While fully acknowledging that I am not a financial specialist I do know the residential property market. I have a proven track record of making money from letting property for 40 years. In my first book, which I released just a few months ago, I venture to give my opinion of the criteria I would apply if I were lending my money to a person who wanted to buy property to let.
- Does this person know the law and regulation related to the business, has he taken the trouble to become accredited through an education based scheme.
- Has this person got sufficient funds, borrowed or otherwise, to bring the property up to the Decent Homes Standard, or higher if the market demands, and to meet all the legal requirements before the property is let
- Has this person done the homework, is there a market for the property he is proposing to let in the area where he is proposing to buy.
- Is there any regulation in place that the landlord is not aware of, Article 4 Directions, Selective Licensing, planning controls, lease restrictions etc
- Will the property return a positive cash flow that will pay the loan, keep the property up to standard, pay Agency fees (if the property is going to be managed by an Agent), Pay on-going letting fees/marketing costs and leave a margin for rent arrears and the cost of removing a tenant if necessary
- Does this person know how to legally remove an undesirable tenant and the length of time this might take and has he got the financial safety net to cover the loss of income during this period
- Is this person a member of an organisation that will supply the correct documents and support to sustain the tenancy
- Has this person got a system in place to ensure that he remains legally complaint at all times thus avoiding expensive litigation which may result in large fines, rent repayment orders for up to one years’ rent or up to 4 times the tenants deposit etc.
- Has the person got Rent Guarantee Insurance, Public Liability Insurance, Landlord Property Insurance and (if the property is furnished) contents insurance
- Does this person intend to manage the property himself or does he intend to employ a Letting Agent. If he does intend to employ a Letting Agent how will he choose a good Agent, who has Client Money Protection, and is he aware that he cannot devolve his legal responsibilities to that Agent
- Has this person made provision to re-pay an interest only loan should the property value decrease
Are Banks aware of these important issues or are they making a risk assessment purely on FCA guidance and criteria without taking in to consideration the “real” risks of investing in property to let?
Do you agree with me or am I missing the point?
Follow me on Twitter@landlordtweets
My book, where I warn about the storm clouds that are gathering for landlords is here >>>http://www.amazon.co.uk/dp/1484855337
Common sense tenant referencing was pretty much the only option available when I first became a landlord and started letting property in the late 1980’s.
In this article I am going to explain what my family do to find the next perfect tenant, right from the day an existing tenant let’s us know that they want to move out. More often than not these days, tenants think they can serve notice with just a phone call, email, facebook or text message – more about that later. Continue reading Tenant Referencing Using Common Sense
Referencing services for landlords come in several varieties and with numerous options and price structures.
You can get anything from a credit check for a fiver through to full referencing which guarantees rent on the due date if your prospective tenants and guarantors are considered to be a good risk.
The larger referencing companies have been around for several decades and are used by literally thousands of letting agents across the UK. They have, therefore, also developed huge databases over the years of bad payers, anti social tenants and tenants who have caused wilful damage to landlords properties.
If you are offered referencing for under £10, chances are that you will get what you pay for which at best could be described as an indicative report only. A company which previously provided lifestyle referencing free of charge now only offer this service when combined with a £4.99 credit check for example.
The advice from Property118 is to pay slightly extra and buy the real thing. If you are heavily reliant on your rental income and could not afford the legal costs associated with evicting a bad tenant we also recommend you to purchase rent guarantee insurance. The entire package is generally available for less than £100 a year. Do check the small print on RGI policies though as your claim might not be valid unless you follow time sensitive claims processes.
As of next month (August 2013), a new service will be launched into the market for complete peace of mind. It is a rent collection product with a difference; in that rent is paid to the landlord on the due date whether it has been collected or not. The company offering the product is new to the market but the scheme is underwritten by FCC Paragon, established in 1996 and regarded by many in the PRS as one of the UK’s most established referencing companies. The legal services for possession are outsourced to Landlord Action. Rent continues to be paid on the due date until such time as possession is recovered, all at the expense of the underwriters. This scheme will be competitively priced at just 5% of rental income when it is launched towards the end of August 2013. It’s an ideal half way house in terms of pricing between self management and full property management, however, the major benefit is the certainty of cashflow. For more details see LettingAgentsOnline.co.uk
I have had an enquiry in respect of diplomat tenants.
Where I would stand if I had rent guarantee insurance and they were to default on their rent or breached their contract?
Would the same rules apply to evicting them or would they have diplomatic immunity?
My concern is whether my rent guarantee insurance would be worth the paper it was written on as I assume they would pay out in respect of loss of rent based on the belief that they could proceed to evict the tenant.
I am a non-exec Director of Letting Supermarket, an ARLA member letting agency which we have been recommending to Property118 readers since the end of 2012.
The feedback received from landlords we’ve referred has been superb with savings of 50% or more being reported when compared to other ARLA member letting agents. Continue reading Letting Supermarket provides massive cost saving opportunities for private landlords
Tenants are now staying in one property for a record duration of 20 months, according to the latest research from the Association of Residential Letting Agents (ARLA).
This figure is up year-on-year from an average of 19 months in Q1 2012, indicating that tenants are starting to take a longer-term view of renting a property. It is also the joint highest tenancy length recorded by ARLA. Continue reading ARLA figures suggest lack of housing supply taking firm hold
How difficult can it be to advertise property to let on all the major rental portals, reference the tenants properly and guarantee the rent and legal expenses in one package with money back guarantees?
It shouldn’t be difficult should it?
Continue reading Advertise property to let, reference tenants, guarantee rent – one package
A growing number of Landlords are falling for a “Guaranteed Rent” scam which enables a landlord or an agent to sublet a property.
There are several examples of how this works, below is a relatively “clean” one, I will share a much nastier example of how landlords are being stung as comments begin to appear in the forum thread below this article:- Continue reading Guaranteed Rent – A Warning for Landlords
Increasing rents, a difficult economy and job losses mean a growing number of tenants are struggling to pay their rent. When rental income is relied upon to cover a buy-to-let mortgage, arrears can be a very real risk and it doesn’t look like the economy is going to improve significantly any time soon.
As rents typically increase towards the summer months, we could see tenant’s budgets being squeezed, leading to some unwanted arrears. The question is, if you’re a buy to let landlord, how can you protect yourself against every landlord’s worst nightmare: a tenant who can’t, or won’t, pay the rent? Continue reading Are Rent Guarantees Worth Buying?
Scottish landlords want at least three things from their tenants:-
– Rent paid on time
– Respect the property
– Respect the neighbours
There are many ways to find these perfect tenants and to insure against the risks of any problems. The cost of full property management in Scotland has been increasing as agents are having to pass on costs landlords previously paid by tenants. Continue reading Lettings package exclusively for Scottish Landlords