Tracker rates on top

According to leading buy-to-let mortgage lender the Landlord Centre their latest quarterly survey reveals that tracker mortgages are the most popular of all loan applications being made by landlords.  Andy Young, chief executive at Landlord Centre comments on the Index’s findings:

“During the course of last year fixed rates were a more popular choice by landlords, making up 63% of applications in the last quarter of 2010, with just 37% of applications for variable rates. However, this preference appears to be changing as the Bank of England base rate has remained at its historical low of 0.5% throughout the first quarter of 2011.

 

“During Q1, 52% of applications were for variable rates, perhaps reflecting opinion that any interest rate changes during the year will be small. There have also been some very attractive discounted rates available via a number of regional building societies, resulting in an influx of applications for these products. Interestingly the average rates chosen during the period increased slightly. The average fixed rate was 5.00% (up 0.24%) and the average variable rate was 4.20% (up 0.13%). However, one set of results is not sufficient to tell whether this is a developing trend or just a minor deviation compared with the previous quarter.”

Mortgage SEARCH - free advice

Buy a Mill on 10%+ yield

Any landlord that likes old building and architectural heritage will be interested in this renovated Mill.  Springfield Mill located just outside Nottingham has over 100 apartments and comes with a rent roll that equates to over a 10% gross yield on the 5.5 million asking price.

Details are contained below.  For more info contact

Michael Gorman
Email: michael.gorman@allsop.co.uk
Tel: 0113 236 6683

Robbie Underhill
Email: robbie.underhill@allsop.co.uk
Tel: 0207 344 2659

Springfield Mill, Sandiacre, Nr Nottingham NG10 5QD
Freehold Grade II Listed Converted Mill comprising 105 Apartments
11 apartments sold on long leases 94 apartments fully let subject to ASTs
20 x studios
20 x one bed apartments (including one duplex)
54 x two bed apartments (including 18 duplexes) 72 car parking spaces
Total AST income £614,760 per annum
Total ground rent income £3,025 per annum

Investment finance & mortgage search

Gambling on house prices

Figures from RBS indicate that the futures market are pricing in a drop of 10% in house prices next year.

RBS is preparing to launch a series of house price derivatives in 2011 according to the FT allowing landlords and other investors to bet on the medium term direction of house prices.

The products launching next year will have a minimum investment of £10,000 and last for 4 or 8 years.

How do house price derivatives work?

Landlord insurance quote

Seasonal fall in rents

Property Hawks sister website the Rentindex gives us unique access to AST rental data.  Interestingly, it reveals a seasonal pattern in rents where the level tends to peak in the late Autumn.  During this summer, rents have been rising strongly as demand for rental properties has outstripped supply.

We have noticed however over the last couple of weeks that rents which peaked at about £605, have dropped back to below £600 and are now 0.4% down over the last month.

The tip for landlords looking to set their rent is that they should attempt to negotiate the new rent with the tenant between September to October to maximise their likely rental returns.

Instant tenant reference

Principality 3.64% tracker launched

Principality BS has reduced it's variable tracker buy-to-let mortgage rate by 0.1% to give a new rate of 3.64%.  The rate is based on the Bank of England Base rate currently at 0.5% and is calculated by BBR + LOADINGS.

The fee on this buy-to-let mortgage has also been reduced from 3% to 2.5%.  This mortgage is available up to a maximum of 60% LTV which will limit it's appeal for some landlords.

Landlords looking to reduce their fees should also look at Principality's 4.19% tracker which also offers incentives for remortgages of free legal fees as well as a fixed application fee of £999 and has been rated a Moneyfacts BEST BUY product.

NEW VARIABLE TRACKER RATE MORTGAGES: 4.19% to 31.12.12, max 60%, fee £999, with incentive for remortgages of free legal fees; 3.64% to 31.12.12, max 60%, fee 2.5% of advance. Above tracker rates are based on BBR (currently 0.50% + loadings).
FIXED RATE MORTGAGE of 4.69% to 31.12.12 

MORTGAGE SEARCH - WHOLE OF MARKET

Prices down again Nationwide

The Nationwide today reported that house prices have continued the downwards path with a fall of 0.7% in October.

This follows on from the record fall reported by the Halifax for September of 3.6%.

