Tag Archives: Mortgage Express

Mortgage Express stopped lending and were taken over by a Government quango called UKAR. This forum shares tales of woe and advice from affected borrowers.

Mortgage Express – UKAR – Catch 22 Latest Articles, UK Property Forum for Buy to Let Landlords

I am a landlord with 3 Buy 2 Let properties and my own private mortgage with Mortgage Express ( 4 properties in all ).

I got into trouble by not paying the monthly mortgage on 2 Buy 2 Let properties then a managing agent was appointed to collect rental income and forward amounts monthly ( net of commissions ) to Mortgage Express. Mortgage Express - UKAR - Catch 22

At the end of March 2015 the tenant vacated a property and the managing agent secured as empty. The other two properties remain occupied and with the original tenants.

Cashflow was effected negatively by £2,000 pcm, in that :

  1. the empty property is no longer rented ( £950 pcm )
  2. I became liable to pay the Council Tax on the empty property ( £125 pcm ) and
  3. surplus rental on other properties is retained by the managing agent / Mortgage Express ( £925 pcm )

The loss of net rental income to my account prejudices ability to pay my Mortgage Express private mortgage ( £625 pcm ).

Is it possible to take the above to Court to consider the total economic impact when today the buy to let mortgage accounts are up to date and the managing agent acting / lingers on behalf of Mortgage Express thereby adding to loss of rental income.

( Ref : there has been a detriment to customer in the above , as compared with NRAM plc v. McAdam & Hartley 10 / 12 / 14 )

Thanks

Michael


Mortgage Express – UKAR – end of term on buy to let mortgage Latest Articles, UK Property Forum for Buy to Let Landlords

My mum has come to the end of the term of her mortgage with Mortgage Express.

The loan is £100,000 and realistically the property would only sell for about £75,000 max.

The term ended in March 2015. Mortgage Express - UKAR - end of term on buy to let mortgage

Has anyone any experience with a buy to let mortgage coming to the end of the term with Mortgage Express or those that manage in now UKAR?

She hasn’t got the money to pay the shortfall.

Is there any other option other than them repossess the property?

Any advice appreciated.

Thanks

Emma


Splitting title from Freehold house to two leasehold flats while MX hold the mortgage? Latest Articles

Hi my husband and I have owned a mid Victorian terrace since about 2000, when we first purchased it had a separate flat on the ground floor, and first floor was two sort of bed sits.

We converted with planning permission and building control into two flats.
A one bedroomed flat on the ground floor and a two bedroomed two bathroomed flat on the first and second floor.

We have a mortgage with mortgage express, but originally purchased with cash, we now need to split the title so that the house is officially two flats and land registry need to have the mortgage companies consent to do this.

I don’t know how the mortgage company would view this, its been remortgaged with them on a few occasions so I am sure they must have the property down as two flats but all paperwork just have one address.

Doing this exercise as the tenant in ground floor flat has been accepted for a new boiler under the affordable warmth scheme and company help link following guide lines.

Any one else had a similar situation, don’t want to rock the boat with mortgage express.

Many thanks

Paulinerisk


Landlords Revenge – Prosecuting Rogues Latest Articles, Legal

If you are angry about being ‘ripped off’ and being left out of pocket then you probably don’t relish the thought of spending money on solicitors or grovelling to disinterested authorities either!

There is another option though, which has been in existence longer than the police and the CPS, and which can be cost neutral regardless of whether you win or lose your case. Best of all, as well as the prospect of recovering what’s owed to you, you may also get the satisfaction of knowing that the person who ripped you off could serve a sentence behind bars, because a prison sentence could also be applied as a result of your actions.

Don’t get mad, get even!

LINK to http://privateprosecutions.org/

Do not be fobbed off by the authorities! Private Prosecutions

I got fed up of hearing stories about letting agents going out of business having plundered their client accounts and leaving both landlords and tenants out of pocket.

The police regularly tell victims that scenarios of this nature are “civil matters” and to seek advice from a solicitor. If you think about it, is it really that surprising that the police try to fob off financial crimes, which they don’t really understand, when they haven’t even got enough resources to prosecute known paedophiles who download illegal images of children or run child prostitution rackets?

Most financial crimes lead to nothing because solicitors charge a fortune, and that’s not particularly helpful to people who are already suffering financially! I rarely hear stories of money being recovered via civil litigation in these circumstances anyway, probably because the businesses owing the money tend to go into liquidation leaving the unscrupulous owners of those businesses to enjoy the protection of limited liability.

However, my frustration turned to inspiration in 2010 when I learned of the crime “Fraud By Abuse of Position”, a new law created in 2007.

Also, did you know that if a judge considers a private criminal prosecution to be justifiable that Counsels fees and investigation costs (i.e. the barristers fees and disbursements) are paid for by the state, regardless of whether the accused is found to be innocent or guilty at a trial by Jury? To protect both his client and his own reputation the barrister must, of course, be confident that there is a case to be answered. There is no requirement for Police or CPS involvement in a Private Prosecution. In fact, Private Prosecutions are as old as law itself and pre-date both the CPS and the Police.

