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jghomer
17-05-2007, 10:38 AM
Like many in this forum i'm feeling the squeeze with interest rates really hammering my rent/mortgage surplus. Feels like my eyeballs are going to pop out!

I'm thinking of introducing a few small charges to tenants for various things for new tenancies and wondered what your thoughts were on them.

Was thinking of charging about £15 for a landlords reference, £25 for end-of-tenancy inspection and £15 for bounced cheques.

They seem ok or totally unreasonable?

I already charge a tenancy fee and a quarterly contribution of £25 towards buildings insurance.

Sorry if we sound greedy - it's not, it's survival!!

Poppy35
17-05-2007, 14:02 PM
As a LA I think that sounds fair.

Your charges for bounced cheques are slightly higher than what we charge, we charge more for refs and if a Tenant Find landlord wants us to to a check out we charge £35.00.

lorenzo
17-05-2007, 16:48 PM
Like many in this forum i'm feeling the squeeze with interest rates really hammering my rent/mortgage surplus. Feels like my eyeballs are going to pop out!

I'm thinking of introducing a few small charges to tenants for various things for new tenancies and wondered what your thoughts were on them.

Was thinking of charging about £15 for a landlords reference, £25 for end-of-tenancy inspection and £15 for bounced cheques.

They seem ok or totally unreasonable?

I already charge a tenancy fee and a quarterly contribution of £25 towards buildings insurance.

Sorry if we sound greedy - it's not, it's survival!!
£15 for a landlords reference - fair enough as there is a cost in time, paper ink etc.
£25 for end-of-tenancy inspection - I don't think it's reasonable unless an independent clerk is used, which I think is a really good idea under the new TDS regime
£15 for bounced cheques - very reasonable, should probably be a bit more
£25 towards buildings insurance - not reasonable at all.
I already charge a tenancy fee - what is this and how much?

All these things of course are subject to competition. If you are competing for tenants, they'll tell you to stick it where the sun don't shine. However you'll get away with murder if tenants are competing for your property.... supply/demand equation.

IMO

J4L
17-05-2007, 17:48 PM
haha lorenzo

I actually started to write a response SO like yours about an hour ago but got interrupted by an estate agent on the phone and timed out.
Couldn't be bothered to rewrite it then but ditto ditto ditto!!!

I think the tenant paying toward the buildings insurance is a cheek and personally i'd tell you where to stick it.

Can I just add here that the OP is saying how tight things are and how they feeling the squeeze. And WHO is gonna pay AGAIN?? THE BLOODY TENANTS.

Shame on you landlords if you've made wrong decisions about your property and are trying to make tenants pay for the pleasure of your inaccurate forecasting. It really grates me that the tenants always seem to get the sh*t end of the stick.
Either sell the property or pay a little in yourself. It was, as it happens YOUR investment!!!!!

lorenzo
17-05-2007, 18:22 PM
Can I just add here that the OP is saying how tight things are and how they feeling the squeeze. And WHO is gonna pay AGAIN?? THE BLOODY TENANTS.

Shame on you landlords if you've made wrong decisions about your property and are trying to make tenants pay for the pleasure of your inaccurate forecasting. It really grates me that the tenants always seem to get the sh*t end of the stick.
Either sell the property or pay a little in yourself. It was, as it happens YOUR investment!!!!!
Amen on that.

Anecdotally, in most areas where I have contacts (W, SW) LL's are not able to add a thing. Tenants are not even standing for minor rent increases.

It is not that rents etc are not high enough, they are still expensive by world standards as a proportion of wages. LLs are just paying way too much for a crappy pile of bricks. The fundamentals are %$#&ing dreadful for BTL in most places IMO.

lorenzo
17-05-2007, 18:35 PM
An article from yesterdays "The Business" FWIW

http://www.thebusiness.co.uk/PrintFriendly.aspx?id=18B90348-F5A6-47AB-9B13-213D2B069B93

Beware the bulls: buy-to-let market is not all that it seems

By : Bill Jamieson

16/05/2007
Buy-to-let mortgages have increased 30-fold in the last decade and there is little doubt that Britain is in the grip of a fever”

If Britain’s fourth interest rate rise in 10 months has triggered any cautionary retreat among the growing army of buy-to-let investors, it is hard to detect in the booming lending and financial advisory sector. Dozens of newsletters and briefing notes have been busy in recent weeks pouring oil on seemingly untroubled waters.

