Author Archives: Amer

Electrics Safety A Must!

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According to Government figures there are 30 deaths in the UK each year due to faulty electrics. Statistics show that 20 percent of fires are also started by electrics on the blink.

Figures for the fires bring the total deaths last year, blamable on faulty electrics, to 47 with a shocking further 1000 injured. These are clearly very significant figures and the fact that they are highly preventable just makes them all the more tragic. Landlords in the UK are being urged to carry out comprehensive and regular checks on their electrical systems in a bid to try and reduce the figures.

The number of electric appliances in rental accommodation has risen steadily over the years, with everyone having personal stereos and TVs plus an increase in the number of electric stoves. That is why PAT, or Portable Appliance Testing, has become such a vital part of every UK landlord’s responsibility.

As well as preventing tragic accidents, it pays landlords to bear in mind it is very possible that their house insurance will be void if these tests are not carried out on a regular basis.

Nobody wants a preventable accident taking place on their property and PAT will help you to eliminate the chances of this happening. It is well worth the extra hassle to make sure that you have peace of mind on this subject.

Overseas Property Reaps Rewards

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Four years ago buying property overseas was all the rage and a lot of lucky people were able to do so without getting a foreign mortgage. According to the merchant bank, Close Brothers, these investors are now reaping the rewards of their investment.

For example, if you purchased an Italian property in Euros 4 years ago you will have seen the real value of your investment rise by approximately sixty five percent. The reason this is the case is a combination of a rise in property value of thirty percent and an increase in the value of the Euro in comparison to Sterling.

Close Treasury’s head of foreign exchange, Mark Taylor, comments:

“When British investors calculate the value of an overseas property they bought a few years ago, they not only need to look at how real estate prices have changed, but also what has happened to the exchange rate between Sterling and the local currency.”

He adds:

“Even though overseas property prices tend to have fallen in the last year, in many cases the fall in the value of Sterling will have offset this, and many people may still have seen the value of their homes increase in Sterling terms.”

The report goes on to add that a lot of Britons are taking advantage of this and selling up to realise the profits that are sitting on due to the weaker pound.

Agency Collapses: Deposits Vanish!

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We all understand that there were some rogue landlords that made things tricky for tenants regarding their deposits. We even kind of understand why the government intervened with its approved tenant deposit scheme but it is interesting to see that even they do not get it right all of the time.

Last month, one of the governments approved agencies collapsed and went into liquidation owing a whopping 382,000 pounds, largely made up of tenants’ deposits.

Stephen Greenwood had apparently been in business 36 years prior to this fall from grace. The company gave the recession and the failure of a large Spanish investment as reasons for their liquidisation.

Of course, we all have a lot of sympathy for this as many of us have experienced the hardships that have come with this recession. We wish the Rugby estate agency firm that has taken over his properties,  Craig Walford, the best of luck.

He seems to be doing the best he can by the existing tenants, having worked 23 hours day in the initial stages to get things up and running and has now opened the doors to the former Greenwood’s office to accommodate the extra business.

Paragon’s Success Indicates Buy to Let Surge

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Paragon are the UK’s biggest player in the buy to let sector and it appears from figures released this week that their figures are on the up!

2008 bought in figures of 53.7 million pounds and it appears likely that the figures for 2009 will top that by 1.1 percent. The group is putting their success down to very careful mortgage book management.
 
Paragon chief executive, Nigel Terrington, can be forgiven for sounding a little smug when he  says “In a year which has seen a deep UK recession and continuing turmoil in credit and banking markets, Paragon has fared well, significantly strengthening its position at a time when many of its competitors have failed.”

Despite the fact that the group’s loss provisions showed an increase in this time they are clearly making enough in other areas to offset this and show an improvement in their overall figures.

According to analysts, this is a good sign for the market in general. Galvan Research head of trading, Ed Woolfitt, says “As the property market firms up and starts to improve, niche sector operators like Paragon are set to benefit substantially. We believe the improving prospects and strong cash position puts Paragon into pole position as a recovery play.”

And paragon themselves have indicated that as the market firms up and profits start to improve, they hope to be able to go back to supporting the new lenders in the market.

Regulations to Protect Buy to Let Borrowers

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In a move that many have been calling for and predicting for a very long time now, the Government has announced that the buy to let sector will now be regulated to protect the borrower.

This follows a comprehensive investigation by the government into the causes of the latest financial crisis, and means that people entering into a BTL agreement can now do so with some sense of security.

Exchequer Secretary, Sarah McCarthy-Fry, says “We are determined to reform the system for the future, to offer both stronger protection for consumers and greater stability in the housing market.” And most of us can only say “about time!”

Apparently, the sticking point regarding the regulation of the BTL industry involved the fact that expenditure in this area was regarded as investment finance. Many have rightly pointed out though that given the huge number of amateur landlords involved in BTL this is a bit of a misnomer.

The bad news about this regulation is that some mortgage lenders have issued a thinly veiled threat about how it will affect the number of BLT loans available. Anyone involved in this area knows that it is very hard to secure this kind of mortgage at the moment and it seems that mortgage lenders are saying that this regulation will make it even harder.

I am not sure why this should follow. If the regulations are designed to protect the consumer then surely only those loans that were abusing the rights of the consumer will disappear. The mortgage industry must agree that those should never have existed in the first place?

