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Saturday, April 19, 2014

PM 3.0 tips, advice & improvements

The Property Hawk team had one of their regular 'hot housing' get together chewing the cud over the website and working on improvements to the Property Manager software.  Thanks to our friends at Ziferblat for playing host to several days throwing around ideas and pink cards full of details of your suggestions and our latest ideas for PM 3.0.

We did manage to fit in an excellent lunch at 8 Hoxton Square and I can thoroughly recommend the Cuttlefish with risotto nero. 

Look out over the next few weeks and months for a number of little tweaks and improvements.

If you are looking with help in using the software don't forget to have a look at our tips and advice within the Forum and feel free to sign up and once your membership has been approved post a question.  We will answer it.

Free property management software, Free tenancy agreements
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Friday, April 18, 2014

Interest only vs repayment mortgages

There are pros and cons for choosing either an interest only or repayment mortgages to buy a investment property.  The pros of interest only finance are obvious.  You pay less initially.  This means you can borrow more (gear up your investment) and that you can buy more property, more quickly by preserving your all important capital.  Lower repayments mean that your rental profits also benefit.  These profits can then be reinvested in the future and faster growth of your renal business.  However, underlying these positives there are a number of negatives too:

1. Gearing up your investment is great in a rising property market.  The more you can borrow....the more money you's that simple.  However just as recent experience demonstrates that when the opposite can be a recipe for disaster ....the more you borrow ...the more you loose.  As we have also witnessed with the credit crunch, there comes a point when the lenders start pulling the plug and landlords can be left with nothing.

2. Borrowing on an interest only basis will cost your more.  Much more.  Using a very simple example if you borrow £100,000 at 5% interest over 25 years it will cost you the following in interest payments:

Interest only: £125,000 in interest payments but then you still have the £100,000 debt to repay giving a total repayment sum of £225,000.

Repayment mortgage:  £175,377 in interest and capital repayments but you have no debt and the property is yours.

The result is a  saving of almost £50,000 in interest payments over the 25 years alone.

Inflation could be key
This assessment between the two methods of loan repayment is complicated by another factor.  Inflation.  If inflation roars away then your debt gets inflated away to practically nothing.  For example, if we assume an annual inflation rate of 5%; in 25 years time then the £100,000 debt will be worth the equivalent in todays terms of only £29,530... a hell of a lot more affordable to repay.  However if inflation is only at 1% during the same period, your debt remains at £77,977 not so easy to stump up the cash for.

The choice of whether to elect for a repayment or interest only mortgage is a complicated and personal one.  You must carefully consider and be aware of all the factors.  In essence though, the low risk option is repayment whilst the optimist is likely to elect for the interest only option.  The choice remains yours.

Mortgage Search -  expert brokers - internet rates
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Wednesday, April 16, 2014

Buy-to-let 'guru' hits out

The so called King of buy-to-let has been found guilty of flooring a small time estate agent with a good old fashioned left hook or was it a right jab...

I know we all have felt like giving an estate agent a bit of a kicking from time to time but steady on Fergus.  Fergus a former teacher and boxer denied the charges claiming instead:

"If I had intended doing him an injury I probably would have kicked him a few times while he was on the floor and I don't think he's suggesting I did” said Wilson, who represented himself in court.

I'm guess this line of defence probably didn't help his case.  Fergus and his wife have amassed a property portfolio of £200m buy shrewdly buying family orientated new builds in Kent.

I'm guessing they probably don't need help with the legal fees.

Anybody else feel like wacking their agent?

Free property management software, Free tenancy agreements
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Monday, April 14, 2014

Mortgages -time to get fixed up!

Like many landlords hit by the credit crunch.  I have pretty much 'bunkered down' with all my mortgages.  Most, fortunately were linked to the bank base rate which we all know has been on the floor since 2008.

Mortgages - time for a fix
However, in light of the recovering mortgage market I decided to have a look around at the alternatives.  I only have one problematic mortgage through the Leeds & Holbeck building society on which I feel I'm paying way over the odds.  My current pay rate is 5.79%, that's a massive 5%+ margin over the current base rate - frankly it's not on!  Whilst I looked at changing it a couple of years ago, when I looked at the limited alternatives it just didn't add up.  However, I've recent come across the Santander 5 year fix rate mortgage which at 4.34% is almost 1.5% below my current mortgage.  This works out at a saving of over £100 a month or £1200 a year.  Even with the £1495 fee, in just over one year I'm going to be saving at least £100 per month and given that any base rate increase will increase the margin between the two mortgage products the benefits of switching to the lower fixed rate will only increase. I figure my situation is similar to many other landlords.

