Tag Archives: residential

Remember our background is in BuytoLet and Commercial finance Buy to Let News, Commercial Finance, Latest Articles

PartnersRemember our background is in BuytoLet and Commercial finance Mark, Mike and I met through the common background of BuytoLet and Commercial Finance. Over the years through The Money Centre and now Property118 we have literally helped 10s of thousands of Landlords, developers and investors start and grow their property businesses.

Unfortunately we are now old enough to have seen, done and bought the t-shirt for most things in the property finance industry including Mark and Mike being founder members of the NACFB (National Association of Commercial Finance Brokers) and working with Nationwide Building Society and Paragon Mortgages on the concept of Forward Buying Facilities.

We have been sharing our experiences and strategies for property finance as much as we can with readers, but there is always a time when you just need some help.

To start with we have our own BuytoLet mortgage sourcing system and calculator, which we designed ourselves and I keep updated. This will help you see how much you could borrow, what the costs would be and which are the most popular Lenders and Products.

We have a team of highly experienced NACFB member commercial finance Brokers who can advise you on and source the best Commercial, Development finance and BuytoLet deals.

If you need help with…

Buy to Let mortgages  : info@property118.com

Commercial Mortgages CLICK HERE

Development Finance CLICK HERE

Bridging Finance CLICK HERE

…. or guidance regarding property finance you can email us on : info@property118.com Call Property118 on: 01603 489118

Or contact me directly on npatterson@property118.com.


Capita TDP to be taken over by MyDeposits Landlord News, Latest Articles

The Capita TDP (Tenancy Deposit Protection scheme) has been closed to accepting new deposits since the 14th of September this year.

Capita a corporate giant and FTSE 100 company was only awarded the contract by Government to operate the scheme from the 1st April 2013 (no pun intended) in an effort to increase competition and drive down costs for this service. Mydeposits has however stepped in to take over responsibility for Capita TDP protections in England & Wales after confirming their withdrawal from the market.

All of Capita TDP’s existing deposit protections will be automatically transferred to mydeposits from 1st December 2013. Landlords, agents and tenants in England &Wales will also have access to the scheme’s dispute resolution service. Capita TDP has now written to all existing members informing them of the news.

All transferred deposits will continue to be protected throughout the duration of the fixed term tenancy. my|deposits will also reissue a new Deposit Protection Certificate (DPC) and the relevant Information for Tenant’s leaflet for each protection.

Eddie Hooker, CEO of mydeposits, said: “Capita TDP’s existing landlord and agent members can rest assured they’re in safe hands with mydeposits. The experience and knowledge we derive from partnership with the both the National Landlords Association (NLA) and the UK Association of Letting Agents (UKALA) means we’re well placed to manage the handover following Capita’s withdrawal.”

“Landlords, agents and tenants will also have access to our free award-winning dispute resolution service, giving them peace of mind that the deposit will be returned fairly if they’re unable to reach an agreement over its return.”

“We’re on hand to speak to existing Capita members who have concerns regarding the transfer of their deposits. Landlords, agents and tenants can also visit our website www.mydeposits.co.uk where they can find details of the scheme and a range of useful guidance and advice on deposit protection issues”.Capita TDP


Record levels of Bridging Finance used by Landlords Buy to Let News, Commercial Finance, Latest Articles

In the last year Landlords borrowed £640 million on Bridging finance for the purposes of Buy to Let.

The use of Bridging Finance by Landlords has increased significantly in the last few months with a record total for July and August alone coming to £194 million, which is an estimated 36% of all bridging loans drawn down during the same period.

Figures supplied by the West One Bridging Index show that over the twelve months to August, industry gross bridging lending was £1.79bn. Compared to the previous twelve months, to August 2012, this represents annual growth of 26%.

Duncan Kreeger reporting on the index figures said “Landlords don’t just need mortgages. To expand portfolios, landlords are increasingly converting properties from other uses or from a dilapidated state.”

