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Saturday, October 25, 2014

Thrills & spills of being a landlord

It makes me laugh. The diversity of "living the landlord dream".

Online management of property
In the morning in my capacity of Director of Property Hawk I have been 'shooting the breeze' with two guys from a billion pound company looking at the possibility of how we can allow landlords to manage their whole rental operation from their phone or laptop. A digital end to end solution from getting in tenants to managing the day to day operation of getting a CP12 or landlord safety certificate to being able to sort out the process of gaining possession of a property through the courts.

Hands on management 
In contrast in the afternoon I spent half an hour trying to explain to one tenant the scientific causes of condensation and mould. This was quickly followed by physically manhandling a fridge freezer from one of my garages into the back of Micks (pictured above) waiting van. Comically it was not possible to extract the said fridge through the front entrance. Instead I was left trying to smuggle it down the side passage of the adjoining property without being spotted.

All in a days work for a jobbing landlord and highlighting the fact that are still a long way from every landlords dream of a hands free, hassle free direct residential property management. Occasionally though it's great to dream!

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Thursday, October 23, 2014

18 years of BTL growth set to cont...

Figures from Paragon say that private landlords now own 18% percent of the UK's housing stock. These five million rental properties are owned by two mullion landlords, which by my calculation makes it an average of two and a half properties each.

The Paragon report, titled "18 Years of Buy-to-Let" reflects on the period from the birth of BTL in 1996 to now. 

The report looks at the phenomenal trajectory of BTL lending, with the private rented sector now worth close to £1 trillion and only looking to increase. BTL mortgage lending continues to rise at a rate of 20 percent per year, and with a resurgent lending market now with more than 700 different BTL mortgage products on offer.

The Government's own study into the private rented sector predicts landlords will come to own more than a third of the UK's residential property by 2032.

Beyond that, who knows...

John Heron, Managing Director of Paragon Mortgages, said: “The buy-to-let market has been a force for good for the wider UK housing market. Before the development of buy-to-let landlords had few options when considering how best to finance a rented property. The finance that was available was expensive and poorly matched to the customer’s needs. It was particularly difficult for new landlords to start to build a portfolio.

Buy-to-let has changed all this. It enabled landlords to access finance that was better designed to meet the specific needs of the rental market at much more competitive interest rates and thus helped expand quality and choice in the PRS.

Whilst most people continue to aspire to home-ownership, and the mortgage industry plays a critical role in facilitating this, for many the PRS remains a housing choice out of both convenience and need. Mortgage lenders can and do work alongside landlords and the letting agency industry to make sure that renting privately provides safe, efficient and flexible housing for those that rely upon the sector for a home.”

IMPORTANT! Due to current market conditions, lenders are withdrawing and replacing products with little or no notice.  Please check our website regularly to see the most up-to-date products available.  

 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.

Frank Knight tenant survey infographic

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Wednesday, October 22, 2014

Suspended student property fund

I have spoken many times about putting your faith in so called experts and fund managers to manage your assets or avoid the hassles of direct property management. The plus is you cede the day to day hassle of property management to somebody else. No more text, emails and calls informing you that the kitchen ceiling is dripping water, the central heating doesn't work or that my garden is over grown and what are you going to do about it?

Brandeaux fund devalued 
This week the FT carried a report about the Brandeaux student fund investing in student properties. The fund had to be closed to prevent an outflow of cash. The fund was due to float on the stockmarket but this float was suspended because of insufficient investor appetite. The value of the fund has been cut due to a revaluation and investors are likely to only receive 93% of the previous value. At the current time there is no exit route for investors. To read more about the travails of the investors have a look at this piece in the Investment Week. 

What it does say to me is that frequently fund managers are more bothered about collecting their big fat fees when a fund floats than about the long-term performance and welfare of the individual investors.  So bare this in mind before investing ALL your cash with somebody else!