The average price of a house according to the Nationwide is now £164,381 which is still 1.4% above the price last year.

The main brake on house prices appears again to be lack of finance as banks keeps a tight rein on their Loan To Value ratios.

Landlord Insurance - the value option

STUDENT LANDLORDS – TO RENT FOR 10, 11 or 12 MONTHS?

Traditionally there will often be a history of renting student houses for a particular period in your area and in ours it is either 10 or 11 months, however in a large nearby town it is almost always 12 months. Students usually pay the full rent for the whole of the tenancy regardless of whether it includes all or part of the summer holiday.

'Our houses are let for 12 months'

I have broken with tradition in our area. Our student houses are let for the full rent for 12 months. Our tenancies are from August 1st to July 31st. Students almost always check-out a couple of weeks before the end of their tenancy and we ask their permission to enter the property during this time to prepare for the next group of students. Having established a good relationship with the students and responded promptly to maintenance requests during the tenancy they always agree.

'So, why do students pay for 12 months, when locally most are 10 or 11 month lets?'

We have always quickly let all our properties, because we are in the higher quality end of the student market. There is a local accreditation scheme, run by the District Council, where landlords’ properties are inspected and awarded a certificate, which ranges from basic up to 5 star. All our properties are 5 star accredited and this enables us to charge a premium rent.

We also carefully researched the area and purchased properties in what students consider a more desirable area. Once students have compared our houses with others they almost always snap up our properties regardless of the length of the letting period.

There are some other good reasons to let for the full rent for 12 months.

Students may want to return or stay in their house during the summer holiday to work away from home. They may be on a longer course, for example, medical students and work placements or they may want to store their belongings (and often their many friends!) over the summer. We have known parents stay during this time for a cheap holiday in the area!

Financially landlords have to pay Council Tax and probably water rates and a mortgage during a void. Spreading the annual cost of these over a 10 or 11 month let raises your monthly rent. A property let over 12 months, will potentially bring in a greater annual rent, but could be offered at a comparatively lower monthly rent to other local shorter tenancies.

Renting properties to students is a business and landlords should seek to gain the maximum return on their investment and consider the challenge of promoting a longer let to the norm in their area. Most student properties are let at least six months before the start of the tenancy, so test the water and offer your houses initially for full rent for 12 months.

After your success, other local landlords may follow your example and you will never again have to consider offering your property for half rent over the summer period!

Student landlord insurance

STUDENT LANDLORDS – HAPPY FREE ADVERTISING

Many student landlords will now be thinking about advertising their properties. I recently received an unsolicited email suggesting we advertise our student properties for only £50 on national internet sites.

We manage all our own properties, so we avoid expensive management and advertising fees. Are you taking control of your advertising?

"We've never had a void"

We have never had a void or paid for an advert. Some major national sites are of limited value for local students looking for properties. Look for internet sites that have a filter, which narrow a search to your particular county or town. Some sites specialize in finding roommates or flats. There are many sites specifically or generally available for the student landlord to use.

Some sites, such as Gumtree, count the number of hits on your advert. Others, such as Vivastreet, email you to enable you to regularly replenish your advert free. Studentbunk and Gumtree will email you directly, when there is interest in your advert. Torent enables you to save and manage your advert from one year to the next. Easyroommate will send you daily emails of people who might be interested in your property from their database. LetaLife can be seen by tenants, landords and agents using the latest mobile technologies such as 3g internet phones, PDA's Blackberry and iPhones. Many have a student property section such as Roastbeef and Torent.

Should I pay to bump up my advert?

Some will try to charge you for extras such as ‘bumping up your advert’, ‘featuring your advert’ or ‘upgrading your package’. We avoid these extras as it takes very little time to repost a new ad.

If your local university has its own housing department then they may be reluctant to advertise your independent property in competition with their housing stock. Try contacting the students union. They are often delighted to promote a more balanced view of good quality student housing to let in the area plus they may have a student housing day, where your properties could be featured.

Get one of your existing student tenants to post paper adverts on university notice boards. We put our contact details on several tear-off perforated slips at the bottom of each advert.

