Written By Em

Em Morley

Landlords Invest in Property for the Long Term

Published On: September 23, 2010 at 4:33 pm

UK landlords invest in property for the long term and have been criticised lately, as many feel that they are benefiting from the housing crisis and the increasing number of people who now rely on the private rental sector.

This has led Labour party leader Ed Miliband to announce recently that if he is to win next year’s general election, his party will introduce a number of rent reforms, which place greater restrictions on landlords and provide more security to tenants.

Landlords Invest in Property for the Long Term

Despite this, a recent survey conducted by mortgage specialists Precise Mortgages has found that over a quarter (27%) of all landlords are far from being impulsive, and view their buy-to-let properties as long term investments.

Additionally, there has been an increase in accidental landlords; those who are letting properties due to various situations that are out of their control. This includes not being able to sell their home, or inheriting a property from a family member.

Alan Cleary, Managing Director of Precise Mortgages, discusses the report: “The rental sector appears to be thriving and presents buy-to-let landlords, whatever their genesis, significant opportunity. As a nation, we are renting longer and until much later in life; a demographic and social shift that breaks away from past realities. This is for a variety of reasons, not least that we tend to marry later or migrate across country for jobs and family life.

“This change calls into question the availability and quality of rental stock, and shines a spotlight on landlords. The research demonstrates, that contrary to popular believe that buy-to-let landlords are mere speculators, many landlords are in it for the long term. In order to respond to the changes, to support buy-to-let landlords and bring quality rental stock to market, the mortgage industry must work to develop a truly modern suite of products. Only then can we meet the need of emerging landlords.”¹

This study reveals that a large percentage of landlords are purchasing properties in order to provide a solid income, or a comfortable home for their retirement, which indicates that Labour’s plans for stricter restrictions on the private rental sector may put landlords off investing in more properties.

Despite there now being more mortgage and landlord insurance products designed for helping landlords protect their investments, tougher regulations could make this more difficult in the future.

¹http://www.justlandlords.co.uk/news/Landlords-are-in-it-for-the-Long-Haul-1803.html

Rent arrears top cause of repossessions

Published On: August 16, 2010 at 1:31 pm

Author: Em Morley

Categories: Landlord News

Tags: compounded by late rent payments,possession can be very costly for landlords,rent arrears to their landlord

Recent research from the National Landlords Association shows that almost half of repossessions from private landlords are due to rent arrears.

47% landlords questioned indicated that late or non-payments caused them to take action. The same figures show that around 20% of tenants were in rent arrears to their landlord during the second quarter of 2010.[1]

Over one-third of landlords said that they had not had to seek a premature end to a tenancy agreement. Of those that had, only 23% said that the reason was because of anti-social behaviour.[1]

Rent arrears top cause of repossessions

Where landlords had taken action to remove tenants, 57% left within three months, with 81% of cases settled within five months.

Costly

The chairman of the National Landlords Association, David Salisbury, said that the findings highlighted the potential costly process for landlords. Salisbury said, ‘Gaining possession can be very costly for landlords, especially when it is related to rental arrears. Many landlords have mortgages to pay on top of the expense of gaining possession. One-third of landlords have reported paying between £250 and £1,000 to have tenants removed. This amount is often compounded by late rent payments.’[1]

[1] http://www.landlords.org.uk/news-campaigns/news/rent-arrears-are-main-cause-possessions

New HSBC Mortgage is Popular

Published On: June 9, 2010 at 4:39 pm

Author: Em Morley

Categories: Finance News

Tags: hsbc rate matcher mortgage,rate matcher mortgage

The introduction of the new HSBC Rate Matcher mortgage is proving to be popular among consumers in the UK.

A survey from Fairinvestment.co.uk indicated that over a quarter of respondents said they would apply for the new mortgage deal.

Rate Matcher mortgage

The HSBC Rate Matcher mortgage is open to customers who have a fixed-rate mortgage deal that is due to expire before 30^th June. Available to HSBC customers since February, the deal is now open to everyone.

Non-existing HSBC customers can now take out the Rate Matcher mortgage for a set two-year period. Conditions however, are attached, including having a loan value of up to 80% and having to pay a fee of up to £5,000.[1]

Attractive

David Doulton, Director at Farinvestment.co.uk, said: “The HSBC Rate Matcher mortgage appears to be a really attractive deal for consumers. Many mortgage lenders have withdrawn deals or raised prices, so matching their current deal could offer homeowners a ray of hope.”[1]

However, less than complimentary results were also provided by the survey. 24% said that the fee makes the Rate Matcher mortgage less competitive. 18 even described the whole deal as a fabricated publicity stunt.[1]

More pleasingly, 14% said that the launch of the deal could assist the overall mortgage market, by inspiring other lenders to provide similar deals. [1]

Doulton warns: “Many people will find themselves unable to apply for the HSBC deal if they do not have a deposit of 20% and high fees could make the offer far less competitive than it originally sounds.”

