Tag Archives: “War Chest”

Barry’s story – it could have been you! Financial Advice, Landlord News, Latest Articles, Property News

Barry’s story was written by the Mark Alexander back in December 2010. It has since been updated and re-published several times. The dates, times and people are fictional but the story is based on real life events.

It’s a modern update of the classic “A Widow’s story”, this time written as a cautionary tale for landlords and their families.

Barry is 53 years old and married to Sharon. They have three teenage children; twin girls aged 15 and a 13 year old son. Barry worked as a self employed salesman in the plant hire business. Sharon had a part time secretarial job in a local school.

Barry and Sharon purchased their first investment property in 1996.

As property values have risen they have continuously remortgaged and used a proportion of the equity released as deposits to purchase additional rental properties. They also saved a proportion of the equity released for a rainy day. To accelerate the growth of their portfolio Barry and Sharon raised extra cash for deposits by remortgaging their home. The profits from Barry’s plant hire business covered the family’s commitments comfortably.

They had accumulated a portfolio of 23 properties with a combined valuation of £1,650,000, against which they had mortgages of £1,400,000.  The portfolio produces rental income of £87,000 per annum. Their rainy day fund amounted to just over £64,000. By having all of the above in place you might be forgiven for thinking that they had set themselves up with a very safe future.

On Sunday 21st December Barry had a bad day. He was on the way home that evening having just been out to fix a tenants leaking shower tray when the traffic on the M6 came to a grinding halt. Barry managed to stop his car, avoiding the lorry in front of him, but the car behind him ploughed into the back of him, wedging his car under the back of the lorry.

The emergency services managed to free Barry from the wreck and his only damage was shock, whiplash and major bruising to his legs. However, two days later Barry collapsed whilst out shopping for last minute Christmas presents. He was rushed to hospital where it was discovered that a blood clot in Barry’s leg had passed to his brain. Barry had suffered a major stroke.

He lost his speech and most of the use of one side of his body. The family were in tatters. Sharon had to give up work to care for him.

Up until having a stroke Barry had managed the property portfolio and taken care of most of the maintenance himself. Could Sharon care for her husband, her family and the management and maintenance of the property portfolio too?

They considered putting the properties on the market but soon realised that after deducting selling costs and CGT there wouldn’t be much money left over. They would also lose their income and they would be leaving their tenants in a difficult predicament too. Sharon has had to employ a lettings agent to manage the portfolio. Since then it has cost the family an average circa £3,000 a month to pay for ongoing maintenance and management.

Fortunately there has been some good news, at least financially. First, low interest rates have meant that Barry and Sharon’s mortgages have got much cheaper than when they started their property rental business. Many of their mortgages have reverted to tracker products due to their fixed rates coming to an end. They are focussing on Barry’s recovery. What will happen when interest rates go back up again though? How will the restrictions on finance cost relief for individual landlords affect them?

The real saviour for the family has been insurance. Fortunately, Barry and Sharon were astute enough to insure against these eventualities. They took out life assurance policies that pay out a regular monthly income right up to Barry’s 65th birthday. These policies were written on the basis that they also pay out in the event of a critical illness. The family are therefore confident that these provisions will see them through these troubled times and out the other side. They will then revert to plan A, which was to live off surplus rental income over and above the mortgage payments on their portfolio or to sell the properties and live off their gains.

What insurance provisions have you made for your family?

How are you investing the windfall of increased cashflow that record low interest rates have produced for your family?

Have you made similar provisions to Barry and Sharon?  If you haven’t it may not be too late, we want to help.  If you have already taken advice and put insurances into place we would like to introduce you to one of our recommended advisers to review your policies and ensure they are competitive. Most important of all, to ensure that the right person gets the right money at the right time.

Property Values vs Interest Rates Buy to Let News, Cautionary Tales, Fun Stuff, Latest Articles, Property118 News, Question of the Week, UK Property Forum for Buy to Let Landlords

A question that came up in conversation this evening whilst in the car on the way back from my fiancée’s offices was “which will rise first, interest rates or property values?” Have you ever asked yourself this question?

I know what you are probably thinking, “haven’t you got anything better to talk to your fiancée about”, right? Well I guess that’s what happens when you mix an accountant with a Masters Degree in international business finance and economics with a landlord, economist and former finance broker LOL !!! Seriously though, give it a go at the pub or over dinner, ask the question, it’s an interesting debate for anybody with any interest in property, whether they are landlords or not. Continue reading Property Values vs Interest Rates

What does the Future Hold for Buy to Let? Guest Columns, Property Investment News, Property Investment Strategies

Why Property?

Over the last 30 years UK property prices have achieved average compound growth of approximately 10% each year for all areas and all dwellings. Property investment is not a quick get rich scheme but most futures are made with time, not timing! It is a manageable asset which you can control; you can see it and touch it. With property you can look forward to both positive cash flow and capital growth. Continue reading What does the Future Hold for Buy to Let?

MPs urged to vote for measures to curb landlords Buy to Let News, Latest Articles, Property Market News

House with for rent sign

Government set to "not have time" for Landlord regulations

A proposal urging MPs to vote for tighter regulation of private landlords is likely to be booted out of Parliament due to lack of time.

The private member’s bill, promoted by the Labour MP for Sedgefield Phillip Wilson won 10 minutes of time, but is unlikely to win any further support. Continue reading MPs urged to vote for measures to curb landlords

HMRC starts criminal cases against tax cheats Latest Articles, Property Market News

HM Revenue and Customs is planning to flood the courts with criminal and civil cases against tax cheats after the first round of amnesties has closed.

The tax man has started 16 criminal investigations for tax evasion – six involving the medical profession and ten relating to failure to declare interest on offshore bank accounts.

Hundreds of civil cases to recover tax are in the pipeline. Continue reading HMRC starts criminal cases against tax cheats

Buy to let lending restrictions hamper landlord borrowing. However, quality funding lines are well and truly open to landlords with substantial cash or equity reserves. Learn how to find out who’s lending but not advertising the fact Latest Articles

The buy to let mortgage market is in a state of flux as key lenders have changed their criteria over recent weeks.

This weekend, Lloyds Bank effectively shut up shop to portfolio landlords with more than three properties.

From close of business Friday (September 24), the bank reshuffled buy to let mortgage products and lending criteria for wholly owned brands Cheltenham & Gloucester (C&G) and BM Solutions. Continue reading Buy to let lending restrictions hamper landlord borrowing. However, quality funding lines are well and truly open to landlords with substantial cash or equity reserves. Learn how to find out who’s lending but not advertising the fact

Who really cares if house prices fall? Are falling prices an opportunity or a threat and what actions should you be taking right now? Latest Articles, Property Sales & Sourcing

Switch on the TV or radio news, open the paper and log in to the internet and just about everyone is lamenting the price of a home.

First time buyers can’t afford to step on to the property ladder, families can’t afford to move and banks aren’t lending. Continue reading Who really cares if house prices fall? Are falling prices an opportunity or a threat and what actions should you be taking right now?

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