The themes are familiar: the market is healthy; loans are readily available; the market can comfortably cope with a cooling in the pace of house price rises, why, a fall might even be beneficial. There are even forecasts from Mintel that the number of buy-to-let investors will double over the next four years, and that buy-to-let mortgages will rise from £38bn ($75.4bn, e55.5bn) in 2006 to £68bn in 2011. In 1999 the total was just £3bn.

So talk of a “house price collapse” or “bursting bubble” is exaggerated. No sharp decline in prices in prospect. Talk of a bubble is sensationalist. And yet, according to Martin Weale, director of the National Institute of Economic and Social Research: “Buy-to-let is probably the weakest link in the market. Most property speculators… reassure themselves, like all speculators, with the thought that although prices are very high, they will continue to rise.

“Perhaps they will, but multiple buy-to-let holdings create potential for instability. Anyone with a large mortgage, especially for buy-to-let, is taking a big risk.”

Most now agree that Britain’s housing market – with the exception of some types of properties in parts of London, which are still buoyant – is starting to slow. The question is not whether this slowdown is underway but how the market will react and in particular whether it could trigger a debt default across the industry.

The annual rate of house price increase across the UK is down from 11.8% to around 10% and is expected to slow to 3%-4% by the end of the year. And the rate of mortgage approvals is down 12% in March on the level a year ago.

Almost without exception the buy-to-let industry declines to recognise that any serious threat is posed by these figures. Ironically, one reason for the sanguine response is that the sharp rises in property values over the past few years have provided a cushion of equity that gives buy-to-let investors the confidence to hang on rather than sell up.

Says Professor Michael Ball of the University of Reading Business School: “Many buy-to-let investors have a lot of their own equity in their properties and are pretty financially secure. In any event, most are confident that prices will slow down rather than slump. There is very strong demand and tight supply.”

It is true demand has been boosted in recent years by an influx of workers from mainland Europe who are used to renting or who cannot afford to buy. As a result rents have risen substantially and voids are shorter.

The industry draws comfort from another feature. Investors are generally cautious and usually borrow on fixed-rate mortgages. About 70% of buy-to-let mortgages are fixed rate. Knowing that mortgage costs are fixed for a time at least gives landlords confidence to stay put rather than incur selling costs. Nigel Terrington, of the specialist buy-to-let mortgage lender Paragon, says: “If landlords believe that prices will drop by even 20% they will sit on their hands until prices have stabilised, then take advantage of lower prices to buy”.

In the previous 2004-05 dip, the rate at which mortgages were redeemed actually fell. And the number of buy-to-let mortgages running three months or more in arrears at 0.69% is actually lower than that for regular mortgages.

But all this may prove too sanguine by half. The huge growth in buy-to-let has been fuelled by the entry of novice landlords. Some 58% of landlords have only one or two properties. Buy-to-let mortgages have increased 30-fold in the last decade and there is little doubt that Britain is in the grip of a fever reminiscent of those that used to grip the stock market. Last year a record 330,000 loans worth £38.4bn were taken out by buy-to-let investors, equal to 11% of all lending. Yet it is increasingly clear that landlords are unable to cover their monthly costs because interest rates are now rising faster than rental income.

“The cost of the average property has risen by 66% over the last five years while rents have risen slightly above or in line with inflation”, says Lee Grandin, managing director of Landlord Mortgages.

“This has created an environment where investors need to be less concerned with high rental-yield figures and more concerned with achieving sufficient rental to cover their mortgage repayments”.

Hence the fear that investors, convinced that the market will not fall, or fall to an extent that requires any corrective action on their part, are ploughing money into an already saturated sector.

The redeeming argument of the bulls is that even if interest rates rise to 5.75% they are still substantially lower than in the crisis period of 1990. The concern of the bears is that a toxic combination of over-optimistic investors and lenders desperate to maintain business growth will push the entire buy-to-let market over a precipice, with drastic consequences for borrowers, lenders and Britain’s housing market as a whole.

chrisbell
17-05-2007, 22:22 PM
I once read about a landlord (on his website) who charged for just about everything you could think of. But he was charging for tasks he was carrying out on behalf of the tenants whether administrative tasks or practical ones. So although at first glance it seemed unreasonable, in a way he did have a point. I think that we, as landlords, sometimes undervalue our time.

