The Telegraph had an interesting article this week that pulled together a few things that we have been talking about on here for some time. They covered the fact that at the moment banks are very shy of buy to let mortgages and are making it hard for the average landlord to get hold of one. Something we are all too aware of.

They also went over the fact that banks want high deposits and are proving themselves unwilling to loan to people whose monthly income from rent is not far higher than the mortgage they would be taking on, a bit of a double bind for those landlords who are having to drop their prices to attract tenants.

They did, however, set out some steps for landlords to take to make sure their portfolio ‘weathers the storm’ as they put it.

The first is to thoroughly check out the mortgage market before you change any mortgages you may have coming out of date. There will be things out there that suit your particular needs, despite all the doom and gloom around, it is just a matter of careful research.

The next piece of advice regards getting tenants. It is probably not something that landlords want to hear, but, potentially, void periods are far more costly than lowering your rent, so if it comes down to it you may have to bite the bullet and put your prices down a little to attract clients. It is also suggested that perhaps you could approach your local authority for a tenant.

Lastly, The Telegraph expert suggests that you do what you can to offer the best product around. New paint, clean garden, all the things we tend to put off.

This may seem like it is all pretty standard advice but sometimes we can all do with a reminder about the basics.

With banks being extremely strict about who they deem to be worthy of a loan these days, landlords are being encouraged to do something for themselves by applying themselves to improving their credit rating.

Clearly this is one of the first things the banks look at when they are deciding who to loan money to. The better yours is the more chance you have of getting your hands on a buy to let mortgage and at a favorable rate.

Now is the ideal time to try to get your credit history to paint a more favorable picture of you as a good ‘risk’. With interest rates so low, landlords who have stable tenants are in an excellent position to pay a little more than the minimum on any outstanding mortgages in their portfolio. This will help to improve your credit rating.

It is true to say that one of the biggest reasons for a landlord falling behind in payments and, therefore, damaging their credit history is tenants who default on their rent. It is very hard for a landlord to meet their commitments if a tenant is failing to meet the rent. For this reason it is especially important at this time that landlords are cautious and vet their potential tenants carefully.

Your credit rating has never been as important as it is in the current climate.

Further to my blogging yesterday I was interested to come across an article stating the that the popular ITV show ‘Tonight With Trevor McDonald’ is going to be doing a program on why investing in property may be a smarter move than many other kinds of investment available. As part of this they are looking for landlords to give their opinions.

It appears the focus of the program is to be a trend for couples over the age of fifty, those baby boomers approaching fifty, to invest in the buy to let sector as the best way to fund their non working years.

These are not people who are becoming one of the ‘accidental’ landlords we talk about so often but are actually putting a great deal of thought and planning into their purchases. They believe they would prefer to wait out the recession fortified by ownership of bricks and mortar.

If you are looking to the long term there is little doubt that investment in property is still one of your best options. There is no longer a quick buck to be made in the rental market but many are happy to return to it for all the reasons it was traditionally popular. A sense of owning something that will benefit you financially in the long term.

The show is likely to air later in the spring.

I have blogged about it before but it really does look like people with any extra money lying around are starting to choose property as the best way to invest it. Contributing factors to this are, of course, low interest rates and an untrustworthy stocks and shares market.

Many people who used to rely on these methods for investing and growing their money are now being attracted to the property market in quite substantial numbers. Cullen property who are based in Edinburgh seem convinced that this is happening and is likely to be an option chosen by certain types of people, namely those with enough cash to finance a substantial deposit. Managing Director of Cullen, Malcolm Warrack was recently quoted as saying

“Most of the potential investors we have recently spoken to are looking for fairly priced quality properties with ‘loans to value’ of about 50% to 60%.

“We are starting to see sellers accepting realistic offers which offer investors reasonable deals, ensuring rental return and, eventually, capital growth.

He also seems to be of the opinion that the Edinburgh market, at least, may be bottoming out. Making this an ideal time for people in this lucky position to snap up a bargain and have their investment problems solved at the same time.

Let’s hope he is right, that could only be a good thing for the rest of us.

If you think that collecting your rent in a timely manner is harder now than it ever has been, that is hardly surprising. According to a BBC news report last week tenants are further in debt now than they have been any time since the late 80’s.

Things are extremely tough for the general population at the moment, as we know, with unemployment climbing and banks unwilling to lend money to anyone without a pristine credit history and a decent income. It is true to say that anytime tenants are suffering financially the landlord will eventually suffer too.

The report on the BBC contained an interview with a landlord from London who epitomised    just how tough it can get for those who have invested in property when money gets short for tenants. This landlord was owed £9000 by tenants who had recently lost their jobs and fallen behind in their rent payments.

Of course, we all feel for previously good tenants who find themselves unemployed and unable to meet their rent payments, but people need to take into account the devastating effect this can have on landlords.

