Despite the deep recession many residential landlords have continued to add to their portfolios, encouraged by steady tenant demand and the availability of bargain properties, including distressed sales and re-possession property through the auction houses.
Cash rich landlords are in a strong position to pick-up bargains, as others (including first time buyers) struggle to raise the deposits needed to secure a mortgage. There are also signs of an increasing number of banks and building societies coming back into the buy-to-let mortgage market, albeit still with some strict lending criteria and quite high fees.
Income (yield) is the key to success with buy-to-let right now, plus the ability to manage tenancies efficiently. Buy properties at the right price and keep mortgage payments within bounds and a buy-to-let investment offers sustainable positive returns. However, there are issues that landlords should be aware of. In a recession rent arrears are an inevitable consequence and if you are unlucky enough to have tenants losing their jobs then it’s no consolation that you have a high theoretical yield investment.
In addition, according to eviction specialists Landlord Action, tenants are becoming more assertive in challenging possession claims in court. No doubt fuelled by the information now freely available on the Internet some tenants are becoming savvier at using delaying tactics to the cost of their landlords.
Identity fraud is another serious issue for landlords and letting agents. There is evidence of an increasing number of attempts to obtain tenancies under false identities, often serial bad tenants who have no intention of paying rent beyond the first payment, and not even that if they can get away with it!
One recently reported scam has involved a letting agent renting an apartment to a tenant fraudster using a false identity who, having gained access to the block and all the mail boxes, proceeded to steal mail and the identities of other residents.
Landlords and agents must be particularly vigilant when letting: (1) always get a comprehensive application form completed, (2) do face to face identity checks with original documents, (3) always do full credit checks and referencing, (4) always have a comprehensive inventory, preferably by an independent inventory company.