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Monday, June 30, 2008

Confucius he say.....

....there are two things in life you can't avoid. Death & taxes. Well I didn't actually say that, sue me!.
However, it is a fact. As you all probably know, Tax evasion is an offence, whilst tax avoidance is still legal (until the taxman can find a loophole to close).
Just a little about me before I start posting here. I've been interested in tax matters for some while, and got particularly interested in CGT (Capital Gains Tax) and IT (Inheritance Tax) when relatives nearly got hit by both.
Luckily for them, they knew that I was involved in the tax business and came to me for some advice. Just by acting prudently and in the nick of time, they both avoided being hit hard by the taxman. Following those incidents, I decided to try and find out more. After some long nights over a spluttering candle, I have put together a few hints and tips that most people reading these blogs (anyone out there?)will find useful.

Sunday, June 29, 2008

Buy-to-let investors secure huge discounts

The Financial Times reported this weekend that some investors were securing huge reductions on new build sales.

Where do professional landlords go for buy-to-let insurance?

Property developers and house builders who are struggling to sell in the current market are seeking to unload unsold housing units fearing further house price falls and needing cash to shore up their business.

Professional buy-to-let investors who are able to buy in bulk are finding some great deals and negotiating genuine large discounts, in some case up to 30% the paper reports.

Expert mortgage advice - 5 brokers - 1 SIMPLE FORM

Mathew Tack, director of global investments at Hamptons International warns investors that: "This is a distinct window and by this time next year, these opportunities will be gone." The message to cash rich landlords is clear. They need to move fast to hunt out the best deals. Landlords are in particularly a strong position where:

* it is an apartment development because developers cannot mothball these projects
* the developer has completed a phase of development but has not sold all the units
* a scheme involving small developers who are exposed to high on going loan costs and cant cross subsidise costs from other parts of the business

New build opportunities

In all these cases it is essential for developers to sell quickly to generate the cash they need to keep the business afloat. In these circumstances developers may be prepared to sacrafice their profit in order to generate the cash they need. Most developers work on 20-25% profit margin before discounts and incentives. Landlord and buy-to-let investors should therefore be pushing for that kind of discount on any initial asking price.

Landlords however still need to be cautious about diving in too early and at too high a price. This is because with prices heading down and over supply in many city centre markets, a large discount still may not represent quite such a bargain over the long-term.

Thursday, June 26, 2008


We've started the experiment - no deposits! Once the legislation was in place last year we decided that we would no longer take a security deposit from our student tenants.

We changed our thinking. Did we really want our properties registered on a TDS (Tenancy Deposit Scheme) database? Why do we need to take a security deposit, with all the hassle of the TDS and possible loss of money via an arbitration process.

There is a perfectly good legal system that solves the issue of student tenants not paying for damage, lack of cleaning or rent during or at the end of a tenancy.

It's called a guarantor. A guarantor is over 18, a UK house-owner and has a regular income, which is sufficient to meet their potential liabilities. Don't mess around with an overseas guarantor. It may be impossible to recover a debt. What if your potential tenant is an overseas student and doesn't have a UK guarantor? Tell them to find a UK guarantor or another property to rent.

A guarantor is often a parent, who is checked out by a credit reference agency. They will pay any demanded outstanding debt within 14 days or face the prospect of a court case and the likelihood of not being able to get credit or insurance in the foreseeable future. A powerful reason for paying up should the student tenant default on their obligations.

The guarantor and landlord create a deed of guarantee, which is a legally binding separate contract to the tenancy agreement. No need for arbitration, landlord fines, unable to serve a section 21 notice, wrong wording in the tenancy agreement and so on.

Most student tenancies require the group to be jointly and severally responsible for the payment of rent and other charges. Make sure in your deed of guarantee that the guarantor is also jointly and severally responsible. A useful arrangement should one or more guarantors default on their payments.

On signing the contract we now charge each tenant a perfectly legal non-returnable administration fee of £50. That's £200 upfront in a four-bedroom house for any future expenses. Add to this a £20 fee for the credit check. We use the company 'Rentchecks', they are quick and efficient.

Our student tenants have leapt at the opportunity to pay only £200, rather than the usual security deposit equivalent to one month's rent.

At the end of the tenancy, if necessary, we intend to send duplicate letters for charges simultaneously to both the tenant and guarantor. In the letter we will detail the reasons for the charges and note that if the tenant fails to pay within 14 days we will demand the guarantor pays.

We cannot legally harass tenants for payment, however we expect their guarantor to do the chasing on our behalf! If the tenant fails to pay we can legally hassle a guarantor!

The new approach hasn't yet been tested. Next summer in 2009 we will see whether our experiment pays off. We are quietly confident that if a student doesn't pay charges, their guarantor (or other guarantors), often mum or dad, will pay, once the consequences of not paying are fully appreciated. There is also the added bonus of an additional £200 upfront admin fee!

Impending crunch and the benefits of renting

Proprietor of Belvoir Peterborough, Terry Lucking, takes a look at the impending credit crunch and the benefits of renting…

Meet Terry:
Formerly a managing director of a food processing business. My franchise started June 1999 with me alone as a sole trader working in a home office. Mid 2000 I moved to a small serviced office and employed my first staff member. We outgrew these offices and moved to larger offices in 2003. Between 2003 and 2007 my franchise changed significantly. As confidence and profits grew we decided to move to a new location on a long-term lease. Now I run one of Peterborough’s leading letting agents; I have the most visible location of any letting agent in Peterborough. My role now is team developer/manager and business planner.

Terry says:
Other than folk who have been hibernating for the last few months I think it is fair to say we all know property sales have slowed. At least the exciting end to the European championship football having three British clubs in two finals gives the newspapers something else to deal with rather than continually analysing the housing market and talking us into doom and gloom.

The current drop in confidence in our housing market and the changes in the mortgage market is opening up great deals for prospective buyers. Vendors (those selling) have had to drop their asking price to get an offer. So vendors who have to sell have to take offers against the asking price. The next difficulty is finding a suitable mortgage and a getting valuation for what price was agreed. Many current valuations are not reaching the agreed sale price, which means the buyer has to try to negotiate a lower price.

