Written By Em

Em Morley

Average Buy-to-Let Loan

Published On: December 19, 2013 at 2:48 pm

Latest research from the National Landlords Association (NLA) reveals that the average buy-to-let loan applied for in the UK is £149,000.

Average Buy-to-Let Loan

The range of buy-to-let loan values does differ drastically around the UK, as one third (33%) of landlords borrow between £50k-£100k to fund their house buying.

Additionally, 27% of landlords borrow between £100k-£149,999. 13% borrow between £150k-£199,999. 5% borrow between £200k-£349,999, and 12% borrow over £250k.

Around the UK, landlords in central London borrow the highest amount, at about £228,000, a difference of £141,000 compared to the average landlord in Scotland, borrows under £87,000.

Full regional borrowings1

Region	Buy-to-let loans
Central London	£227,813
Outer London	£198,790
South West	£158,807
South East (excluding London)	£152,777
West Midlands	£149,333
East of England	£125,000
North West	£117,647
Wales	£112,500
East Midlands	£106,373
Yorkshire & Humberside	£103,431
North East	£101,250
Scotland	£86,538

Chairman of the NLA, Carolyn Uphill, says: “While these findings indicate that the current mortgage finance market is healthy, it shows that landlords, and their finance needs, are far from homogenous.

“Like any small enterprise, private landlords are always looking for an opportunity to invest and grow and this is only possible if their individual circumstances are taken into account by lenders.

“In order to support the provision of homes where and when they are needed, landlords need access to tailored, affordable finance, which makes investment viable.

“Landlords who are looking for a new property should contact NLA Mortgages, where they will have access to a wide range of products not available in the general marketplace.

“NLA Mortgages features a free online search which will instantly check the best deals available and includes a handy rental calculator to help landlords find products that fit their expected rental income.”1

¹http://www.landlords.org.uk/news-campaigns/news/average-buy-let-loan-£149k

Rental income risks

Published On: December 18, 2013 at 12:57 pm

Author: Em Morley

Categories: Finance News

Tags: loss of rent cover,rent arrears

Landlords are being urged to ensure they have appropriate cover to protect themselves in the event of tenants not paying their rent.

Insufficient cover

The National Landlords Association (NLA) has issued the call following their survey of 1,019 landlords. Results of the survey show that 38% of landlords have experienced rent arrears during the past 12 months. On average, non-paying tenants owed landlords £1,943.[1]

Surprisingly, the findings show that a huge 89% of landlords had no insurance policy that would cover them in the event of rent arrears. Only 23% of landlords questioned said that they take out loss of rent cover.[1]

Rental income risks

These statistics have led for the NLA to encourage landlords to take out a rent arrears insurance policy. Many of these policies cover landlords not only against the non-payment of rent but also any legal fees necessary to recover monies.

Be Prepared

Chairman of the NLA, Carolyn Uphill urged landlords to take out sufficient cover to help themselves in the future. Uphill remarked that “most landlords will be affected by rent arrears at some point” due to “many different reasons why tenants could find themselves with difficulties over meeting their rental obligations.”[1]

She went on to say: “It’s important to be prepared as the amount of money lost through arrears can roll into tens of thousands of pounds.”[1] Uphill then pointed out that the act of recovering unpaid monies as “a very stressful and costly process.”[1]

As a final comment, Uphill said that she would “advise all landlords to take out specialist rental arrears cover” to give “peace of mind.” She says that taking out this type of cover can also guarantee “legal advice and specialist lawyers to assist in the recovery of any lost monies.”[1]

[1] http://www.landlords.org.uk/news-campaigns/news/dont-take-risk-rental-income-warns-nla

Don’t take the risk with rental income

Published On: December 18, 2013 at 9:51 am

Author: Em Morley

Categories: Landlord News

Tags: rent guarantee insurance,rental income risk,tenants not paying rent

With rent arrears on the rise, the National Landlords Association has issued a warning for landlords. The warning is for landlords to ensure that they are suitably covered in the event of their tenants not paying rent.

