LandlordZONE Newsletter - June 2008 - Conveyancing

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

Conveyancing, HIPS & EPCs - June 2008 Issue 30

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As I write this, mid-June 2008, things look pretty gloomy.

The credit crunch is putting the banks under extreme pressure (we still don’t know the full story) leading to a contracting property market because of a severe tightening of lending criteria and the end of cheap money.

Savills last week revised their forecast that residential property values could fall by 9%, to as much as 25%, by the end of 2009.

This in turn is severely affecting the construction industry which is seeing builders halting new development plans and even mothballing some current developments.

Rising redundancies in related industries will inevitably have knock-on effects to the economy as a whole, which is already feeling the effects of rising inflation and in particular higher commodity prices and quite dramatic fuel price rises. Households are also feeling the effects of rising food and fuel prices and therefore retailers’ profits will be hit, inevitably affecting commercial rents and tenancies.

The whole scenario looks set to lead to a full blown recession (the first we’ve seen in the UK for 18 years—so much for Gordon’s “the end of boom and bust”) unless moves by government and the Bank of England have their desired effect—so far there’s little evidence of this.

Fortunately for landlords residential rents and demand for renting is holding up very well, though the situation could deteriorate quickly if mass redundancies result. Established landlords with sizeable chunks of equity in their properties will inevitably ride our the storm and many well take advantage of distressed selling and falling values to add to their portfolios, ready for the up-turn—but things can get worse yet!.

Additionally, an overall shortage of UK housing should help shore up the market in many locations, especially as new development will slow down or stop.

The ones most likely to suffer are those overstretched newbie property investors, and in particular those owning new-build urban flats whose values are badly affected due to oversupply and poor tenant demand in some locations.

You didn’t need to be the Sage of Omaha or even those illustrious property education “experts” running overpriced property courses to see this coming a long time ago. For what some have paid for these courses you could have gleaned more wisdom buying 3 or 4 good investment books and spending a luxurious two weeks of study in one of the best hotels in the Caribbean!

For all those responsible for fleecing and then leading naive and unsuspecting investors into a living hell, to now say: “we were taken by surprise by the credit crunch”, is nothing short of scandalous in my view.

Tom Entwistle, Editor

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

Landlord’s Insurance from Coverlet

This month’s Topic - Conveyancing, HIPS and EPCs

Conveyancing is the legal and administrative process associated with transferring the ownership of land or buildings from one title holder to another.

Recent legislation has added HIPS and Energy Performance Certificates to the traditional conveyancing, surveying and mortgage finance services associated with property transfers.
The whole process starts once an offer has been made and accepted for a property, and solicitors’ details have been exchanged by the two parties.

This month’s Newsletter content has been provided by Dominic Toller, Director of Marketing and New Business at LMS - www.lms.com

LMS is one of the UK’s leading providers of outsourced conveyancing, remortgage, survey and energy services to Estate Agents, Solicitors and the lending industry, and is now one of the UK’s biggest suppliers of HIPs. Last year LMS successfully managed some 400,000 transactions, helping to enable more than £26 billion in loans for intermediaries and lenders.

Now, through its subsidiary ERS, LMS is also the biggest full employer of Domestic Energy Assessors in the UK (100), and has the capacity to complete 300,000+ EPCs per annum. LMS offer a range of services to property clubs and networks and to the residential, rental and social housing sectors. Read on to get a better understanding of what’s now involved in the modern UK conveyancing process…

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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…

LandlordZONE Newsletter - March 2008

Newsletter - The UK Landlord & The Economy - March 2008 Issue 28

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

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With the continuing turmoil in the financial markets as I write the question now is not if there will be problems with the economy in general and property markets in particular, but just how bad will it get?

Whichever way you look at it the collapse of the US bank Bear Sterns (the US equivalent of Northern Rock) and it’s subsequent takeover by JP Morgan Chase it’s a significant event, in some respects the like of which has not been seen since the 1930s.

Had Bear Stearns not owned its headquarters building, the sale price of $240 million or $2 a share (under review but down from $160), would not have been possible. At $1,000 a sq. foot the building is worth $1.2 - $1.3 billion, so the actual value of Bear Stearns less their headquarters at 385 Madison Avenue would be minus $1 billion.