“The trouble is that standard mortgages were never really set up for that sort of loan, and the financial crisis has made lending criteria even stricter. For example, it’s practically impossible to get a high street mortgage on an ex-office – or a flat with no bathroom.

“Working alongside mainstream finance, short-term, secured loans increasingly bridge that gap. There are more and more landlords who want to grow their portfolios in more intelligent ways. Most vitally, this can actually expand the stock of available properties.”

If you need help with…bridging dinance

Buy to Let mortgages : info@property118.com

Commercial Mortgages CLICK HERE

Development Finance CLICK HERE

Bridging Finance CLICK HERE

…. or guidance regarding property finance you can email us on : info@property118.com

Call Property118 on: 01603 4891181


Development finance using Equity instead of Liquid Cash Commercial Finance, Latest Articles

I have an example of how the commercial market is changing. Some lenders are now taking a risked based view of using second charges over equity as security for development finance rather than only relying on pure cash being put up as collateral by investors.

Example of a recently completed case, as follows:

A builder/developer was looking to buy a property to renovate for a long term investment and once complete take out a Buy to Let mortgage based on its new and improved value (and if possible have additional funds returned too).

He was very limited in the cash deposit he had, as all his money is tied up in other properties which he lets out, however he had a good level of equity in his main residence, which has a value of £600,000 and an outstanding mortgage with the Halifax for £300,000

He found a property which needed heavy renovation including a full new and extended kitchen, and also a new bathroom. The purchase price was £150,000 in its current state and the cost of renovation was £40,000 (as he would be able to do it himself). Therefore, the total borrowing required was £190,000

He ideally wanted to borrow 100% of the purchase price and 100% of the renovation costs using both properties as security, including using the equity in his home as additional security.

Once renovated he required a quick solution in changing the bridging loan into a Buy to Let mortgage

He was able to borrow 75% of the new purchase – which gave him £112.5k on a bridging rate of 1.15% for 3 months. A very keen rate for refurbishment deals.

The short fall of £37.5k towards the purchase and the £40k needed for the renovation works was raised by adding in the additional security via a 2nd charge on the client’s main residence by the same Bridging company.

He was offered a 2nd charge bridge on his residential property up to 70% LTV (although he did not require as much as that) including his existing main residence mortgage at a cost of 1.4% per month. This meant he could raise up to up to a max £120k from this property, more than enough to raise the required 100% of the purchase together with 100% of the renovation costs.

The valuer was booked to attend the property within 72 hours. In the meantime the shopping list of requirements was quickly collated and submitted.

Working closely with a solicitor that understood the speed required for a bridging loan, the deal was completed within a few weeks enabling him to ‘do up’ his new property, increasing the value to £300k.

3 months later he was then able to change the bridging loan product to the lenders the same lenders Buy to Let product at 4.10%, releasing 75% of its new improved (and surveyor agreed) value. This released £225,000 back to the client, enough to clear the bridging loans and put some money back into his cash flow.

Summary of Deal:

  • Liquid Cash available £0
  • Purchase Price £150,000
  • Costs £40,000
  • Gross Development Value £300,000
  • First Charge Bridge £112,000 at 75% LTV
  • Second Charge Bridge on Main residence £77,500 at 70% LTV
  • BTL on completion of works £225,000
  • Liquid cash released £35,500

The set up costs not including interest were:

  • 1st Charge on property of £150k = valuation £330
  • 2nd Charge on residential property of £600k = valuation £540
  • Legal fees = £780
  • Total = £1,650

Buy to Let 3 months later:

  • Property now worth £300k = valuation £360
  • Legal fees = £540
  • Total = £900

Could this be of interest to you?

If so, check our my member profile, linked from my author profile at the top of this article.liquid cash


Rant About Scottish Letting Regulation Commercial Finance, Latest Articles, UK Property Forum for Buy to Let Landlords

As the Scottish Government gets set to embark on the regulation of letting agents – regulation which is badly needed in my view – I fear that my worst nightmare may be about to become true.

Why? Well, let’s look at what’s happened already with Scottish renting legislation.