Given we currently have lower house prices you would expect it would be easier for FIRST TIME BUYERS to buy. This is what the headline writers have been saying for months.

Well it isn’t working like that. A major reduction in the number of mortgages on offer combined with tougher loan qualifying tests and larger deposits has actually made it more difficult for FTB’s to buy!

Something to learn from this is that lower house prices doesn’t automatically mean it will be good for all FTB’s.

Why do we need to own a house?

Why do we need to own the house we live in?

Many people will have different answers. If you decide owning a house is important DO YOU need to own the one you live in to benefit from the property ladder? In my opinion the answer is NO.

You can buy an investment property in another area and let it to renters. You could buy more investment properties in the future as the value of the first one you purchased increases. You could use these investment properties as part of your pension planning.

Many people think their own house will be part of their pension. If your strategy is to sell this house what are you going to live in??

Buying a house in another area may actually mean that FTB’s can afford to buy and benefit from the property ladder………just not live in it themselves.

A rethink in how you can use your money, what you own and what you live in may be useful for many people and families.

Renting offers many benefits:
• Predictability of annual costs; more accurate budgeting
• If your job takes you to a new location you can move quickly
• If your family numbers grow or reduce you can up or down size quickly
• Move quickly to reduce your outgoings
• A wide choice of houses and apartments in various sizes in most locations
• Better value for money

Renters are protected now more than ever before. For information on tenants rights and responsibilities have a look at our central government website:

Tenants should select their landlords and agents carefully. Don’t just choose the property and forget to ask the landlord or agent some key questions. Be confident and ask searching questions. If the landlord or agent is unable to answer, perhaps you should look for a different property.

The choice of properties available for renters is wide and landlords have to invest to make their properties attractive to prospective tenants.

Length and security of tenure can be negotiated with landlords or their agents. Spend time planning and discussing what you want. You will find most landlords will be cooperative and welcome polite discerning customer (tenants).

So renting can open up new opportunities enabling faster and more flexible solutions when dealing with today’s fast changing demands and lifestyles. It does not mean you are not on the property ladder or able to benefit from future capital growth the UK housing market may have to offer.

• For more information on how renting could work for you or your family, visit the Belvoir website at Please feel free to get in touch. Contact Belvoir central office on 0845 331 2741.

Landlords Back to the Property Auctions

My current search for good news for landlords, seems to be consistently met by a fundamental split of good news for some / bad news for others.

I was just reading This Money article reviewing the recent property auction at London's Cafe Royal.

It's full of property from distressed sellers, many from unfortunate property investors who have seen their investment portfolio go off the rails with the rises in mortgage rates.

'You're not cheering me up.' I hear you mumble.

But, here's the good news, some of these properties are starting to make a reasonably sound investment argument.

If you are a landlord or property investor, with decent credit options or bag loads of cash, I think the time is right to start sniffing at the auctions.

It all comes down to old school investment fundamentals.

Look at the realistic rental figures you will obtain, check out the finance costs and move forward with a reasonable yield, maybe factor in a small capital growth % over the next 15 years.

If you can bag a bargain now whilst the property market is having an over- reaction to city centre apartment property, you might just bag a great long-term buy.

SOLD to the woman in the rubber gloves.

Wednesday, June 25, 2008

Creating a new tenancy - BIG TIP

That student tenant upstairs wants to sign a new tenancy agreement. I know what he's like. Sneaky little bugger. Landlords I've got a nice little TIP to make sure that you keep the upper hand with your tenants & it's perfectly legit and it goes likes this.

Serving a Section 21 Notice
Landlords generally wait until the tenancy hits the buffers before serving a section 21 notice to get possession of their investment property.

Most of the problems landlords experience with serving a section 21 Notice relate to getting the dates correct particularly the expiry date on a fixed term that has become a periodic tenancy.

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Avoid or that shenanigans and keep ahead of the game I say by doing all the paperwork at the start of the tenancy. Serve your section 21 (1) B at the beginning of the tenancy at the same time that the tenant signs the tenancy agreement.

Landlords - keep one step ahead
What I will do is to get that pesky student to sign the Section 21 (B) when I grant him another 6 month assured shorthold tenancy. All I need to do then is include the expiry date for the Section 21 Notice as the last day of the tenancy. As far as he is concerned it's just another bit of paper work that forms part of the tenancy.

Free Section 21 Notice

The great thing for me as the landlord is if he causes me any more grief or has any more of those student parties I can get rid of him at the end of the 6 months tenancy. There will be no arguments about whether he has or has not paid the rent or is more or less than 2 months behind on his rent.

Because it is not fault based possession I can go straight in and issue a County Court Form N5B

If the Judge is satisfied that the section 21 notice is correct and that it has been served then he will make a Possession Order without a hearing. That normally means the pesky tenant gets booted out in 14 or 28 days. If that time will causes the tenant hardship the judge has power to extend the time to 42 days but no longer.

Anyway, must go I promised Miss Jones that I would put up some shelves to house her collection of snow domes. She is such a sensitive lady that I don't want to keep her waiting for it, I mean me, I mean to get it up....the shelf.

The Story of How a Luxury City Centre Apartment Block Becomes a Student Halls of Residence - A Warning for Landlords

Good block / bad block - this is the question many landlords should be asking about their city centre investments.

The potential value of any block of flats, sorry I mean apartments in a city centre location is the quality of the people who live in them.

Now when I say this I don't want to sound snobbish or judgmental. So I apologise if this is how I sound.

I am purely looking at this from an investor angle - so therefore financially.

However the reality is that well heeled buyers or tenants aren't going to want to live in a block populated by loads of students for one simple reason.

They are well heeled for a reason, because they get up early, work hard and need a good nights sleep after a long day.

Students in contrast lay in bed till noon, drift out after Loose Women (the TV show) and drink and party until 2.00am. Return to the apartment block, slam a few doors, sing a bit along the corridors, put some toast on, switch on the music and chat till 5, before passing out( forgetting to switch the music off).