New HSBC Mortgage is Popular

He suggests: “Anyone looking for a mortgage deal, whether first time buyers or existing homeowners, should consider all the available options rather than opting for the first deal that jumps out at them. Although the rate is important, other factors, such as the arrangement fee, should not be overlooked.”[1]

[1] http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=9478&cat=2-0-0

Fears over Impact of Universal Credit Scheme

Published On: December 27, 2009 at 2:13 pm

Author: Em Morley

Categories: Finance News

Tags: Universal credit scheme

Fears over Impact of Universal Credit Scheme

The elimination of direct housing benefit payments to landlords will leave some homeless, and cause problems with rent collection to landlords, it is apprehended.

The Government’s new Universal Credit scheme will make payments direct to tenants. Currently, the housing benefit is paid to the landlord, meaning that they are certain to receive their rent payments and tenants know that they will not fall into arrears. The new scheme risks rental arrears and homelessness.

The Northern Ireland Assembly Member and Social Democratic and Labour Party Social Development spokesperson has requested that direct payment to landlords remains in Northern Ireland. They say: “The introduction of Universal Credit will cause many problems, not only for the vulnerable people whose welfare is being attacked but also for advice workers, charities, Government agencies, and significantly, providers of housing.”¹

The Social Market Foundation has also voiced similar worries. They conducted research into the problem among low-income households, finding that the majority are opposed to the new scheme, and would prefer their housing benefit to be paid to their landlord.

The Foundation want the Government to provide an online budgeting tool for households affected by the scheme, to help them meet their rent payments.

Universal Credit is scheduled for introduction to the system in October 2013.

¹http://www.justlandlords.co.uk/news/Concern-over-Impact-of-Universal-Credit-1430.html

Universal credit scheme concerns

Published On: December 25, 2009 at 10:12 am

Author: Em Morley

Categories: Finance News

Tags: Government universal credit UK,Universal Credit

Plans under the Government’s new Universal Credit scheme have caused concern over potential rent arrears and even homelessness.

New rules

The new proposals will see housing benefit payments paid directly to tenants and not landlords. Currently, this payment is given straight to landlords, ensuring rent is paid promptly and reducing the chance of arrears. It is feared that by taking the direct payment away, more tenants run the risk of falling behind with their fees.

Northern Ireland

A Social Development Spokesman, who is also a member of the Northern Ireland Assembly, called for payment of housing benefit directly to landlords to be retained in Northern Ireland. The spokesman said, ‘the introduction of Universal Credit will cause many problems, not only for the vulnerable people whose welfare is being attacked but also for advice workers, charities, government agencies and significantly providers of housing.’[1]

Universal credit scheme concerns

Concern

The Social Market Foundation has expressed similar concerns. Research from the organisation suggests that a number of low-income households are opposed to the action. Instead, they want the existing payments direct to landlords to continue. In addition, the foundation called for an online-budgeting tool to be set-up in order to assist households affected to keep up to date with payments.

[1] http://www.justlandlords.co.uk/news/Concern-over-Impact-of-Universal-Credit-1431.html

Landlords Cautioned over Drugs

Published On: August 6, 2009 at 2:12 pm

Author: Em Morley

Categories: Landlord News

Tags: landlords cautioned over drugs

Landlords Cautioned over Drugs

Investors with landlord insurance should be wary of their properties being used as cannabis factories.

Landlords cautioned over drugs by solicitors, Williamson and Soden and have implied that rental housing is increasingly being used to generate drugs.

They have also advised landlords on how to treat this situation, which could result in properties losing their value; tenants will alter the house to benefit their drug production.

Property expert at Williamson and Soden, Louisa Jakeman, says: “Be wary of any tenant who offers to pay a large amount of rent, say for six months or 12 months, in advance.

“Many factory operators make these kinds of offers which can seem very attractive to the landlord. Do not be seduced by these offers.”

She also adds: “Be very wary of the tenants who will never allow access; the tenants may offer various excuses as to why an appointment cannot be offered or kept.”¹

In 2009, West Midlands Police spent £500,000 attacking cannabis factories in residential properties.

¹http://www.justlandlords.co.uk/news/Landlords-warned-over-cannabis-factories-19298617.html