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Tuesday, October 21, 2014

Affordability the primary concern for all tenants

Knight Frank have published their Tenant Survey 2014. The survey represents the opinions of 3,500 tenants in the UK private rented sector.

Amongst  the report's charts, statistics and drawn out conclusions, it identifies one very interesting key point - tenant's from all age groups, regions and income groups have the same primary consideration -  affordability.  

Nearly two thirds of the 3,500 respondents marked up affordability as their main concern when picking their rental property.

It appears cost overrides all other decision factors, including location and space.

The flat might be perfect, but if the rents too high....

Trend line better reflects rent reality

The endless rental data pumped out by letting agencies, property portals and to some extent, ourselves, has become increasingly skittish. Average rents fluctuate from week to week, even day to day - this week I've somehow managed to read that rents are both up and down.

As with so many things in this press release hungry world, nothing makes any sense.

'Statistics, damn lies and statistics' as they say.

For a more stable and trajectory of what is actually happening to rents I use the trend line from our Rent Index graphs.

The Blue trend line smooths out monthly glitches, seasonal peaks and concentrates on creating a more rounded, long term view on where rents have been.

As you can see from this recent snapshot, the BLUE trend line shows a slow steady climb in rents from 2008 to 2014.

This probably reflects the reality for most landlords, instead of the press release up/down approach that drives column inches.

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Leicester landlords face alarming fines

According to the Hinckley Times, landlords could find themselves fined for each time the fire brigade attends a false alarm at a rental property.

A fine of £290 has been proposed if a rental property creates repeat false fire-alarm call-outs involving fire officers from the Leicestershire Fire and Rescue Service.

Leicester's Fire Chiefs have decided to start charging private residential landlords for false alarms after receiving 2,700 automatic fire alarm call-outs last year of which only 80 turned out to be real.

Leicestershire Fire and Rescue Service hope the introduction of fines would 'encourage better management of alarm practices'.

There proposals follow a similar scheme introduced by the London Fire Brigade back in January. In the first four months of London's scheme 224 invoices were issued of which 33 were paid.

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The best yields for buy-to-let revealed

As a landlord have you ever wanted to be show where the best yields across the UK are for buy-to-let?

Sheffield City Centre best for yields?
The postcode S1 which for those in the know has the best yield in the UK according to the totallymoney website.  For those in the know this is not surprising.  Sheffield city centre like many provincial city centres is benefiting from a boom in rents as International students from the likes of China and the Middle East bid up the cost of renting the best quality new apartments.  The average rent is showing as £645 giving a yield of over 11% on the quoted capital value of just under £60k.  The reality is that to achieve that kind of rent a landlord would be looking at paying over £80,000 for a 2 bed apartment and that after paying the ground rent and service charge a landlord would be lucky to have £500 in their pocket each month (even less if they had a mortgage).  The figures have been distorted by the large number of ex council properties in the area that would only be suitable to LHA tenants.

International students a lucrative market
On the recent Letting Essential Course I was talking to one newbie landlord that had created her own specialist letting business by letting new builds almost solely to these types of tenants on a 12 month Assured Shorthold Tenancy Contract.

Dangers of letting to international students
The danger with international students is it's very difficult to insure against bad debts.  If they disappear off to China then how will you get your money back.  Even a guarantor agreement is not likely to be much help.  So far she has been lucky so fingers crossed.

The yield table is an interesting  tool but like all statistics a landlord needs to delve behind the headlines and understand what they really mean.

