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Friday, August 29, 2008

Landlords face up to the harsh realities of a rental loss.

Landlords, property investors and country men.

The time to stand firm is here as we face an uncertain property investment future.

For those of you who are facing financial ruin in the face of an onslaught of negative financial realisation I would like to offer you these kind words.

'Im sure the majority of you are kind and honest folk who went about trying to better yourselves financially.

Maybe you were one of many thousands of new landlords who felt let down by the pensions system and looked instead to make your future security through property.

Now some of you are confronted by a harsh financial reality that leaves you caught between a rock and a hard place. What should you do?

Well unfortunately there is no simple one answer.

My advice is look to cut costs, by self-managing property, and that includes rolling sleeves up and taking on as much of the property maintenance tasks.

Shop around on all your financial products ie, landlord insurance and btl mortgage.

And here is the one that many new landlords may have to face, to supplement potential rental losses from other incomes landlords might have to cut personal spending.

That in simple terms means spending less on holidays, spending less on food, less on going out and less on clothes.

Hello George at Asda and goodbye to Giorgio Armani.
Hello camping and goodbye Capri.

But before you get too down and I mean this from my heart - if you have your health and your family who needs fancy goods.

In fifteen years time we may be out of this and have seen a subsequent boom and that property investment that is providing such heartache might be looked upon as a great property investment.

Lets all hope so.

But until then you might have to make the best of the simple things in life - and that might not be such a bad thing.'

With love and kisses a sentimental Hawkeye.

Landord News Articles

Here are some landlord news articles I picked up to add to the endless bad news for the world of Buy-to-let property landlords.

I charged myself with the challenge of bringing landlords good news through these times of 'credit crunch' but unfortunately having returned from three weeks in France I have found only bad news for landlords including todays news of Bradford and Bingleys record losses. This doesn't bode well for any recovery in the property market anytime soon.

Anyway I thought I'd get the bad news for us poor landlords out the way in one go.

Landlords struggle to meet repayments according to the Daily Mail article.

Rental demand has increased but so has rental supply reducing potential rental increases according to the Independent.

Difficulties for landlords trying to obtain btl mortgage finance increases with criteria from mortgage lenders becoming evermore difficult for landlords to meet in this Guardian article.

Well theres the bad news - for now.

Thursday, August 28, 2008

Search for a buy-to-let mortgage

Landlords who have followed me on my journey to get a buy-to-let mortgage will be relieved to know that my search is almost over.

Having tracked down a suitable product. My priority was to get it at the lowest cost.

I knew the product but as I already explained it was only available through a financial intermediary such as a mortgage broker. This situation is ideal for one one company. Money Back Mortgages.

Money Back Mortgages
This company was set up by very affable and efficient Tony Chewins. It allows landlords to collect 50% of the so called procurration fee paid by many mortgage companies as a commission when they sell a buy-to-let mortgage. This is great in my circumstances. Not only do I avoid paying any broker fee, I also get some cash back. The figure they have quoted is £187. Better than a kick in the teeth I thought!

Money Back Mortgages are best suited to landlords that have sourced their own mortgage but want to gain the benefits of paying no brokers fee and then sharing the spoils of their labour by sharing the commission with them.

So, I had a suitable mortgage and a means of getting it. The next thing was to contact them through the Enquiry Form

I received a prompt email response conforming that they could obtain this buy-to-let mortgage.

They then sent me an email with

The Mortgage Workd Decision in principle.pdf (488KB), The Mortgage Works BTL Application.pdf (229KB), The Mortgage Works Valuation PDQ form.pdf (40KB), MBM Initial Disclosure Document.pdf (16KB), The Mortgage Works 6.29% tracker illustration.pdf (97KB)

The next stage was to get FORM FILLING - not my favourite activity but it has to be done.

I'll keep you updated on the progress of my application


EPC questions and answers are provided as part of the Energy Performance Certificate guidance in the Landlords Bible.