Government issued housing benefits now often go directly to the tenant. Why can we not return to the old way of it going directly to the landlord, it is designed to pay the clients housing costs after all.

The landlord in the BBC report was so stressed she had had to resort to anti depressants; I am not surprised. People forget that landlords need to pay their bills and put food on the table too.

One thing I have always said is that it is impossible to manage your properties effectively from a distance. If you are not prepared to visit your properties on a regular basis to carry out inspections then you had better be prepared to accept the consequences.

Belvoir, a firm which specializes in providing consultancy services for the residential rental sector seems to agree with me on this aspect of property management. In fact they have dubbed regular visits and open lines of communication ‘the golden rule’ of being a successful landlord.

Of course, you must remember to follow all the rules set down to govern such visits to your properties. Tenants quite rightly value their privacy and failing to respect it can only lead to future conflict.

Make sure you give your tenants a decent amount of warning and inform them of not only the date but the approximate time of your visit. This will make the tenant feel less ‘watched’ and more supported.

There is no doubt about it though regular visits will keep your tenants on their toes in terms of keeping your valuable investment in good shape.

This of course means that in the long term these visits will literally save you money.

Remember – No one can possibly blame you for wanting to protect your investment in this way.

For a time there people saw the buy to let market as an easy way to get rich, almost a license to print money. There were even ludicrous claims flying about that once you had established your portfolio you would have to work less than four hours a week and still you would be raking it in.

For the record these kinds of claims were always madness and anyone with any experience knows it was never that easy. Having said that making money in this industry required less finesse a few years ago than it does now.

It is always easy to make money in a market that is booming!

The recession has put us firmly back in reality and I agree with personal finance expert Andrew Hagger of Moneynet.co.uk when he says “Too many people got carried away with hearing how others were raking in the monthly rental income but without appreciating the potential pitfalls or having the financial back up to cope when things didn’t go according to plan.”

With lenders proving that they have no appetite for this sector at the moment and the government introducing legislation that seems destined to make things much harder on landlords, this sector is definitely no longer a place for the faint of heart. If indeed it ever was.

The government are taking a moral high ground stance in their defense of their new property reform. Under the new reform all landlord’s will be required to fork out fifty pounds to register with a national body the government is claiming is designed to rid the sector of rogue landlords.

Clearly, I have no problem with the government’s plans to try and clean out the bad wood in the buy to let sector. No one approves of landlords who bully or intimidate their tenants least of all other landlords who risk being tarred with the same brush. The thing I object to is the fact that those landlord’s, the large majority, who are fair and conduct their business with the upmost integrity, are being asked to fund this clean out.

It is also unclear exactly what powers this new body will have, I agree with Simon Gordon of the National Landlords Association when he says “We can see the thinking behind this but we need to see the details and be reassured that this is not simply a mechanism for tougher regulations,”

I think it is understandable that certain factions in the buy to let sector are harbouring a strong suspicion that this new charge could be a fund raising exercise on the part of the government.

Between this and the hard squeeze that has been put on loans for buy to let mortgages, there is no doubt that landlords are having it tough at the moment.

We all know that things have gotten pretty bad in the buy to let sector over the past year and we have had hundreds of statistics thrown at us to prove it, but every now and again a statistic has the power to shock even me.

One such stat appeared in a story in The Telegraph this week, apparently the buy to let mortgage market has shrunk by 95 percent over the past two years. According to the financial website moneysupermarket.com, the number of different mortgages available for rental properties has dived from 4,384 in April 2007 to just 213.

On top of this the rates for buy to let mortgages, if landlords are lucky enough to get hold of one, are far from as favourable as in the mainstream mortgage range. The average interest rate charged on a buy-to-let mortgage has reduced by only 1.51pc since June last year, compared with a 2.6pc drop in average residential mortgage rates.

As if all this is not enough lenders are also demanding much higher deposits from landlords, on average 15 percent more.

It is no wonder those of us in the buy to let market are finding times so tough at the moment. Making things so difficult may prove short sighted of lenders in the long run; they are after all just the type of business that may help to spark a recovery, if given half a chance.

So many mistakes were made through naivety during the buy to let boom. Many of the people attracted into the market by the huge house price rises were inexperienced and bound to make rookie’s errors.

Unfortunately for those who arrived into the game quite late any mistakes they made were soon magnified by the recession crashing in.

New build apartments in the city centre were very popular during the heady days of the boom, last year. The Telegraph reported that some of these were now going for half their original selling price. Quite a blow if you were an inexperienced landlord getting into the market to make a quick buck.

Things are a little better for those who decided on getting into the buy to let market via houses but in most cases landlords are still finding it tough even in this area.  It is a simple matter of oversupply.

There is some good news on the horizon with the 1.2 percent rise in supply of properties in the last month being the slowest rise since September last year, however, many experts warn that while this may indicate that we are close to the bottom, the climb back is likely to be very slow.