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Wednesday, March 31, 2010

News merges with blog

It's spring again - so time for a clear out.

We're constantly adding new things to the site, consequently we felt that it was looking a bit confusing, especially the homepage.

So as a way of tidying things up we have merged the landlord news with the landlord blog.

If users want to look at the historic news posts then they can still see them here.

We hope users like the changes, let us know what you think.

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Protection from rogue agents

Landlords and tenants urgently need more legal protection from letting agents, the Property Ombudsman warned today.

Read full article in Citywire

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A good tenant - hassles you

A good tenant paradoxically is the ones that often give you the most grief.

They are the ones that keep hassling you to get the shower curtain fixed and the flickering light sorted. Us landlords need a bit of keeping in line sometimes!

It is exactly this attention to detail that hopefully will mean your rent gets paid on time and that standing orders are set up and that their utility and council tax payments are sorted out.

Lets face it, a tenant that wants their property right and in tip top condition already considers your property as their home .....not a doss pit that they can abuse and then leave at will.

I much rather have a tenant that cares than one you never hear from even when things go wrong......this can sometimes spell trouble.

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Light refurbishment - finance

Any investors who feel the need for a light refurbishment. God knows I do...

Will be relieved to know that they can get finance for this from Mortgages For Business.

The buy-to-let mortgage product is not aimed at landlords that are carrying out a more extensive development project but would be perfect for a property needing a little bit of a spruce up inc new kitchen and bathroom, etc.

The buy-to-let mortgage is available up to 65% LTV for the initial purchase. Further funds are then released at the end of the refurb up to 70% of the new LTV. The interest rate is 5% above base with a 1% loading during the period of the refurb.

There is a lenders fee of 2.5% and also a brokers fee for this buy-to-let mortgage product.

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Tuesday, March 30, 2010

Evicting tenants is never easy

I realised a little robin had started building a nest in my garden waste wheelie bin this morning.

The lid was open because as always I'd over filled it and despite standing on the lid it wouldn't close flush.

I don't know how long he had been busily constructing his new home, but I did know I was going to have to stop works as the bin was about to be collected that morning.

I went out, took out the excess prunings and closed it shut, with a heavy heart.

I then spent the next hour watching the little robin hovering up and down to the front door of his old home wondering why it was now locked up.

Evictions are traumatic for both landlords and tenants.

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Rent, a game of two halves

The latest rental index from Findaproperty shows marked differences in the way the lettings market has been performing over the last month.

The latest figures indicate 5 out of the 11 regions experienced a rental increase.

Increases were particularly strong in London (+0.7%), South East (2.7%) and the East of England (2.0%).

In London there were rental increases in 24 out of 33 Boroughs.

The biggest increases were in Lambeth (+2.7%) £1468 pcm, Richmond Upon Thames (+2.5%) £1755 pcm, Harrow (+2.4%) £1228 pcm and Hammersmith & Fulham (+2.4%) £2,346 pcm.

The largest falls in the London Boroughs were experienced in Greenwich (-3.2%) £1,184 pcm, Merton (-2.4%) to £1,585 pcm and Lewisham (-1.8%) to £1,127.

The other half

In contrast, rents fell in the North East (-2.3%) and West Midlands (-1.4%). The heaviest falls were experienced in the North East with rents falling to an average asking rent of £605. Both regions economies are heavily orientated to manufacturing and have been badly impacted by the down turn in this sector.

The good news for Yorkshire & Humberside landlords is that rents were stable at £535 pcm. This follows a period of steep declines which has resulted in rents having fallen the furthest out of any region in the last year - down 9.3%.

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How about being a lunar landlord?

Have you ever got fed up with the earthly constraints of tenants, letting legislation and increasing amounts of bureaucracy?

It's possible to escape from it all.

Why not become a lunar landlord? Owning a slice of the Sea of Tranquility or Lake of Dreams has got to be good for your soul even it isn't going to do a great deal for your bank balance.

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Monday, March 29, 2010

Cautionary tale of property clubs

We've been telling property investors for the past 5 years not to trust property clubs.

Here's a further cautionary tale in the Guardian.

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Landlords not meeting payments

I've just been reading that a new report from a debt solutions firm, has recorded a 53% increase in BTL investors struggling to pay their creditors. report a “near meltdown” among BTL investors, with typical debts in the range of £163,000 to £201,000.

Lets hope that interest rates remain low otherwise even more landlords will continue to struggle.

Read more in this Lovemoney article.