Energy Supplier Grants

The Carbon Emissions Reduction Target came into effect in April 2008 and has placed an obligation on UK energy suppliers to help reduce CO2 emissions. The benefit of this to Landlords is the availability of a wide range of subsidises for the insulation of insulation including cavity wall and loft. One little known fact is that you can take up grants and offers from any energy company, regardless of whether they supply your gas and electricity.
British Gas are currently running a scheme whereby if they install insulation at your property you become eligible for a £100 council tax rebate. This scheme is operating in conjunction with 64 local councils details of which can be found at British Gas

Green Home Service

Landlords that find the results of their EPC at the bottom of the scale with an F or G may be advised to contact this government organisation who are able to offer specialist advise and access to grants for poorly performing properties. They can be contact via the Energy Saving Trust

Tuesday, August 26, 2008

20 small ways to make big savings when letting property

Belvoir Lettings share their secrets on how clever landlords can save money on their property investments

Follow these simple tips to lower your costs and raise your property investment return – all are easy to implement and will encourage long-term positive cash-flow with little outlay…

1.) It’s all in the presentation
“Maximise presentation even if it means a small initial spend,” says Rick Flay, proprietor of Belvoir Sheffield. “The saving will come in the speed in which you rent out the property and will ensure fewer voids.”
Paul Cartwright, proprietor of Belvoir South Hants, agrees, “The property should be presented in the best possible condition. This will make it easier to let and thereby reduce the ‘void’ period between lets in which there is no rental income.”

2.) First impressions count
“Make the front photo used for marketing and the walk-up to the property attractive and inviting,” says proprietor of Belvoir Peterborough and Corby, Terry Lucking. “You only get ONE chance at the FIRST impression.”

3.) Think long-term
“I quite often use an old Scottish saying - ‘buy cheap, pay dear’ - when talking to new landlords,” says Mike Campbell, proprietor of Belvoir Falkirk. “This basically translates that if you put down cheap carpets you might think you are saving money but they won’t last as long so it’s a false economy. Equally this applies to furniture and fittings too.”
Keith Morrison, proprietor of Belvoir Aberdeen, agrees. “Don’t cut corners initially,” he says. “I’ve seen many landlords try to do jobs on the cheap or use cheap fixtures and fittings and it often doesn’t work out, sometimes even costing more in the long run.”

4.) Ensure you’re insured
“Invest in good Rent and Legal insurance,” advises Susie Geddes, office manager of Belvoir Corby. “Belvoir offer this at £99.75. The insurance will pay for all rent not paid in excess of one month for 12 months or up to £10,000, whichever is the lesser amount.
“Therefore it will pay for part payments as long as there is an excess of one month after the part payment has been paid. It also covers the cost of legal fees if you require to gain possession etc. It works out to be about £2 a week and could potentially save thousands.”

5.) Read the reports!
“Be certain that any maintenance reports are genuine,” says Terry Lucking of Belvoir Peterborough and Corby. “Ask your agent to give before and after photos and check the responsibility of the maintenance report – the damage may have been caused by the tenant (accidentally or negligently).
“Some agents don’t check the detail while others don’t understand legal responsibility - the result could be the landlord having to pay for something that should have been charged to the tenant.”

6.) Clever buying
Think carefully about the type of property you’re investing in and its location. “The worst property in the best area is always a better prospect than the best property in the worst area,”
says Mike Campbell, proprietor of Belvoir Falkirk.

7.) Picking your price
“If there are a number of similar properties on the market at a similar rent, consider
taking a reduced rent,” says Paul Cartwright of Belvoir South Hants. “While this may seem counter-intuitive, it will ensure that yours lets before the others and that you have the funds to pay the mortgage! This will certainly save money in the long term.”
Terry Lucking of Belvoir Peterborough and Corby agrees. “Always maximise annual rental income. Don’t leave a property empty for the sake of £50 difference in rent per calendar month if a potential tenant makes you an offer lower than what you were asking for – think about an annual profit instead.”
Remember, if a property is left empty, your return nothing for that month is nothing!

8.) Don’t delay – fix today
“Maintenance when required should be attended to as soon as possible,” says Paul Cartwright of Belvoir South Hants.
“This will impress the tenants and possibly extend their stay in the property. Also, if maintenance is left it will only become worse - and more expensive - to fix in the long run.”

9.) Speculate to accumulate
“Pay attention to the external environment and look out for risk factors that might put people off renting your property,” says Mike Campbell of Belvoir Falkirk. “Poor lighting and lack of defensible space can be off-putting for potential tenants. Re-visit at night, too, to make sure your property looks at its best at all times of day.
“None of these things will cost much but may have a good comeback, even avoiding the ‘void’ periods which can end up costing landlords in the long-run.”

10.) Good management matters
“Employ a good management agent, such as Belvoir, to manage the property for you,” advises proprietor of Belvoir Rochester, Karen Huane.

“A good letting agent will ensure that the landlord has professional working tenants and that their rent is paid on time and their property is looked after - this will save them a fortune long-term.”

11.) Brand power
Without clever marketing a property may be left empty. High visibility of its availability is a must. “Landlords should focus on agents who are highly visible on the web and various property portals,” says Terry Lucking of Belvoir Peterborough and Corby.