Landlord Registration has for the most part been startlingly ineffective in raising standards. In fairness, that perhaps was not its prime purpose (having been introduced under anti-social behaviour legislation) but the fact that we now have a national database of private landlords should allow national and/or local government to target those landlords with awareness-raising advice, invite them to seminars and so on. Those unfortunate tenants who suffer at the hands of malicious or, more likely unaware, landlords need that to happen. I’m fairly sure there must still be many landlords who are not yet registered. The fact that Scottish Government hiked the penalty for non-registration up from £2,000 to £50,000 must surely indicate that registration is seen as important. The requirement to quote registration numbers in property advertisements seemed a pretty good way of bringing all landlords into the system. Yet, how many adverts still appear with no registration numbers? How many unregistered landlords have been fined?

No. I see poor practice flourish aplenty and registration requirement ignored. I see responsible landlords pay their dues while the irresponsible carry on regardless. I see local authority Landlord Registration teams funded by those responsible landlords and, it seems, doing not a great deal to bring all within the net.

Why not simply legislate to make it a requirement that for any individual to rent out a property he or she must either use a regulated agent (when that’s in place) or achieve accredited landlord status (or commit to a time-limited accreditation path)? Overnight, poorly performing landlords would be outlawed.

Look at Tenant Information Packs. Of course it’s good practice to pass incoming tenants information and advice relative to their tenancy and their new property. Responsible agents and landlords have been doing so for years as a matter of course. So surely it’s good that all now have to do so?

In theory, yes, but from our perspective as a letting agency we now find ourselves managing a parallel process issuing the mandatory Tenant Information Pack (TIP) alongside our own one, as the mandatory one is so stodgy as to be a turn-off to most tenants, contains errors, and imparts nothing of substance about the property. The effect of this has been to sap resources, particularly time – our scarcest resource – and so impact negatively on our finances. So a highly responsible agency, regulated by RICS and licenced by ARLA is being forced to go through an ineffective process which hampers business efficiency while less regulated or less responsible agents who decline to do so, or are even unaware perhaps that they need to, sail on in the same old way. How many letting agents have been taken to task for failing to issue a TIP? How many who fail to do so, use a low-fee basis as a means of attracting clients? The answers to those questions are unknown, but I’m pretty certain the first is zero or we’d have heard about it.

Simply Let pays about £2000 per year in professional membership subscriptions and regulation levies. We do that because we believe in high standards, and in demonstrating that we hold that belief. We undertake continuing professional development. We do so because we need to be fully informed in order to serve our clients well. We cannot give our landlord clients and their tenants the service they deserve on a low fee basis.

If a landlord’s agent fails to fulfil one of his client’s statutory obligations, it will be the landlord who is held responsible. Are all landlords aware of this? How many agents are playing fast and loose with their obligations to their clients? Again I don’t have an answer to that. If an agent lands a landlord in trouble as a result of negligence or incompetence does that landlord have recourse to a complaints redress mechanism? If that agent goes bust or even runs off with the cash is the landlord’s money safe? Does the agent have client money protection? Unlike estate agents selling houses, a fairly straightforward one-off task, letting agents have on-going management responsibilities which require detailed knowledge of complex housing law. Currently anyone can set up as a letting agent without any qualifications or training whatsoever and without any insurance or external monitoring and take on responsibility for managing clients’ major financial assets and ensuring tenants’ safety in the home.

You can see then why we favour regulation of letting agents. With a level playing field, landlords and tenants could go about selecting an agent knowing that all agents had the basics in place. Why then do I fear, as I said at the beginning of this blog, that my nightmare is about to be realised?

In my nightmare, responsible and already regulated agents found themselves obliged to register and of course to pay a recurring fee for doing so. In my nightmare less responsible agents continued to operate without appearing on the register. The third strand of my nightmare is that nothing much else happened.

It’s turned out like that with Landlord Registration so it’s perfectly possible that Letting Agent Regulation will go the same way.