If you look at the comments you'll see that landlords won't receive any great sympathy if they do go under, women and children first, then save yourselves.

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Boiler Scrappage Scheme Ends

The boiler scrappage scheme has ended after just three months because all 125,000 vouchers have now been taken by property owners.

Read more in the Times

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Grant Boveys Imagine Homes up for Sale

Grant Boveys BTL property company, Imagine Homes is been put up for sale by its administrators, Deloittes.

The sale of the companies property portfolio is hoped to raise £100 million.

One half of an infamous 'celebrity couple' after leaving his wife for cleaner and Television presenter Anthea Turner, Bovey has had a high profile bankruptcy following the failure of his Imagine Homes BTL business.

Read more here

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Sunday, March 28, 2010

Government rules out residential REITs - but why?

Chancellor Alastair Darling said in his pre-Budget Report and Comprehensive Spending Review noted that the UK Real Estate Investment Trust or REIT regime, launched in January had 'been a marked success'.

He said: 'To date 16 companies have become UK-REITs with a total market capitalisation of around £30bn. The Government has recently reviewed the viability of residential REITs and the REITs listing requirements – but has concluded that there is not at present a compelling case for change. However, the REITs regime will continue to be kept under review.’

I would ask why exclude residential property? Given the resilience of residential property values compared to the commercial sector it seems strange not to allow people to be able to benefit from an investment in a company investing in residential property which then has to pay out 90% of their income in dividends.

This to me would be an attractive alternative to landlords and investors not wanting the responsibility of direct property ownership. Residential REITs are available to US investors where the system has been established for many years so why not over here Darling?

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Saturday, March 27, 2010

Parliament urged to 'hurry up' and increase rent threshold

An Early Day Motion tabled by MP Greg Mulholland is calling for the Government to hurry up and get on with its plans to raise the rent threshold for ASTs to £100,000 on October 1, and to introduce a legislative timetable.

Mulholland is Liberal Democrat MP for Leeds North West.

The motion says: “That this House welcomes the Government’s announcement recommending that the threshold for the Tenancy Deposit Scheme be raised from £25,000 to £100,000 which will ensure that many more people, including thousands of students, will be protected from rogue landlords wrongly withholding deposits; celebrates the success of the campaign for such a change, which was supported by the National Union of Students, Unipol and The Sun newspaper; notes that the Use Class Order consultation calls on the Government to ensure that the results of this consultation become law as quickly as possible; expresses concern that the Government has not set a date or a timescale for introducing this important change; and, with the general election imminent, urges the Government to do so before Parliament is dissolved.”

It's amazing how many words an MP needs to say "get on with it"!

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Friday, March 26, 2010

Northern Ireland landlord register

Northern Ireland landlords will have to register their details under new government regulations currently been set out.

The new proposals include a rent deposit scheme to protect agreements between tenants and landlords.

There will also be an "education programme' to ensure landlords and tenants are aware of their respective rights and responsibilities.

The plans are part of a new private rented strategy, entitled 'Building Sound Foundations'.

Read the full 'Building Sound Foundations' document here

Read responses to the proposals here

Read full article on the BBC

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Bank of China launches 3.88% tracker

Bank of China has launched the cheapest term tracker with a 3.88% buy-to-let tracker mortgage.

The mortgage comes along with a flat rate fee of £1695 up to £150,000 and is available up to 65% LTV.

The mortgage is now available to landlords with a portfolio of up to 10 buy-to-let properties.

One word of warning is that I've heard that Bank of China who have only recently entered the UK mortgage market are not the easiest buy-to-let lender to deal with. Therefore any landlord who deals with them will have to be prepared to jump through hoops and meet all their qualifying criteria if they are to be able to secure a mortgage with this lender.

VARIABLE TRACKER RATE MORTGAGE of 4.00% withdrawn & replaced.

NEW VARIABLE TRACKER RATE MORTGAGE available to direct business in major conurbations in England & Scotland: 3.88% for term, max 65%, fee up to £150K - £1695, over £150K to £500K - £2195, over £500K to £1m - £3195 & over £1m - 0.50% of advance (all tiers except over £1m increased by £900 for expatriates & foreign nationals), BBR + 3.38% for term.

PROPERTY PORTFOLIO now 10 properties up to a maximum of £2m. W.e.f. 24.3.10.

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Rents continue to fall...

According to the UK's only real-time measure of national rent levels rents using an Assured Shortold Tenancy (AST) continue to fall.