New Laws Will Govern Landlords in 2010

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We have known it was coming for some time but the news that laws governing landlords are nearly upon us.

These laws, which are designed to provide a better service for council tenants, will come into effect in April 2010. They are apparently supposed to make sure that the landlord gives the tenant more rights over the management of their homes, keeps maintenance to a pre-arranged schedule and, quite bizarrely in my opinion, does more to tackle anti-social behavior.

I will have to investigate further exactly what this means but on the face of it landlords being responsible in any way for anti-social behavior sounds like nonsense. I could have sworn that is what the police were for and that the government we elected should be responsible for making sure it is done.

Apparently, the Government has appointed the Tenant Services Authority (TSA) to keep check on the new laws. Peter Marsh, Chief Executive of the TSA, said:

“We welcome the Government today confirming that our powers will be extended and the standards we’re developing for landlords will apply to local authorities as well as housing associations from April next year.”

This seems very handy for the government and does smack a little of a huge washing of hands. I may stand corrected once I have learned a little more about it. I will keep you up to date on this one.

Property Prices to Fall in 2010

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According to Bloomingberg, UK house prices are more likely than not to fall next year. Furthermore they state that it will be 2014 before house prices get back to the highs of 2007 when the UK was at the peak of its housing boom.

The economists and estate experts surveyed say that the rebound of 2009 was as surprise and highly unlikely to continue into the following year.

Most predict, on average, a 1.6 percent fall in UK house prices:

“The market is still overvalued, whichever measure you use, prices need to fall a further 20 percent to 25 percent to get back their long-term trend.” said Seema Shah of Capital Economics Ltd.

This was quite an extreme view for the survey with this group being the most bearish in their predictions but there is definitely a trend in the report towards thinking property is still well over valued in the UK.

In terms of what this means for landlords, it could be seen as a mixed blessing. While we all like to see the value of our investments growing, a lower price on property gives many a chance to further add to their portfolio. This means that in the long term they will find themselves with a much more valuable collection of property.

In the end it probably comes down to whether you are in property for the long haul. This research once again enforces the point that property is not necessarily the way to go if you are after making a quick buck. Most of us knew that anyway.

Professionals Back into Buy To Let Market

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It appears that the low price put on a lot of housing at the moment is encouraging professionals such as lawyers and doctors to get involved in the buy to let sector.These people have cleaned out the stock of several leading house builders recently, especially in the northern cities.

According to Cluttons, the estate agents, they are also becoming increasingly active in London.
 
Speculation on why these youngish professionals have chosen now to get into the buy to let sector throws up a multi faceted answer. Most of these people are sick of the small return on their money from the average bank. With interest rates being so low, they would rather put their cash into something they can see returning handsome dividends in the long term.

Another issue that faces these people, in a lot of cases, is the prospect of future housing for offspring attending college and university. They see buying rental property now as killing two birds with one stone.

Hopefully, their asset will appreciate, and when the time comes they will have then somewhere to house children rather than being forced, or opting, to move from the family home.

In theory this sounds like a good plan. All we can hope is that they are prepared adequately for the rigors of becoming a landlord. Many people aren’t.

UK House Sales Remarkably Stable

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As I ended the last blog with some of the bad news floating around regarding the property sector, I have decided to begin this one with some more upbeat news.

It appears that house sales in the UK have been holding very well in last financial year. According to construction companies such as Redrow, UK house sales are very stable at the moment.  A spokesperson for Redrow had this to say this week after the company’s general meeting.

“Home sales in the financial year to date have been remarkably stable with net private reservations averaging 45 homes per week, including the normally seasonally weaker months of July and August,” the company said.

“Total net private reservations achieved in the first 18 weeks are 47 per cent ahead of the same period last year with cancellation rates having returned to historic norms.”

This is a very encouraging sign of renewed growth in the housing sector that can only benefit the entire economy.
 
On the down side the same companies were quick to point out that the lack of mortgages available from the banks is still a matter for concern. As we know, that concern is twice as relevant in the buy to let sector as banks seem determined to keep options very limited in this area. We can only hope that banks see the error of their ways and loosen their purse strings sometime in the near future.

Doom and Gloom Predicted!

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Having given all of us, and myself, a few cheery blogs in a row it is time to face up to the fact that some experts are not giving the thumbs up to the immediate future in the property sector.

The National Landlords’ Association is very clear about the fact that rental arrears are still causing potentially ruinous problems for a lot of landlords. In a recent report, the NLA revealed that according to their figures three quarters of landlords have experienced problems with rental arrears and, even more worryingly, nearly half of these reported substantial problems in the last twelve month.

Of course, this rental arrears issue then impacts dramatically on a landlord’s ability to meet their own commitments including their mortgages and the upkeep of their properties. Tenants with financial difficulties appear to still be a huge headache for landlords despite all the talk of an upturn in the economy.

Another worry on the horizon for professional landlords is the plan to bring the property sector under full regulation. Many may think there is nothing to fear from this but it is certainly a huge unknown that is making many landlords uneasy. It is a fact that regulation tends to cost a lot of money, and that cost is often passed down to the ones being regulated. This fact alone is enough to make landlords nervous.

In the next blog I will look at the way landlords are being treated by the financial institutions and do a bit of a summary of where all this leaves us.