I bided my time until I came across somebody I knew well who had a good enough case to package up and refer to a criminal barrister. Within days of him issuing a summons the wayward letting agent paid the landlord back all the money he had taken, as well as costs including the legal fees of the barrister, on the understanding that charges would be dropped. This was agreed in the best interests of public funds.

The problem was that I couldn’t publicise this great news, because that was the basis upon which the deal that was made, but I knew I was onto something very useful, not just for landlords and tenants but for any business which has been a victim of financial crime.

Other example cases might include:-

  • Rogue letting agents who have stolen clients money
  • Builders taking money for materials but vanishing without trace before doing the job.
  • Copyright theft on behalf of record producers.
  • Assisting Insolvency Practitioners.
  • Financial Services Network collapses, e.g. Directors misappropriating funds received from mortgage lenders and insurers leaving brokers out of pocket.
  • Call Centres hacked and telephone lines diverted to premium rate numbers running up massive bills.

Important note: if you drop charges made after a barrister has been appointed to initiate a private prosecution, then Counsels fees and costs incurred to that point will become payable by you. Therefore, it is imperative that you consider this if you are offered a settlement deal.

Private Prosecutions - Expression of Interest

  • If you are interested as a client please tell me a bit about your case. If you are interested as a marketing partner, please tell me how you think you can help me to build this business, and in particular to increase awareness post launch.

Should I redeem my Mortgage Express mortgage? Latest Articles

Hi guys

I currently have a mortgage on a London flat which I purchased 9 years. The flat is now worth about £160K – £170K and my outstanding mortgage is just below £100,000. Should I redeem my Mortgage Express mortgage?

My lender is Mortgage Express and although I would like to re-mortgage with them to pull out equity from the property I cant because they no longer lend.

I’m currently on 2.5% variable which is low compared to what’s obtainable out there these days.

I have been looking around for a lender to re-mortgage with but none seem to be able to offer a rate as good as Mortgage Express….. plus I’m looking for a lender who’ll consider the fact that I work as an IT contractor.

I feel trapped with Mortgage Express and I don’t intend to sell the property 🙁

Any advice?

Regards

Lammy


85% LTV is now possible with at least 13 buy to let lenders! Latest Articles, UK Property Forum for Buy to Let Landlords

If your mortgage is with any of the following lenders you may be in a position to increase your gearing to 85% LTV ……….. and best of all, WITHOUT refinancing! 85 percent LTV is now available with 13 buy to let lenders

  • The Mortgage Works
  • BM Solutions
  • Leeds Building Society
  • Godiva
  • Platform
  • Mortgage Trust
  • Kent Reliance
  • Keystone
  • Virgin Money
  • Shawbrook Bank
  • Woolwich
  • Nat West
  • Kensington

There may be a few more lenders I’ve missed. Sadly Mortgage Express are definitely on the list and the following need a lot of convincing 🙁

  • Aldermore
  • HSBC
  • Investec
  • Paragon
  • Precise
  • Principality
  • Skipton (Amber Homeloans)
  • West Bromwich Mortgage Company

The reason 85% lending is possible with first list of lenders above is because they will ALL consider allowing second charges, which enables landlords to consider taking on Equity Finance to release cash to fund deposits on additional purchases.

Equity Finance providers are very happy to lend on a second charge basis – this is known as joint venture funding. In other words, their finance sits above your first mortgage and their security also ranks second to that of your existing mortgage lender. Therefore, you could look at Equity Finance as a second mortgage on your property, the first mortgage remains in place. This is particularly good news if you have a good tracker rate mortgage with any of these lenders, which you don’t want to disturb.

Unlike traditional mortgage lending, Equity Finance doesn’t attract monthly payments of interest or capital. Instead, the lender takes a share of capital appreciation after 10 years, or when the property is sold or refinanced (whichever is sooner). The equity finance provider does not take any share of rental profits, you keep 100% of any profits or losses you make.

The minimum amount of equity finance is £10,000 per property and the combined LTV across the mortgage and the equity finance must not exceed 85% of the current value of the property.

Returns for the Equity Finance Provider

Given that the Equity Finance provider isn’t taking any monthly payments there has to be a way for them to profit from the deal. This is quite simple, their return is a minimum of 2.5% of the amount borrowed for each year the loan remains outstanding, or a percentage of the capital appreciation on the property after making their loan (whichever is greater). If you borrow 10% of the value of the property, their return is 20% of the capital appreciation. If you borrow 15% they take 30% of the capital appreciation and so on.

As an example, let’s assume you currently own a property worth £100,000 and that you currently have a mortgage of £65,000 secured against it. The equity finance provider will lend up to a further £20,000 which is 20% of the current value (85% LTV in total).

Now let’s assume you sell or refinance that property after 5 years and it is worth £140,000 at that point. The capital appreciation would be £40,000 so the equity finance provider (based on the example above) would get 40% of that, which amounts to £16,000, plus of course the £20,000 they loaned to you in the first place. During that 5 years you would have made no payment to the equity finance provider whatsoever. The extra £20,000 released could have been used as a deposit to purchase another property which could also have produced rental profits and capital appreciation  – Oh HAPPY DAYS 😀

Just to clear up one further point, if the property falls in value (or stagnates) the equity financier charges only 2.5% per annum for their loan. That’s only paid when the property is sold or refinanced. Now that’s very cheap money compared to traditional mortgage funding!