The reminder for landlords comes after research from the NLA suggests that nearly four in ten landlords have been the victims of rent arrears within the last year. That accounted for an average of £1,943 being owed by tenants.[1]

In addition, the findings show a staggering 89% of landlords do not take out any kind of insurance policy to cover themselves in the event of experiencing rent arrears. These policies do, in general, cover landlords against lack of rent payment and for legal fees required to chase unpaid money.

Only 23% of landlords said they were in receipt of rent cover.[1]

Don’t take the risk with rental income

Stressful and costly

The chairman of the NLA, Carolyn Uphill, emphasised the need for landlords to be vigilant. She said, ‘Most landlords will be affected by rent arrears at some point and there are many different reasons why tenants could find themselves with difficulties over meeting their rental obligations.

“It’s important to be prepared as the amount of money lost through arrears can roll into tens of thousands of pounds in the worst cases. It can also be a very stressful and costly process to regain possession and claim any unpaid monies through the courts.[2]”

Rising problem

Figures released from financial capability organisation The Money Charity indicate the growing problem of rent arrears and underline the need for vigilance from landlords. The latest debt recordings released from the charity suggests that there has been a rise in landlords claiming against their tenants in courtrooms throughout England and Wales.

CEO of The Money Charity, Michelle Highman, said that, ‘many people feel trapped in the rental sector,’ due to the, ‘high level of rents they are forced to pay.[2]’ She went onto say that the, ‘increasing numbers are unable to even sustain their rental payments is particularly worrying.[2]”

[1] http://www.landlords.org.uk/news-campaigns/news/dont-take-risk-rental-income-warns-nla

[2] http://www.landlordtoday.co.uk/news_features/%E2%80%9CDon%E2%80%99t-take-the-risk-with-rental-income%E2%80%9D-warns-NLA

Landlords Concerned over Immigration Bill

Published On: December 18, 2013 at 9:40 am

Author: Em Morley

Categories: Landlord News

Tags: Immigration Bill,Immigration Bill responsibilities

There is unease over the potential responsibilities stated in the Immigration Bill for landlords, according to the Association of Residential Letting Agents (ARLA).

The recent Immigration Bill plans to make landlords responsible for checking the immigration status of potential tenants. ARLA’s research reveals that more than half (55.2%) of landlords do not feel confident conducting the checks, and one in five (21.8%) were not sure if they would be able to make the checks. Just 22.9% said that they would feel confidence in their ability in making the checks.¹

Landlords Concerned over Immigration Bill

These worries appear, despite the majority of landlords being extremely experienced, and having long-term investments in the market. Within ARLA’s most recent report, they found that the average landlord is now 54-years-old, and owns an average of around nine properties (8.7). This is the highest number since 2004, when comparative ARLA records started.1

Landlords are also found to be keeping their assets for a record length of time. The average landlord believes that the life expectancy of their investment is 19.9 years, longer that the 2012 peak of 19.8.1

Managing Director of ARLA, Ian Potter, says: “Checking the immigration status of prospective tenants is a sensitive and potentially lengthy task. It’s perhaps not surprising that even experienced landlords are concerned about exercising these new duties.

“While landlords recognise a degree of responsibility for this issue, the sheer variety of documentation alone adds a new layer of complexity to the whole process. It is essential that landlords collaborate with the Government where possible to ensure the final Immigration Bill is workable when passed.

“Our research shows the majority of landlords have invested for the long haul, and are therefore well aware of their existing responsibilities. However, I would urge anyone who is seeking expert advice on a new tenancy, is re-letting a property, or is entering the sector for the first time to consult with an ARLA agent.

“All ARLA licensed agents must adhere to a strict code of conduct, as well as offering client money protection and redress schemes, which protect all involved parties if things should go wrong.”1

¹http://www.landlordtoday.co.uk/news_features/Landlords-concerned-about-proposed-Immigration-Bill-responsibilities

Landlords use Bridging Loans to Raise Money

Published On: December 14, 2013 at 11:15 am

Author: Em Morley

Categories: Landlord News

Tags: bridging loans

Buying a house is becoming more difficult for everybody, says the International Monetary Fund (IMF) stating that the housing market will get worse before it recovers.