This all makes the message that dropped on my mat the other day inviting me to a seminar on property investing all the more ironic. “How You Could Give Up Work and be a Property Millionaire Instead”

Well it’s always good to be optimistic and there’s always a danger in talking ourselves into a recession, but the organisation putting these out is off the scale of what I would term responsible investment advice.

They do themselves and the industry few favours and I feel the main effect will be to “come back and bite”, not just themselves, but a lot of others in the industry as well.
Looks like we’re in for a rough ride.

Tom Entwistle, Editor.

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 - March 2008…

LandlordZONE Newsletter - February 2008 - Energy Performance Certificates

This month’s edition of the LandlordZONE Newsletter is devoted to Energy Performance Certificates (EPCs) which are being phased in this year.

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It’s important that landlords are aware of this development as all residential and commercial buildings are affected from 1st of October at the latest, with some commercial buildings being affected earlier.

Remember, heavy fines are on the cards for non-compliance.

Energy Performance Assessors are likely to be in demand so prudent landlords may consider getting their properties up to standard and assessed early, especially if re-letting is likely.

The Landlord’s Energy Savings Allowance scheme (LESA) allows landlords to claim the cost of buying and installing energy saving measures against their tax bill, so take alook.

Content for this month’s newsletter has been supplied by Jane Needham B.Sc(Hons) MRICS, Chartered Surveyor, Accredited Domestic Energy Assessor.

Jane, who answers questions on the LandlordZONE Forum as a Topic Expert on Energy Assessment, Business Rates and Council Tax matters, has 18 years’ experience as a property professional.

It’s property show season again and we start off with one of the UK’s biggest events: 7-9 March 2008 at ExCeL London, The Homebuyer & Property Investor Show
Friday the 7th has been designated “Landlord’s Day” so there will be more exhibitors of interest to landlords that day.

LandlordZONE will be exhibiting and Editor Tom Entwistle is giving a presentation:

15:45—Tom Entwistle—LandlordZONE—Investing in Commercial Property: Successful Strategies for the Private Investor in 2008

Other seminars of interest:

10:45 - Paul Shamplina of Landlord Action—Dealing with Tenants From Hell

16:30 - David Lawrenson, consultant, author & regular contributor to the LandlordZONE Newsletter -  What type of property will show both capital and rental growth over the next 5 -10 years?

13:30 - John Socha - of the National Landlords’ Association—Lettings 2008 - Threats and Opportunities (also on Saturday & Sunday)

12:45 - Christopher Tanner - Blevins Franks Mortgage Brokers—The state of Buy-to-Let mortgage finance post-Credit Crunch

13:45 - Andrew Callen—lawyer, HMO’s and Positive Cashflow
Full Seminar Details —We look forward to seeing you at the event!

Tom Entwistle, Editor

EPCs for all sales and lettings of property are due to come into force on a phased scheme. By 1 October 2008 let residential property MUST have a valid EPC when it is let.

The EPC scheme will apply to commercial property from 6 April 2008 (1000 sq M+) 1 July 2008 (500 Sq M +) and 1 Oct 2008 (All)

An EPC can only be carried out by an Accredited Energy Assessor. For let residential property this must be an accredited Domestic Energy Assessor.

Registered EPCs are held on a central register and can only be accessed by the landlord or person who is responsible for commissioning the EPC, although it must be made available for viewing by prospective buyers or tenants.

An EPC is valid for ten years on let property. If changes are made to the property which may affect the energy efficiency of a property, then a new EPC should be commissioned before a new letting takes place.

The theory goes that from the EPC, a potential tenant can see just how much it is likely to cost to heat and run the house for a year. Publicity will be aimed at tenants encouraging them to assess properties through the EPC before taking up a tenancy. The impact of this for the landlord is that tenants will be more aware of these issues and will become more selective on energy efficiency.

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Toddler died - boiling hot water crashing through ceiling.

Dear Editor

I thought your readers may be interested to know about the real cause of this tragic accident. This is the third death in as many years.

