Buy-To-Let Landlords Warned Of Rise In 'severe Arrears'

[interestrateripoff]

http://www.telegraph.co.uk/finance/personalfinance/borrowing/9971243/Buy-to-let-landlords-warned-of-rise-in-severe-arrears.html

Buy-to-let landlords are being warned of a rise in the number of UK tenants in "severe arrears".

The Tenant Arrears Tracker, published by LSL Property Services, shows the number of renters more than two months behind on payments rose by 4,000 to 94,000 in the first quarter of 2013 - an increase of nearly 5 per cent. This represents 2.3 per cent of all tenants in England and Wales.

The statistics suggest an improving trend has gone into reverse. Severe arrears were running around 50 per cent higher in 2012 than in 2011 but the number had improved significantly toward the end of the year. The number of cases fell by 14.5 per cent in the final quarter.

No need to worry it's guaranteed income, that's what the nice man said.

[Mrs Bear]

http://www.telegraph.co.uk/finance/personalfinance/borrowing/9971243/Buy-to-let-landlords-warned-of-rise-in-severe-arrears.html

No need to worry it's guaranteed income, that's what the nice man said.

Last weekend there was an article about BTL and rents in one of the papers, forget which. There was a quote from some lettings management company (the name included Midas - I thought that was telling) saying they raised rents as often as possible. There were scathing remarks about one of their LLs - she didn't want to raise the rent of her property since the tenant was very nice and always sent her a Christmas card. Reponse from Midas, 'Give us an extra x% a year and we'll send you a Christmas card!'

It was all particularly sickening.

By contrast there was an opinion from another big LL or lettings co, forget which. This one said he believed in keeping rents slightly lower than local market rate and certainly not raising them as often as you could get away with. He said it paid to retain good tenants at slightly lower rents, and in his opinion constant greedy rent-raising only led to voids and cost more in the long run.

[goldbug9999]

By contrast there was an opinion from another big LL or lettings co, forget which. This one said he believed in keeping rents slightly lower than local market rate and certainly not raising them as often as you could get away with. He said it paid to retain good tenants at slightly lower rents, and in his opinion constant greedy rent-raising only led to voids and cost more in the long run.

Ive been paying the same rent for 5 years.

[dances with sheeple]

£350 central Edinburgh 1997, £450 central Edinburgh now. Honestly don`t know why landlords bother, apart from supplying me with comfy flats.

[Frank Hovis]

Is it good news day?

[AThirdWay]

£350 central Edinburgh 1997, £450 central Edinburgh now. Honestly don`t know why landlords bother, apart from supplying me with comfy flats.

What do you rent for that? A room?

[The Knimbies who say No]

Last weekend there was an article about BTL and rents in one of the papers, forget which. There was a quote from some lettings management company (the name included Midas - I thought that was telling) saying they raised rents as often as possible. There were scathing remarks about one of their LLs - she didn't want to raise the rent of her property since the tenant was very nice and always sent her a Christmas card. Reponse from Midas, 'Give us an extra x% a year and we'll send you a Christmas card!'

It was all particularly sickening.

By contrast there was an opinion from another big LL or lettings co, forget which. This one said he believed in keeping rents slightly lower than local market rate and certainly not raising them as often as you could get away with. He said it paid to retain good tenants at slightly lower rents, and in his opinion constant greedy rent-raising only led to voids and cost more in the long run.

Common sense does not apply to churn merchants.

[Bruce Banner]

Ive been paying the same rent for 5 years.

Me too.

[spyguy]

I'm noticing the length of voids at the moment.

The 'Let By' signs are being left up for months which means either its not let (hangover from 'Sold' days), or they don't need another 'Let' sign.

Neithers a good sign for a LL.

I also noted the few half-ar5ed attempts at the normal Easter flyers - 'We can !!SELL!! your house. Buyers lined up, et etc'' only came to a couple of flyers.

Nomrally I get a couple of day during the easter week. Must be the snow.

The flyers also had 'We've can rent your house' plastered over them.

