UK residential letting is ‘a growth industry’

Posted on January 25, 2012 by admin

Making a UK property investment could prove a lucrative move, providing you know how to choose and manage the premises correctly.

That is according to Tom Entwistle, editor and founder at online community and information portal LandlordZONE.co.uk, who sees the buy-to-let sector in the UK as continuing to see growth over the coming years.

"Residential letting is a growth industry in the UK and is likely to be so for many years to come," he said.

However, would-be landlords will need to do their research and think carefully about how to manage their buy-to-let properties if they are to profit from the lettings market.

"There is the opportunity at the moment for good income returns for those able to buy the right properties in the right locations for the right prices, providing they know how to manage them well," said the expert.

With so much to consider before buying and renting out a property, first-time landlords may benefit from the help of professional residential lettings agents and landlord support service businesses like Homecheck UK.

"Letting is a growing market and new landlords are entering the field all the time, so they need all the help they can get – letting out a property yourself is a huge learning curve," commented Mr Entwistle.

Meanwhile, he argued that the government should do more to help the lettings industry by removing the burden of new regulation.

The government should "enforce the laws that already exist instead of dreaming up more and more regulations", he argued, adding: "Good landlords (by far the majority) follow the rules."

His comments come the same time as the release of new figures from the Resolution Foundation which reveal that there has been a surge in the number of young people turning to rented accommodation rather than buying a house of their own in recent years.

The proportion of low and middle income earners aged under 35 and renting has more than tripled from 14 per cent in the late 1980s to 47 per cent now, the foundation said.

Landlords urged to check tenant references as arrears rise

Posted on January 25, 2012 by admin

Landlords should make use of the property management services offered by residential lettings agents or professional property managment company to help avoid taking on tenants that fall into arrears.

That is according to the Association of Residential Letting Agents (ARLA) which has noted a rise in tenant arrears rates in recent months.

A survey of member agents by the organisation found that, in the final quarter of 2011, over 39.2 per cent reported an increase in tenants struggling to pay their rent, up from 36.7 per cent the previous quarter.

ARLA speculated that this rise could be down to the effects of falling household income coupled with increased job uncertainty in the current economic environment.

"It could be that increasing rental arrears is a sign that the wider economic malaise is having a tangible impact on personal finance – some consumers may have reached the limit of their access to finance, while others may be cutting back as many commentators have predicted," said the association's president Tim Hyatt.

As such, it could be particularly important under the present circumstances that landlords use tenant referencing services to help them avoid taking on those who are unlikely to be able to meet rent payments, something residential lettings agents could help them with.

"In tough economic conditions both landlords and tenants can find themselves struggling to keep up with rent or mortgage payments," said Mr Hyatt.

"It is therefore more critical than ever to take references and conduct thorough research before signing a tenancy agreement. Seeking advice from a professional, licensed letting agent is the best way to ensure tenants and landlords' rights are protected."

Meanwhile, the ARLA survey also revealed that an average 34 new tenancies were signed per ARLA member office in the fourth quarter, the same figure as in the preceding three months.

To discuss your tenant referencing requirements and letting industry best practice, contact your Homecheck rental property inventory clerk now. We are also landlords, so know exactly what you need to look for in a potential tentant, and how to guide you to carry out comprehensive checks.

Rental Property Market 2011 Review

Posted on January 18, 2012 by admin

2011

2011 was a mixed bag for the residential property investor. Here is our take on last year:

Rental Demand

Lack of mortgages drove buyers in to rental properties, the collective attitude became more accepting to renting and so demand increased, dramatically in our case. As we look back comparing 2010 with 2011 our enquiries for invnetory services for renting properties doubled. As the rent increased over 2011 many landlords who had aggressively expanded before the credit crunch through high gearing were able to breath a sigh of relief as they moved in to positive cashflow for the first time since 2008. Demand reamins high, but as with all things there is a double edged sword – there remains a lot of choice of properties for tenants. Many of today's landlords are reluctant landlords, they would prefer to sell but are unable to – so opt to let for the short to medium term instead. This has the effect of tenants being spoilt for choice. The solution? Make sure your property is in tip top condition. Be flexible on the criteria you apply to your tenants (e.g. reconsider accepting pets etc). Beflexible on the rent – tenants now make offers on rental values – be prepared to negotiate. Offer your tenant a quality service by having an inventory and check in service from an independant inventory clerk.