Chris

jghomer
18-05-2007, 09:30 AM
Interesting comments all, thank you.

For the more negative amongst you, don't forget we're in a market economy, and if the demand is high enough to allow charging little extras for the landlords time then so be it. Truth is, with the possible exception of the cheeky buildings insurance charge of £2 a week (which by the way nobody moans about and I have 76 properties), the other items involve spending my valuable time on things which to now I have not charged for.

Granted demand for rental property may now allow for such extras in some areas but in my area it certainly does, and until the government comes up with some crazy new scheme to stop it (which i'm sure it will) then it would be foolish not to capitalise on the demand. I run a business to make profit not to make friends :-)

nick..
18-05-2007, 09:33 AM
Now seems like as good a time as any to remind Landlords that Tenants are not there to pay their mortgage, they are living in their property, paying the local market rate for that sized property

If a landlords costs go up, through additional legislative charges or interest rates, unless the market rates go up, you will not be able to pass these additional costs onto your tenant

How does a few months voids sound when put up against petty charges?

£25 for end of tenancy inspection? good luck with that one mate :D

landlordtome
18-05-2007, 09:36 AM
In all honesty. This smacks of financial incompetance.

You have obviously seen greed and bought either too high or too many BTL and now are feeling the squeeze and want to pass the costs on.

Unfortunately this is not the answer. Your tenants will leave or not take your properties on leaving you in a worse situation.

You really need to look at why you have no movement in your finances.

Sounds to me, like many new BTL, you paid too much for the property.

It is just not viable anymore.

nick..
18-05-2007, 09:39 AM
In all honesty. This smacks of financial incompetance.

You have obviously seen greed and bought either too high or too many BTL and now are feeling the squeeze and want to pass the costs on.

Unfortunately this is not the answer. Your tenants will leave or not take your properties on leaving you in a worse situation.

You really need to look at why you have no movement in your finances.

Sounds to me, like many new BTL, you paid too much for the property.

It is just not viable anymore.

Spot on, Sir

Surely all recent BTLers knew we were in a time of historically low rates, and planned accordingly for the inevitable increases?

I think it will be good practice for all tenants to now check when their property was purchased, and the associated financial strife a newbie landlord may be in

J4L
18-05-2007, 10:05 AM
In all honesty. This smacks of financial incompetance.

You have obviously seen greed and bought either too high or too many BTL and now are feeling the squeeze and want to pass the costs on.

Unfortunately this is not the answer. Your tenants will leave or not take your properties on leaving you in a worse situation.

You really need to look at why you have no movement in your finances.

Sounds to me, like many new BTL, you paid too much for the property.

It is just not viable anymore.

I couldn't agree with you more!!
We have just purchased a couple of new properties and have worked in a hypothetical 2% interest hike and made sure we haven't overstretched ourselves.
If this OP has 76 properties they should sell one or two and re evaluate their business plan.

Esio Trot
18-05-2007, 11:13 AM
A number of agents around our way (not us as yet) have started to charge a fee where their tenant has no choice but pay if they want the agent to act.

This is a charge against the (ex)tenant for giving a reference to a future landlord, mortgage company, etc.

We do about 40 a year, so at £20 a time could increase our income by £800!

There is no reason why landlords cannot do the same - if tenants want the reference, they'll have to pay the dosh.

jghomer
18-05-2007, 11:57 AM
I like the passion that some of these debates stir up.

Thanks all for the comments.

Think I may ditch the final inspection fee. Thought it might have been pushing it a bit.

nick..
18-05-2007, 12:06 PM
A number of agents around our way (not us as yet) have started to charge a fee where their tenant has no choice but pay if they want the agent to act.

This is a charge against the (ex)tenant for giving a reference to a future landlord, mortgage company, etc.

We do about 40 a year, so at £20 a time could increase our income by £800!

There is no reason why landlords cannot do the same - if tenants want the reference, they'll have to pay the dosh.

Times must be hard in Landlord land !! :eek:

jghomer
18-05-2007, 14:13 PM
In fairness Nick if they can increase they're income stream by £820 a year, then good for them. Why should we as landlords give references for free? It takes our time up.