Start by investigating these free to advertise sites:

Gumtree.com; Letalife.com; Studentbunk.com; Iclads.com; Torent.co.uk; Freads.co.uk; Easyroommate.com; Simple2rent.co.uk; Starflats.co.uk; Vivastreet.co.uk; Classifieds.co.uk; Letmatch.co.uk; Roastbeef.co.uk; Houseladder.co.uk ; Yourstudenthouse.co.uk

Once your advert is live try doing a search for your property. You will often find that part of your advert is featured prominently under various sites in the search results. Unlike many of the sites where you have to pay for advertising!

In one search recently our property advert was listed 2nd, 7th, 13th, 17th, 18th and 28th on the first 3 pages of the search and we hadn’t finished posting our adverts on all our usual sites! Spreading you adverts across many sites is very important if you want to be seen.

Ask your tenants for feedback

We always ask the students on which particular site they saw the advert, this may influence where you advertise in future. However some just say they searched for student houses and just clicked on our advert on page one of the search!

If anyone has found another good free site to advertise their student properties, why not share for others to investigate!

Happy free advertising!

Landlord insurance

STUDENT LANDLORDS - TIME TO CHECK IN

Many landlords will soon check in their new student tenants. Time to think about the check out!

Students excited about moving in? Moving out seems a long way off? Planting some key thoughts at the start may alter the way they behave during the tenancy and help avoid hassle when they move out.

Our check out leaflet is succinct with a 'start here, follow this simple information and avoid loosing your deposit', approach. Don't just give them a leaflet. Many will never get round to reading it until it's too late at the end of the tenancy. You have a captive audience at the check in. Take time to stress key words such as 'clean cooker', 'walls not damaged by posters', 'stains on carpets'. 'rubbish' and 'loss of deposit'.

Our leaflet includes information on cleaning, damage, tenantable repairs, key return, cleaning carpets and furnishings, maintaining the garden, raising charges (or returning the deposit) and the inventory.

If you are interested in creating your own check out leaflet then this extract from our cleaning section might be a good starting point.

'Cleaning products should be appropriate for the job and any instructions, particularly safety instructions, carefully observed.

Use the steps provided for higher level cleaning.

The property should be returned to us cleaned to a good standard, as indicated in the Inventory and Schedule of Condition or you should pay for a professional clean.

We charge for removing rubbish that is not in a wheelie bin or red box and for sorting out rubbish that has been wrongly placed in a bin/box at the end of the tenancy.

You could borrow a carpet cleaner, hire one or employ a company to clean the carpets. Carpets often contain deep dirt, which is difficult to remove with a vacuum cleaner. They can take several hours to clean and dry, so do this about a week before you check out. A carpet cleaner such as a 'Rug Doctor' can usually be hired from a place such as Tesco or Homebase.

Carpets might need treating with a stain remover before cleaning. Carpets may be replaced, if badly damaged or stained.

Windows, paint work, hard floors, skirting boards, mirrors, bins, window/door frames, lampshades, drawers, tops of cupboards/wardrobes, plastic Venetian blind slats should be carefully cleaned with an appropriate cleaning product.

Have you spilt anything on the furnishings? Does a curtain or furniture cover need removing, washed or dry cleaned and ironed before being re-hung or refitted?

Cleaning a cooker, which has not had regular attention, can take several hours. Remove burnt on grease from around hob rings, oven(s), cooker shelves, grill and oven pans. A stainless steel pad and 'elbow grease' will help clean neglected cooker shelves and enamelled pans. A product such as 'Oven Pride' could be used on oven racks - follow meticulously the safety instructions. Only use 'Hob Brite' or similar on 'glass' cooker hobs.

Fridges/freezers should be defrosted, switched off, cleaned both inside and out, dried and door(s) left ajar.

Appliances in the kitchen should be moved forward to ensure the sides of the appliance and the floor and wall behind are clean.

Empty the vacuum cleaner and if necessary clean/replace filters and dust bag.

Clean the washing machine filter, rubber seal and powder container.

If applicable, clean grass cuttings off the lawn mower.

Treat mould/stains on grout, tiles, walls and ceilings in bathrooms. Clean the shower head.

Marks can often be wiped off paint work and walls.

Stained mattresses will be replaced.

Furniture, including beds, should be carefully moved and, if appropriate, cleaned inside underneath and behind and, if necessary, returned to its original position at the start of the tenancy.'