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Monday, October 20, 2014

This weeks most popular BTL mortgages

Max LTV Initial Rate Term Completion fee Booking fee Incentives Lender
85% 5.29% Fixed 2 Years 2.5% £130.00 No Kent Reliance Semi Exclusive
85% 5.99% Discount 2 Years 3% £130.00 No Kent Reliance Multi Let & Ltd Co. Semi Exclusive
80% 3.99% Fixed 2016-12-31 £2495 £150.00 Free valuation Mortgage Trust Exclusive
80% 4.99% Fixed 2016-12-31 0% £150.00 Free valuation Mortgage Trust Exclusive
80% 4.09% Discount 2 Years £750 £250.00 No Hanley Economic Exclusive
75% 2.39% Fixed 2016-12-31 2.5% £150.00 Free valuation Mortgage Trust Exclusive
75% 3.79% Fixed 2016-12-31 0% £150.00 Free valuation Mortgage Trust Exclusive
75% 2.5% Discount 2 Years £1995 £250.00 One free Valuation on properties valued up to £1,000,000 Hinckley & Rugby Exclusive
75% 5.39% Variable 0 Years 2.5% £0.00 No Saffron Light Refurbishment
70% 2.5% Fixed 2016-11-30 £2495 £245.00 Free valuation (maximum of £781 for properties up to £1,000,000) and free legals for remortgages. Skipton Exclusive
65% 2.99% Fixed 2017-01-31 £1995 £150.00 Free valuation Mortgage Trust Exclusive
65% 3.49% Fixed 2017-01-31 0% £150.00 Free valuation Mortgage Trust Exclusive
60% 2.45% Discount 2 Years £1950 £250.00 One free Valuation on properties valued up to £1,000,000 Hinckley & Rugby Exclusive
60% 2.25% Fixed 2016-11-30 £2495 £245.00 Free valuation (maximum of £781 up to property value of £1,000,000)and free legals for remortgages. Skipton Exclusive
IMPORTANT! Due to current market conditions, lenders are withdrawing and replacing products with little or no notice.  Please check our website regularly to see the most up-to-date products available. 

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.

Hammersmith landlord fined

A London landlord, Royston Cooper has been fined nearly £30k for various breaches of the Housing
Act at a HMO in Hammersmith.

The fine breaks down into £15,000 for not having a HMO license, £5,000 for not maintaining the boiler,  £5,000 for not fixing a leaking soil pipe in the toilet, and another £3,000 for not responding to a request for information, court costs of  £2,160, and a victim surcharge of £120.

The five architectural students who were letting the property reported the landlord to Hammersmith and Fulham Council.

Cooper, 47, of Billingshurst, West Sussex failed to appear at Hammersmith Magistrates’ Court.

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Average rents fall by 0.3% reports Homelet

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Saturday, October 18, 2014

10 things you need to trace a tenant

On the first ever Letting Essentials Course we learnt from Simon Bennett of Springfield Associates  what the 10 essential pieces of information that a landlord needs are if a tracing agent is going to be able to find a tenant who has disappeared.  They are surprisingly straightforward, but having these bits at information at the start of the tenancy could give you up to a 75% of your tenant being traced if they abandon your property compared to the figure of only 9% success rate for debt recovery in the courts.

The information he suggest that are needed are:
  • FULL name including all middle names 
  • Correct date of birth 
  • Last known address 
  • Last permanent address 
  • Family address 
  • Partners FULL name 
  • Partners last known address and permanent address 
  • Family address 
  • Phtographic ID - driving licence, Home Office ID card, Passport 
  • National Insurance number
 How many of these do you obtain from your tenants before handing them the keys?  Tracing costs start from £75 but be warned finding a penniless tenant can be less than useless if you want your money back...unless you have a solvent tenant guarantor in place.

Worth thinking about.....

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Friday, October 17, 2014

Letting Essentials Course - NEW DATES

Letting Essentials  the course to give landlords, letting agents and property professional the essential insights on how to let residential property legally has just announced a number of new dates:

Friday 27th February - Central Sheffield nr train station
Friday 24th April - London / Luton nr train station
Mon 6th July - Nottingham nr train station

The 3 courses will take place in Sheffield, Nottingham & Luton.

For more details and to book a place:


Landlord Training - expert insights

Thursday, October 16, 2014

Miliband to ban BTL investors buying new builds

The rumour is, Labour will announce new council powers today, that will enable them to ban buy-to-let investors from purchasing in
designated new build developments.