The hot water system that has failed relates to copper hot water cylinders, the type found in most airing cupboards. When the thermostat fails to a boiler or immersion heater obviously the water can reach boiling point, if this happens the water expands quickly and enters the cold water storage tank (cistern) which is usually located in the roof space, above the airing cupboard.

However it must be noted that in the cases of the deaths the cold water tank was situated above the bathroom.

Continue reading Toddler died - boiling hot water crashing through ceiling….

LandlordZONE Newsletter - January 2008

Issue 26 - Gas Checks - In this issue we look at some of the important aspects of ensuring that gas is safe in your properties.

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Welcome from the Editor:.

Happy New Year everyone—let’s hope it’s a good one for landlords, though the signs are it’s a likely to be very tough in the economy for everyone: landlords, businesses and consumers alike.

The commercial sector seems to have taken the biggest hit so far with CB Richard Ellis reporting a 4.1% drop in values in December alone and 10.3% in Q4 2007.

Couple this with tough trading conditions going forward and it doesn’t appear that we have reached the bottom on the high street yet.

Those investors who helped pump £5billion into commercial property funds over the last 2 years—the likes of New Star, Norwich Union and Scottish Widows funds—have lost 15 to 20% of their value. REITs have faired even worse—British Land and Land Securities REITs have fallen by 44.9 and 35.2% respectively.

Residential property values have so far faired better. But with UK house prices the most overinflated in the world, according to research by Policy Exchange, a correction or at lease a long “flat” market seems inevitable.

House prices in Britain have risen for 13 years on the run with average prices going from £70,000 in 1997, when labour came into power, to just under 200,000 today—a rate of more than 4% above inflation—a compounded increase of around 180%

Historically, values go in 20 year cycles and it’s unlikely to be different this time. But despite the gloom and the pain felt by Northern Rock and Paragon Mortgages, it’s possible the liquidity crunch, which has brought far more expensive mortgages, may yet be contained?

Continue reading LandlordZONE Newsletter - January 2008…

LandlordZONE Newsletter - Local Housing Allowance

December 2007 Issue 25
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Welcome from the Editor: Season’s Greetings to everyone from LandlordZONE.

I’ve said this before—we’re living in interesting times - and very worrying times they are too for many investors and particularly new landlords.

There are some ominous signs as we look to 2008, not just in housing and commercial property but in the economy as a whole.

There have been some dramatic falls in the price of some property funds (as much as 40 to 50%) and to a lesser extent property prices themselves.

If you are too highly geared and rushing for the door right now then there’s a price to pay for liquidity.

As the governor of the Bank of England said recently, “Property prices are a matter of opinion, debt is real” I will add this: income is real too—it’s tenants you need right now!
Given time, if you have it, these prices will come back, in abundance, but in the meantime we may still see further falls.

On the other hand, as the arch contrarian investor Anthony Bolton, Fidelity’s star investment fund manager with a record of 20% growth over many years, is calling the bottom of commercial property stocks. He is reputed to be buying in, arguing that the share values have fallen far more than their underlying assets—the properties themselves.

Despite all this the government regulation bandwagon affecting landlords rolls relentlessly on: HIPS, HMO Licensing, Tenancy Deposits Scheme and they’ve just announced a full scale review of the Private Rented Housing Sector - is this the precursor to yet more legislation?

Continue reading LandlordZONE Newsletter - Local Housing Allowance…

LandlordZONE Newsletter - November 2007

November 2007 Issue 24

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Welcome from the Editor:

Welcome to the November 2007 issue of the LandlordZONE Newsletter
It’s not all doom and gloom, though you might think so reading some parts of this Newsletter and the press this last week.

But to the contrarian investor it’s times like this that present real opportunities—as John D Rockefeller said—buy straw hats in winter. Markets always overreact and there will undoubtedly be some real bargains to be had when property is no longer a topic of popular conversation.

Established landlords know how to weather a storm like this because they know their markets, they know how to manage tenancies, they keep costs under tight control and they have kept their borrowing within sensible limits.Some will even be fortunate enough to strategically pick up bargains and grow their portfolios over the coming months and years.