[The Knimbies who say No]

http://www.telegraph.co.uk/property/property-club/9959044/landlord-help-rent.html

Landlord help: how to make more money – the right way

Landlords need to conduct rent reviews on a regular basis but they should try to avoid alienating good tenants and, therefore, the costly re-letting process.

What is more valuable to you as a landlord: raising the rent yearly in line with inflation, however often you have to remarket the property? Or keeping hold of a good tenant and saving yourself the time and effort of having to re-let the property every year?

In London, rents have risen by 6.2 per cent in the last year (compared to 3.3 per cent nationally) and now average £1,086 a month, according to LSL Property Services’ latest Buy-to-Let Index. Landlords may be feeling more bullish about being able to raise their rent regularly.

That’s certainly the approach encouraged by investment company Midas Estates, whose services include property management. “We had one client who chose to keep her existing tenant rather than take on someone who would pay an extra £120 a month because the current tenant was a nice person and sent her a Christmas card every year. I told her we’ll send her a Christmas card every year if she’ll pay us £120 a month!” says Midas Estates’ Robin Campbell.

“The thing to remember is that your tenant knows they are on a good deal and won’t make waves while they are,” Campbell adds. “But we conduct rent reviews every six months and increase the rents as often as possible.

“We also recommend using a two month notice period so there is maximum time to market the property and handover is less likely to include any significant void period. We also never sign on a new tenant on a six-month agreement in June or July because we don’t want them leaving over Christmas, so we use eight, 10 or 12-month tenancy agreements to minimise the risk of a void.”

Members of the Residential Landlords Association (RLA) – who represent 16,000 private sector landlords in England and Wales – feel differently, however. In a recent survey, 56 per cent said they would be freezing rents this year, mainly in acknowledgment of tenants facing real-term cuts to their wages. A third would raise prices and the rest were undecided.

UK landlords today are widely portrayed as cashing in on the “rentysomething”generation who can’t afford to buy. But a recent English Housing Survey – which shows that private sector rents nationwide increased by just over 7 per cent between 2008/2009 and 2011/12 when inflation over the same period was 12.5 per cent (and the social rented sector saw rents rise by nearly 17 per cent over the same period) – suggests greed may not be the main driving force of every landlord in the land.

“The issue of raising rents is very topical,” says Samantha Cooper from Cooper Associates independent mortgage advisors. “Most rents are rising due to demand. But in the event of the mortgage market relaxing and rental demand decreasing, they won’t forget the hikes in their rent and will be more likely to move to a lower rental payment.

"Most of our landlords believe that it’s better to keep the rent at around market value – not low, but average – and keep a good tenant.”

David Lawrenson, author of Successful Property Letting and himself a landlord whose portfolio focuses on two/three-bedroom terraced houses in south-east London and east Kent, advises against greed.

“Keep your rents a bit below the market rent and don’t always push for the highest figure. I usually pitch at 5-10 per cent below the market rate, build up a lot of interest and invite candidates to view the property within 20-minute intervals of one another, so they can see the demand. Then you pretty much reach the market rate anyway,” he says.

“The value to you of good people who will take care of your property is worth far more than the money you will need to spend re-letting the property – even if you do it yourself.

"Any gap between tenants, which there invariably is, can gobble up any profit made from the higher rent.”

Good communication is the key to making rent hikes more palatable, suggests Dan Channer from Finders Keepers lettings agency in Oxfordshire. “Most of us will understand a reasonable inflationary increase. Our rents rose on average by 3-4 per cent across 2,500 properties in Oxfordshire,” says Channer.

"It would be good practice to survey what rent truly comparable properties are achieving. If yours is significantly less but you want to keep your tenant, then indicate what you would be re-marketing the property for, should they not wish to renew, but at the same time offer a renewal around inflation rate to demonstrate they are getting good value.”

Channer advises starting the rent review process 12 weeks before the tenancy ends, allowing time for the tenant to express their point of view and for you to remarket the property if necessary.

