Buy-to-let giant Inside Track goes bust

Inside Track, the company that promised to turn a generation of Britons into ‘property millionaires’, has gone into administration.

Simon Lambert, This is Money - 29 April 2008

Inside Track’s model of recommending flats such as those in Manchester’s Hacienda building has collapsed in the face of the credit crunch

Britain’s biggest property investment company made its money encouraging people to purchase - at a supposed discount - strings of new-build flats to rent out: a business model that has faltered in the face of falling property values, below average rents and a mortgage freeze.
Inside Track epitomised the buy-to-let boom of recent years, with high-profile and ambitious advertising for its property seminars that it claimed would lead to riches - full article

Home Information Packs (HIPS) – Here to stay so be prepared.

Local firm Empire Plumbing & Heating take the pain out of HIPS.

28 April 2008

With the arrival of spring homeowners thoughts turn to moving house. Since 14th December 2007 all houses marketed for sale within England and Wales are required to have a Home Information Pack completed. Temporary restrictions which currently allow houses to be marketed without certain aspects of the HIP in place until the Energy Performance Certificate (EPC) is available will end on 31st May 2008. This means potential vendors must ensure the HIP is completed before marketing commences.

A crucial part of the HIP is the Energy Performance Certificate (EPC), and this should be carried out by a competently trained and legally qualified engineer, preferably CORGI registered. The EPC rates the energy efficiency of the home on a scale of A-G and also offers advice on how to make the home more energy efficient and save money.

Continue reading Home Information Packs (HIPS) – Here to stay so be prepared….

Tenancy Deposit Schemes - 12 months on…

The new tenancy deposit schemes have been operating for 12 months. This is an important review, of considerable interest to landlords and letting agents, by Daniel Dovar and Michael Walsh, barristers at 33 Bedford Row - April 2008

Introduction

The tenancy deposit schemes came into force on 6 April 2007. The idea of the schemes is to safeguard tenancy deposits and to provide ADR methods of resolving disputes in relation to deposits. From that date it has been necessary for every deposit taken by a landlord in respect of an assured shorthold tenancy to be protected by a tenancy deposit scheme. If it is not it will not be possible to serve a s21 notice and thus obtain possession (Housing Act 2004, s215).

See also para 7B(d) of the revised form N5B (Accelerated procedure claim form) which states:

“If your claim for possession is in relation to an Assured Shorthold Tenancy where a deposit was taken after 6 April 2007, you must provide evidence that such deposit is safeguarded with a tenancy deposit scheme (TDS) authorised under Part 6 of the Housing Act 2004”.

The scheme applies to any deposit taken in relation to a new assured shorthold tenancy granted on or after 6 April 2007. It is not applicable to continuation tenancies, ie where the tenant stays in occupation as a statutory periodic tenant (Housing Act 1988 (HA 1988), s 5)).

Continue reading Tenancy Deposit Schemes - 12 months on……

Get an accurate picture of your local lettings market

There is no doubt that doom and gloom about the property market - including buy to let - is rife at the moment, including speculation about property prices falling dramatically and landlords selling up in droves.

However, according to Leaders – one of the UK’s largest independently owned letting specialists which has 34 offices across the South East – it is important to look at the facts and figures on a local rather than national level in order to get an accurate picture of the market and how it affects you.

Says Leaders’ Managing Director, Paul Weller: “The problem with looking at averages and trends is they don’t reflect a true picture of what is happening in specific locations. For example, the latest quarterly report from ARLA shows letting agents reporting an average slight fall in rents in the South East, yet we have seen an average rent rise of 1.5% over the 3 months to March 2008 across the towns and cities we cover. Within this increase there have been a number of particular hotspots where rents have risen by up to 2.5%, including areas in Surrey, Sussex and Hampshire.

“In any given period of time, rents on some property types may be falling in some areas because of oversupply, whilst other property types may be in greater demand and show significant rent increases. These details are never reflected in average figures, which is why you need to speak to a local specialist who knows your market inside out – what is most in demand in which areas; how best to present it; and what its realistic rental value is.”

Continue reading Get an accurate picture of your local lettings market…

Landlords advised not to take advantage of crunch

With demand for housing in the Private Rented Sector likely to soar due to the credit crunch, the Association of Residential Letting Agents, ARLA, has warned agents and landlords not to take advantage by cutting corners.

Housefund.co.uk - 22 April 2008

ARLA pointed out that both the law and best practice has moved on a long way since the early nineties when the last housing crisis produced soaring rental demand, cowboy agents and rogue landlords.

Nowadays, as well as the duty of care that landlords and letting agents owe to tenants, compliance with new legislation and operating to a code of best practice is seen by most to be in the interests of everyone - full article

LandlordZONE Newsletter - April 2008 - The Budget Review

Welcome to the April 2008 edition of the LandlordZONE® Newsletter.

Newsletter - The 2008 Budget Review - April 2008 Issue 29

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The gloom, it seems, continues. A downbeat IMF report out last week concludes that the financial market crisis has developed into the biggest shock to the system since the 1930s Great Depression and predicts 1 trillion $ total losses (around £500 billion)

With oil and food price inflation rising, the report warns of a one-in-four chance of a global recession, with the world economy trapped between fire and ice—between slumping growth and rising inflation—the dreaded stagflation of the 1970s.