The proposed ban is part of the the Lyons review, part of which is  looking at ways to promote opportunities for first time buyers.

The review proposes handing new powers to councils which would enable them to stop investors from buying new build property in certain areas/developments.

Ed Miliband has been reported by the FT as saying "A significant proportion of homes on those sites cannot be bought by anyone before first-time buyers from the area have been given the chance." 

The proposals are focused on relieving the property shortages in the South East, particular in certain  London boroughs where much of the new build property is being taken by foreign investors.

Alongside the block on BTL investors, the 180 page Lyons review on the future of housing puts forward Labour's aim to build 200,000 new homes by 2020.

“We propose that local authorities apply their powers, funding and incentives to take a proactive approach to land assembly and locally led development models in housing growth areas,” the report says.

Lyons also recommends giving greater planning powers to local authorities who form what are being tagged as 'Homes Corporations' similar to those held by the now defunct Urban Development Corporations.

Well, that all sounds like a bit of vote winner.

Read the full 180 page - Lyons Housing Review

Or read comment from -

RLA accuse Shelter of distorting evictions

Shelter's have been pumping money into their most recent campaign to convince the general public we are suffering from an eviction epidemic. The charitable / tax payer funded campaign group would have us all think that landlords are bludgeoning tenants out onto the street if they so much as turn their nose up at the state of a microwave.

"Please Mr Landlord, could you put a front door on my property."
"A door, whatever next? You're evicted!"

This is far from the truth. The majority of landlords want to keep tenants for as long as possible. Re-letting a property is a costly and time consuming exercise that is best avoided. 

I suppose we shouldn't be surprised to find that political campaigning is biased, warped and manipulative of the truth. It's why so many of us have lost faith in the entire political system.

Today's political furore involving Lord Freud is a classic example. Politicians seizing on a sound bite, like cheap lawyers, dissecting a phrase or sentence out from it's context, blowing it out of proportion and sensationalising it for a cheap point score.

It's embarrassing, and sadly it reveals politicians for what they are, ugly actors and PR bunnies.

In the Lord Freud case, though his wording was ill considered, the fact that he was at least debating the issue and looking for solutions should be looked on as a positive. ( I did spend five years setting up projects and schemes for adults with learning difficulties so understand some of the issues his comments were directed at.)

The cheap political point scoring only goes to underline how one word out of place can be seized upon and man-handled into some kind of dishonest truth. 

So I say it again, that's why people have lost faith in politics.

Anyway, enough of my Thursday morning rant, back to evictions.

The Residential Landlords Association has pointed out that according to figures in the most recent English Housing Survey,  2012/13, there were seven per cent of tenants who had been asked to vacate  their rental property in the last three years. This is a fall of 2% from the previous years figures, with the 2011/12 English Housing Survey recording a figure of nine per cent.

The RLA has said that the majority of evictions happen for legitimate reasons, a landlords wanting to sell, or  perform refurbishment extensive work,  or because tenants aren’t paying their rent or are committing anti-social behaviour. 

The association claims the figures expose Shelter’s campaign today as “irresponsible scaremongering which can only serve to unnecessarily frighten tenants” according to

Policy director Richard Jones, policy director for the RLA has accused Shelter of putting out "highly questionable" statistics. 

Going on to accuse the charity of “irresponsible scaremongering which can only serve to unnecessarily frighten tenants”

“The official figures show quite clearly a fall in the number of tenants having their tenancies terminated and by far most of these are for perfectly good reasons. Shelter’s campaign on so called revenge evictions is totally inaccurate and irresponsible”

“To severely restrict landlords’ right to regain possession as Shelter advocates would severely damage confidence in the sector. This would reduce supply at a time of high demand causing more people to be homeless and we thought Shelter is all about reducing the number of homeless” he says.

Sadly, Shelter have a lot more money to throw their distorted PR messages our there.

