deposit should be split, then the case goes to the Tenancy Deposit Scheme’s arbitration systems.  In this case:
  • The landlord/letting agent give the Tenancy Deposit Scheme their view of how the deposit should be split between the landlord and the tenant along with the evidence backing up this view.
  • The tenant does the same thing.
  • Once the Tenancy Deposit Scheme gets this information, it passes it to their arbiter who decides how the deposit is split based on the EVIDENCE only ..... they do not speak to the landlord/letting agent or the tenant.

At The Key Place, we have extensive experience of tenancy deposit schemes including the arbitration process which is the most complicated aspect.  Based on this, here are some helpful hints:
  • Always follow the TDS rules .... there are fines of up to three times the deposit amount if you don’t.
  • The law has been amended recently to make it really clear that money received from a tenant can only be rent or deposit ..... it cannot be anything else whatever name you may give it.
  • Evidence is key to getting any money from a tenant’s deposit
  • Key pieces of evidence are:


      Detailed inventory at the start of the tenancy.

      Check out report at the end of the tenancy.

      Detailed rent records.
  • Arbitration submissions .... these are a wee bit of science and a wee bit of art so it is best to get somebody who has experience of these to manage the process for you.

We at The Key Place are always happy to help with deposit scheme queries, just give us a shout.  





    Wednesday 28 November 2018

    It is win win for Falkirk landlords – capital growth AND rental yields are higher than in Polmont, Larbert and Linlithgow!


    I am speaking to more and more Falkirk landlords as they read The Falkirk Property Blog that shows that the Falkirk rental market is doing reasonably well, with rents and property values rising. 

    When I was having a chat with one of these landlords over a cup of tea in Finnegans Cafe the other day, he asked me two completely unrelated questions that got me thinking.  The questions were, how much faster are property prices in surrounding towns rising than Falkirk ones (she has properties in Falkirk, Larbert and Linlithgow and is thinking about buying another one) and how much he should be paying per square foot?

    Interestingly, we both thought that obviously Larbert, Polmont and Linlithgow property prices would be rising faster than Falkirk property prices but, going by my mantra of ‘never assume nuthing’, I did my research and was astounded by what I found.

    Over the last twenty years, property values in Falkirk have risen by 243.12%, compared to Larbert’s 238.23%, Polmont’s 242.72% and 240.95% in Linlithgow.


    This is an astounding result as it turns the historical view of the capital growth vs income see saw on its head.  The capital growth vs income see saw says that the higher the capital growth the lower the rental yield and vice versa. 

    However, the property values research I did means that not only has capital growth been greater in Falkirk than in Larbert, Polmont and Linlithgow, but your investment money also goes further in Falkirk as properties are cheaper meaning there will be higher a rental yield – in Falkirk you can get easily 6-8% whereas in Larbert, Polmont and Linlithgow you are lucky if you get 5-6% per year.

    So looks like ‘you can have your cake and eat it’!

    What about the ‘how much he should be paying per square foot’ question I hear you say?  Well, that’s a topic for a future blog post .... watch this space.

    Whether you are a landlord, a ‘Homes Under the Hammer’ addict or just a homeowner who is interested in what is happening to the local property market, then please visit The Falkirk Property Blog (www.thefalkirkpropertyblog.co.uk), contact me for a chat (phone on 01324 469840), come and see me in my office (6 Vicar Street, Falkirk) or email me (robert@thekeyplace.co.uk).



    #falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #privaterentedsector #prs #firsttimebuyers #lettingagents

    Friday 23 November 2018

    Welcome to our monthly blog - Confessions of a Letting Agent.



    Landlords often ask us what goes on behind the scenes at The Key Place and so we thought we would share our experiences, and what we have learned from those experiences, with you.

    This week I thought I would tell you about a high end property which we manage in a prestigious Edinburgh location.  We have looked after this property for a number of years, without any problems.  Well, apart from once . . .

    The property is a converted warehouse with a stunning interior.  Included in the furnishings are a baby grand piano and original art works by artists including John Bellany and Peter Howson.  We advised the owner to remove these prior to letting however he declined. 

    The property was up for rent and I had an enquiry from a local businessman who was keen to view.  I met him myself.  At the viewing he was overwhelmingly interested in the artwork, more so than the property itself I felt.  I have to say that I became a bit suspicious about his motives, as he enthused about the paintings.

