Landlord and BTL Blog

Monday, October 07, 2013

Tenant arrears drop according to LSL

The latest Tenant Arrears Tracker figures from LSL Property Services, surprisingly show a sharp fall.

The number of private tenants classed as being in severe arrears (two months or more behind on their rent) is now at the lowest level for two years. The figure for Q£ 2013 dropped to 69,000, – a 34 per cent drop from the 92,000 for the same period a year ago.

Private renters in serious arrears now represent 1.7 per cent of all tenancies in England and Wales, down from 2.4 per cent in the previous quarter.

David Brown, commercial director of LSL Property Services, believes this is due to improving tenant finances due to investment in the private rented sector and inflation slowing. ‘Investment in the private rented sector is accelerating. That’s helping to keep supply growing of homes to let. And in turn, better supply is the only real way to keep rental inflation under control,'

He went on to say ‘Over the last quarter, rents have consistently risen more slowly than shop prices, and wages and rents are now growing at a similar annual rate. Recently, that seems to have really helped tenants under financial pressure. But ultimately, many more homes will be needed for them to keep going round at an affordable rate.’

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Property bubble set to inflate

Bubble talk is everywhere. The extension of the Help to Buy scheme has returned focus onto the property market following four lack lustre years in most areas other the SE.

Many analysts are now predicting a boom.

Santander's research forecasts that 10 per cent of the population hope to buy a new home in the next year. A third of those are hoping to be helped by the Help to Buy scheme. With current levels of supply far from being able to meet this pent up demand - property values could rocket.

It might be worth property investors getting in now, before this new flood of buyers get their paper work in order.

The BBC ask, how will 'Help to Buy' help property seekers?

The Telegraph put forward their argument against the Help to Buy scheme.

The Guardian question Help to Buy

The Independent give their opinion

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Tenants charter - mortgages the key

The one sticking point of the 'tenants charter' is that many buy-to-let mortgage companies will not allow tenancy agreements of over 12 months. The exceptions are The Mortgage Works Paragon, and Woolich that all allow longer lets.

The remaining lenders generally limit tenancy agreements to 12 months. This puts a big legal constraint in the way of Pickles masterplan for a longer term tenancy agreements meeting the demand from longer-term renters. There are now an estimated 1.3m families living in the private rental sector. Currently the average length of an AST is about 9 months. Despite this a recent YouGov survey of 2,300 tenants found that 48% of respondents over the age of 45 agreed on the need for longer term tenancies.

The big issue for landlords is to what degree the aspiration of Eric Pickles to provide for longer term tenancies will come from encouraging mortgage companies to be more flexible and to what extent it might derive from additional legislation to force landlords to accept a tenants request for a longer tenancy. I'm thinking that the 'tenants charter' is meant as a sounding piece to find out the strength of public opinion from both landlords and tenants. Obviously, I've not got a problem with longer term tenancy providing with the fact that landlords NOT tenants have the final say over whether they go down this route. Otherwise, the essence of the Assured Shorthold Tenancy will be dead - a retrograve step for landlords and the private rental sector. If you have a view I suspect that not only other landlords but Eric Pickles and his cronies will be listening.

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Saturday, October 05, 2013

Being a landlord without hassle

Is it possible to be a landlord and avoiding the hassle associated with having rental property and tenants? Well yes and there are several ways of doing this.

The first we have talked about before in the form of Private Sector Leasing. This is where a landlord enters into a long-term lease with a local authority who then sub-leases the property to a tenant. The local authority takes on the responsibility for letting the property along with all maintenance costs leaving the landlord with limited responsibilities.

An alternative is to invest in a retail bond from one of the many housing associations. A2Dominion Housing Group is offering a unsecured bond paying 4.75% providing landlords with a regular income. No hassle but equally no capital appreciation. I'm guessing this is why us landlords endure.

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