If you are unfortunate enough to find yourself in difficulties there just two options: (1) pull all the stops out to meet those mortgage payments and see it though by marking personal sacrifices, or (2) cut your losses before you lose it all.

Just to cheer us all up the Landlord Show will be held 6th December at the NEC Birmingham with a record number of exhibitors and registered visitors.

I shall be giving a seminar on “Selecting Tenants & Managing Tenancies” [in good times and bad] so don’t miss it.

Tom Entwistle, Editor, LandlordZONE.co.uk

Continue reading LandlordZONE Newsletter - November 2007…

LandlordZONE Newsletter - October 2007

October 2007 Issue 23
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Welcome from the Editor:

Welcome to the Oct 2007 issue of the LandlordZONE Newsletter.

We’re living in turbulent times.

If you are interested in the broader picture from a renowned authority I recommend you read Alan Greenspan’s timely biography—The Age of Turbulence—Adventures in a New World.  Greenspan, chairman of US federal reserve for nearly 20 years, knows a thing or two about markets and has produced a very readable analysis.

Following the credit crunch of recent weeks, triggered by the US housing downturn and the emergence of the so called “sub-prime” mortgage debacle, we’re all now wondering if the UK housing market will follow suit.

A bleak warning by the IMF that Britain’s homes are 40% overvalued—higher than the US market before it’s collapse, at 9 times average earnings (up from 5 times in 2001) - does nothing to allay our fears.

But if the worst should happen, and it might not - then what?

Well, there’s a strong letting market in the UK, a continuing housing shortage and low unemployment.

If you are not overstretched financially and you can manage your tenancies well, why worry about the value of your property in the short-term?

In fact there could be some real buying opportunities in the near future for those with the resources to add to their portfolios, but use good advisors and brokers.

All this is nothing new - we could be going back to normal conditions, where making money from property is about wise investments, managing tenancies well and making long-term gains.

Tom Entwistle, Editor, LandlordZONE.co.uk

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Buy to Let Motgages

This edition of the LandlordZONE Newsletter looks at the some issues involved with mortgages and the current market conditions for buy to let.

The buy to let mortgage, introduced 11 years ago, has helped, along with the AST, to transform the rental market in the UK at a time when social and demographic changes demanded a big increase in rental accommodation. This has been good for the country and the economy.

Continue reading LandlordZONE Newsletter - October 2007…

LandlordZONE Newsletter - September 2007

September 2007 Issue 22
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Welcome from the Editor:

Welcome to the September 2007 issue of the LandlordZONE Newsletter.

What a week it’s been in the markets. I’ve never seen a run on a bank before, not quite in such a dramatic fashion anyway.
From the market reports you read the property market is heading anywhere between a slow-down and a complete crash. Read David Smith’s blog for a conservative view economicsuk.com to housepricecrash.co.uk for the whole range of views.
There’s no doubt large sections of the commercial property market have dropped back, perhaps by 10% already. The residential market is less certain in my view, as there’s so many positive factors supporting it.
Any set-back can be seen as an opportunity in the investment world and those sitting on a cash mountain pray for times like this - it’s not all bad.
Buy-to-Let generally should hold up well as even with a crash, it won’t be any easier for FTBs to get a mortgage and actually get in the market - there will still be a health demand for renting, and rents may rise.
If you’re in London at the Property Investor Show this Saturday (Excel Centre, Docklands) I shall be giving another seminar on “Investing in Commercial Property: Successful Strategies for the Private Investor”come along and see it.
Tom Entwistle, Editor, LandlordZONE.co.uk

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Student Lettings - Make Money in the Student Lettings Market.

It’s that time of year again - holidays are over and we’re back to a busy time for student landlords, and landlords in general, as not only are students off to university, many other working and professional tenants are starting new jobs.

The student rental market is here to stay and it’s expanding. Remember Tony Blair’s mantra - Education, Education, Education - well student numbers have risen dramatically and will continue to do so into the future as we move to a high-tech information based economy - the new economy demands educated people…

Read the FULL Newsletter to find out more…

Continue reading LandlordZONE Newsletter - September 2007…