You may be wondering why I underlined the word consider at the beginning on this article. This is because it is not a given that your mortgage lender will allow a second charge. For example, The Mortgage Works will need to be convinced that your existing LTV is below 65%. If this is the case due to your property having appreciated in value, then TMW will want to see a new valuation report to confirm that. Other lenders may want to be clear that you understand the transaction that you are entering into. This might be due to you having say 15 years on your mortgage with them, but the equity financier wanting their return in 10 years time, either from the sale or refinance of your property. Your existing lender might not want relish the idea of you refinancing in 10 years time as that will impact on their profits. Accordingly they may make you jump through a few hoops to convince them to agree to a second charge. They cannot withhold consent unreasonably though, unless of course they are now entirely Government controlled, as per Mortgage Express. For this reason we have created a spreadsheet which makes it very easy for you to justify any decisions regarding equity finance to yourself, and to your existing lender if necessary.

Consider the benefits

If you are currently at 65% LTV, using Equity Finance could enable you to double up the number of properties you own and make profits from. If you do that you would retain 60% of any capital growth, which multiplied over twice as many deals provides 20% more than just one deal. On top on that you can also double up any rental profits, and you keep ALL of that profit 😀

If you would like to learn more about joint venture finance, and to obtain our spreadsheet so that you can analyse the viability of equity finance for yourself, please complete the form below. A fee of £200 is payable which covers an introduction to and initial advice from our recommended brokers, and also a copy the spreadsheet referred to above.

Oops! We could not locate your form.

 


Property118’s own Buy to Let Mortgage sourcing system and calculator Buy to Let News, Latest Articles

I regularly update the products on our own in house Buy to Let Mortgage sourcing system and calculator. This takes quite a bit of time, but it is definitely worth it is worth reminding readers what it can do as it is our own in house design specifically based around the needs of property investors.

round click hereIt will not only find products for the amount you have requested, but also show you how much you could borrow as a maximum so you can request figures based on either.

The first Key inputs are the Value of the property or Purchase Price, the amount you want to borrow and the Rental income pcm

  • This will then work out if the rental income is enough for every lender and product on the system to agree a Buy to Let mortgage. This is called Stress Testing and is commonly worked out (but not always) by the rent covering the interest only mortgage payment by 125%.
  • It will also consider the amount you want to borrow against the value of the property as a percentage. This is called Loan to Value and some products or Lenders will vary from 50% LTV to 65%, 75%, some up to 80% and even one still at 85%
  • Another factor from these figures are the Lenders’ maximum and minimum loan amounts (most lenders will not lend below £25,000) and also minimum property values ( most lenders will not lend on a property below £40,000 and some higher).

Other key inputs are:

Income – many lenders have a minimum income level for applicants although this does not affect the loan amount as it is based on rent.

Preferred rate type Fixed or Variable – Do you want it to search for products where the interest rate will remain the same for the term of the product or are you happy to take the risk of a rate that may change up or down. The system will then only show results for the type you choose (although you can easily change your mind).

You will then get a list of results (see example below) which will show:

  • A list of the available products based on your criteria
  • Interest Rate
  • Product term
  • reversion rates
  • Fees
  • Early redemption penalties
  • How the Stress testing is worked out ie the amount you can borrow for every £1 of rent pcm
  • If you could borrow more how much you can borrow as a maximum and get a quote based on that figure

Buy to Let mortgage search results

Then just click on the Get quote Link for the loan requested or the maximum possible loan.

You will then get an full illustration of the product you selected along with a financial summary showing:

  • The interest only Buy to Let mortgage costs per month
  • A table showing the Capital and Interest Buy to Let mortgage costs per month
  • The minimum amount the rental income would need to be for the loan requested
  • Yield (i.e. annual rental income expressed as a percentage of property value)
  • Rental Return on Equity Invested (net of mortgage costs)
  • The LTV (i.e. the loan expressed as a percentage of valuation) is

And much more see below:

Buy to Let mortgage Illustration

You can find The Buy to Let Mortgage sourcing system and calculator under our Finance tab see below or CLICK HERE to start your search

Buy to Let mortgage tab

If you would like our help applying for a Buy to Let mortgage and finding the best deal for you just complete the form below and we will get back to you asap 🙂

Form to Contact Property118

  • Please give us a few details so we can investigate and call you back

FCA think it might be OK for lenders to ignore contractual terms Latest Articles, UK Property Forum for Buy to Let Landlords

This week our favourite journalist at The Telegraph (Nicole Blackmore) wrote an article entitled “Should mortgage lenders be allowed to change mortgage terms” FCA think it might be OK for lenders to ignore contractual terms

What an outrageous question you might think. However, it’s not Nicole’s question, it is a question posed by the FCA!

Mark Smith from Cotswold Barristers commented …

“This is the line that worries me most “The FCA stated: “Lenders can change their regulated mortgage contracts after the point of sale without treating their customers unfairly.”

He then went on to add ….

“This is utter rubbish. 

A contract cannot be ‘changed’ by one side without agreement of the other side. A term can be varied only if the contract permits it. This is the whole nub of the argument we are having with West Bromwich Mortgage Company.”

David Lawrenson, a consultant at Letting Focus and an expert on the residential property market responded by writing the following letter to the FCA …..