The average rent as shown by the Rentindex now stands at just above £570 pcm down 3% in the last 3 months.

This continues the downward trend identified last week with rents falling further.

Is this the start of a downward trend?

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Thursday, March 25, 2010

Massive increase in defaulting tenants

A report shows a massive increase in landlords having to claim on rent guarantee insurance because of defaulting tenants.

The Telegraph report a 58 percent increase in the second half of 2009.

Read full article here

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The NLA review the 2010 budget for landlords

The National Landlord Association have a look at the detail of the 2010 budget and it effects on landlords.

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New £250k stamp duty exemption for first time buyers

Nine out of ten first time buyers are now exempt from stamp duty, thanks to the Budgets new £250k exemption for first time buyers.

Even though as a property investor I will not be able to take advantage of this, I for one think it's a positive initiative.

Read full story in the Telegraph

Read the RICS response to stamp duty changes

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Nothing in the budget for landlords....but discrimination.

As expected - nothing in the budget for landlords apart from a blatant bit of discrimination.

The Chancellor in his one gesture to the housing market has decided to scrap the 1% stamp duty on purchases up to £250,000 saving a potential purchaser up to £2,500.

This saving is only available for first time buyers and not landlords. This means automatically that a landlord is having to pay more effectively for their property than somebody trying to get on the housing ladder. Is this a good thing?

I'm all for greater home ownership, but since the scrapping of MIRAS back in the 90's I thought that ownership was a personal choice not something that should be addressed and funded by the tax payer.

To me this selective change discriminates against landlords and distorts the housing market. That ultimately is unsustainable and can't be good for any of us involved in housing provision.

The National Landlord Association have had a close look at the detail of the 2010 budget and review its effects on landlords.

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Wednesday, March 24, 2010

Property price twitter - drivel and discussion.

Property price tweets, twitter, twaddle, discussion, drivel and distraction.

House price February lull - Guardian

Mortgage approvals flat on recovery fears - Times
UK Housing market remains subdued - Press Association
UK Property Prices up 0.3% in March - Marketwatch
Election threatens property prices - Propertywire
Can Londons property boom continue? - Investors Chronicle

See all the property price tweets

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Derivatives show residential values to only rise 9% by end of 2014

Landlords expecting a sharp rebound in house prices could be sadly disappointed according to the latest info coming out of the residential derivatives market.

These financial instruments used by institutions to manage risk and speculate on future values without the need to buy bricks and mortar show that the market expects the average house price as measured by the Halifax house price index to be only 9% higher by the end of 2014 than their value was in December 2009.

The near time forecast is not that promising either showing that prices will have risen a measly 1.5% in the two years to December 2011. Not much fat here to dine out on!

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How to vet your tenants remotely - without ever meeting them

I've just vetted a new tenant without even meeting them.

It was easy.

All I did was have a quick chat with the prospective tenant. He sounded reasonably plausible i.e. he was working and been with his current landlord for a couple of years. What's more he was after a fairly long-term let! Love it....

So I explained that I would need to credit check him and he was fine about it. I sent him a list of details that I needed from my prospective tenant by email.

1. His landlord reference
2. A work reference
3. Personal details so I could carry out a basic credit check to ensure he was not a serial debtor: his existing address, full name and date of birth
4. Copies of the last 6 months bank statements on his main bank account

The prospective tenant impressed me

The prospective tenant duly responded. I was impressed. Not only was he quick, he was very thorough and even emailed me scanned copies of his bank statements.

Having spoken to his landlord (difficult position for him & me) I'm effectively robbing him of his customer. He genuinely didn't appear to be expecting the call and was lost for words when faced we the prospect of loosing one of his tenants. I then move on to his employer. He was genuinely positive about the prospective tenant who I think works in accounts so hopefully he will be able to budget.

Next it was a case of going through the tenants bank statements. It was clear that the prospective tenant was not a big spender. Little cash withdrawals and a large monthly cash amount that i presumed was his landlords rental payment. I was warming to this guy.

Finally - the credit check

Finally, I went to the property hawk lettings directory and selected credit check service. It cost me £9.70 and true to form it was delivered the same day. I have subsequently realised that Letting Ref does a credit check for £9.99 but you get one extra check for free.

The check didn't show any 'nasties' in the shape of CCJs.

I'm happy and gave the tenant the green light to hand in his notice to his existing landlord. I obviously feel a pang of guilt about robbing from your own. But hey - being a landlord is a business and a competitive one at that!