    The businessman came back to me after the viewing to say that he would like to take the property.  I sent him an application pack.  Although his references checked out, something still didn’t sit right with me.  As he owned a business locally, I took a drive by to have a look.  To my surprise the business didn’t actually exist.  There was a business with a similar sounding name but not the one he claimed to own.  I asked him to confirm the business name and address and he came back with the same information.

    While I was snooping around, the businessman phoned wanting to know about the progress of his application.  As he had said he was moving in with a wife and son and they hadn’t seen the property, I suggested a second viewing to let them have a look.  He said he would get back to me on this.  A few days later he called to set up a viewing. 

    I met the family at the property and was immediately aware of the very strange dynamic between the 3 of them.  It was as if the businessman had never met the boy and the wife seemed more like an acquaintance who wasn’t particularly interested in looking around the place.  Once again the chap spent almost the entire viewing looking at the paintings.

    Well by now I had convinced myself that he certainly had the potential to be an art thief. I shared my concerns with a colleague who was in agreement.  I decided to speak to the owner, who was aware that someone was interested in taking the property.  I told him the whole story and advised him not to take these people as tenants.  He was happy to trust my judgement and so I let them know that their application had been unsuccessful.

    I think in business it is essential to listen to your instincts.  It would have been easy to take the businessman’s money to secure a let but who knows what may have happened next.  Rather than choosing this option I stood back and looked at the bigger picture, and at the possible long term repercussions if my suspicions were proved to be correct.  In the end I decided to give up the short term gain in favour of doing what I instinctively felt was right for the landlord.  Shortly after, I secured a good long term let for the landlord, and was able to sleep easy at night!  To this day, the paintings remain in situ.




    #bathgate #bonnyrigg #bo’ness #boness #dalkeith #edinburgh #falkirk #grangemouth #kelso #linlithgow #livingston #loanhead #musselburgh #penicuik #stirling #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #firsttimebuyers #brexit #hardbrexit #cliffedge


    Wednesday 21 November 2018

    Falkirk BTL opportunity that has been on the market for a long time ....



    The buy to let opportunity from The Falkirk Property Blog has been on the market for a long time.

    The property is a two bed flat, first floor flat in Farm Street, Falkirk in Bainsford.  It has a large lounge with a dining area, a separate fitted kitchen, two double bedrooms one with built-in wardrobes and a shower room.  It is worth confirming that there is double glazing, gas central heating and residents parking as these type of blocks of flats do but this advert for this one does not explicitly say this. 


    Turning the all important financials.  The flat is on the market with Falkirk Homes Estate Agency for a fixed price of £64,000.  I would expect this property to achieve rent of £475 pcm so when we work out the annual yield you could be looking at a gross return of 8.9%.

    The property has been on the market for some time as the advert says that the price was reduced on 27 June 2018.  This would normally suggest that the owner may be open to negotiation on price but as it has on the market for such a long time it may mean that others have tried and failed to negotiate the price down.  However, it is work a try.

    I hope you find our posts useful.  If you would like some advice with your potential i
    nvestment, please come and see me in our offices (6 Vicar Street, Falkirk), call me (01324 469840) or email me (robert@thekeyplace.co.uk).


    #falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector #firsttimebuyers

    Wednesday 14 November 2018

    How Would a Hard BREXIT Impact Falkirk House Prices?


    Brexit has been around for, what at least seems to be, a long, long time but more and more the concept of a hard Brexit has been taking centre stage in the Brexit discussions recently. 

    I am often being asked how a hard Brexit would affect the Falkirk property market so I am going to try and give you what I consider a fair and unbiased piece on what would happen if a hard Brexit takes place in March 2019.

    After the weather and football, the British obsession on the UK property market is without comparison to any other country in the world. I swear The Daily Mail has the state of the country’s property market on its standard weekly rotation of front-page stories! There are better economic indexes and statistics to judge the economy (and more importantly) the property market. The number of transactions are just as important, if not more, as an indicator of the state of the property market.

    Worries that a ‘Yes’ vote in the Brexit referendum would lead to a fast crash in Falkirk (and national) property values were unfounded, although the growth of property values in Falkirk has reduced since the referendum in the summer of 2016.

    Now, it’s true the Falkirk property market is seeing less people sell and move and the property values are rising at a slightly slower rate in 2018 compared to the heady days of a few years, but before we all start panicking, let’s ask ourselves, what exactly has happened in the last couple of years since the Brexit vote?

    Falkirk house prices have risen by 6.22% since the EU Referendum…

     …and yes, in 2018 we are on track (and again this is projected) to finish on 3,000 property transactions (i.e. the number of people selling their home) … which is slightly more than 2017 … and higher still than the long term 10 year average of 2,468 transactions in the local council area.