“Dear Sirs, 

I see at the FCA you are asking for the public’s views on whether mortgage lenders should be allowed to alter mortgage terms and conditions mid term.

Funny that, but I thought a contract was a contract, was a contract – and was for life. I must have missed that in the small print.

Perhaps I should now write to all the lenders I have mortgages with and tell them that due to changes in “the funding environment” (i.e. I fancy a yacht and a racehorse) I will now be paying off their buy to let mortgage loans at rate of 0.1 per cent per annum. How would they like that, I wonder?

How on earth can you, at the FCA, even have the gall to be not upbraiding these lenders, never mind seeking advice from Joe Public on whether they can cheat in this way.

The landlords affected by the West Bromwich and Bank Of Ireland’s decision to cheat in this way was appalling – and you let them get away with it, so now the landlords affected have to go to court to enforce their rights. You really should be ashamed of yourselves and are now seen as something of a laughing stock and stooge for the financial services amongst the landlord community.

These landlords made a bet with the lenders on tracker mortgages – and they won. They often paid high application fee and high initial interest rates to get the benefit of a long term “rest of life” tracker rate later on in the term of the mortgage.

Now the tide has turned and the lenders are losing money, do not like it and would like to wriggle out of the contract.

Tough! They would not let their borrowers wriggle out, so why should they be allowed to.

And you should stand up against lenders – because this is simply cheating. You should not be wasting time asking for consultation on whether or not this is cheating.”

You can read my response in the comments section below the article The Telegraph – LINK HERE

If you would like to express your disgust directly to the FCA their email address is mortgage.dp@fca.org.uk

If you are into Twitter, please re-tweet the following

 


Best practice guide to letting your property Latest Articles, Letting, Lettings & Management, UK Property Forum for Buy to Let Landlords

All landlords want three basic things:-

1) Tenants who pay their rent on time
2) Tenants who will respect their property
3) Tenants who respect their neighbours

This is a relatively comprehensive guide, hence it is quite long. It may well put you off self-management but please invest your time into reading it fully to gain a better understanding of how to protect yourself, even if you do decide to use an agent.

Forward

Despite having granted over 1,000 tenancies on properties belonging to our family portfolio we have only had to go to Court twice to seek possession and have never had a tenancy deposit dispute referred to arbitration or the small claims courts. Perhaps we have just been lucky? However, we like to think our experiences are more likely to have something to do with the way we apply common sense to our letting and tenant referencing processes.

Tenant Referencing Using Common Sense

In this guide I am going to explain how you can use same processes we do in order to achieve similar results to find your own tenants as opposed to paying the extortionate fees often associated with high street letting agents.

I will explain what you can do begin the process of finding your next perfect tenant from the day an existing tenant lets you know that they want to move out through to the check in of your next perfect tenant. I have also included several bonus tips to help you to minimise your risks and increase efficiency.

Help from existing tenants

As soon as a tenant serves notice it pays to arrange to meet them. More often than not these days, tenants think they can serve notice with just a phone call, email, facebook or text message.

It is important at this stage to get tenants to serve proper written notice. Therefore, prepare a letter for them to sign at your meeting stating the date they wish to end their tenancy. Produce two copies, one for them and one for you and leave some space so that you can also sign to accept their notice.

Next, find out why they are moving and let them know that you will do your best to help them as much as possible. For example, assure them that you will deal with meter readings on the day they check out and that you will produce letters to inform the utility providers of their contract termination and new address.

Discuss references which you are bound to receive from their new landlord or mortgage lender. Let them know what they need to do to get a good reference and a full refund of their deposit. This meeting is also the perfect opportunity for them to show you around the property and to point out any little jobs which might need to be dealt with.

Discussing references and the potential for a full refund of their deposit is a big incentive for tenants to be as helpful as possible. Explain to your tenants that it is your aim to provide an excellent reference and refund the entire deposit. We use this as an opportunity to tell them what they can do to help that to happen. For example, replacing light bulbs, carpet cleaning and professional cleaning are a classic examples of things your tenants can do prior to checkout to ensure a full deposit refund and a good reference.

By explaining that your aim is to get your new tenants moving in within a few days of your your current tenants moving out will help your tenants to understand the importance of leaving the property in tip top condition. The more helpful you can be in terms of advising tenants what they need to do to get a good reference, a full refund of their deposit and what you will do to help them, the better your chances will be for them agreeing to help you.

At this point you are in a good position to ask your tenants to allow you to show prospective tenants around before they move out. We recommend arranging block viewings. Give your tenants tips on what they can do to help, for example; if they are a bit untidy or the grass needs cutting etc. very subtly point that out. The discussion about references, a full refund of their deposit and what you will be doing to help them on moving day are all very powerful motivators.

Always remember allow yourself at least a day or two to redecorate between tenancies.

Creating and increasing demand

If you only have one tenant enquiry and a vacant property there is a strong temptation just to get it rented to the first person who comes along. That person may well be a model tenant but if you don’t do all of the necessary checks you could be swapping a short term void in your cashflow for a ‘tenant from hell’ who could end up costing you £ thousands. To avoid putting this pressure on yourself you need to make sure your properties are advertised at the right price and well before they are vacant whenever possible.