I've waited patiently, but I think the time is right for landlords to seriously look at their finances and if my situation is anything to go by we may have reached a time where it really does add up to switch towards a longer-term fixed rate product.  I'm certainly going to do my home work over Easter and I'll let you know what I conclude.

Mortgage Search - professional rates - expert broker

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Saturday, April 12, 2014

Landlords seeking finance - 'gain confidence'

Landlords confidence in the availability of buy-to-let finance has hit a post crash high according to a recent survey by Paragon Mortgages.  Out of 200 landlords questioned 44% were of the opinion that mortgages to purchase a buy-to-let property were readily available.  This is up 2% on the same period in 2013.

Further evidence of the recovering mortgage market for landlords is the recent Moneyfacts survey that showed over 500 mortgage products available now compared to only 200 just after the credit crunch.

The FT also reports an up trend in buy-to-let mortgage advances. In February 2014 the volume of gross buy-to-let loans advanced increased 46% compared to 2013.

Mortgage Search - finance my investment
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Thursday, April 10, 2014

RICS see spread of property price boom

Property price boom spreads across the whole of the UK according to the Royal Institute of Surveyors.

RICS economist Simon Rubinsohn described how the property market conditions have improved nationally “There has been a sense that it was one story for London and a very different outlook everywhere else, with perhaps a few other city centres edging ahead. But that is not the case any longer.”

The 513 RICS branches across England and Wales recorded an average of 23 property sales in the first quarter of 2014. The figure compares against a post crash low of 12 in 2009 and the mid-2007 high of 40.

Most pundits are feeling confident of price rises, with RICS increasing their forecast for property price growth to between 6 and 8 percent for 2014, however, they do warn of a shortage of property coming to the market.
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Rise in possession court fees

New court fees will come into place on the 22nd April. Landlords will see a sharp increase in fees on both Section 8 Notice possession and Section 21 Notice possession.
Section 8 (PCOL) claims and accelerated Section 21 claims will rise to £280.

The online possession service will also see a sharp rise in charges, with an application for possession used after the service of a Section 8 Notice, increasing from £100 to £250.

Landlords planning on submitting for a possession order have two weeks left of the current cheaper rates .

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Wednesday, April 09, 2014

The rise of the centenarian landlord

The BTL mortgage market is considering loosening age restrictions on lending.

The changes in the budget giving access to pension pots has meant a flood of elderly landlords are expected to hit the rental scene.

BTL lenders are re-considering their lending restrictions to cater for the ballooning market in elderly investors. With many pensioners holding large capital pots in the existing residential properties lenders see them as a safe bet despite any fragility in their health.

Currently most BTL lenders have age restrictions on when a mortgage will mature, typically 75 is the limit.

However, Mortgage Works are launching a product with a application age limit of 70, with a 35 years term mortgage product!

Now that would make the landlord 105 years old by the time their BTL mortgage matures.

Search the whole BTL mortgage market free 

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Tuesday, April 08, 2014

Rental arrears fall

Landlords reporting tenants in severe arrears  from non payment of rent has fallen over 35% over the last year according to LSL's buy-to-let index.  Their data from  LPA Receivers show that at 68,000 the number of tenants in serious arrears is now over 40% below the peak of 116,000 reached in mid 2012.

The trend is improving with the latest figures indicating that severe arrears only account for 1.4% of all tenancies.  This is down from 2.3% of all tenancies one year ago although it still remains flat on Q4 the previous quarter.

Property Hawk - insights

It could well be that the overall improving economic environment is feeding through to tenants and that less of them are falling into arrears.  Time will tell but with more people in work and the financial squeeze finally reaping economic results maybe landlords will be able to benefit from the economic up turn too.

