LandlordZONE Newsletter Oct 2008 - Fire Safety Order

Welcome to the October 2008 edition of the LandlordZONE Newsletter.

Fire Safety Order - October 2008 Issue 33

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Welcome to the October 2008 Issue,

We’re living through some unprecedented and scary times: if you are a landlord or running a business it’s now about survival.

Regardless of whether your properties are in negative equity, and it only really matters if you are forced to sell, it’s about reducing your costs and keeping the rental income flowing.

Just like the stock market, property prices are depressed and still falling, but they will return.

When they do, opportunities will abound for those with the resources, but I would recommend the adventurous investors sit on their hands for now.

In the meantime, routes to survival:

- Consider managing your property yourself and save on agent’s fees. If you do use agents make sure you know exactly what you sign up to and negotiate hard on fees and renewals costs.

- Know your local market and the demand / supply balance and price your rents conservatively to avoid the voids and retain your tenants longer.

- Select your tenants very carefully and avoid panic lettings—a bad tenant can be far more expensive than a void—do tenant checks and follow a good screening system.

Continue reading LandlordZONE Newsletter Oct 2008 - Fire Safety Order…

Rental demand up by 50 per cent

Buy-to-let investors have reason to cheer with rental demand on the rise as first-time buyers stay away.

Paul Farrow, Daily Telegraph - 22 Oct 2008

The number of people signing up for rented accommodation rose in September, with demand up 50 per cent year on year, according to the UK’s second largest lettings agent Your Move, which has 250 branches nationwide. The number of leases commencing in September jumped 4.34 per cent compared to August 2008 - far beyond normal seasonal fluctuations, the agent added.

Your Move said that has the increase in demand coincided with mortgage advances being at an all-time low, it indicated that would-be buyers are renting rather than buying property. It is estimated that there are 1.6 million 20 to 39-year-olds who are renting because they cannot afford to get on the property ladder, according to Hometrack, the property data company. A 20 per cent fall in house prices would still open the market up to only 600,000 young buyers. Full Article

Creating a less risky rental market for Landlords and Tenants

Major recommendations to improve the Private Rented Sector for both tenants and landlords are being published today.

The independent review into the Private Rented Sector (PRS), headed by Julie Rugg of the University of York, recommends a new drive to improve the quality of the sector through:

* Introducing a light touch licensing system for landlords and mandatory regulation for letting agencies, to increase protection for both vulnerable tenants and good landlords.
* Introducing a new independent complaints and redress procedure for consumers, to help end long drawn out disputes.
* Tax changes to encourage good landlords to grow, including changes to stamp duty to encourage them to buy more properties.
* Looking at ways for the PRS to be more accommodating towards households on lower incomes, including considering more support for landlords prepared to house more vulnerable people.
* Local authorities taking steps to better understand the sector and support good landlords whilst tackling poorly performing landlords and promoting tenants’ rights.

Continue reading Creating a less risky rental market for Landlords and Tenants…

Landlords get police advice on how to spot a drugs factory

LANDLORDS are being given tips by police on how to spot drug factories being run in their properties following a spate of cannabis farm discoveries in rented homes.

This is Plymouth - Thursday, October 16, 2008, 13:14

A new booklet gathers together information gleaned from thousands of raids on homes in recent years which have led to large seizures of marijuana plants.

The guide, entitled ‘Keeping illegal drugs out of rental properties’, notes how organised crime gangs, particularly those involved in drug production, use rented premises in an effort to hide their activities from police.

The guide, written with the assistance of Merseyside and Derbyshire police forces as well as the Association of Chief Police Officers’ Drugs Standing Working Group, contains indicators which could show a landlord that synthetic drugs such as amphetamine or ecstasy are being made in hidden laboratories, that cannabis crops are being grown or even that drug-trafficking is being conducted at rental properties.

It reminds managers of properties of the very high price they may end up paying, from the financial cost of repairing damage caused in adapting buildings for drug production to the damage to their reputation with potential property-owners looking elsewhere to rent, as well as dealing with ‘hostile tenants’ and complaints from neighbours. Full Article

OFT: Sale and rent causing ’serious harm’

Cash-strapped homeowners considering selling their home and renting it back urgently need regulation to protect them, according to the consumer watchdog.

Simon Lambert, This is Money - 15 October 2008

An in-depth study by the Office of Fair Trading into sale and rent back firms has found some are misleading customers about the value of their properties and security as tenants.

Vulnerable homeowners unable to keep up with mortgage payments are being offered the ability to sell and then rent back their property by an array of firms, ranging from large companies to small buy-to-let investors.

But many receive much less than they could get on the open market, or even by selling at auction.