The well heeled occupant gets up the next morning, heads out to Starbucks for a coffee ,grabbing a local property guide from the newsagents on the way.

And so this cycle continues until the luxury apartment block is the new local university hall of residence.

The problem for landlords or property investors if they may get a slightly improved rental by cramming in a gang of students into their two bed apartment, but they could be destroying the capital value of their property.

Landlords have been warned.

My advice would be for blocks to take control of the situation on blocks with a large buy-to-let ownership and for the management to draw up strict,restrictions on the types of tenants excepted.

Property Auction Doldrums for City Centre Apartments

The current talk in the property press is about the collapsing prices of the city centre apartment developments.

David Sandeman of the auction site Essential Information Group commented

“We are at a stage where there are now flats which are completely unsaleable. In many cases, the flats have been repossessed after the owners failed to meet rising mortgage costs.

“People believed all the hype and the marketing that they would be able to rent out their flat for £1,200 a month to a professional couple. But they could only actually get £800 a month renting it out to students who have trashed it.’

Mr Sandeman said the situation was likely to have worsened since February.

The EI Group study showed that out of 535 flats sold at auction, only 20 were sold for a profit on their purchase price.

Tuesday, June 24, 2008


If you are a student landlord at some time you'll hear the words, "Would it be okay if we just left a few things in the property over the summer, before we start our tenancy" or " we will be moving into another house after the summer and your new tenants have said it is okay for us to leave a few things in the property.

Our experience is that they just don't mean a few things. Cupboards will be bulging or the lounge will be full from floor to ceiling.

If you let your properties on a 10 or 11 month contract there will be a void period, when often maintenance and decoration are planned.

Time to consider the issues. The new tenancy hasn't yet started or their tenancy has just finished, so who takes responsibility for the student belongings should they be stolen or damaged? Have half the local student population sneaked in their little bit to the pile, because of your generous gesture?

What if you have to move stuff around during maintenance and cleaning and they are damaged in the process? Who pays?

We no longer allow access to the loft for storage either during or between tenancies. A student left a pile of stuff in there during the summer and on returning, when the other tenants had moved in, climbed the ladder and found the one spot in the loft that wasn't boarded out, putting their foot through the ceiling.

No apology and when we suggested they pay for the damage, not only wasn't there any payment, but there was a hint that they might take the matter further, because the floor in the loft was unsafe and the result was a bruised foot. How's that for trying to be helpful?

Student's don't usually pay to store their goods during a void period so, when we hear the words, "Would it be okay if we just..." the answer is a resounding no!

Generalities are dangerous

Just having read through the various posts, I think that one thing is clear. How any one landlord is doing it totally dependent on the particular type and location of property that that person owns. At one end of the scale is the frightening media hype over new build apartments in central Leeds quartering in value in a year and at the other is the well researched, sympathetically renovated terrace in an up and coming part of London near to a hugely improved school or tube or such like. Even if bought in the last couple of years, the right purchase will remain as such. I think this market is a good lesson in research, research, research - know your market and play for the long term.

Monday, June 23, 2008

And the award for the most glamorous landlord goes to ......

My search for an image that represents a typical UK landlord lead me to stumble on possibly the most glamorous image of a landlord so far.

Even the massive key is a ebonized picture of taste and style.

This image adorns the pages of the website of , obviously for a different class of landlords to the riff-raff I mix with.

70% drop in Leeds City Centre Investment Property

This sorry tale from the Daily Mail tells of a Leeds new build flat that was sold for £238,000 two years ago and has just sold at auction for £71,000.

That is a record drop to my knowledge, of 70%.

Can anyone beat that?

As many 'pundits' have been saying, "you can't go wrong with 'bricks and mortar'."

I think this finally shuts up the salesmen and barrow boy pundits who have appeared over the last couple of years.

I just hope the poor investor didn't buy any others.



or BLT, cappucino and a packet of Mcoys Beef and Onion, please.

Landlords want people to be lonely

Landlords are hoping that we become a nation of lonely singletons.

Sad but true - I've just received a press release from a letting agent saying that experts predict that more and more of us are choosing to live alone.

These experts predict that this trend will continue and the UK will see a continued increase in single occupancy households, with levels forecast to hit 40% of the overall housing market by 2026.

Now this is all good news for landlords, ( I promised that I would find some didn't I).

Especially for those poor things who have dropped a clanger on a shoe box (see this previous post) in a provincial city centre, because apparently this is where these lonely folk will want to live.

As a property investor I welcome this future Britain of people lying alone in their home, but as a romantic it makes me feel a little sad.

Do I follow my head or my heart?
Should I hope for money or love?

This has got me into a bit of a fluster, I think I need to pop my marigolds on and lather up Gerry.

Buy-to-let meltdown won't last forever - but some landlords will be badly burned.

As someone who likes to bring good news, it's difficult to come along and say we told you so.

But unfortunately we did.

The team at Property Hawk has been warning landlords ever since its launch in early 2007 that investors should proceed with caution. We have also repeatedly warned against new build city centre apartments, money off deals and supposed Below Market Value (BMV) property investments.

Anyway, moving on (and not getting any pleasure from the fact we were correct in the reading of the market and the quality of our advice.)

This article in the Telegraph
relates the split in the market between established landlords who have built up a portfolio over a number of years and those novice landlords who jumped with both feet into the dream of great wealth and investing in new builds over the last couple of years.

Unfortunately the latter investor type has got himself stuck well and truly in the dirt. These novice investors have the unfortunate dilemma of, either running at a rental loss over the next few years and supplementing the loss with other income. OUCH!!!!!! or selling at a loss . OUCH!!!!!!!! again.

As we have been posting on the site over recent months, the reality will be that after all the fallout, property investment opportunities will present themselves in 2009 and 2010, for cash rich property investors.

Whether that be as property or property focused equity shares as the Income Monkey has been posting about.