    So, it appears the EU vote hasn’t caused many major issues so far, however, if there was a large economic jolt, that could be a different game, yet how likely is that?

     The property market is mostly influenced by interest rates and salaries.

    A hard Brexit would subdue wage growth to some degree, yet the level of the change will depend on the undetermined type of Brexit deal (or no deal). If trade barriers are imposed on a hard Brexit, imports will become more expensive, inflation will rise and growth will fall, although at least we are not in the Euro, meaning this could be tempered by the exchange rate of the Pound against the Euro. In plain language, a hard Brexit will be worse for house prices than a deal.

    So why did the Governor of the Bank of England suggest a disorderly hard Brexit would affect house prices by up to 35%?

    I mean it was only nine years ago we went through the global financial crisis with the credit crunch. Nationally, in most locations including Falkirk, property values dropped in value by 15-20% over a two to three year period. If we had a similar percentage drop, it would only take us back to the property value levels we were achieving in 2015.

    And let’s not forget that the Bank of England introduced some measures to ensure we didn’t have another bubble in any future property market. One of the biggest factors of the 2009 property crash was the level of irresponsible lending by the banks. The Bank of England Mortgage Market Review of 2014 forced Banks to lend on how much borrowers had left after regular expenditure, rather than on their income. Income multipliers that were 8 or 9 times income pre-credit crunch were significantly curtailed (meaning a Bank could only offer a small number of residential mortgages above 4.5 times income), and that Banks had to assess whether the borrower could afford the mortgage if interest rates at the time of lending rose by three percentage points over the first five years of the loan … meaning all the major possible stumbling blocks have been mostly weeded out of the system.

    So, what next?

    A lot of Falkirk homeowners might wait until 2019 to move, meaning less choice for buyers, especially in the desirable areas of Falkirk. For Falkirk landlords, Falkirk tenants are also likely to hang off moving until next year, although I suspect (as we had this on the run up to the 2015 General Election when it was thought Labour might get into Government), during the lull, there could be some Falkirk buy to let bargains to be had from people having to move (Brexit or No Brexit) or the usual panic selling at times of uncertainty.

    Brexit, No Brexit, Hard Brexit … in the whole scheme of things, it will be another footnote to history in a decade. We have survived the Oil Crisis, 20%+ Hyperinflation in the 1970’s, Mass Unemployment in the 1980s, Interest Rates of 15% in 1990’s, the Global Financial Crash in 2009 … whatever happens, happens. People still need houses and a roof over their head. If property values drop, it is only a paper drop in value … because you lose when you actually sell. Long term, we aren’t building enough homes, and so, as I always say, property is a long game no matter what happens – the property market will always come good.

    Growth in UK property values as well as in Falkirk seems fated to slow over the next five to ten years, whatever sort of Brexit takes place.

    We hope you find our posts useful.  If you would like some advice with your potential investment, please call us (on 01324 469840), come and see us in our offices (6 Vicar Street, Falkirk) or email us (robert@thekeyplace.co.uk).


    #falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #firsttimebuyers #brexit #hardbrexit #cliffedge

    Wednesday 7 November 2018

    Modern, fixed price Falkirk BTL property with a yield of 8.6%

    Today’s buy to let opportunity from The Falkirk Property Blog has some certainty about it as it is on at a fixed price and, according to Rightmove, this price was just changed last Friday.

    The property is a one bed flat, second floor flat at 22 Longdales Place, Falkirk in New Carron Village.  It has a large lounge, a separate fitted kitchen, a double bedroom with built-in wardrobes and a bathroom with a shower over the bath.  The flat looks like it has double glazing (but the sales chat doesn’t actually mention this so it would be worth checking) and it has electric heating although the EPC (energy efficiency) rating is C which good.  It is worth checking the parking arrangements as it is not immediately obvious what they are but normally there is residents parking for flats in this block.  




    Turning the all important financials.  The flat is on the market with our good friends at Caesar & Howie for a fixed price of £55,000.  I would expect this property to achieve rent of £395 pcm .... in fact there is currently a similar flat near to this one on the rent market for £395 .... so when we work out the annual yield you could be looking at a gross return of 8.6% which is a good return in the current market.

    I hope you find our posts useful.  If you would like some advice with your potential investment, please come and see me in our offices (6 Vicar Street, Falkirk), call me (01324 469840) or email me (robert@thekeyplace.co.uk).


    #falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector #firsttimebuyers