Landlords don't forget to take a holding deposit!

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Tuesday, March 23, 2010

The importance of location in a divided society

We live in divided times.

After a decade of a supposed 'socialist Government' the gap between rich and poor has increased.

These divides will only get larger over the coming decades and we will see an increased rate of exodus from poorer areas to wealthier areas.

That old cliche of 'location, location, location' will continue to ring true, so buy in quality areas to insure for long term capital growth on property.

Sad but true, and the inevitable consequence of a free market economy.

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And the least most popular celebrity landlord is .......

................ John Terry.

Apparently the ex England captain comes out as the celebrity landlord that tenants would least want in a recent National Landlord Association poll.

For our next award the most popular celebrity landlord goes to ........

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Getting your money back from ex tenants

So the tenant that you never really liked, who caused you problem after problem has decided to put you out of your misery and done a runner! Unfortunately, they have done so owing you rent and have damaged your property, so what can you do to get your money back?
There are a number of enforcement options open to you, with each having their pros and cons.

1. Warrant of execution
The court sends a bailiff to seize goods from the defendant, only if the goods are worth enough to pay the warrant of execution (after the cost of the bailiff is taken into account).

2. Attachment of earnings orders
If the defendant is an employee, the court orders his/her employer to make deductions from their pay, (inapplicable if the defendant is unemployed or self-employed).

3. Third party debt orders
The court orders a third party (for example, the debtor's bank account provider) to freeze their funds while the court decides whether or not money should be paid to you.

4. Charging orders
The court places a charging order on the debtor's assets (for example, land, property, investments), preventing the debtor from selling them without paying their debts first.
The other option, which is one of the most common is to make a small claim of up to £5,000 through the county court.

But before you attempt to make a small claim, always ask yourself a few questions:

• Can you settle your dispute without going to court?
• Will the debtor pay you if you make a successful claim?
• Will you be able to successfully enforce a County Court Judgment against them?

To make a small claim you need to find your ex tenant, as you cannot enforce a claim without the current address of your absconded tenant. The easiest way of doing this is to use a tenant trace service. Issuing a small claim through the County Court can often prove to be a very useful tool. Indeed, a Law Society spokesperson stated that the UK's small claims procedure is "simple, efficient, informal and facilitates access to justice for thousands of litigants, many of whom act in person."

The other thing you need to consider before going down this route is, does the absconded tenant have sufficient assets to pay you back? It may be worth checking to see if they already have county court judgements or if they are already bankrupt before pursuing them. A tenant verification check can give you this information.

Another alternative is to apply for the defendant to be made bankrupt if the amount owed to you is more than £750. The fear of being declared bankrupt may well convince your debtor to find a way of making a payment.

However, bankruptcy proceedings can be expensive, and costs incurred by you will often be unrecoverable.

Whatever option you choose, make sure you know the costs and information required for each.

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MFB launch 4.5% two year tracker

Mortgage broker Mortgages For Business is doing it's best to tempt landlords with their latest offering of a 4.5% two year buy-to-let tracker with a reversionary rate of 4.24%.

The mortgage is available up to 70% LTV with the ability to add the £1,999 application fee to the loan.

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I'm glad I didn't fly to let

Like many property investors in the mid noughties I found myself for the first time in my life and in a relatively short period of time with 'quite a lot of money to invest' but also feeling that UK property was fully valued. On top of this property shows such as Property Ladder seemed to be exhorting their band of eager amateur followers to 'go out there and buy property'. The message was "You too can be a developer with the underlying tenet even if you get it wrong you'll make loads of money." The consequence was any reasonably attractive development and refurbishment project would have an army of amateur developers chasing it and pushing prices to ridiculous levels. So much so that 'wrecks' were priced more expensively than similar tatty properties on the same street.

Investing abroad looked attractive

I like many more experienced investors turned instead to looking at buying abroad. I was attracted by the concept that many European cities in the old eastern europe offered greater growth prospects. Having travelled extensively in Europe and the Baltic states I could see that many grand former cities were just ripe for improvement and would in time be the Mayfair or Kensington of the resurgent independent country resulting in values showing strong growth over time.