Landords Insurance - professional rates - online brokers
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Monday, April 07, 2014

Most popular BTL mortgages

Max LTVInitial RateTermCompletion feeBooking feeIncentivesLender
85%4.99% Fixed2 Years2.5%£130.00NoKent Reliance Semi Exclusive
85%5.99% Discount2 Years2.5%£130.00NoKent Reliance Multi Let & Ltd Co. Semi Exclusive
80%4.09% Discount0 Years£499£100.00NoHanley Economic Exclusive
80%4.47% Fixed2016-11-302%£0.00NoSaffron BS Semi Exclusive
80%4.87% Fixed2019-08-31£995£0.00NoSaffron BS Semi Exclusive
75%2.84% Fixed2016-04-30£2495£130.00NoAccord Exclusive
75%2.99% Fixed2016-04-30£2495£130.00Free valuation Accord Exclusive
75%3.69% Fixed2019-05-312.5%£250.00NoHinckley & Rugby Exclusive
75%3.5% Discount0 Years0%£0.00NoHanley Economic Exclusive
65%5.27% Fixed2016-11-302.5%£0.00NoSaffron BS Ex-Pat Semi Exclusive
60%2.45% Discount2 Years£1950£250.00One free Valuation on properties valued up to £1,000,000Hinckley & Rugby Exclusive

Search the whole BTL mortgage market free

Tel: 029 2069 5446
Your home may be repossessed if you do not keep up repayments on your mortgages.  
The Financial Services Authority does not regulate some forms of mortgage.

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A balanced view of tenant eviction

The Guardian has made an attempt to show both sides of a tenant eviction story - the landlord's and the tenant's.

It makes a change to have a human face put on a landlord. For too long the left wing press have used landlords as easy bile fuel to feed the angry, 'this world is sh*t' brigade. A bit of balance is nice to see.

Simply put - most tenants are good,  most landlords are good, but a few tenants are dicks and so are some landlords.

Maybe Shelter should use that in there next press release - it would be more accurate than their usual statistics.

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Sandwell landlord licensing scheme consulation

Sandwell Council have started running a ten week consulation over plans for the introduction of landlord licensing in certain areas of West Bromwich. The consulation period ends May 12.

The proposed licensing scheme will apply to all private residential landlords within the area. Each rental property will require a separate licence. Licence costs will be charged as a one off fee to a landlord and might be as high as £500 per rental property.

Landlords would also be subject to a series of tests before a licence is granted, moving forward, and certain grounds would need to met to avoid fines of up to £5000. One proposed ground that landlords might be expected to meet is making sure bins are taken in from the pavement after refuse collection.

Leave your thoughts and read more on the Sandwell landlord licensing scheme proposals

It appears a tenants actions are increasingly becoming the responsibilty of their landlords. Where tenants don't have the money to pay fines, councils are clearly turning to a more lucrative source.

It begs the question, when did certain parts of society stop being responsible for their own behaviour?

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Investment returns could disappear

Calculations from Your Money indicate that new property investors could see their cash flow turn negative by 2017.

Projections are based around a property investor who has borrowed 70% of a residential investment property on a loan with the loan base rate of 3.4%.  With the bank base rate of 0.5% and the current mortgage costs of 3.9%.  Should the bank base rate rise to only 3% (a sixfold increase) the mortgage rate would double to 6.4%.  Have a look at the most recent interest rate projections.

The suggestion from Your Money is that in London for example, where the average valued property of £291,500 would attract a monthly rent of £1121.  An interest only mortgage of 70% of the property value is £204,050 would at a rate of 3.9% equal a monthly cost of £633 leaving a rental profit of £458.  But at a mortgage rate of 6.4% the mortgage cost would increase to £1088 giving a rental profit of just £33 per month.  This is before other rental expenses that could easily amount to another 1.5-2% of the gross rental yield

All this could lead to landlords being confronted by a rental loss within a couple of years.  Booming capital values would obviously compensate for any rental shortfall but if they don't materialise then investment returns in the short run may disappear.

All this is food for thought for highly geared landlords. Landlords can use our BTL mortgage search to find the best deals from the market.

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Saturday, April 05, 2014

Chainsaw rent demand

Landlords looking at getting their rent back might want to look at the headlines in the Toronto Sun.  Apparently, a landlord in Berlin had completely 'lost it' and gone rent collecting armed with a chainsaw.

NOT ADVISEABLE!  even if it is somewhat understandable.  I've got a tenant who has decided stop paying their rent.  Unfortunately, my mortgage company still needs me to cough up the 'readies' each month.  You do feel like banging the door down or even cutting it down.

Instead in time honoured tradition I've served my section 21 notice and I'm now waiting to serve the follow up N5B.  Have a read of this Landlords Bible about filling out your N5B form seeking possession.  If you are still not sure how to do it feel free to drop a question about N5B on our Forum.

I'm afraid this is the boring but correct way of getting your property and your money back but it should avoid you been slung in the slammer for 'harassment'.

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