Despite some firms telling people they would be able to stay in their homes for years, with no increase in rent, there is no such guarantee. Full Article

House prices ‘will fall 30%’

House prices are poised to fall almost a third from their peak last year to reach values last seen in September 2003, says one of the country’s leading estate agents.

Daniel Thomas, Property Correspondent, FT.com - 15 Oct 2008

Knight Frank said on Wednesday that the market was halfway through a price correction, with about 15 per cent already wiped off the price of an average home in the UK. But the expected peak-to-trough decline of about 30 per cent would mean that prices would continue to fall until late 2009.

House prices will take an average of seven years to return to the 2007 peak, says Knight Frank’s research. But prices in central London will rise faster, passing their previous peak by 2012.

Sales volumes are expected to hit their lowest point later this year, when Knight Frank expects transactions will fall to about 30 per cent of their long-term average. The agent said the market would pick up next year with hopes that sales volumes would recover to about 60 per cent of their long-term average by the second half of 2009.

“Our forecast suggests that we will be closing in on the bottom of the market during late 2009-early 2010,” said Liam Bailey, head of residential research at Knight Frank. Full Article

The unravelling of the great buy-to-let scam

Ross Clark says speculators and fraudsters saw easy money in buying city-centre flats with borrowed money — but investors and lenders now face huge losses as prices crash.

Ross Clark, Spectator.co.uk - 15 Oct 2008

I have developed a rather ghoulish pastime. It involves thumbing through auction results for repossessed apartments in city centres, then checking what those same properties sold for when new, a year or two ago. My record so far is a two-bedroom flat in a development called Beauchamp Place, Coventry, which was auctioned in September for £85,000 — less than 40 per cent of the £214,000 for which it was sold new in June 2006.

That flat has, however, performed better as an investment than the shares of the company that led the buy-to-let boom. The share price of Bradford & Bingley, the former building society whose subsidiary Mortgage Express lent more money to property investors than any other in 2007, collapsed from 450 pence to 20 pence before being suspended when the government moved in to nationalise it. There will be no more multi-million-pound loans for budding tycoons whose business model was based on the fateful premise that house prices only ever go up. Full Article

Important court ruling for landlords

ONE of the first cases concerning the 2007 tenancy deposit protection scheme was heard recently.

The County Court overturned the findings of the first instance judge to find in favour of the landlord.

Richard Freeman-Wallace, nebusiness.co.uk - 8 Oct 2008

The landlord in question had properly placed his tenant’s deposit in a tenancy deposit scheme but had not informed the tenant about the details of the scheme within the statutory 14 days, Sheffield County Court heard (Harvey v Bamforth, Sheffield County Court)

The statutory penalty is three times the deposit for failure to register or protect the deposit.

The County Court judge ruled that in this case the failure to provide information on time did not mean that the penalty was payable because the information was still provided before the tenant submitted his application.

The decision is an important
one for landlords as the Citizens Advice Bureau said there were hundreds of similar cases waiting to be heard.

The judgment clarified that provided the landlord supplies the certificate and other prescribed information without delays outside the 14-day statutory limit, he will not breach the Act.

The tenancy deposit scheme, which came into force in April 2007, affects thousands of property owners who currently take deposits worth about £1.2bn from tenants each year. Full Article

Desperate property developer forced to give away £1.7m apartments

Desperate property developer forced to give away £1.7m apartments

The UK property slump has forced a Devon developer into extreme measures to recoup the costs of building four luxury apartments worth £1.7 million.

Cliff Rawlinson is giving away all four in the UK’s biggest ever property competition and the first launched by a developer.

45,000 tickets are being sold at £50 each in the competition which has just launched at WinADevelopment.com.

Continue reading Desperate property developer forced to give away £1.7m apartments…

Chancellor clarifies “misunderstanding” over mortgage plans

The Chancellor and Treasury have sought to clarify proposals calling for HBOS, Lloyds TSB and Royal Bank of Scotland (RBS) to resume lending to homeowners and small businesses “at 2007 levels”.

James Charles, Times Online - 14 Oct 2008

In the House of Commons today the Alistair Darling said that there had been a “misunderstanding” in relation to the Treasury plan, which was announced this morning following the Government’s £37 billion bail-out of the three banks.

The Council of Mortgage Lending (CML) was quick to condemn the original proposals, which included a reference to “maintaining, over the next three years…competitively-priced lending to homeowners and to small businesses at 2007 levels”. The CML said that such a goal was “not prudent” and that it was “very unlikely that we will see lending return to 2007 levels in the near-future.”

But the Chancellor and Treasury have since attempted to calm the dispute. The Treasury told Times Online that the original statement released this morning was making a general point about the desire to ensure that there was a broad range of mortgages available, in general, across the mortgage market. Full Article