Why not simply make it a requirement that in order for any letting agent to practice he or she must have in place:

  • A minimum level of relevant knowledge
  • Professional indemnity insurance
  • Client money protection
  • A complaints redress mechanism
  • Evidence of continuing professional development?

All are currently available to any responsible agent.

The private rented sector involves the very basics of life: a tenant’s home and a landlord’s financial investment (and possibly pension plan). It is critical therefore that all who manage any part of that process, landlord or agent, have the knowledge and capability to undertake their role to a high standard and fulfil it in a professional manner. It is critical too that those who entrust their lot to an agent have the benefit of certain basic protections. So my plea to the Scottish Government, when it develops letting agent regulation, is to make it impossible for any agent who can’t deliver those five elements above to continue in practice. The country and its tenants deserve nothing less. Rant About Scottish Letting Regulation

John Gell MRICS


CAMPARI – old school lenders underwriting Commercial Finance, Latest Articles, Mortgage News, Property News, UK Property Forum for Buy to Let Landlords

CAMPARI stands for Character, Ability, Means, Purpose, Amount, Repayment, Interest and Insurance CAMPARI - old school lenders underwriting

It was also a popular drink in the late 70’s and early 80’s but that’s not what this article is about LOL

If you are applying for a commercial mortgage facility, chances are the person making the decision will be trained to use the CAMPARI underwriting method. Knowing how they will assess your application will improve your chances of success as you will be able to structure your business plan accordingly 😉

C=Character
The background and experience of the individuals or business can be a pointer to the potential for success. This includes integrity, past performance, and evidence of financial acumen. No business proposition can be viewed in isolation from the people who will put it into action, and the bank manager will scrutinize both closely.

A=Ability
The likelihood of the business being able to repay the money. This will often depend on the skills and abilities of the owners. On the personal side, intelligence, training and determination should all be considered.
On the business front, the bank will look at profitability, capital requirements, and above all cashflow.

M=Means
The means and resources to run the business, and to do so in a way that allows the bank to see what is going on. You may be asked for quarterly or monthly summaries of how the business is doing. Could you provide them?

P=Purpose
Explain in detail why you wish to borrow money. The bank will want to know that you have thought it through, and that it seems sensible.

The banker may comment on your purpose in general terms. Remember that you ought to know far more about your type of business than any banker, and treat any advice accordingly. Bankers can offer you knowledge of business theory but they have no practical experience of running their own businesses. Asking for practical business advice from a banker is like seeking guidance on seduction techniques from a eunuch.
However, the bank should tell you whether the form of finance you have asked for is the most suitable.

A=Amount
Make sure that you establish the correct amount you need, allowing a margin for error in your forecasts. Be realistic: don’t ask for too little or ‘just enough to get by’. If you have to come back for an emergency second bite, the bank will really have the drains up to see what’s gone wrong.
The bank will look to the business to put some of its own money in. This shows the borrower’s commitment.

R=Repayment
You will usually need to fill in the bank’s cash flow forecast forms, to show that your business can afford repayments on the amount you wish to borrow.

I=Interest and Insurance
Many lending schemes offer reducing loans over an agreed period and have fixed rate of interest. If you are borrowing on overdraft, the bank will set the interest rate to reflect its view of the risk – and what it thinks it can get.
Risk takes us to insurance. The bank may ask if security is available. They may also ask you to consider taking out insurance cover, against illness for instance. Illness of a key player can be a major risk to a new business.

If you need any assistance with a Commercial Mortgage application please Click Here

Development finance please Click Here

Or

email: info@property118.com

Tel: 01603 489118


Alternatives to Landlord Licencing Schemes Latest Articles, UK Property Forum for Buy to Let Landlords

The alternatives to Landlord Licensing Schemes require joined up thinking, changes to data sharing protocols within local authorities and revised high level directives and strategies which must begin at Government level. 

Perhaps the first question to ask is what is Landlord Licensing all about? Is it really about raising standards or is it more to do with raising funds?Alternatives to Landlord Licencing Schemes

Funding

If society as a whole desires that people should not be subjected to sub standard housing conditions then society as a whole must pay to enforce this (howsoever that might be done) whether the money is raised at a local level or centrally.