Remember, when tenants begin their search for a new home their initial decisions are based on price, location and pictures.

There is not a lot you can do about the location of your property if you have already purchased it but you can be realistic on price and give prospective tenants a lot of pictures to look at, but not too many.

We recommend adding up to 10 pictures to your adverts. Remember, tenants live inside the property, not outside, so make sure you have more internal pictures in your advertisements. Adding good pictures to your advertisements can also reduce wasting time on viewings.

Given that tenants buy on price, why not make your property slightly cheaper than others currently being advertised in the area? Also consider that tenants search Rightmove based on rent bands in multiples of £100. Advertising a property for £825 could result in you receiving far less enquiries than advertising it for £800. This is because people searching up to £900 may be expecting something better. If they are searching for properties up to £800 they may not find yours if it is priced at £825 but they will if it’s £800. Don’t make the classic mistake of advertising at £799 though, otherwise all those listed for £800 will show above yours on Rightmove! Make sure people see yours advert first.

Remember that we are a Nation of pet lovers. Would you really object to your tenants owning a goldfish? Think about the message you are sending out when you advertise your property. Most landlords includes the words “no pets” in their advertising and that potentially rules out enquiries from over half of the population. The easiest way to double the number of your enquiries from a property advert is to use the words “pets considered – guarantors may be required”.

Where to advertise

The most popular place for tenants to begin their search for a new home is the internet. The UK’s largest property portal is Rightmove, Zoopla are also a huge group which included Prime Location and several “partnerships” with Newspaper groups. You will need to use an agent to advertise on these portals but you don’t have to sign up to a management contract if you don’t want to. Also BEWARE some companies “Let-Only” contract. They charge you for doing nothing if the tenant stays on! Details of the company we use can be found below.

Zoopla

New tenant enquiries

The following is a list of initial questions to ask before arranging a viewing. These are in addition to standard questions such as name, contact details and income:-

  1. Where are you living now?
  2. Why are you looking to move? If, for example, they say they want something bigger ask in what way, i.e. more bedrooms or just more space? The more you talk the more you will learn. When tenants first call they just expect to make an appointment for a viewing. However, when you show a genuine interest most tenants appreciate it. You probably don’t want to rent to people you can’t get on with so why would you want to show such people around your property if it’s clear from a quick conversation you are not going to get on? If their time scales don’t match your requirements tell them that. Sometimes people can be flexible and may even pay rent on your property whilst they are serving notice on another. Point out the benefits of not having to move out of one property and into yours all on one day.
  3. How long are you planning to stay in your next property? Most landlords are looking for long term tenants as changeovers are time consuming and usually require some redecoration between tenancies, all of which can impact heavily on profits.
  4. Do you have any children? If so, engage in conversation about age, schools etc. to build rapport. People with children of school age generally don’t like to move home very often as this can be disruptive to their children’s education. If you are planning not to sell your property for several years make sure you point this out.
  5. What pets do you have and who looks after them whilst you are at work and on holiday? If a person has pets chat about that to build rapport, i.e. type, breed, colour, how long have you had him/her etc.

A typical conversation will last 10 to 20 minutes. If you don’t like what you have heard don’t arrange a viewing. Of course you need to be polite at all times but there are several excuses you can use to put people off. A classic is:-

  • I’ve got three viewings tomorrow morning which I’ve managed to squeeze in and unfortunately I won’t have any more time. Can I get back to you tomorrow evening and let you know how I get on with those as I wouldn’t want to commit to a viewing and waste your time if it’s already gone.

Often it is just better to be completely honest, e.g. I’m really sorry but I don’t think it would be fair on your two Rottweilers to leave them in a 2 bed flat all day whilst you are out at work!

Viewings

It’s best to do viewings in pairs for security and other practical reasons.

Try to arrange block viewings wherever possible to save yourself multiple trips to the property.

We suggest you stagger appointments every 15 minutes and always text people an hour before to confirm. Very rarely do people ever turn up on time but that’s fine if there are two of you. This is because one of you of you can keep the next set of viewers chatting whilst the other is showing others around. This also demonstrates that demand for your property is high.

During a viewing we always explain the referencing fees we charge, but only when we feel confident that we will be offering a tenancy subject to satisfactory referencing. If you like what you see and hear and your prospective tenants appear to feel the same way then explain that you would like to meet them at their home to complete some paperwork. Explain that you will need them to provide photocopies of their passport/driving license and two utility bills at that time and that you will also need to see the originals.

If they agree to everything above they’ve pretty much made up their minds that they want to take your property.

If they don’t agree you may wish to apply this little motto “some will, some won’t, so what, who’s next”.

Some people will want to look at other properties and that’s fine, they can always get back to you and you can pick up where you left off if your property is still available. If you don’t like the look of them simply tell them to have a think about it, go and look at some more properties, and that you have several more viewings to do. Leave it with them to get in touch again if they want to proceed. Usually by the time they get back to you your property will be let if you have followed our advertising tips.