Local knowledge is so vital

However, there were significant issues that put me off following my hunches. Firstly, I know how significant local knowledge is in choosing where and what property to invest in. Values can be dramatically different on different sides of the same street and it is only local knowledge that would tell you this. The prospect in buying in another country, with a different culture and laws and regulations that were complicated and likely to change was just too much of a risk for me. Added to this was the cost and complication of trying to manage a buy-to-let property through an agent thousands of miles away who was always likely in my mind to disappear into the night with your dosh. It just wasn't worth it, particularly as the concept of it being partly a holiday home never meant sense to me. Why would I want to keep going back to the same city every years when there are so many fantastic places I haven't been to?

Whilst I debated over whether to invest and where to invest there was a global boom in property prices and suddenly prices gains meant these properties were no longer cheap and the downside seemed ever greater.

Downside too great

So I didn't invest abroad. After reading this article in the Times about the sad experiences of many fly-to-letters I'm quite glad that I didn't. There can't be anything more miserable in holding a property thousands of miles away where you have lost tens of thousands of pounds and then having to shell out money on service charges and letting fees in the vague hope that one day it might be worth what you paid.

Has anybody had a successful experience of fly-to-let? There must be some landlords who have made a successful transition to international landlord. A concept I am attracted to. I just haven't met any yet.

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Monday, March 22, 2010

NLA beg for gentleness from Darling

The National Landlords association have begged for gentleness from that naughty beast, Darling in his budget next week.

They hope Darling will be sensitive to a landlords needs........ and bring them presents of -
  • Landlords should be entitled to utilise ‘roll-over’ relief to encourage reinvestment of released capital gains.
  • VAT rate for renovations and home improvements should be reduced to the lowest possible rate of 5 per cent.
  • A review on Stamp Duty on multiple purchases.
  • Review on how Council Tax is assessed for multi-occupancy dwellings.
  • Rent a room allowance to be extended from £4,250 to £9,000 per year.
Oh please be gentle with us sexy beast!

Read the full wish list from the NLA and lets see what Darling has in his sack next week.

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Falling rents - landlords playing safe?

Identifying rental trends is difficult. As we have recently said you choose your information source and then make your mind up.

We've recently highlighted the figures from Rentindex which gives real time rental information and shows that rents have shown a dramatic fall in the last 6 months. The latest figures based on over 4000 AST rental agreements over the preceding 3 months have shown falls of over 3%. It's doesn't sound much but in a world where average rent changes nationally change by perhaps 2-3% per annum; it's significant.

I can only speak from recent personal experience. I had a tenant giving notice who luckily for me had a colleague wanting to rent my flat. Now if I'd put the flat on the market I would have been looking for a rent of between £350-375. As it was, the new tenant who was trading up from £275 pcm and was only able to afford £315. My dilemma.

Push for more rent but then have the additional marketing costs of employing a letting agent and even worse a potential rental void. The alternative was to accept less rent, get a tenant in pretty much straight away and then potentially increase the rent in line with the tenants rising income. I chose the latter.

I'm just wondering whether the recent rent falls reflect this pattern of behaviour from landlords across the sector. Are we prepared to accept less rent in return for keeping our properties let?

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International buy-to-let yields above 12%

More adventurous landlords who may feel that the UK housing market is going to be stuck in the doldrums for the next couple of years might be interested in what type of returns their 'cash' could generate in other housing markets around the world.

It shows three countries yielding over 10%. Panama City in Panama with over 10%, Lima in Peru 12.12%.

Topping the international yield charts is Jakarta in Indonesia with a whopping 12.34% yield.

For more information and a table of international residential investment yields.

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Sunday, March 21, 2010

Say it loud - "I'm a landlord & I'm proud!"

So often us landlords get it in the neck.

Tenants complain we are; money grabbing individuals who consistently fail to get that leak fixed.

Governments see us as errand individuals determined to evade taxes and who constantly need to be regulated into oblivion to protect the rights of the poor defenseless tenants.

First time buyers blame all their woes on greedy buy-to-let landlords beating them to their first bolt hole and pricing them out of the house market.

Enough I say!

Landlords need to stand up and be counted. Say it loud. 'I'm a landlord and I'm proud."

  • Proud that we house 14% of the countries households at no cost to the state
  • Proud that we contribute huge amount of tax revenue to the countries depleted coffers
  • Proud that we provide choice and flexible accommodation for tenants across the social spectrum.
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Saturday, March 20, 2010

Zoopla online auctions - now taking registrations

Landlords looking for an auction bargain may be interested in the latest online auction on the Zoopla property portal.

The auction of over 50 properties will begin taking bids on the 25th March.

Zoopla have partnered with REDC the US based and worlds largest residential auction house.

To view properties and register for the auction click here

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