This is down to big banks trying to recover from mounts of debt, the housing bubble, and a decrease in competition in the mortgage industry.

This is not only affecting would-be homeowners, but also the buy-to-let sector, where mortgages are becoming stricter. Normally, rental income must be at least 125% of the mortgage repayments, and a deposit of about 40% is needed.

Increasing rental returns have, however, created more interest in buying to let. There is strong demand from tenants for rental accommodation, as many cannot afford to buy their own homes.

Landlords use Bridging Loans to Raise Money

Landlords are now able to add considerable numbers to their property portfolios with bridging loans, which allow investors to borrow on the equity contained within their assets.

Bridging loans are short-term lends that are secured on investments that you own, for example, a property. In the past, they have been useful for people who are in a property chain, but needed when the chain fails or is going to take a long time. The loan allows you to continue with the transaction and obliges selling the property at a later date, and paying back the money.

Because the bridging finance market is growing, loans are now available on other assets. The money has been used to buy yachts, pay outstanding corporate tax, and business development finance.

They are ideal for the buy-to-let market in terms of expanding landlords’ portfolios, by finding good deals in property auctions or quick sales.

A bridging loan will give investors the advantage of not being part of a buyer chain. A transaction should be able to be finalised very quickly, and a discount may be able to be negotiated.

The promptness of transactions is one of the top benefits, as they are often completed within a week. This is helpful when a property is up at auction or when it is repossessed.

Interest can also rollover to the end of the loan for a greater repayment. This is useful if a property will not be making any money whilst in renovated, for example. Once refurbishment is complete, the loan can be paid back once the property is sold, or once tenants have moved in.

Landlords can sometimes need to redevelop or convert a property for the rental market, but cannot qualify for buy-to-let lending until there is a full rental valuation. Bridging loans allow an investor to fund the renovation stage.

Loan to value (LTV) rates can be increased by combining equity in other assets, and loans can be provided to cover maintenance, in addition to the value of the property.

However, bridging loans aren’t a long-term solution, as they must have an appropriate exit strategy in place. Buy-to-let is still the best option for buying properties intended for the rental market. Although bridging finance does offer solutions for landlords planning to refurbish.

Chancellor controversially cut tax breaks

Published On: December 13, 2013 at 10:52 am

Author: Em Morley

Categories: Landlord News

Tags: tax cuts

November’s Autumn statement saw the Chancellor controversially cut tax breaks for so called ‘accidental’ landlords.

In the statement. Mr Osborne announced that the length of private residence relief (PRR) is going to be halved to just 18 months from April 2014. Opponents to the scheme have warned that this will leave accidental landlords facing a vast charge. Experts are also gravely concerned that the move has come at the wrong time and could damage the small signs of market recovery.

Warning

One of the opponents of the change is The Association of Taxation Technicians, who themselves question the timing of the reforms. The ATT warn that people who relocate and fail to sell their old house within 18 months is just one example a group that could expect tax charges. The charges would still apply even if they are renting as opposed to having purchased a new home.

The disabled or people being looked after in care-homes with no other property on which they are claiming PRR will not have their final eligibility period halved. While the ATT welcome the break for these groups, they feel that other taxpayers need to undergo special exemption consideration.

Chancellor controversially cut tax breaks

Wrong timing

President of the ATT Yvette Nunn was disappointed with the content of Osborne’s statement. Nunn said that, ‘When the state of the property market was poor and many people were experiencing difficulty in selling their property, the period qualifying for exemption after vacating the property was increased to 36 months.’[1]

‘To halve the exemption period now when the property market is still far from buoyant across much of the country could well leave individuals in exactly the same difficulties.’[1]

Nunn was also concerned that the, ‘reduction in the exemption period will have a damaging effect upon the rate of sales within the U.K property market.’ [1]

Despite her challenges to the bill, Nunn agreed that it would eradicate individuals with many properties using different primary residences for tax evasion purposes. She also called the Government’s relaxation of the rules for disabled and cared-for persons, ‘sensible and welcome.’ [1]

[1] http://www.landlordtoday.co.uk/news_features/Tax-experts-question-scrapping-tax-break-for-accidental-landlords