A vicious circle could be set in train: lack of confidence by the financial markets, lack of funds for investment leading to falling property and asset vales, reduced economic output, leading to job losses in turn leading to lack of investment—lasting for years.

But there are now some signs that the credit crunch may be contained and although the 1/4% cut in in Bank Rate this week to 5% has had little initial impact, analysts are predicting that the rate is headed to 4% in the next 12 months. The BOE could also do more to stimulate confidence & growth, helping borrowers.

The problem at the moment is that the cost of money (the wholesale interbank lending rate (LIBOR) is around 1 percentage point above Bank Rate, which means that mortgage rates are stubbornly refusing to come down quickly.

Previous house price crashes have only occurred in serious recessions, so it remains to be seen if this scenario is enough to precipitate one in the UK.

With house prices up around 180% in 10 years, 300% over 20 years and 9,000% over 50 years, owners should have some room for manoeuvre, though overstretched newcomers who have paid over the odds are already feeling pain.

Currently, average house prices are around 6 times male average earnings, a traditional guide, though some experts now argue the measure is obsolete with 2-earner couples.

Average house prices could fall by around 10% this year with commercial values expected to correct by between 20 & 30%, hopefully before picking up again in 2 years or so.

Given this background and despite evidence of a relatively strong economy in the UK, it brings into question our government’s handling of first the Northern Rock crisis (vis-à-vis Bear Stearns), the recent budget and it’s room for manoeuvre in a crisis because of government debt.

In this issue Maurice Patry FCA, of Landlords Tax Services Limited reviews some of last month’s budget measures with particular reference to landlords.

Maurice says, “the 2008 Budget is wide ranging, and this summary deals only with key points. It is not an exhaustive review. Whatever is contained in the Budget should be treated with caution; the final version that becomes law may differ significantly from the Budget. You should not rely on summaries. Use it as a guide only and take professional taxation advice which takes into account your personal circumstances.”

This issue is wholly sponsored by Coverlet one of the leading providers of insurance for the rental property market.

Landlord’s Insurance from Coverlet

Landlord’s Insurance from Coverlet

Continue reading LandlordZONE Newsletter - April 2008 - The Budget Review…

Landlord Action’s - “Power to the Landlord” Seminars

For over a decade Landlord Action has been working in the best interest of the Landlord sector. To date they have acted for over 10,000 landlords and have first hand experience, expert knowledge and contacts to the inner workings of the industry.

Over the years Paul Shamplina has been invited as a spokesperson to appear at industry seminars and talks and regularly advises the media on the buy to let sector.

Currently, the hot topic of the markets and the media is the Credit Crunch and the property investment in crisis, which has got people running scared, and in our industry confused and concerned!

As a call to action, Landlord Action have gathered together their contacts and will be hosting a focus day for landlords in June at The Park Inn, Heathrow.

‘Our aims is to pass on our insight into industry trends, and to see how we in rhe “buy to let sector” best manage our investments at this time’ explains Paul.

Continue reading Landlord Action’s - “Power to the Landlord” Seminars…

CML Chairman addresses mortgage industry

Speaking today at the Council of Mortgage Lenders’ annual lunch, CML Chairman Steven Crawshaw gave guests a hard-hitting look at the impact of the credit crunch on the UK mortgage market.

CML Press Release - 11 April 2008 

Buy-to-let investors to be hit

Buy-to-let landlords will have to raid their savings and inject extra capital into their homes, under an obscure clause in their mortgage contracts, if house prices continue to fall. Daily Telegraph

Property Week - 14th April 2008

Both Bradford & Bingley and HBOS-owned Birmingham Midshires, the two largest buy-to-let mortgage providers, each with 20% of the market, require customers to top up their initial deposits if falling house prices mean the size of their mortgage rises above 85% of the value of the home - full article

The bubble bursts

HOME renovation would seem to be as exciting a spectacle as, well, watching paint dry. But as Britain neared the peak of a decade-long housing boom, it became prime-time television as producers rushed to make shows like “Property Ladder”. Those happy days in which acquiring a house seemed a sure bet have now ended and even the boost of a quarter-point rate cut from the Bank of England on April 10th is unlikely to bring them back.

From The Economist print edition - Apr 10th 2008

Prices, which had been drifting slowly lower over the winter, have started falling more rapidly and dropped 2.5% in March, according to Halifax, part of HBOS and the country’s biggest mortgage lender. The biggest monthly drop since September 1992 prompted widespread concerns in a country that still remembers its previous big bust, which started in late 1989 and from which prices did not fully recover for almost a decade.

Mortgage lenders and Labour politicians (see article) have talked down the significance of the drop, arguing correctly that monthly data is volatile and that other indices show a very different picture for the month. The Nationwide Building Society, another large mortgage lender, thinks that prices fell just 0.6% in March. What really matters is the annual rate of growth, which has slowed to 1.1%, the lowest since 1996, according to both lenders.

Worryingly, both estimates may already be out of date. Their data, which show that house prices have fallen about 4% from their peaks, are based on mortgages that are approved by lenders. Yet mortgage approvals capture only a portion of purchases—about a quarter of properties bought each year are paid for in cash—and take place only some weeks after a price is agreed. “The Halifax is behind where we are in the market,” says Marc Goldberg of Hamptons, an estate agent. “The prices we’re getting now are about 10% down from the peak last summer.” - full article