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Landlords- Risk Management is the Key

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Volatile times make everyone cautious. As landlords, the way forward for us is sensible risk management. Risk management is the key issue for private landlords in the UK.Malcolm Harrison of Let Insurance Services believes that rental insurance comes first when managing risk. Landlords need to take well thought out risks.

Landlords must gather good tenant references, although individual circumstances of the customers can change once the tenancy agreement has started. It is quite possible to get an amazing tenant for whom things can go awry during the period of the tenancy.

Earlier this month, LSL Property Services gave figures on the current trends found in the property market and the way rent rates are moving. It reported a 1.2 per cent rise in rent levels in the month of September which followed a 1.4 per cent increase in August in the UK. These figures are quite encouraging to an extent. But raising the rent is not what landlords are aiming for, by and large.

 It has been found that not all are trying to dramatically increase rent levels in the coming future. There is no doubt that the biggest challenge that we face as landlords in the current climate is to minimize voids.

Cash Rich Landlords Revive Buy to Let Market

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Latest figures show that buy-to-let investors are back in action. Estate agents are reporting an increase in landlords buying property in the last three months.

However, investors are not snapping up city-center flats. There is an increased demand from buy-to-let landlords but the demand for flats has seen a sharp drop.

Yet, not all parts of the country have shown a revival. The Midlands have experienced a drop in demand. The demand was strongest in the North West with 29 percent more surveyors reporting a rise than a fall. The buy-to-let market was hit hard by the sharp drop in mortgage availability.

The recent Council of Mortgage Lenders’ figures showed a decline of 4 per cent on the previous three months, with only 21,600 buy-to- let loans being granted in the second quarter. The rise in buy-to-let investment is being attributed to higher proportion of investors making outright cash purchases than taking out mortgages.

Allsop, the UK’s biggest property auctioneer has been encouraging landlords to pick up repossessed buy-to-let stock.

Landlords are being driven to property due to poor returns from other investments. The private investor who has cash to invest is attracted to residential property for the prices are low compared to the peak in 2007. Residential property is being viewed as relatively rewarding by the current market.

Is it the road to recovery for UK property market?

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The UK buy to let market is all set to hit the ground as a forecast suggests that portfolios will rise by an average of 0.8% over the next 12 months. This is significant as property prices have been falling for the last two years and rental income has also seen a decline for the last 12 months or so.

 

However, differing information regarding property values in the UK exist, with some areas responding better than others. Rental income has started to level off and it looks like the worst is over. This is coming at a time when buy to let entrepreneurs have witnessed their property values collapse and many borrowing money on previous property acquisitions. It has led to a number of portfolios falling like a pack of cards.

 

The property sector for years has enjoyed the status of being very lucrative for a large number of UK business people but the economic downturn has soured things and left many bankrupt.

 

The positive interpretation of the 2010 property market goes against the prediction of many analysts who expect a further fall in this sector in the coming year. Only time will tell what to expect. Till then landlords can hope for the best.

Stable buy-to-let sector sparks interest among investors

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The private rental sector is showing signs of stability after a phase of uncertainty caused by falling rents and rising vacancy.

Britain’s Excel Centre survey shows that more than one in five rents have increased over the last 12 weeks and an additional 39 percent of rents have remained stable at current levels. This spells good news for residential landlords, as rents are either rising or staying the same for a large majority of rental properties.

Thankfully, the demand for residential rental properties has seen a 50 percent jump over the past six months, and conditions look conducive for the current landlords as well as for those who are looking to buy a stake in the rental sector.

However, property values continue to remain low throughout much of the UK. A large number of properties in the UK are still selling below the original asking price. One in ten properties sold for the listed amount and 50 percent of residential property for 10 percent below the original asking price.

Nevertheless, this could be an opportunity to expand our portfolios and is a boon to first time buy-to-let business entrants.

The renewed interest among investors is a positive sign. 75 percent of estate agents noted a marked growth in demand.

Landlords need to watch out for tenants’ criminal convictions

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Now criminal convictions of tenants can have serious consequences for a landlord’s insurance cover.

7.3 million people with criminal convictions are present in the UK and many likely to be the tenant population. Undeclared unspent convictions have the potential to be material facts in the assessment of risk resulting in invalidated insurance cover, if the crime has any relevance to the policy risk.

This is because insurance contracts are based on the principle of ‘uberrima fides’ (utmost good faith) on both parties involved in the contract. So the duty of full disclosure lies with the landlord who is the policy holder.

There is lot of uncertainty and confusion among landlords. So, what can we do as landlords? Do we ask the question in the tenancy application form, include a disclosure clause in the tenancy agreement, or just simply ignore it?

Some smart home insurers have an outright policy of not insuring people with unspent criminal convictions; irrespective of the relevance.

I feel this has stirred up quite a hornet’s nest. One has to decide between actively seeking the information from the tenant and thereby getting the insurers remove to the cover or just ignoring the issue.

More clarification is needed from the insurers to prevent landlords being effectively uninsured.

Landlords Property Manager and Windows 7

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Today sees the launch of Windows version 7, Microsoft’s new operating system. Let’s hope that the release of this new operating is a much bigger success than Vista. One thing can be said for sure, at least it has been delivered on time.

Our website visitors and customers have been asking for a while whether our landlords software solutions will be ‘Windows 7’ compatible.

The answer is off course ‘Yes’.

Our development team have had access to the new Windows 7 operating system and have been making sure that our software runs smoothly on it.

To learn more about the technical requirements of our software, please refer to our technical specifications section.

Could Rent Guarantee Insurance help you out?

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Finally things are looking up for landlords as rental prices have gone up, taking cue from the recent RICS survey. However all is not good as some tenants face financial pressures leading to increased rents.

The UK’s leading representative body for private-residential landlords, the National Landlords Association (NLA), in their research found that nearly three quarters of landlords are experiencing rental arrears. A dismal 43 per cent of these occurred in the last 12 months.  

Luckily all’s not lost. The NLA Rent Guarantee Insurance allows a way for us to minimise the risk that occurs due to loss of rent. Legal expenses and a 24-hour advisory service are also provided if other problems arise. Landlords can now relax with the NLA Rent Guarantee Insurance as it gives some much needed piece of mind.

Redundancy and unemployment among some tenants is making them struggle with the payment of rents but nevertheless there is a need to safeguard rental income.

Even as the insurance has come as a ray of hope, as landlords we need to take full references and make checks at the outset of a tenancy. Keeping in touch with your tenants will enable them be upfront when they face difficulties and you can make arrangements before rental arrears become more serious.

Water Woes for Landlords

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Unpaid water bills worth £500m of tenants are now being passed on to the landlords causing them to unite in anger to protest against such a possible move.

The British Property Federation (BPF) and Residential Landlords Association (RLA) responded to the Walker Review of the government’s water charging calling it unfair.

Prohibition on cutting off or limiting supply makes debt collection harder for water companies.  Increased   metering  has   been  proposed  to  conserve  water  and  the
Government’s decision to pay housing benefit to social housing tenants instead of the landlords who usually pay the bills has escalated the problem. Having a lot of unpaid debt themselves, small landlords will be burdened further as we already have problems collecting money which is due to us.

Landlords are suggesting alternative solutions to help with the problem such as water companies working with landlords to identify when tenancies started and finished instead of issuing bills to ‘the occupier’. As landlords we must find it easy to give such notice and water companies must promptly act on the information received.

Authorising local authorities to pass council tax bills to landlords in case the tenant cannot be identified has also been proposed.

It seems as though landlords will fight this inequity tooth and nail for the gross injustice it represents.