Category Archives: Property Finance

Doom and Gloom Predicted!

Posted on by

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.

Rental Returns Looking Rosy

Posted on by

In the last blog, I covered some of the positive stories that are around at the moment about the rental sector. This blog is a little more of the same with a bit more focus on the rental returns aspect of things which, let’s face it, is the most vital part for any landlord.

LSL Services, which owns the UK’s largest lettings agent network, puts the improvement in rental returns in the UK at 13 percent over the last twelve months. It now puts the average rent in Britain at £669.

One of the things that LSL attributes this to is the number of first time buyers who are being turned away by the banks’ new lending policies. It estimates that a staggering two hundred thousand of these have become renters when before they would be in their own houses. This increased demand has allowed landlords to put a fair price on their rental properties.

All of this good news has resulted in a feeling of optimism in a lot of landlords, with surveys showing that fourteen percent of us are expecting to add to our portfolios over the next two to three months.

Looking at it from the point of view that this purchasing will promote growth, it is easy to think that things really do look quite rosy in our sector, but should all this good news be tempered with a bit of caution? According to some experts it should.

I will look at what they have to say in the next blog.

The Long and the Short of the Good and the Bad!

Posted on by

As I said in my last blog, I am a bit of an optimist myself so I am going to start this series off by looking at some of the good news that abounds about the property sector and where it is heading.

There have been a lot of positive murmurs coming from the buy to let sector over the last month or so and we should be encouraged by this. One thing that I’ve learned from economics 101, is that positivity breeds positivity.

According to property portal findaproperty.com, things improved dramatically for long term landlords in September and October when ‘accidental landlords’ finally decided it was time to sell up and the stock of available rental property dropped by ten percent. This clearing of the glut of properties up for rent allowed a lot of landlords to return to the fair asking price they had been forced to drop because of the oversupply of housing.  There is no denying this is excellent news for landlords, not to mention the relief for the ‘accidental landlords’ who had no desire to be involved in the rental market in the first place.

Average rent also rose in the month of October, not by a lot but any rise is a step in the right direction. Further good news is that it rose for the sixth consecutive month, giving out strong signals that things may be beginning to stabilise in the market.

Finally, for this section, the average time that a property sits vacant has fallen. Properties are now rented in an average of 58 days. We all know that less vacant properties is excellent news for landlords.

There is further good news in the area of rental returns but I will cover that in the next blog.

Check the safety of that portable electrical device

Posted on by

 

Residential landlords provide tenants with any number of portable electrical devices in their tenancy contract. They need to check for its safety as per the law. It is advisable to conduct regular safety checks on appliances which become part of the rental agreements.

This is because the landlord can be held responsible in the face of an injury by way of an electric shock or if the appliances become defective. The UK is no stranger to fires caused by electrical devices. Close to 20 percent of these are caused by faulty electric equipments that end up in a short circuit. Government statistics suggests that more than 14,000 Britons suffer varying degrees of injuries due to problems with their electrical appliances.

The UK’s Electrical Safety Council has issued that we will be held responsible if tenants are injured due to defective appliances found in the rental properties.

It can prove costly for us as such injuries can mean rejection of insurance policy, apart from the major fines and criminal prosecution. The best way to avoid this mess is to sign the portable appliance testing (PAT) at regular intervals. This inexpensive testing can be done using dedicated testing equipment. It is better to be safe than sorry.

Is it the road to recovery for UK property market?

Posted on by

 

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

Posted on by

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

Posted on by

 

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

Posted on by

 

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?

Posted on by

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

Posted on by

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.