12.) Plan ahead for EPCs
“We are currently working with our Landlords to make them aware of Energy Performance Certificates,” says June Rakeshaw, proprietor of Belvoir Cheadle. “It will become a legal requirement to have an EPC in place from 1 October 2008 when the landlord is marketing the property. And, after the 1st October it is expected that there will be such a ‘rush’ for these that it could possibly increase the price.
“As the certificate is valid for 10 years we are suggesting to our landlords that they consider having the report carried out now to avoid the rush and possibly an increase in the cost later.”

13.) Seek advice before investing
“Always consult a letting agent prior to buying into an investment as they will know which areas to buy in and what to avoid,” says Wayne Mearns of Belvoir Southend-on-Sea. “We can also tell the investor what sort of property is in demand. Plus, I also inspect a property prior to my investors buying to spot anything that could be costly and to examine decorative needs.”

14.) Move with the times
“In this market, when there are a considerable number of similar properties being
offered for let, yours must stand out,” says Paul Cartwright of Belvoir South Hants. “If it is furnished ensure that it is furnished with modern furniture in good condition.
“If it is a student property consider providing ADSL and a wireless router as part of the let. This may cost more initially but will ensure the property is let with a minimum void and at a higher rent.”

15.) Grow your portfolio
“Draw down on equity to release cash for a deposit on another property,” suggests Terry Lucking of Belvoir Peterborough and Corby. “It’s a great time to buy on a flat market looking forward to future rises in capital values.”
A larger portfolio may also mean that you can negotiate discounts with builders, accountants and stockists of fixtures and fittings.

16.) Keep up inspections
“Regular inspections are a MUST,” warns Wayne Mearns, proprietor of Belvoir Southend-on-Sea. “This keeps the tenant aware of their obligations to look after the property and also gives the agent a chance to look for any maintenance issues that could be more costly later on down the line if not tackled early.”

17.) Rent appliances
Consider renting rather than buying expensive appliances, especially ‘white goods’. Craig Walker of Belvoir Camberley says, “Rather than buying washing machines that could potentially break down, you can rent them for about £10 per month. If, and when, they do break the rental company will do all the running around to fix or replace them, saving you the time and money.”

18.) Shop around for your mortgage
Don’t get tied in to a long-term mortgage rate. “Ask your letting agent for the details of a good independent mortgage advisor who will periodically review your mortgage for the best savings,” advises Wayne Mearns of Belvoir Southend-on-Sea.

19.) Get handy!
“Find yourself a good local handyman,” says Keith Morrison proprietor of Belvoir Aberdeen.
“He’ll be able to do all those simple jobs, such as tiling, painting, flooring, grouting and re-sealing baths etc, at the fraction of the price of a tradesman, such as a carpenter or joiner.”
He may even give you a discount if you use him exclusively, especially if you have more than one property.

20.) Estate agent versus lettings specialist
“While estate agents once dealt only with the buying and selling of properties, many have now diversified - including doing lettings as a sideline,” says Rick Flay, proprietor of Belvoir Sheffield.
“On paper what they offer is fairly similar to a lettings specialist. A tenant find service and full management can be all part of the service. But! The killer is in the detail… and potentially the quality of delivery.
“Before deciding whether to use an estate agent or lettings specialist to take on their property I would suggest that the landlord decides what they want from the relationship.
“If they want a quick turnaround on finding tenants for empty properties, legal protection, quality leases to protect their assets, and someone to talk to who has been trained and can actually add value, then surely it’s a no brainer.”
To find your nearest Belvoir office, visit their website at

Property Empire (Part 2)

Continuing from last week I touched on the various ways of getting the best out of a company (if you decide to go down that route). This week we'll get on to part two which is

2. Dividends

If a company 'distributes' its profits by paying dividends, it cannot get a deduction from its taxable profits for doing so; so the sums are different. Because dividends are paid out of profits already charged to corporation tax, they come with a 'tax credit' that can be offset against any income tax due from the shareholders who receive the dividend. The sums can be complicated, but here goes;
If the company pays a dividend in cash (say £900.00), you have to add one ninth (£100.00) to it to arrive at the taxable amount, so in this case you are treated as receiving £1,000.00 of taxable income, which includes a 'tax credit' of £100.00. If you don't pay tax at the higher rate, the tax credit is enough to cover the income tax due, so you don't need to pay any further tax.
If you are a higher rate taxpayer, you will pay income tax at the 'dividend rate' of 32.5% on your dividend of £1000.00, giving a tax bill of £325.00. From this you can deduct the tax credit of £100.00, so you have to pay a further £225.00 in income tax.
It's much simpler to look at it like this; a higher rate tax payer will pay income tax of £225.00 on a dividend of £900.00....that's 25%

If you can't wait to read parts 3 to the end, please email me at with subject matter "TAXFACTS 7" or call 0800 298 9358 and we'll send you the complete article either by email, on a fax number or by post.