Meeting prospective tenants at their current home

Dress smart casual as that’s generally what makes tenants feel comfortable. They know why you are there and in most cases they will have their documents ready for you to take a look at. As well as looking through these make sure you get chatting and reconfirm the reasons they first told you they were looking to move. Ask to meet their pets if they have any. During this time you should be looking for little tell tale signs of whether they are likely to respect your property. Look out for washing drying on radiators (as this is a common cause of condensation on windows which leads to mould problems), mould on walls, condensation on windows (as this is often a sign of a property being poorly ventilated by tenants) scratches on the backs of doors, poor cleanliness of carpets and gardens, messy kitchens and unpleasant odours of pets or cooking.

It’s also a good idea to mention that you would like to review their last 6 months bank statements. Some people ask why. Explain that you are not particularly fussed about how much money they’ve got. You just want to see their income going into the bank and that their regular commitments are honoured without exceeding any agreed credit limits as this information can help you to make an informed decision if for any reason the formal referencing process is delayed.

Tenant Referencing

For the very best results you should use a combination of “soft referencing” and “formal referencing”.

Soft referencing includes:-

1) Meeting the tenants in their own home to see how they live and to meet their pets

2) Reviewing bank statements

3) Taking copies of passport(s) and proof of current address and viewing originals

Formal tenant referencing includes:-

1) Credit history check (which will highlight any CCJ’s & bankruptcies)

2) Confirmation of showing on the Voters roll

3) Locate information (which may reveal undisclosed addresses which can then be searched)

4) FCC Paragon are one of the UK’s largest tenant referencing agencies and providers of rental warranties. As a result they have a huge database of tenants which they know have previously caused problems to former landlords. A cross check against this database is incredibly valuable.

5) Managing agents/landlords reference(s) (both current and previous if applicable)

6) Income reference(s) regardless of whether employed, self-employed or retired. If your prospective tenant is a foreign national you must view original Visa / Work Permit. Check that the expiry date has not passed or will come about mid-tenancy.

Note that if a tenant fails formal referencing we a good referencing company will usually advise the level of rent they think the tenants are good for. You should also consider requesting a guarantor who should also complete formal referencing.

Explaining your processes to prospective tenants

It is important that processes are followed properly so forewarned is forearmed, particularly for the benefit of your tenants.

Whilst you are with your prospective tenants, ideally when meeting them in their own home as part of your soft referencing process, and before either of you have formally committed to anything, we recommend you to explain what the processes will be from that point in time right through to move in day. That way, your tenants will know exactly what to expect and what needs to be done.

Move in day can be incredibly stressful for tenants so it’s important that you set their expectations in regards to the time you will need to spend with them going through various paperwork. If tenants don’t know what to expect you might find yourself fighting for their attention whilst they are dealing with removals or getting impatient because the removal people want to get on with their jobs.

The processes and time required from “agreement in principle” to let through to handing over keys and completing paperwork, including serving legal information/notices, should first be explained and then completed in the following order:-

1) Formal referencing typically takes two working days if the tenants have primed those required to provide references. It is important that you remind prospective tenants of the importance and urgency relating to formal referencing. Advise them to let their employers, accountants, existing and previous landlords know to expect reference requests and to ask them to respond quickly.

2) Explain that the tenancy agreement will be drawn up as soon as referencing has been completed and assuming that all references are satisfactory of course .

3) Explain that once referencing is accepted you will ask for a holding deposit to be paid to hold the property. This will often be the same amount as you will be expecting your tenant to provide as a deposit towards possible damages when their tenancy officially begins. You will need to protect the deposit and have the Deposit Protection Certificate and Prescribed Information ready to serve within 30 days of signing the tenancy agreement. You are not required by law to protect a holding deposit until such time as a tenancy is granted. If referencing fails we recommend you to insist on a Guarantor. You are of course at liberty to ignore the results of formal referencing but that is not recommended. If a tenant withdraws from letting the property and decides not to sign your tenancy having paid the holding deposit you will usually be entitled to retain it in full.

4) If possible, give your tenants a copy of the tenancy agreement to look through prior to move in day. You should never sign the tenancy agreement prior to move in day unless you already have vacant possession of the property. This is just in case the existing tenant doesn’t move out. The same goes for new purchases by the way, they can fall through and the completion date can be delayed. If you are purchasing a new property you can still do everything explained in this guide. Just make sure that your purchase offers are conditional upon the vendor allowing you to show your prospective tenants around the property prior to completion.

5)Explain to your tenants that they should allow between one and two hours to go through all paperwork on move in day.

6) Explain that on move in day the first thing you will do together is meter readings. We also recommend you to have letters prepared for the tenants to sign to go to Utility companies and the local council for council tax purposes, these include meter readings and move in dates. The tenant signs these, you counter sign and you make sure they are posted. This ensures that bills don’t stay in your name.

7) Explain to tenants that you will do a snagging list inspection after the first month but they are to contact you immediately if there are any problems whatsoever. It might be coincidence that we have never had a cannabis farm in one of our properties but it’s more likely our due diligence has put the crooks off. Some apparently perfectly acceptable tenants show great interest and then for unexplainable reasons don’t proceed – perhaps these people are the rogues and criminals you are looking to avoid? – you will never know!