The article also confirms that Buy-to-let will rise phoenix like from the ashes of the current meltdown. But between now and then many landlords might find themselves taking some serious financial heat.

Rigsby stands for thrift & the british way

I hate regulations, beauracrats, scammers, idiots and most of all politicians who spend my money on their self engrandisement.

I stand for thrift, self reliance and the british way.

Oh yes secretly I love Miss Jones

Saturday, June 21, 2008

Landlords & commercial property investors - I've seen the light!

Landlords that have read my previous posts may be confused about why I'm so optimistic about commercial property shares as an investment. There is no doubt that capital values continue to fall and most industry experts expect this to continue.

Landlords - cant get a buy-to-let loan - use our specialist broker

I was reading an article in the FT at the Weekend when it suddenly hit me this is whats going to happen to property shares so read carefully.

Things will get worse
YES YES things will get worse. Capital values will continue to fall in 08, but probably not as much as many pundits expect. According to Credit Suisse share prices predict another fall in capital values of about 26% which is on top of the 18% fall since last June. However, many share prices have already factored in these kind of falls. Shares appear discounted to reflect an "almost Armageddon" scenario, according to Patrick Sumner, head of property equities at Henderson Global Investors.

Tipping point
My prediction is that early in 2009 there is likely to be a tipping point and a sudden rebound in property shares, for these reasons:

1. A steadying of the prices of property assets will expose how undervalued property shares with good income streams are.
2. A realisation by investors that if inflation is back as i think it is for several years, the best hedge against it is property which always has its own intrinsic value and also because the real value of any debt secured against it is reduced over time. Remember inflation is a debtors best friend.
3. There is a wall of money that institutional investors have been building up waiting to invest in property to balance their portfolios. At the moment these institutions are holding back waiting for prices to stabilise.

Sudden rerating
When the market turns on commercial property shares, expect the rerating to be sudden as institutions scramble to buy shares at what will inevitably be bargain prices. This rerating could be all the more dramatic if some of the hot money currently speculating in over priced commodities looks for a new and more stable home.

The secret for landlords and investors will be getting the timing right. This is the tricky bit, I'll be looking out for signs and will obviously keep you up to date. If fellow landlords and investors have any ideas and thoughts please feel free to leave your comments. Maybe we can crack this one together!

Thursday, June 19, 2008

Deleverage - landlords understand it!

Unlike other less responsible landlord websites we are not actively promoting schemes and ways landlords can buy property and only put down £5k or £10k. Why?

Because the latest projections for house prices by HBOS are that house prices are to fall 9% this year.

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“We expect the UK economy to slow further in 2008, with a modest rise in unemployment and low interest rates, accepting that inflationary pressures will restrict the MPC's ability to reduce base rates below current levels. We now expect house prices to fall by up to 9% in 2008,” said the group, having mentioned in April that it expects only “a mid single digit percentage decline.”

LOSS of 200% in 1st year
This means on a £100,000 residential investment property a 1st time landlord who scrimped and saved to put £4500 down could be facing a £9,000 loss at the end of their fist year. This is a massive 200% of their initial stake.

All this is going on at the same time that the only game in town is deleveraging. This is where the banks and companies are frantically restructuring their balance sheets to reduce the amount of debt they are carrying. Landlords should be doing the same. How? By opting for a repayment mortgage where possible and ensuring they are getting a competitive long-term interest rate on their buy-to-let mortgage.

Landlords - 5 leading buy-to-let brokers - 1 SIMPLE FORM

Building a cashpile
Landlords who do have considerable equity in their buy-to-let portfolio should be looking at building a cashpile ready to strike when the right bargain comes along.

Remember after a decade of rampant credit growth the only sensible game in town right now is deleveraging.

Luxury apartment to council house

Landlords who have bought in good faith luxury new or off plan apartments could soon find that they have purchased a residential investment in the middle of a council estate according to the latest news from the Telegraph. This is because cash strapped housebuilders are now looking at selling off on the cheap thousands of unwanted properties to housing association in a bid to keep themselves a float.

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£1 billion indecent proposal
A proposal to free up £1 billion of public money from the National Housing Federation (NHF), the umbrella body for the UK's housing associations, is under consideration by ministers at the Treasury and the Department for Communities and Local Government. If the package is agreed, it could kickstart the moribund housing market by buying at least 10,000 units.

Professional rates - buy-to-let insurance

Landlords stabbed in back by developers

I'm not a snob. But financially it is an added blow to landlords and property investors if they have bought a luxury apartment off a developer who marketed the property just as that. Only then to find out that most of the neighbours to their luxury apartments are paying a fraction of the rent they expect and need from their tenants. How will a landlords be able to square it with their tenants that they are paying a premium rent when next door is occupied by a bin man, bus driver and road sweeper?!

To cap it all housing associations are likely to demand significant real discounts, not the fake show ones that housebuilders were bandying about. This could be as much as 20-25% or all the developers profit, just to get the cash in get the units off the developers books.

Therefore a landlord could not only have been stuffed on capital values but also bear the cost in terms of a reduced rent.

Sounds to me that landlords have been stabbed in the back by developers and ouch it hurts!

Landlords - what do they really look like?

Landlords - who are they? What does a typical property investor actually look like?

On many websites and magazines they use stock photos to represent the image of a landlord or property investor. See pic.

Landlords are seen as booted and suited, carrying a gadget and standing next to tall office buildings.

In reality the majority of landlords I know, don't look like this perceived ideal.

Often they are women, often they are scruffy, carry a notepad and stand outside a two bed Victorian terraced house.

In reality landlords are invisible, and that's just how they like it.

Please email images to that you feel represent the typical landlord. Maybe we can find a more honest depiction of the 'typical landlord'.

Wednesday, June 18, 2008

House price recovery is 4 years away

I caught this article in the Financial Times referring to the predictions of a bunch of ecomomists. The survey was conducted by the Society Of Business Ecomomists for ITV's Tonight programme ( possibly in my view the most detestable, sensationalist, current affairs programmes on TV - how Trevor Mcdonald got a knighthood I will never know - having fronted some of the most one-sided coverage of current affairs on the box - But anyway - back to what I was saying)

In it the majority of economists perceive that prices wont return to the 2007 high for four years, in 2011.