Search for a buy-to-let mortgage

Landlords who have read my previous posts will know that I have got to the stage where I have identified a buy-to-let mortgage that suited my needs, a 6.29% 2 year tracker. However, my dilemma was that I was not happy with the costs of securing this mortgage. Was there any alternative I thought on using a mortgage broker and having to pay their fees?

Buy-to-let mortgages - save time & money - expert brokers - 1 FORM

Saving money on getting your buy-to-let mortgage.
This is where a little bit of effort and undercover work by a landlord can work wonders. I knew the type of mortgage but just didn't know who it was from. Mortgage brokers aren't alway keen on giving these sorts of details away. To track down the lender I used the search facility on Property Hawk's mortgage section. All it involved was doing a search on tracker mortgages, scrolling down the results to find one with a pay rate of 6.29%. Low and behold, there it was the 6.29% tracker from The Mortgage Works.

I trust the Mortgage Works
I trust the Mortgage Works. Why? Well they are part of Nationwide which being the UKs biggest mutual has in my view trod the line very well between making a profit but also not ripping off it's customers. The other thing is being a building society it is able to attract funds from it's retail customers at reasonable rates and therefore is not so reliant on the very expensive money markets for funds.

A quick glance at some of their rates showed it was possible to get a tracker rate as low as 4.99%. However the Loan To Value (LTV) on that was 60% plus it had a hefty arrangement fee of 3.75% (min £875). I wanted 75% LTV and was not prepared to pay a fee of that scale which after all really is dead money.

Therefore, satisfied with my original selection; my dilemma now was that given TMW buy-to-let mortgages were only available through an intermediary such as a mortgage broker was how I could access this mortgage but avoid paying such a large amount in brokers fees.

To be cont......

Lessons from the field

When you get into the property business, it stands to reason that you will best understand the benefits your product has, and which features are likely to attract customers the most - but until you’re out there doing it, you really know nothing. At least this has been true for my letting agency.

I thought our concept of 'free property management*' would be the most attractive feature to London Landlords. I was expecting people to beat down the door in search of this magical offer, but the attraction actually lay in a different direction all together. I believe that owing to the credit crunch, it is actually the fact that we guarantee landlords their monthly cash flow that caused the most stir! Needless to say, we have restrategized in our marketing - though we are attentive for any other shift in the market, because if you're advertising the wrong thing you'll either get the wrong people or no clients.

It seems to be similar with lettings. We advertise using a variety of online methods, and for many of our properties we have similar ads (because we have similar properties in our personal portfolio). The standard: close to tube station and shopping areas etc. just doesn't cut it. It's the little value ads which separate you from the hundred other listings that seem to get the most attention - the fact that we include a cleaner, a Plasma TV etc.

The lesson I've learnt from this: If your letting, or running a lettings company you need to really pay attention to what your customers are finding attractive in your product - and then make a big deal in your marketing about that feature! Simple enough eh.

*Compared to the standard agency equivalent

Monday, August 25, 2008

Property Sparrow is hopping mad about a hedge

Property Sparrow has always enjoyed a good relationship with her lettings agent: she has the utmost respect for their quiet efficiency, ability to communicate and willingness to solve problems. Value for money every month.

Not so with freeholders’ agents. In her experience, birds of very different feathers.

Property Sparrow has three to contend with in her small portfolio and has strange relationships with them. The best keeps the grounds in immaculate condition with the hedges tightly pruned. Periodically they send stroppy letters to the leaseholders to tell them to put their rubbish in the right bin. The worst does not seem to know why this sort of thing is important.

Since 21 July Property Sparrow has been trying to get this freeholder's agent to prune the hedge at the front of the building where she has a vacant flat.
The local sparrows love it but on Rightmove it looks like a burglar’s paradise. Property Sparrow has sent a two page letter, three e-mails and made two phonecalls. No reply; he is always out of the office. Her lettings agent has also tried to get this done.

Property Sparrow does not understand this. It’s not a glossy corporation, it’s a small local property outfit. Under the current management arrangements at this flat Property Sparrow is wholly dependant upon this person to get the hedge cut. Is this incompetence? Laziness? A contempt for leaseholders?