Hands up to a few of my charges being cheeky, and i've taken on board comments made to act on them, as I happen to think this forum gives bloody good advice :-)

Furthermore in an earlier post you indicated that we can't pass on the higher costs of our BTL mortgages to our tenants. Not so. We're in business and mortgage costs are a cost, a raw material if you like. If the costs of a raw material goes up in another business sector this gets passed on in the form of price increases....gas, elec etc Granted we can only increase rent & other fees to a level the market will stand, but higher costs of borrowing mean that renters are less likley to be buying houses, which leads to higher demand, which leads to higher price. It's simple economics.

nick..
18-05-2007, 16:25 PM
In fairness Nick if they can increase they're income stream by £820 a year, then good for them. Why should we as landlords give references for free? It takes our time up.

Hands up to a few of my charges being cheeky, and i've taken on board comments made to act on them, as I happen to think this forum gives bloody good advice :-)

Furthermore in an earlier post you indicated that we can't pass on the higher costs of our BTL mortgages to our tenants. Not so. We're in business and mortgage costs are a cost, a raw material if you like. If the costs of a raw material goes up in another business sector this gets passed on in the form of price increases....gas, elec etc Granted we can only increase rent & other fees to a level the market will stand, but higher costs of borrowing mean that renters are less likley to be buying houses, which leads to higher demand, which leads to higher price. It's simple economics.

Not every landlord is a highly leveraged BTL latecomer who is affected by rate increases

Like I said before, the market drives rental rates, not your costs. Put the rents up if you like, but be prepared for your decent tenants to go elsewhere if there is cheaper to be found

With regards to why should you provide references for free, will you be expecting references on potential new tenants?

So you'll agree its part of the process, and hampering someones chances of finding somewhere else to live by holding them to ransom, is a pretty despicable act

Should I be surprised judging by the nature of this thread?

J4L
18-05-2007, 17:31 PM
I see it all now . . . . .. .

tenant gives notice because they've found somewhere (dare I say it) cheaper!
{please refer to previous posts}
Landlord accepts notice. . . .
New Landlord requires reference . . . . .
Old Landlord says . . . . . . .
£35 for the pleasure please . . . . . .
You can't pay???
I'll take it out of your deposit . . . . . . . :(

J4L
18-05-2007, 17:34 PM
Money Laundering is a criminal offence and that's why there are strict laws to prevent it. . . . . ..

A license to print money . . . . that's a different game . . . . . .

Ain't these Nearly the same?????

GuitarMan
18-05-2007, 22:02 PM
Landlords adding charges are basically trying to up the rent by the back door. Why don't LLs just put up the rent if they think they can get away with it? Simply adding £20-£30 per month rent will cover the increased costs.

It looks to me that landlords suggesting these charges are assuming that tenants will still think that the rent is the previous market rent, and not factor in the additional charges. I don't think tenants are that stupid.

GuitarMan
18-05-2007, 22:05 PM
In fairness Nick if they can increase they're income stream by £820 a year, then good for them. Why should we as landlords give references for free? It takes our time up.

Hands up to a few of my charges being cheeky, and i've taken on board comments made to act on them, as I happen to think this forum gives bloody good advice :-)

Furthermore in an earlier post you indicated that we can't pass on the higher costs of our BTL mortgages to our tenants. Not so. We're in business and mortgage costs are a cost, a raw material if you like. If the costs of a raw material goes up in another business sector this gets passed on in the form of price increases....gas, elec etc Granted we can only increase rent & other fees to a level the market will stand, but higher costs of borrowing mean that renters are less likley to be buying houses, which leads to higher demand, which leads to higher price. It's simple economics.

It's also simple economics that if you price your service higher than your competitors, then you'll most likely lose business to them.

jghomer
19-05-2007, 10:05 AM
Hardly a latecomer Nick, bought my first one in 1997. Unless 10 years is a short time in BTL....although maybe the highly geared comment holds some truth :-)

And as for markets driving rent and not costs - quite true. But interest rates make houses less affordable and drive up rents. It's a simple fact. If landlords margins gets squeezed rents will rise. We had occupancy of 97.2% in 2006, and 98.3% so far this year so demand here is sufficient to test the water a little.

nick..
19-05-2007, 13:17 PM
And rising rents cause inflation to rise....