Now the question in my head is how low will they go and at which point will they start their upward path.

These economist are saying that that within a four year window from now, prices will recover to where they were in 2007. That means at some point in the next four years there will be a optimum buying opportunity.

The question is will the opportunity be 2008, 2009, 2010 or early 2011?

Whose going to start the bidding?

Tuesday, June 17, 2008

More positive comment on the state of BTL

As promised I'm bringing landlords some more positive property news from that fickle world of the populist media.

Rosie Millard's column was talking up some positivity in the buy-to-let property world.

Yes, I know shes not an expert ( two London flats does not make a property expert), but she is part of the media machine that has recently been talking up the house price crash to try and sell a few more papers or get a few more viewers in this ever fragmenting media market place.)

Is it the start of a counter wave of media argument, talking the property market back up or at least not as far down?

We will see as the months pan out, but we all know that scaring people is a great way to get their attention (house price crash), exciting them is another way to get attention ( house price boom ), but boring them is never going to drag the punters in ( static market / slow annual increases for the next ten years).

Let's hope the latter happens and the media start finding something more frightening or exciting to focus on.

What next , we've had dangerous dogs, gun crime, house price boom and bust, terrorism, etc.

My prediction is striking. I can see it becoming big in 2009.

With the spotlight off property, landlords can go back to business in a steady way , with rational house price growth and rental demand. Peace at last!

Anyway, Rosie's basically sharing her experiences of increased rental demand on her rental properties that are reducing voids and increasing rents.

More positive property market news coming soon.

Monday, June 16, 2008

House price future dependant on supply and demand

The classic supply and demand equation is something that will potentially result in shorter and less drastic house price crash than the one many doom-mongers are predicting.

The reality of the UK housing market is that they are building far too few homes to meet government targets. Heres a recent Times article on the subject.

Long term house price inflation is very much dependent on the two key factors of supply and demand.

Supply - how many properties will the government actually get built ( at the moment not enough)

Demand - how many people will be living in the UK ( at the moment the government don't have a clue about the true levels of immigration, will the population continue to balloon through immigration, both illegal and legal or will as the Polish workers are starting to do - will immigration levels start to balance out because many migrants prefer it 'back home'. Or will there be stricter restrictions on immigration that will limit UK population growth.)

Sunday, June 15, 2008

City centre bargains

I've been looking at city centre apartments since the start of the new millennium. Thing is, they never made sense to me as an investor. What do I want with Philip Stark taps. Who is Philip Stark anyway? What's wrong with Wickes taps, surely a tap is a tap as long as it works.

Landlords - save time - 5 buy-to-let mortgage brokers - 1 FORM

I'm not subsidising my tenants
I looked at the costs. Not only was I going to pay out 30-40% more for the flat at the start, but then I had to keep paying some management company: to clean the halls, maintain the lift, the swimming pool, pay a concierge. My tenants don't want all those luxuries and they certainly aren't prepared to pay the extra £150+ a month to cover the costs. That would have meant it would of be me 'muggins' who would left having to foot the bill for them having a gym and swimming pool on tap. What do they think I am, a charity!

City centre apartments at 2001 levels
Miss Jones as you probably know is thinking about going to 'UNI' to study social work. I obviously couldn't bare the thought of her living in a squalid student halls with all those over sexed male students; so I've been looking at getting her something convenient in town whilst she studies. She pointed out this article in the Telegraph the other day. A new apartment in Bradford for £55,000. That's more my sort of price! I'm not paying anything over £100,000 and I don't care what sort of taps they've got. The article seems to suggest that prices for some city centre apartments are now back at 2001 levels. I have suggested to Miss Jones that with this 'credit crunch', if we wait a bit longer maybe prices will be at 1970's levels. That's more my preferred price range.

Still looking for a bargain
I have suggested to Miss Jones that we / I might be better off looking at getting a repossession at auction. After all I always buy my clothes second hand so I don't see why i should pay silly prices for a new property. Miss Jones had accused me of being tight, which i think is a little unfair. I did come across a couple of useful money saving websites for landlords the other day. There was freecycle, a bit hippyish for my liking but a great place to get or get rid off furniture. The other one is Gumtree which enables landlords to advertise their rental properties for FREE

Landlords save money on your buy-to-let insurance

Any way, I need to go, the tenant up stairs is calling me. The washing machine only work properly if two people sit on it.

Wednesday, June 11, 2008

'Credit crunch' still increasing landlord's pain

I'll be honest I've been caught out by the severity of the 'credit crunch' like many other landlords. What started as a short term tightening of the purse strings by the buy-to-let lenders is becoming an absolute squeeze on all aspects of buy-to-let finance. The way things are going soon, the only person that will be able to get credit will be the Queen and possibly one or two Russian billionaire oligarchs. Certainly not Gordon Brown - he's more broke than all of us. Didn't you notice he's been spending your money like it's going out of fashion!

Need BTL finance - don't panic - 5 mortgage brokers - 1 FORM

It's increasingly obvious by watching the news feeds on specialist mortgage broking websites like emoneyfacts that buy-to-let lenders are increasingly pulling fixed rate buy-to-let mortgages or significantly repricing them upwards. Why? One word. INFLATION. The only tangible benefit that the Labour government bought to the UK economy was giving control on base rates to the Bank of England Monetary Policy along with strict instructions to keep inflation under control. This they have done very successfully.

However, after a decade of relying on being able to import lowering prices, inflation is now being imported from around the world in the form of rising commodity and food prices - nothing to do with domestic factors. Now the MPC are in a straight jacket. They need to cut interest rates to mitigate the impact of rising mortgage costs caused by the credit crunch and avoid a housing crash but they simply can't.

The result is that banks get even more worried about lending against a depreciating asset i.e. houses and therefore jack up lending costs even more - depressing house prices further.