But heh, that's politics for you.

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Wednesday, October 15, 2014

Forever tenants - give up on ownership

Aviva reckons that in their recent survey 35% of renters aged between 35 and 44 believe they will never be able to buy a property. This figure rises to 50% the 45 to 50 year old tenants.

The survey found that 41% of renters had lived in a rented home for more than five years.

What this tells me, is keep your tenants happy, and they might still be with you in decades to come. 

My record tenant has been with me since I started, he's paid me seventeen years of rent and saved me a fortune in re-letting.

You've gotta love him....

Leicester landlord jailed for eight months

A landlord has been jailed for eight months for ignoring fire safety regulations at a pair of rental properties in the Highfields area of Leicester.

Haresh Rambhai Patel, had failed to act on safety warnings given to him back in 2012, when in May 2013 the adjoining rental properties caught fire, and three tenants had to be rescued by firefighters.

At Leicester Crown Court, Judge Robert Brown concluded: 

“These offences show you failed in virtually every aspect of fire safety in relation to 9-11 Evington Street. You failed to prioritise your obligations as a landlord, whilst taking the rent.”

Mr Patel pleaded guilty to seven offences under the Regulatory Reform (Fire Safety) Order 2005 during an earlier hearing at Leicester Crown Court.

This eight months sentence, is in addition to s an existing £38,000 fine, granted by the magistrates court earlier this year following a separate council prosecution, for Patel's failure to obtain the required licences on the pair of properties. 

At yesterday’s hearing, Patel was ordered to pay a further £13,704 in prosecution costs.

Mr Patel, has since spent £36,000 on fire safety measures across his rental portfolio of sixteen other properties.

A warning to all of us.

Tuesday, October 14, 2014

Life time tenancy purchasing

The Telegraph have done a piece on buying rental properties with lifetime tenancies.

At discounted values of around sixty percent, one investor has taken the opportunity to buy one for his two year old daughter.

However, I cannot help but see it as a bet on death, or would the term 'life expectancy' be a more sensitive way of putting it?

Anyway, no wheeze, no win.

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Contingency planning for BTL mortgage rate rises

Contingency planning

Andy Young, at Property Hawk Mortgages says:

It is highly likely that interest rates will start to rise during the course of the next couple of years, although I think the increases to Bank of England Base Rate will be small and in gradual increments, perhaps reaching 2.00% by the end of 2016. This of course means that the pricing of buy-to-let mortgages is likely to rise too as lenders retain their profit margins.

When considering the implications of a potential rate rise, there is no need for landlords to panic, but some contingency planning is definitely prudent. It is advisable to consider whether current rental income is sufficient to cover any increase in monthly mortgage payments and to ensure a surplus for potential void periods. Most lenders are conservative with their rent stress tests and will only approve a buy-to-let mortgage where the rental income is at least 125% at a notional interest rate of 5.00% of the loan amount. This should provide a sufficient rental income buffer for most properties.

For landlords who prefer to know exactly what their monthly payments are going to be, choosing a fixed rate mortgage may be the preferred option. At Property Hawk Mortgages, our most popular buy-to-let products are often 2 year fixed rates. However, there has also been an increase in demand for 3 year and 5 year fixed rates in recent months.

There is certainly a good argument for fixing over a longer period such as 5 years. Although 5 year money is more expensive and the monthly mortgage payment will be higher, it does provide security and peace of mind over the longer period when interest rates start to rise.

Examples of fixed rates currently available:

2 year fixed - Mortgage Trust - 2.39% fixed until 31/12/2016 up to 75% LTV with a 2.50% completion fee and a free valuation

3 year fixed – Virgin Money – 3.39% fixed until 01/01/2018 up to 60% LTV with a £995 completion fee and £500 cashback

5 year fixed – Accord Buy to Let – 3.99% fixed until 30/11/2019 up to 75% LTV with a £800 completion fee

Although Base of England Base Rate is predicted to rise, I believe that 3 years into the future the ‘new normal’ is likely to be between 3.00% and 4.00% and that rates will remain lower than historical ‘pre-credit crunch’ rates of around 5.00%.