It is both unacceptable and wholly undemocratic that landlords should be singled out by Government, Councils and Local Authorities to pay stealth taxes badged as licensing fees on the pretence that the money will be used to fund enforcement related initiatives.

Costs associated with licensing schemes imposed on landlords are funded through increased rents. Neither landlords nor tenants want this, particularly as there is clear evidence (demonstrated in this article) that landlord licensing schemes have proven not to be an effective solution to problems in the Private Rented Sector.

Recycling of Court awarded penalties

The high costs associated with prosecuting criminal landlords is borne by Local Authorities, however, fines and penalties go to the treasury. If these funds were to be redirected to the prosecuting authorities this would assist funding of additional prosecutions and create incentives to bring more criminal landlords to task. Continue reading Alternatives to Landlord Licencing Schemes


Development Finance – Where do you start? Commercial Finance, Latest Articles

Borrowers are still being frustrated by the banks’ continued reluctance to lend on development finance projects, but reality is that if you know who to ask they are actually eager to lend on profitable projects to experienced developers.

It is navigating a way around the maze of lenders, different products and finding the finance that enables your project to be finished that can seem impossible. Many new lenders have entered the market since the Credit Crunch which has increased competition and resulted in various pricing structures.

I get to chat with many readers about their development projects, but the simple fact is that unless you do it day in day out, which I don’t, it is impossible to know which lenders have funds to lend, and on what type of projects and industry sectors they want to lend on.

I know the basics to ask, such as purchase price, planning permission, development cost, Gross development value, working capital, previous experience etc. This then gives a picture of whether a project is likely to be considered as viable for development finance, but is only really the first step on the ladder.

This is where my Colleague Cliff from Brooklands Commercial Finance comes in as he can navigate this maze of knowing which banks are lending. Cliff has established strong links with many lenders based on the quality of our introductions over many years and understands how to present robust propositions to lenders, each of whom have a specific target audience. This is the key to putting you, in front of the lender who is most likely to offer a finance package to support your project.

Cliff can help with:

  • Residential and commercial property development – rates from 4% over base
  • Structured loans from £75,000 to £25,000,000
  • Development projects throughout England, Scotland and Wales
  • Individuals, companies, partnerships
  • Terms from 1 month to 3 years
  • No exit fees
  • Flexible underwriting and the best deals
  • Unusual proposals
  • 90% property development loans available
  • Mezzanine finance and second charges
  • Joint venture funding
  • Guaranteed exit strategies
  • Residential, mixed use, leisure, health, offices, industrial, etc.
  • Conversions*

*There has been a relaxation in planning regulations in respect of office conversion to residential accommodation.

Brooklands Commercial Finance are Whole of Market Independent Commercial Brokers and if you would like to chat with Cliff please Click Here

or email info@property118.com

or call us on 01603 489118Development FinanceDevelopment Finance


How to help bring about changes to legislation post “Superstrike” Buy to Let News, Guest Articles, Guest Columns, Landlord Action, Landlord News, Latest Articles, Legal, Letting, Lettings & Management, Property Investment News, Property News, The GOOD Landlords Campaign, UK Property Forum for Buy to Let Landlords

One of the things that are uppermost in landlords’ minds at the moment is the concern that we are vulnerable to possible litigation following the “Superstrike” case. The degree of that vulnerability varies from landlord to landlord and of course some landlords are not at all clear where they stand.Mary Latham