How do i find a fixed rate mortgage?

Look at this article in the Times which reported that Barclays the UK's 7th biggest mortgage lender is upping it's rate on buy-to-let mortgages by 0.5%. They are not alone. A cursory look at the emoneyfacts website shows a constant stream of lenders withdrawing products or upping interest rates.

The message for landlords is if you are going to remortgage do it sooner rather than later. Otherwise - just sit tight and hope that inflation doesn't get any worse prompting the MPC to raise the interest rate.

Do you need BTL insurance in 08?

How do landlords survive the housing crash?

Landlords who are witnessing the gathering fall out in the house market must be asking themselves is there anything they can do to avoid the impending crisis.

Having problems securing buy-to-let finance? Use our specialist broker

Sell up!

One of the problems with direct property investment is that a residential property is a very illiquid asset and as we know houses can take months to sell; especially when the market is dead as it is now. A landlord who tries to dispose of their buy-to-let investment will be at the mercy of chancers and speculators unless they are fortunate enough to have a 'trophy asset'. In this case there may be some owner occupiers who are still interested and more importantly, able to raise the necessary finance.

HEDGING against house price falls

It is possible to hedge against falling house prices by using a spread bet. I tried it unsuccessfully with IG Index back in 2005 believing that I could hedge my the value of my residential investment portfolio against falling prices. The way it should have worked was that any fall in the value of my residential portfolio would be compensated by the profit on my spread bet. Unfortunately, house prices continued to rise; but not in the areas where I held property. The result was I lost both ways. I've not done it since.

The problem for landlord using this technique is that the 'bookies' factor in future expectations, the betting period is short and the split between the buying and selling price is high. Bookies especially the new stripey shirt brigade aren't stupid and will generally be the winners.

It is also possible to bet against other betters using Spreadfair.

Change of phsycology

The other way landlords can survive the crash is to change their investment psycology. Residential property investment has in recent years been about borrowing as much money as possible and then using your tenants rent to pay the interest on your buy-to-let loan. Then it was just a case of watching the value of your buy-to-let property go up.

Maybe landlords need to view their investment property as a long-term saving scheme. Rather than assuming that asset values will go up, landlords should adopt the view that what they should be doing is using the rent to repay their buy-to-let loan. If this means them contributing a little extra each month to the mortgage payments, then they should see it as a putting money into your own property pension. After all if you were saving in any other way for your pension you would expect to make a personal contribution however generous the employer. Landlords who opt for this more cautious approach will ensure that that what ever happens with unpredictable credit & housing markets. Their future will be more certain and more secure.
Need advice on getting a repayment buy-to-let mortgage - 5 brokers - 1 FORM

Landlords Need a Bit of Good News

Landlords are feeling gloomy and down. All that on-paper money they had, has disappeared the same way that the dot.commers millions evaporated up their broad band cable.

The one thing landlords can console themselves with, is that unlike the millionaires they still have a bricks and mortar asset. Whereas when the dotcom boom popped over night, many paper millionaires were often left with a desk and a laptop as there only actual financial asset once the party had left town.

And now for some good news released by The Association of Residential Letting Agents (ARLA) showing continued improvement in the rental market. Read more in the Independant's article from Monday.

It shows a fall for rental void periods from an average of 24 days to an average of 22 days.

Average rents for a house now range from £931 a month outside the South-east to £3,000 in London, while flats range from £585 outside the South-east to £2,000 in London.

I will keep my eyes peeled for any further good news in the letting market.

Tuesday, June 10, 2008

Do landlords need a witness

Miss Jones was saying to me just the other day that she wanted to sign up for a further 6 months tenancy which I was naturally very pleased about. Particularly given that as rents are rising I can slap on a nice healthy rent increase.

Where do professional landlords go for their buy-to-let insurance?

Now I know because of the Tenancy Deposit Scheme that I will have to deposit the tenancy deposit funds with one of the approved tenancy deposit schemes. This is a pain because I've been keeping the cash in my old tea caddy just in case I might be able to tempt Miss Jones on a romantic little weekend to 'Skeggy'. So far she has being playing very hard to get.

One thing that I am excited about is that, because an Assured Shorthold Tenancy is classed as a short lease by the Law of Property Act 1925 it does not need to be signed as a 'deed' and therefore we don't need a witness. This is great because it gives me the opportunity of a little bit more 'quality' time with Miss Jones during the signing of the Tenancy Agreement.

I wonder if she likes forget that, I can't dance....what I need is another plan.

Spring has not Sprung any Life into the Housing Market

I have watched the lambs bouncing around the fields full of vitality and energy for the last few months. However the bounce has lessened and the bodies have become heavy and rounded. Now when you look into their eyes you see a darkness that suggests the knowledge of their soon to be destiny has been realised.

This inevitable destiny seems to have gotten hold of the UK housing market and the resignation of a looming crash, spurred on by the ever self-serving media, is now just a case of how big?

This article in the Financial Times
shows that the traditional bounce of a spring housing market has sprung no life back into the property market.

How many Landlords are in Rental Loss?

How many landlords are suffering a rental loss?

ie, Have less money coming in from rent than going out from mortgage interest repayments, repairs and maintenance costs, letting / management costs.

I have started a new poll asking this question - find it in the right hand column of this blog.

Please place your vote, but be honest so we can build up a real picture of the current situation for landlords.

We all know times are tough so let's help by sharing how tough it is.

Most landlords could not foresee the severity of this situation.

With many landlords falling out of discounted and fixed rate deals unable to fit new stringent BTL mortgage lenders lending criteria they are been forced to finance larger and larger mortgage interest repayments.

Post your comments and thoughts and let's see if we can share advice and experience to help each other weather this storm.

Death of property porn

Could we be witnessing the death of property porn?!

With house prices apparently in free fall and clearly nobody wanting to buy
and because of the credit crunch with nobody able to afford to buy is this the end of the British love affair with property and property investment?