8) Explain that on move in day the first piece of paperwork you will present is the inventory. Use this as an opportunity to show tenants where everything is and how all appliances work, especially heating systems and the location of the stopcock for water. If you are not very experienced at producing these we strongly recommend you to use the services of a professional inventory clerk. Professional inventories generally cost in the region of £100 for an average buy to let property. If your inventory is not up to standard you will find it incredibly difficult to make a claim against the tenants for any damages at the end of the tenancy. To save time have the inventory prepared in advance of move in day and make any changes necessary on the day.

9) Explain that on move in day the next stage will be the signing of the tenancy agreements – one for them, one for you.

10) Explain that keys can not be handed over until the tenancy agreement has been signed and at that point you will also hand over the Landlords Gas Safety Certificate

11) You have up to 30 days after the commencement of the tenancy to protect your tenants deposit and to serve a Tenancy Deposit Protection Certificate and Prescribed Information. We recommend the sooner the better. Ideally, protect the deposit on move in day and have the papers ready to present at check in but only after the tenancy agreement has been signed. Always get tenants to sign your copy of these to confirm that they were served after the tenancy was granted.

It is very important that you follow each of these steps in the right order for legal reasons. Advising your prospective tenants about your processes at an early stage will minimise the risk of nasty surprises on move in day and thereafter.

Just remember, this is the start of what will hopefully be a long term relationship. It is important that you nurture the relationship over time. We are not suggesting you become best friends with your tenants, the law is that you give them peaceful enjoyment and that you should leave them alone as much as possible once they are settled. However, it is important to give their property related problems equal if not greater attention as you would your own if and when they arise.

Other things you may wish to consider

  • Possession. In the event of things going wrong, which is highly unlikely if you follow the guidance above, you will want to regain possession of your property at the earliest possible opportunity. Unless you can prove to a Court that a tenant is in breach of contract it is impossible to obtain possession inside six months. Court cases can take several months to arrange and for this reason many landlords prefer to seek possession on the grounds of no fault at the end of the fixed term tenancy. This is because tenants have no right to defend a claim for possession on this basis, providing you have followed the processes above. Rather than waiting until the end of a fixed tenancy period to serve notice you could serve a section 21 (1) b notice as soon as your tenants deposit has been protected and the Deposit Protection Certificate and Prescribed Information has been served. Landlord Accreditation trainers often advise landlords to serve a section 21 (1) b notice before the end of month 4 of a fixed term tenancy. This saves having to wait for two months after the end of the fixed term tenancy to seek possession, and possibly up to three depending on the date of service and the commencement date of the tenancy if notice is served after the fixed term tenancy period has expired. Also note that if you serve notice after the fixed term tenancy period has expired that the correct notice to serve is section 21 (4) a. It’s very easy to serve this notice incorrectly as the dates are crucial. That’s another reason for serving early. We recommend serving notice at the earliest possible opportunity and advising tenants before they even move in why this is necessary. To avoid worrying tenants about this it is important to explain that serving notice gives you the right to apply to the Courts for eviction after an initial six month period but it is only in extreme circumstances that you would ever exercise that right.
  • Deed of Assurance. If your tenants are looking to stay long term they may express concern if you only offer them a six month agreement and then go on to discuss serving notice, especially if they have previously been evicted through no fault of their own. No words of reassurance are going to convince some people. Your opportunity to put our money where our mouth is involves the offer of a Deed of Assurance as an alternative to a long term tenancy. In very simple terms, a Deed of Assurance is a contractual promise from the landlord to pay compensation to the tenant if possession is obtained by the landlord within a given time period (e.g five years) despite the tenants having kept to their side of the contract. This is much better for both parties than tying themselves into a long term contract in our opinion. You find out more about the Deed of Assurance and purchase a document template from the Property118 website by searching Google for “Deed of Assurance”.
  • Advertising Portals (Rightmove and Zoopla). We access these via Letting Supermarket – please see the contact form below.
  • Full management. A significant proportion of the work required to manage your property can be outsourced to a good agent. However, don’t be fooled into thinking that contracting with a property management firm will absolve you of you responsibilities – IT WON’T! If you letting agent is negligent YOU remain responsible and YOU pay any fines or compensation. You may be able to counter-sue your agent for negligence but that will not get you very far if they have no money and no insurance. For this reason you should make sure that your agent has Client Money Protection insurance AND Professional Indemnity insurance. The agent we use is a member of ARLA which means that these insurances are in place as a condition of membership. Our agents (Letting Supermarket) provide an incredibly comprehensive service for a fee of just 4% of rent (minimum £24.99 + VAT pcm per property)
  • RGI = Rent Guarantee Insurance. RGI is recommended for any landlord who is highly reliant on receiving rental income and insuring against the legal costs associated with evictions if things do go wrong. The cost is around £10 pcm per tenant and is generally offered by formal referencing companies.

Recommended Tenancy Term

You may well prefer to take on tenants who are looking to stay long term. However, we only recommend you to offer 6 month agreements. Only offering a short term tenancy when you want tenants to stay a long time might appear counter-intuitive. However, it is important to minimise your risks and to keep your options open so that you can apply to the Courts for a possession order on a no fault basis if you absolutely need to at the earliest possible opportunity. If you are letting to students you may wish to consider 12 month agreements if it would be difficult to re-let your property part way through an academic year. Always take guarantees from parents or rent in advance if you are letting to students because they may drop out mid term.

Letting Supermarket

The owners of Property118.com like this company so much that we acquired 26% of their shares!