All of the deposit protection schemes and large landlords associations are working behind the scenes to persuade DCLG to tweak legislation to prevent courts being overrun with cases from tenants who have not actually been deprived of their legal rights but have become aware of the loophole that Superstrike highlighted.  In other words they are not asking for a change in the law which would enable those landlords who do not/did not protect their tenants deposits (HA 2004 & Localism Act 2012) to get away with it.  What they are asking for is a change which prevents those landlords who believed that they were acting within the law from facing litigation from their past and present tenants. These are the landlords who do/did protect their tenants deposits and provided the tenant with the Deposit Protection Certificate and Prescribed Information for Tenants within 30 days of having received the deposit but who were unaware that they needed to provide the documents again, despite the deposit protection continuing and no new paperwork being issued, at the point at which the fixed term of the tenancy ended and a Statutory Periodic Tenancy began (HA 1988). There are also those landlords who have tenancies that began before the Deposit Protection legislation came into affect (HA 2004) and therefore did not protect their tenants deposits. These landlords were also unaware that if the tenancy became a Statutory Periodic Tenancy at the end of the fixed term after the law changed that they should have protected the deposit and served the documents on their tenants. This last point was the crux of the Superstrike case.

In addition to the concerns many of us have about the potential litigation (it has not yet been established that there is actually a threat beyond the circumstances of Superstrike) is the issue of not being able to regain Possession of properties using Section 21 (HA 1988)

In order to convince Government that this is a major problem in the PRS they need to be shown actual evidence and the only people who can give them that evidence is us (landlords and letting agents).  All of the organisations involved in the discussions have produced a short survey to gather the facts.

The combined results will be present to DCLG.

The survey will take just a few minutes of your time and will not ask you to identify yourself.

If you do not take the time and trouble to complete the survey we may lose the argument and fail to get the legislative changes that we all need. 

Please follow the link  below and do your part to bring about a solution for us all before the Courts are filled with cases brought by the “No Win No Fee” people that have sprung up to make easy money from landlords who have simply made a mistake and have not in any way deprived our tenants of their legal rights.

Please also send a link to this article to every landlord you know to make certain they aware of this very important survey.

Click this link >>> https://www.surveymonkey.com/s/NLASS

When I completed the survey I found that I needed to read it first then work out which category my deposits fell into before going back and completing it – which took less than 2 minutes. By doing the calculations for this survey I am now clear of where I stand with each of my tenancies.

This was a useful exercise and may help me going forward when the inevitable happens and a landlord is sued by a tenant for one of the possible scenario.

I think that you may find this helpful too.


Rent arrears stats are improving says the NLA Latest Articles, NLA - National Landlords Association, UK Property Forum for Buy to Let Landlords

According to the latest research from the National Landlords Association (NLA), incidences of arrears have fallen to their lowest level for over two years.

39 per cent of landlords have experienced instances of rental arrears in the last 12 months, down nine per cent year on year and back to levels previously seen in quarter one 2010.

Void periods in private-residential property have also fallen, down five per cent since last Quarter to 33 per cent, a low last seen in 2012.

At a regional level, voids are greatest in the North East of England where 60 per cent of landlords have experienced empty periods in the last three months and lowest in the South West of England where only 20 per cent of landlords have experienced voids over the same time frame.

The research results also established that seven in ten voids are unplanned. And landlords are covering the financial impact of voids using various means:

• 33 per cent of landlords cover the costs of a void period using rent from other properties

• 10 per cent of landlords cover the costs of a void period using their other income or salary

• Nine per cent of landlords cover the costs of a void period using funds from their savings

Carolyn Uphill, Chairman of the NLA, says:

“It is positive to see reductions in the instances of arrears and voids. This demonstrates that long term, enduring tenancies are on the rise as it is in every landlords’ business interest to maintain good, long lasting tenancies and avoid voids.

“However, it is worrying that void periods often come as a surprise to landlords. Whilst voids represent more of a problem in the North than in the South, where demand is far higher, it is imperative that empty properties are filled quickly, following any necessary maintenance and improvements.

“The NLA’s advice to landlords looking to minimise void periods is to talk openly with their tenants about their future plans. This will give the landlord some idea of when the property might next be empty and allow them to make any improvements and plan advertising activity in good time. It is also wise to budget for 11 months’ rent per year to avoid needing to find additional funds to cover outgoings if a void does arise.”


Property Forum and News website where UK landlords and letting agents share best practice