Students often have only half an idea about cleanliness, particularly if they have had most of it done for them at home. Attention to detail now, will make students more aware of their responsibilities and help stop situations at the end of the tenancy. Avoid the hassle of "I didn't know we had to do that" by giving them a check out leaflet at the start of the tenancy.

STUDENT LANDLORDS - SO YOU"VE DECIDED TO MANAGE?

As the check-in season for the student landlord approaches, what is going to make your relationship with the tenant that little bit special? How are you going to create a feeling of a more personal approach?

We like to start off on the right foot at the check-in with a small welcoming present such as a bunch of flowers or a bottle of wine. Then there's the short welcoming letter, written inside a card:

"We hope you settle down in your new temporary home and trust that you will have a pleasant stay here. If you have any questions or situations please contact us. We are here to help make your tenancy a safe and enjoyable experience.

(signed by the landlord)"

For many students this will be their first time living in the community and we find, once they have checked-in, that they value some simple ideas on what to do next. Our suggestions go something like this:-

"(A header with the full address of the property and your contact number(s) and email)

If you haven't already done them, here are some things to do immediately:

• Check and sign the 'Inventory, Schedule of Condition and Safety Checklist'.
• Set up your standing order(s) for rent payment. Your rent is paid in advance on or before the 28th of the month. Unless your bank is part of the new faster clearance system, transferring money between accounts can take up to five days, particularly over weekends and bank holidays, so your rent should leave your account on the 24th of the month. See your 'House Handbook' for details of our account.
• Contact the Council Tax Department at the (District Council?) and tell them you have moved into this property. Their address is (add address) and their telephone is (add telephone). Full time students are exempt from Council Tax, so do this soon, otherwise they may start to charge you.
• Contact the utility companies below and tell them you have moved into this property. Give them the meter readings of gas, electricity and, if appropriate, water. You will start to pay sewerage and environmental charges for water from the day you move in. You must keep the same water company, however you are free to change gas and electricity companies. If you are going to change companies we strongly recommend you do this now, otherwise they will consider you are on a 'deemed contract' and start to bill you, as if you have agreed to continue with the same utility company.
• We strongly recommend that you get more than one person's name on the bills (preferably everyones' name), so that, if someone is away, at least one other person can talk to the utility companies. They will usually not discuss anything with people who are not named on the bills. These are your existing utility suppliers to the premises:
  
• Gas (Name of utility company) (Contact telephone)
  
• Electricity (Name of utility company) (Contact telephone)
  
• Water (Name of utility company) (Contact Telephone)
• Redirect your mail to this property. See full address above.
• Read the House Handbook. Most of the information is common sense, however it contains some important useful information.
• Read the Check-out Guide. Your check-out seems a long way off, but by reading this guide now it may change the way you clean, use and maintain the property during your tenancy, so as to avoid any situations at the end of your tenancy.
• Go round and check where things are and how they work again, before you forget.
• Re-read your tenancy agreement so that you are familiar with the Landlord and Student responsibilities (e.g. only smoking in the garden or examples of tenantable repairs).
• Security mark your property. Take photos and, if appropriate record serial numbers of all your valuables.
  
• Read the section in the House Handbook on security.
• Keep the House Handbook, the Tenancy Agreement and Inventory, Schedule of Condition and Safety Checklist in a safe place. You will need them during and at the end of the tenancy.
• If the previous tenants have left their forwarding addresses they would be grateful if you could redirect any mail that arrives for them. If you are not sure how to do this you will find instructions in the 'House Handbook'. You will probably appreciate your mail being redirected when you leave the property.
• There will be three inspections during your tenancy to check the cleanliness, tidyness and condition of the property and they are likely to be on (Date A), (Date B) and (Date C) between (11am and 4pm?). Please put these provisional dates and times in you diary and we will confirm nearer the time."
  

These suggestions, on one side of paper, will give your student tenants a feeling of being valued by the personal landlord service you are going to offer. Small details, such as the above, will help to enhance your reputation in the future. Several of our properties were let this year via friends of our existing tenants, before they were advertised.

By managing your own properties you are in control and often your enhanced reputation will enable you charge higher rents in the future. Now that's shrewd property management!