IMPORTANT! Due to current market conditions, lenders are withdrawing and replacing products with little or no notice. Please check our website regularly to see the most up-to-date products available.

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.

Be wary of fake tenant references

Landlords need to be wary of taking references provided by a potential tenant.

References are easy to fake.

There are now even online sites that provide fake landlord references. For a fee, these fake reference companies will even answer the phone to give verbal confirmation that the tenant/ client is the epitome of high morale and trustworthiness. So glowing in fact, you might even consider inviting them to move in with you.

Here's an example of one such fake referencing site.

Once in, however, it might become clear why the tenant used a fake reference service in the first place, but by then it will be too late.

So be warned, and always take up the usual tenant checks alongside any reference provided by a potential tenants - however professional it might appear.

Get a tenant reference here

Landlords reminded of the dangers of CO

For those landlords who still resist giving proper attention to their gas appliances, this close shave involving the dangers of carbon monoxide poisoning might slap them into action.

Fortunately, this time around, the tenants recovered, but it could have all ended very differently, after a the a four month old baby was rushed to hospital for treatment.

The family had been feeling unwell for months prior to the incident, unaware that the invisible killer, CO, was leaking from faulty gas appliances at the rental property.

The landlords, Mehboob Bobat and Suraiya Bobat, were both found guilty of breaching health and safety regulations, following the Health and Safety Executive (HSE) discovery of  two faulty gas heaters, a gas fire and a gas boiler. 

Trafford Magistrates Court were told the tenants had been feeling unwell for months. 

The mother had collapsed on the kitchen floor, but had put it down to complication in pregnancy, the husband had suffered also suffered from headaches.

Finally, after feeling particularly unwell, they called for an ambulance, and after being rushed to hospital were treated for high levels of carbon monoxide poisoning.

The landlords failed to provide a copy of a valid landlord gas safety certificate to the court, and pleaded guilty to two breaches of gas safety regulations.

Each landlord was sentenced to 80 hours of community service and each were ordered to pay costs of £720.

Property forecast to go up by 30%

The crystal ball is out again. This time, Rightmove and economic forecast agency Oxford Economic are peering into the future.

They predict great fortunes, with average house price increasing by 30% over the next five years.

Regionally the south will perform best London predicted to rise by 33%, the south-east by 37%, whilst the North West sees the smallest rise of 24%.

These predictions have been described as 'the most comprehensive house price forecast of its kind ever created,' with data from both asking prices, sold prices and surveyor valuations being thrown into the mix.

Miles Shipside, Rightmove director and housing market analyst comments:

“Alongside the publication of the Rightmove monthly House Price Index which is based on new seller asking prices, we have unique access to other sources of property data from surveyors and property transaction prices at a very local level. This has enabled us to work with Oxford Economics to create a unique forecast that can be used as a guide by a number of businesses."

“Understanding the path of future house price growth is a key element of UK economic strategy and decision making, and our data driven forecasts contain insight not previously available from other commentators or the Government’s own forecasts produced by the Office for Budget Responsibility.”

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House prices to surge 30% over 5 years

The latest survey from economic forecaster Oxford Economics is talking about a rise of house prices of over 30% in parts of the south east in the next 5 years.

Top hot spots have been identified as Southampton with a suggest increase of 43% followed by Luton and Brighton at 41%. The suggestion is that the buoyant London housing market will spread out over the South East in a ripple effect. Outlying areas such as Carlisle and Manchester are only expected to see house price increases of less than 20%.

Interestingly, the survey has been commissioned by Rightmove. Have you ever seen an estate agent which effectively Rightmove is, ever calling an end to a booming housing market. Wouldn't that be like turkeys calling for Christmas?

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