Their “menu pricing” allows you to buy only the services YOU need and they will not tie you into long term contracts.

They are ARLA members which means that they are fully insured.

Details of their full management service can be found HERE.

Contact LettingSupermarket.com


Skipton Building Society Legal Action Advice, Buy to Let News, Cautionary Tales, Financial Advice, Latest Articles, Legal, Mortgage News, Property Investment News, UK Property Forum for Buy to Let Landlords

In 2010 the Skipton Building Society broke a promise to over 60,000 mortgage account holders. 

The basis of that promise was that their mortgage rate would never exceed 3% over the Bank of England base rate – it did – CONSIDERABLY!Skipton Building Society Legal Action

The hike in monthly payments for a person with a £150,000 interest only mortgage has been around £181.25 per month!

Affected borrowers include both home-owners and buy to let landlords.

At the time a small group sought legal advice but insufficient funds were raised to challenge the matter in Court. Looking back at what happened I can only assume this was due to lack of marketing expertise within the campaign group which set out to challenge Skipton.

Given that the rate hike occurred over four years ago the Skipton probably think they have got away with this and are home and dry. Several borrowers have sold their properties or refinanced onto different deals but this makes no difference, they all have a potential claim for compensation.

Saqib Mahmood

Saqib Mahmood – affected borrower

Saqib Mahmood, a non-practising Barrister was affected by the rate hike to his personal mortgage and another on a buy to let deal. Mr Mahmood was part of the initial campaign group and admits “the campaign got nowhere due to lack of marketing expertise. The case we had was strong and Skipton have already capitulated for one borrower to avoid Court Action. I am delighted that Mark Alexander and his team at Property118.com have picked up the gauntlet on this one. I am also affected by the West Brom rate hike”.

Mr Mahmood was also keen to point out what he refers to as ‘the Gerald Ratner moment of the Skipton CEO’. This dates back to 5th March 2009 when the Bank of England base rate fell to 1%. At the time the Skipton chief executive David Cutter told FT Adviser “We have pledged our residential SVR will never be more than 3 per cent above base rate and, even with this at its lowest level for 315 years, we will honour our promise.” – LINK

The Legal Action Campaign Against Skipton Building Society

On the back of organising a successful campaign which raised over £450,000 to mount a legal challenge against the West Bromwich Mortgage Company (whose borrowers are affected by a similar issue) Property118.com has sought Counsels opinion on the conduct of Skipton Building Society. Counsel is so confident that he can get the Skipton’s decision reversed if the matter goes to Court that he is willing to work on a “no-win-no-fee” basis to achieve this. His objective will be to get the terms enforced and claim compensation backdated to the date of the increase. However, this will be subject to recruiting borrowers with a minimum combined total of 500 affected mortgage accounts.

NOTE – No-win-no-fee agreements are also known as a CFA (Conditional Fee Agreement) or a DBA (Damages Based Agreement).

The case will be run on similar terms to the legal action against West Bromwich Mortgage Company, i.e. one borrower will represent all those who instruct Counsel to challenge the legality of the rate hike. Any Court order will only apply to the mortgage accounts represented by the legal action. In other words, there will be no free rides.

There will be two representative legal challenges, one on behalf of consumers (i.e. homeowners and landlords with only one buy to let mortgage) and the other on behalf of landlords with two or more buy to let mortgages.

The Barrister we have engaged is Mark Smith of Cotswold Barristers. This is due to his experience in these matters having taken on the UK’s largest ever direct access barristers case against the West Bromwich Mortgage Company.

Costs and mitigation of risk

Cotswold Barristers will administer the action, Innovative Landlord Solutions LLP (the owners of Property118.com) will be responsible for driving the campaign and associated marketing.

We are not asking anybody to part with any money at this stage. However, to fund the campaign, at some point, we will need to begin fundraising to pay for administration and marketing. We will let you know more about this in due course.

Once an initial target of 500 instructions has been obtained, pre-action protocol proceedings will be initiated and papers will be served to the Courts 90 days thereafter. This 90 day period will be known as the Countdown period.

Mark Smith (Barrister-At-Law) will earn nothing unless he wins the case or arranges a settlement for the clients he is representing.

Skipton No Win No Fee

During the Countdown period Counsel will also organise ATE insurance or litigation funding to protect claimants against adverse costs in the event of the legal action failing and the others sides legal costs being ordered to be paid by the group. The case will not proceed if this risk cannot be mitigated, either by these routes or by self-insurance, a model that has worked with great success in the West Brom case.

Legal Action Objective

The objective of the legal action is for the 3% interest rate cap to be Court ordered and backdated to the commencement of the affected mortgages. In other words, those who sign up to this action could receive a lump sum refund (less costs) and lower mortgage payments moving forwards. If the barrister fails to achieve this objective he will be paid nothing for his efforts. If the case succeeds a percentage of the overpayment will be retained to pay ATE insurance, other expenses, and Counsels fee.

For more details please search Google for “Property118 Skipton Building Society Legal Action”

To register your interest please complete the form below.

Legal Action - Expression of interest form

You will not be committing to anything by completing this form but please only do so if you are an affected borrower, or were previously affected if your mortgage with Skipton building Society has been redeemed.

 


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