Struggling to get a buy-to-let mortgage - don't worry - use our specialist broker

It was only as recently as 2005 that the term 'property porn' managed to squeeze it's way into the Collins English Dictionary. Could it's arrival have marked the zenith of the English obsession with all things bricks and mortar.

Despite all the doom and gloom in the buy-to-let market I confess that the sight of a well turned portico, a plunging arch or even the lines of a flying buttress still gets my pulse racing.

Call me an old romantic but despite all the bad news surrounding property and property investment, I still need my fix of property porn!

Monday, June 09, 2008

Life gets tricky for landlords

Landlords are starting to feel real pain out there in the BTL mortgage market.

I was reading yet another newspaper, this time the article was in the Sunday Times referring to the end of Buy-to Let property investment.

The article refers to Fridays announcement by Mortgage Express that it was increasing buy-to-let mortgage rates by 0.55% on three and 5 year fixed rate loans. OUCHH!!!!@!!!

As the biggest player in the BTL mortgage market that's going to hurt a lot of landlords and doesn't indicate a recovery in lenders liquidity any time soon.

As Ive discussed in the passed these increases in mortgage payments are not been matched by the increases in rents.

Unfortunately many landlords won't be able to take the strain and I can see a rush on landlords unloading un-profitable investment properties hitting a already flooded market.

Bad times - and I do feel sorry for these unfortunate investors. RIP........

But as an investor I have to keep my eye on the opportunities and will the Bad times for some bring about the Good times for others?

Well I don't think quite yet - but as the coming months unravel I see there been a lot of opportunities out there in the market.

My thoughts - sit on your hands but keep your cash around you. There might be a buying spree around the corner. But remember - cash is king!

Save time 5 leading buy-to-let mortgage brokers - 1 FORM

Not looking good for new builds

I was reading over the weekend in the FT an article by the excellent financial commentator Merryn Somerset Webb who has been very accurate in her predictions over the extent of the credit crunch and the impending crash in house prices.

Where do professional landlords go to get their buy-to-let insurance?

Here article on Saturday the City is full of cloth ears points out just how hard it is getting for housebuilders. In April new mortgage approvals were down 40% on last year, no finance means no sales.

The prices of new build flats in centres she says are reported to be down 30% plus. In Plymouth a year ago, new build one bedroom flats went for £135,000. Now a buy-to-let investor can pick it up for £90,000. This is certainly reflected in my home town of Nottingham where two bed 'luxury' apartments which were originally sold for £140,000-£160,000 are now coming back on the market for less than £120,000. Unfortunately many are coming back to the market as repossessions. The FT also reported that more than a fifth of homes being sold at auctions are now repossessions. This number has risen steadily from about 4% in 2003.

Auctions are definitely the place to grab a bargain right now.

Should landlords rush in right now? I suspect that we have some way to go before the bottom is reached - what do you think?

Saturday, June 07, 2008

Painting your buy-to-let property

Landlords that paint the brick work of their property ought to be hung! Brick it beautiful, its natural, its historic and it ages gracefully like a good wine.

Nothing saddens me more than when you look down a lovely uniform Victorian terrace street to see it broken by a series of ugly DIY modifications, the most brutal being to paint the lovely brick exterior. Its wrong - the perpetrators should be halled in front of a local court to account for their actions. I always feel sorry for the neighbours. Having frequently spent time and effort in restoring or upgrading their residential property in a sympathetic way, all that effort can be undone by an unthoughtful act.

Save time 5 leading buy-to-let mortgage brokers - 1 FORM

The most annoying things is that do the perpetrators not realise in the misguided madness they are slashing thousands off the value of their property which serves them right, but when it impacts on a neighbour such as one of my investments I have no redress!

I think these idiots should be forced to pay damages to the owners of the neighbouring property or even better, lets put them in stock and let the neighbours have the satisfaction of giving them a good old fashioned pelting with the out of date contents of our fridges!

House price research

I was doing some research into the lastest house price situation.

The website house price crash must be busier than ever since the turn around in the housing market. It has been predicting a slump in housing asset values since its arrival on the scene in October 2003.

It has some very detailed stats highlighting the latest situation in the housing market. Landlords should be looking at these figures carefully. I would be looking for falls to stabiblise before contemplating buying at the moment. Other landlords may have a different view.

The other interesting aspect is that the forum has a section on house prices within local areas which gives unique anecdotal views on whats happening to prices on the ground.

Landlords need to save time - 5 leading mortgage brokers - 1 FORM

Friday, June 06, 2008

The Rising Property Maintenance Cost for Property Investors

I was interested in a recent property hawk news post that described a 20% increase in the last 2 years on property development costs.

My experience of maintenance/ refurbishment jobs on my properties echoes this.

I get an invoice form my letting agents for various spruce ups and replacements and it brings tears to my eyes.

"Sorry , was it a gold plated tap they put on? - because to be honest I'm sure the tenant would of been happy with a plain old chrome one." I ask.

"We did get three quotes and that was the most competitive"they reply.

Then I look around at the local tradesman in the area - in their prestige four wheel drive £50,000 a pop cars, and I realise they've now got a lifestyle to keep up. What with the four foreign holidays and the golf membership, the wifes manicures and probably theirs too ( just because I'm a rough and ready builder doesnt mean I shouldn't look nice).

Seemingly the trades have been making hay as their customers feel the bloat of property price increases, numbing there sensitivity to high building and repair charges .

Maybe with property prices coming down and the downturn in the economy starting to bite we will also see a reduction in building and maintenance costs.

If not as rental profit continues to increase I can see more and more landlords walking down the aisles of B&Q scratching their heads and looking back fondly to the days when they could afford to get a man in.

Thursday, June 05, 2008

BBC article on the state of BTL property

Jonathan Moore from Mortgages for Business is about to join the Property Hawk bloggers but first an article for the BBC NEWS about the current state of the BTL market.

More BTL industry bloggers as well as landlords are welcome to join our band of BTL bloggers.

Drop us an email at to say hello and tell us what your background is.

The Tenant gets Revenge on his Landlord in the Sweetest Way

The tenant gets revenge on the landlord where it hurts most - his bank balance.