House Values

Regions varied from +1.4 in London to -5.8 in the North East. A double edged sword; good news for the landlord with finance wanting to expand, bad for any of us with already high loan to value mortgages. Not such good growth elsewhere, with most rental values levelling out. The good news though, is that the average tenancy term is now 16 months, so tenants are staying put for longer- cutting down on your void periods and marketing costs

Mortgage Lending

The amount of mortgage lending in 2010 was £136bn. The expected amount in 2011 when all figures are in; £136 to £138bn. A dramatic decrease from the high of £363bn in 2007 yet there is something to feel good about – this is the first time since 2007 that lending has not gone down!

Are you looking forward to 2012?

We are! Yes, there will be challenges ahead, mortgages finance still looks hard to get, values are still shaky and unemployment could affect rents but the wealth creation opportunities, we believe are abundant. This year in our rental property blog we will be explaining what these opportunities are and how to take advantage of them while making sure you know of the threats and how to avoid them.

Let's make it a prosperous 2012

Lenders can make it easier for landlords to let to good tenants for longer

Posted on January 16, 2012 by admin

Buy-to-let mortgage lenders are preventing landlords from renting out properties on longer leases, it has been claimed.

According to David Lawrenson, founder of private rent consultant lettingfocus.com, encouraging landlords and residential lettings agents to offer longer leases to good tenants would help alleviate the pressure of rising rents on tenants' finances.

Writing in an article for the Guardian, he explained: "Despite popular perceptions, our findings are that the majority of landlords actually want to hold on to good tenants for a long time – even if it means they have to accept less than market rent."

However, Mr Lawrenson claimed that mortgage companies are preventing more landlords from doing this as they often stipulate a maximum term for rental agreements of a year as part of their buy-to-let lending criteria.

"Our work with lenders has challenged the logic of this and I'm sure we will see longer-term assured shorthold tenancies become the norm in the future," he said.

Meanwhile, lenders are also partially to blame for landlords being less willing to take on tenants who receive housing benefits.

"Under buy-to-let mortgage conditions some lenders scandalously preclude a landlord from letting to 'non working' people. Only when these differences are removed will landlords be really willing to let to tenants who are dependent on Local Housing Allowance (LHA)," he explained.

However, Mr Lawrenson also noted that there are many other barriers to landlords offering tenancy agreements to those on housing benefits that need to be addressed.

Taking on those who receive LHA is seen as a "huge extra hassle for landlords", he said.

"In a private let, a landlord is paid rent in advance and receives a deposit they can bank and earn interest on. Plus, the process requires a lot less paperwork. Rent payments are less likely to stop without warning simply because the tenant's eligibility for support has changed."

Homecheck UK's rental property inventory clerks have seen some significant changes in the way LHA payments are calculated and paid, with medians reducing to the 50th percentile of the market average and single room allowance reductions. Many of our landlord and letting agent clients confirm that they are less inclined to rent their buy to let property to a non-working tenant due to the issues with LHA payments made direct to tenants rahter than direct to the landlord or agent.

More boom times ahead, say landlords

Posted on January 14, 2012 by admin

Research by specialist buy-to-let lender Paragon Group has revealed that landlords are expecting tenant demand to continue to boom this year.

More than half (56%) of the landlords who took part in the lender’s latest quarterly survey said that they expect tenant demand to either grow or boom, compared with 45% who were asked the same question at the end of 2010.

Only 6% of those questioned thought that tenant demand would decline this year.

When asked whether they thought rental income would increase during the next 12 months, 45% of landlords surveyed said it will increase, whereas 53% said that it would remain stable – and only 2% said that it would decrease.

Two-thirds of landlords believe arrears levels will stay stable and 20% expect arrears to rise moderately.

Nigel Terrington, chief executive of Paragon Group, said: “It is no surprise that landlords are expecting a healthy level of tenant demand.

“With the success of 2011 to build on, I believe the private rented sector will continue to perform and provide a valuable tenure choice for even more people in 2012.

“This year will bring its own challenges, especially with the uncertainty in Europe and the wider financial markets affecting overall confidence levels. But I believe that the foundations that we laid as a sector in 2011 will allow lenders and landlords to continue to do business.”

With anticipated forecast for increased tenant demand, it is vital that you protect your buy to let rental property asset with an independant professional inventory clerk prepared rental property inventory, together with a proper check in, mid term inspection and check out process. Contact one of Homecheck UK rental property clerks now to discuss your letting requirements.