Property Sparrow is not tall enough to cut the hedge herself and why should she – it’s more than 40 miles away.

New landlords: work at your relationships.

And remember, just because you’ve paid £100s per year to a freeholder’s agent doesn’t mean that you won’t need to buy a hedge trimmer.

Friday, August 22, 2008

Is the rental market about to collapse with oversupply of unsold homes?

It's all very well taking advantage of the weak sales market to buy investment property cheap, but it seems thousands of new landlords are being created every week when they decide to let their home that they can't sell.
Until now, demand has met the supply as among others, first-time buyers keen to move out of their parental home but unable to fund mortgage deposits have willingly stumped up the cash to rent.
However, as unemployment rises and less new jobs are created it stands to reason that current rents will become less affordable for the average tenant. Many first time buyers / renters will choose to wait a little longer before fleeing the family nest. Equally, with more and more quality stock coming to market, tenants will have more choice than ever and we will be in the unique position of having both a buyers and tenants market a the same time.
Taking this to its logical conclusion, if landlords are unable to let their properties at economically viable rates, more and more will default on their mortgages leading to more repossessions, a further tightening of credit from banks and a continuing spiral of housing depression.
This may all seem a little apocalyptic but an article in the Guardian is already pointing to falling rents in major cities including London and Manchester:
With the inflationary threat far from over especially as the weaker pound pushes up import prices from Gas and Oil an imminent interest rate cut is surely looking less likely than before.
So next time you're offered a 'bargain' property, my advice is to think long and hard about how cheap it really is.
This is the first recession of the Buy To Let era. It would be ironic if the freeing up of the credit systems that created the recent housing boom have also sown the seeds for the current downturn.

Thursday, August 21, 2008

A landlord's boiler blues just blew up!

Anybody that has read my previous posts on my longstanding spat with my plumber should know that things have finally reached an impasse. He has come clean that he is out of his depth. Having made his diagnosis that it was the PCB costing £150. Having got me to pick it up. Having installed it. The outcome was no hot water and no heating. Not the result I was hoping for!

Where can I get boiler insurance for less than a tenner a month?

I am starting to hear that phrase echoing in my head. "If you pay peanuts you get monkeys". Come to think about it, the plumber was quite hirsute. Maybe my judge of character is not what I thought it was. Landlords know that being a good judge of character is an essential part of being a successful landlord. My error in not being able to distinguish between the primate and the primitive will cost me dearly!

In an attempt to resolve the situation once and for all I phoned up Worcester Bosch to get one of their approved service engineers. "Yes Sir, we can get somebody out to you. We will change up to 3 parts and our price includes all labour and materials."

"The cost, oh yes that £185 call out unless its the heat exchanger in which case its £245."

At that point I was all for getting Miss Jones to knit the tenant a supply of pullovers and buying Masten an extra large kettle. She insisted that this was unacceptable. She feels responsible for the future matrimonial prospects of young Masten.

All I can say is that boiler insurance is starting to look good value.

London landlords suffering....with the rest of us!

I read with interest Tim Jackson's post about London property selling at the biggest discount to the asking price in the UK. It's tempting to say that this is perhaps a belated brush with reality after a year when London landlords thought that property prices could literally defy the laws of gravity. Whilst the rest of the country were getting used to a stagnant if not falling house prices, Londoners were smuggly basking in house prices that appeared that they could rise for ever on the back of big city bonuses and London's international status.

Where do professional landlords go for their landlord insurance?

This article in the Times just shows how Londoners are having to get used to everybody elses reality that the housing market goes down as well as up. It's grim up north but now it ain't so great down south either!

Everyone knows that house prices are falling but the scale with which they tumbled in London last month is frightening (for homeowners). According to the latest figures from, the average asking price in the capital fell 5.3 per cent between July and August. That means a whopping £21,000 has been wiped from the value of the average London home in the space of just four weeks – that is the equivalent of £750 a day or £31 an hour.

Until recently, asking prices in London have remained largely stagnant but the mortgage drought and lack of buyer interest appear to have finally caught up with the capital.

Miles Shipside, the commercial director of Rightmove, says another explanation is that sellers who choose to come to the market during the peak holiday season generally have a greater need to sell, and therefore are pricing competitively to attract buyers.

Of course, the London-wide figures mask wide variations although every borough registered falls last month and only six boroughs still have higher prices than a year ago. See below to find out how prices have changed in your borough.


Average price August 2008

Monthly change

Annual change

Kensington and Chelsea




City of Westminster




Hammersmith and Fulham








































Tower Hamlets
















































Waltham Forest




















Barking and Dagenham