STUDENT LANDLORDS - MANAGE YOUR OWN PROPERTIES?

We know Margo has given up managing, however we're still interested enough to do our own thing, so what are the advantages and disadvantages of managing your own property?

One advantage is no management fee to pay to a letting agency, which can be up to 15% of the monthly rent. That's an annual saving of up to £1,800 on a rent of £1,000 a month or £18,000 on a portfolio of 10 properties. We make sure everything is in place to provide a faster, superior service to letting agents and this develops our local reputation as landlords.

The electrics, plumbing, gas and major kitchen appliances are all insured. We recently received a call from a tenant at 6.30pm. The wall sockets were dead and they couldn't solve the problem. Our insurer's electrician arrived at the property that evening. Within two days this was followed by a further visit and three days later a faulty washing machine had a new motor - all arranged via the tenants without our involvement and all on our insurance.

Developing a good local network of electricians, engineers and builders and paying bills by return ensures our contractors never let us down, responding promptly to emergencies and maintenance.

Student tenants receive a comprehensive 'Household Handbook' with detailed information on how to deal with common situations. We ask them to contact us in an emergency, however if we are unavailable our tenants contact our insurers directly - they do the job of an agency!

An obvious disadvantage is that managing requires a little of our time and sometimes an inconvenient time, however we charge a non-returnable admin fee of £200 per property per year to cover our expenses.

We usually find ways around most situations by:

• Advertising our properties on free local sites such as 'Torent' or 'Gumtree'.
  
• Receiving emergency phone calls from tenants when on holiday (this has only happened once) - we phone our insurer/builder and ask them to deal with it.
  
• Ensuring prospective tenants make appointments with the existing tenants to view.
  
• Providing existing tenants with a supply of Energy Performance Certificates to give to prospective tenants when they view.
  
• Asking our builder to handle a recent insurance claim when the 'owner had to be present'.
  
• Making our builder a key holder (after all they are going to get the work!).
  
• Delivering a new mattress, for example, by asking the tenants to contact the company if the delivery time arranged is not convenient for them to receive the mattress.
  
• Arranging our annual landlord's gas certificate to be organised directly by the company with our tenants.
  
• Developing simple systems for managing accounts, making financial projections and employing an accountant (you would have to do this anyway).
  
• 'Borrowing' and adapting a free tenancy agreement and inventory from the Internet - taking photos for the detailed inventory.
  
• Visiting properties three times a year over a weekend. This ensures the property is tidy and clean on at least three days a year!
  
• Developing contacts with the university. They ring us now for any vacant properties.
  
• Asking the Council to inspect the property as part of the local 'Student Accreditation Scheme'. You can charge higher rents if you are accredited.
  
• Corresponding with guarantors and vetting the guarantors at the tenant's expense.
  
• Responding to activated burglar alarms, because we are the call out centre. Accidental activations occur a couple of times a year and we only respond during a long vacation.
  
• Researching the Office of Fair Trading to ensure our tenancy agreements are appropriate.
  
• Subscribing to free landlord sites such as Property Hawk and keeping up-to-date with legislation. We have never paid to join an organisation in order to get advice or access documents. You can always find everything you want free somewhere on the Internet.
  
• Designing your own, usually much better, comprehensive check-out booklet and giving it to the tenants at the start of their tenancy!
  
• Keeping a record of correspondence.
  
• Issuing a Section 21 notice at the start of the tenancy.
  
• Checking students in and out over a couple of days of our holiday. Sometimes tenants check-out themselves (posting the key though the door in an envelope) and we inspect later at our convenience.
  
• Not taking a deposit from the tenant, which saves a lot of hassle!
  
• And so on.

It looks like a very long list and inevitably it doesn't cover everything, however once things are up and running and as your experience grows, it takes very little time to manage.

If you maintain your properties at a high standard and build a trusting landlord relationship with your student tenants you will receive very few phone calls during the year. Word will get around and your properties will be snapped up.

Is it worth it? With a little extra time and effort what would you do with the money saved? Did your letting agent earn their money last year?

STUDENT LANDLORDS. STILL TAKING A SECURITY DEPOSIT?

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!

STUDENT LANDLORDS, IT’S THAT TIME OF THE YEAR

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!