This post is from a Telegraph article on the Buy-to-let crisis.

"I'm very grateful for the BTL bubble. I moved into a brand new rented property in 2005 bought by my landlord for 220k. My rent has consistently been less than his mortgage interest. At this time last year he had the property valued at 290k, but decided to hang on a little longer.

This year the financial strain got too much for him and the property was repossessed and sold through auction. I lost my home for a couple of months and stayed with friends, but bought it back last week at the auction for 140k. That's about 60% of the 2005 price and under 50% of the 2007 valuation.

And the crash has only just started! Sadly for him my landlord is ruined (with repo expenses he still owes the bank about 100k), but I now own a home and pay less on my mortgage than I did in rent. "
Posted by Graham on June 3, 2008 2:14 PM

Well done to Graham for some shrewd property investment moves, he gets this weeks Propertyhawk ' Sharpest Investor Award and unfortunately we know who gets the wooden spoon.

And the award for smuggest landlord of the week goes to this fantastically boastful post from Spencer ( sorry if you're reading Spencer - but listen to yourself - really)

"I've already made a lot of money out of BTL. Even if I sold my 8 properties after prices had fallen by 20% I would still have made enough money to buy my dream home (outright) in Barbados. So please stop moaning about how bad the property market is. Its like everything else in life - a question of being in the right place at the right time."
Posted by Spencer on June 3, 2008 1:09 PM

Well arent you the 'bees knees'.

Property Price Predictions -

Will prices go down and by how much?
We've all been here before - in fact it's all half the population ever seems to talk about. Lets face it we are a nation of property investors due to the lack of space on this tiny island.

Ive found this interesting article on the Market Oracle - that brings in a fairly clear argument for its predictions. It predicts a 29% fall in property prices from the August 2007 peak.

That would bring me down to the point where I stopped buying ( because I thought prices had peeked) - but it worries me for the new property investors who have only started investing in the last couple of years. On this article the wise move might be to off load now before it gets much worse.

But first theres the small issue of finding a buyer.

"Are any buyers out there?"

What advice would you give to other property investors?

Wednesday, June 04, 2008

The Editor sets out his stall

Hi I'm Chris Horne the forty something Editor of the Property Hawk magazine.

I'm a landlord and property investor but these days my main focus is ensuring that Property Hawk magazine is kept full of useful and interesting news as well as the odd amusing anecdote about being a landlord and investing in UK residential property.

I'm not on here to write my own blog but more to highlight some of the really interesting things that emerge from our bloggers as well as point you our readers towards related topics within the main site.

Chris Horne


Specialising in buying houses and then letting them to student groups in the higher end of the market in a town of over 800 student lets is my focus. Learning the business from scratch, I purchased my first buy-to-let property for my daughter when she went to university.

I'm a hands on landlord and fully manage all my own properties. I'll give you tips on how you can do it and also how not to do it! I'll tell you about my letting experiences - some frustrating, some amazing and some just plain mundane.

As an experienced student landlord I've seen many groups of excellent students over the years, however I've also had my fair share of letting issues - burglaries, floods, non payment of rent, angry student parents, collapsed ceilings, university student welfare offices, broken and stained beds and so on. 

I like a challenge. I don't take security deposits, finding a legal way around this hassle has been interesting and I'll let you know how I get on. I've never paid to advertise. Whilst others let properties in the town for 10 or 11 months, I let my student houses for 12 months. 

Whether you're experienced or a novice, I'll address the issues and share my knowledge and hopefully challenge you to come up with some answers as well, for everyone's benefit.

Tuesday, June 03, 2008

Should Landlords Start Investing in Boats?

I have real concerns for new landlords about the meltdown in the btl mortgage market.

Im finding it incredibly difficult to refinance at the moment and are going to stick to my current deal even though its dropped off its discounted rate. Once Ive factored in remortgaging costs there arent any deals around that will make me any better off.

Those property investors who are highly geared or who have just entered the property market are going to find it difficult to keep their finances intact and are starting to look highly vunerable.

There are definately some stormy waters ahead for landlords.

This Guardian Article continues to spread gloom on the short term outlook for Buy to Let Property.

It just keeps raining and I cant see if this miserable weather is ever going to end.

Maybe we should take the biblical investment tip and invest in house boats to weather the storm.

Would an ark be classed as a HMOs?

Monday, June 02, 2008

Hawkeye - perspective on the buy-to-let property market.

Landlords and fellow residential property investors.

In the words of an old Queen song 'let me entertain you'. I may be too old to dance and I can't sing but my words will hopefully bring about the odd wry smile and make landlords just stop and think.

I'm a qualified surveyor and i've been developing property and investing in buy-to-let long before this rather tired phrase even came into existence.

Landlords will hopefully be able to draw on some of my past experience to generate some perspective on their own property investment decisions and in so doing make sense of a perplexing and dynamic market. All that glitters is not gold but equally even where there appears no hope, there is always light at the end of the tunnel.

What I will bring to the blog is my unique perspective on property investment.


Income Monkey drops in.

Landlords & property investors, this is just a brief introduction to what the Income Monkey is all about.

I'm an investor, a landlord, a surveyor, a speculator. Above all I believe in the power of property investment to generate a long-term sustainable income & a growing capital asset. My blog aims to introduce landlords to some of the alternative non direct ways of investing in property.

The advantages of holding property investments indirectly by: buying shares in a prooerty company, investment trust, fund, ETF, unit trust is that an investor has no tenants, no maintenance, no management but all the potential upside of owning an income generating property asset. I know Property Hawk is aimed at UK buy-to-let property. I wont be quite so focused and will allow myself to stray into international property investment opportunities given that one of the advantages of indirect property investment is that these are are all accessible from the comfort of your own arm chair.

I hope my blog wont be a complete monologue. Feel free to tell me i'm wrong i've missed the point, or that i'm just down right confused. Off course I will never admit to being wrong, but at least it gives the readers a chance to make up their own mind!

The Income Monkey