Professionals Back into Buy To Let Market

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

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.

Check the safety of that portable electrical device

 

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?

 

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

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

 

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

 

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?

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

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.

Banks Preventing Landlords Snapping Up Bargains

The Times Online had a really interesting article on how banks are reducing even further the amount they are willing to lend to landlords. If you are in the market you should probably head over to their website and read the whole thing, but for those of you who are pushed for time or have only an academic interest I will give you a quick rundown.

The depressing news that Lloyds bank has halved the amount it is willing to lend from £6m on up to 18 properties, to £3m on a maximum of nine properties, is probably not a huge shock to anyone but it is certainly a worrying sign of the times, especially when you take into account that two years ago the same bank would have been willing to lend in the vicinity of £14m.

This has come at a very bad time for those property managers with an eye for a bargain. As David Hollingworth, at L&C, puts it: “This is the last thing the market needs. Lloyds’ decision leaves slimmer pickings for landlords hoping to make the most of low [interest] rates and property values.”

Landlords are chafing at the bit to get stuck into these opportunities and yet the banks are holding them back. I cannot help but think that this is counterproductive in an economy that is struggling to recover from a horrible financial downturn, especially when we hear so much about economic stimulation from our politicians.