“Sometimes your tenant might be willing to pay a little more if you improve the property, such as redecoration... or a better shower, new carpets or curtains,” he says. “These things typically get done between tenancies, but can also be an excellent way of retaining a great tenant.”

Join The Property Club to receive exclusive tips and advice on becoming a landlord

Misses the point that voids are risky because they allow the opportunity for the foolhardy LL to take a void and then end up with less rent, and a possibly worse tenant than they had before. Most tenants are (I imagine) happy to renew to pay pay the same rent year to year, so drops in the market rate likely happen in the period where properties are empty and the pressure is on to let them again. In bubbleicious London things are clearly different, only upwards rent reviews as often as possible and agents pretending that inflationary' increases are reasonable despite it not being obvious what RPI has to do with rents. I suspect they might not take it the same way when inflation is low or negative.

It's a puff piece of course, but the notion that rents are not rising in most places doesn't even get a look in, and some will be counting the cost if they turf someone out just to gain a rent increase that fails to materialise.

All very unfamiliar to me when I was looking for a rental recently, albeit not in London. Agent pretty well stonewalled anything over a 6 month deal on most places, I said I wasn't interested in anything less than 18 months. Surprisingly, when the LLs were offered a multi-year AST, they agreed pretty quickly. Funny that. No rent reviews for me, thanks.

here's the webpage for Midas:

http://www.midasestates.com/property-investments/

Surprise, a footballer and a rugger player are co-directors, whatever that is:

Mark Regan MBE: World Cup Rugby Player

Lee Johnson: Championship Footballer

I wonder if an MBE would endorse the comments made by his colleague in the article above..?

Edited April 4, 2013 by cheeznbreed

[isg]

During my time as a landlord whilst living in Sydney and letting my flat in London I never increased the rent on a sitting tenant and I never tried to get the best rental income. Why would you antagonize someone paying your mortgage for you. Unless of course as a landlord you are perilously close to the edge financially.

[disenfranchised]

Mark Regan can be contacted at Ronnie34@talktalk.net if anybody would like to share their impressions of Midas with him!

[btl_hater]

Nice guy Robin. Where would this country be without his sort?

https://plus.google.com/114877952951951570293/posts

[@contradevian]

http://www.telegraph...re-arrears.html

No need to worry it's guaranteed income, that's what the nice man said.

Made me chuckle that did.

[spyguy]

Rentals always strikes me as a risky business.

You are providing an expensive service to people who, on average, don't have much money.

Unless you buy the house very, very cheap i.e. less than 2 times the local average wage then I don't think you've got much wiggle room.

BTL, where people have been buying houses at > 5 local wage, strikes me as abut a good a business as suing people with no money.

[@contradevian]

Rentals always strikes me as a risky business.

You are providing an expensive service to people who, on average, don't have much money.

Unless you buy the house very, very cheap i.e. less than 2 times the local average wage then I don't think you've got much wiggle room.

BTL, where people have been buying houses at > 5 local wage, strikes me as abut a good a business as suing people with no money.

I agree its preposterous really. I would think it unlikely that in the long run, the market would allow a "financial intermediary" between the occupant and the bank. Not only that, an additional layer of middle men leeches such as letting agents.

[dances with sheeple]

What do you rent for that? A room?

Good sized flat, bedroom and boxroom, safe area (for a city) 10 minutes to Princes St. The key is negotiating directly with a private landlord, the ones who know what they are doing, and know that the only way is down for BTL and want to keep long term tenants. The rental agents tried to create a "bottom" of 450 p.m for these tenement flats in Edinburgh two or three years ago, and it held for a while, but that is now slipping away, I am seeing £400 even £350 p.m (okay this would be probably bedroom and kitchen in the same room) Edinburgh is not London, you can`t ask and sustain crazy rents up here, and London will also tank when HB cuts waken landlords up IMO.

The last room I rented was in a house in the same street as Fred the Shred (although I didn`t know he was there until the police protection and protesters turned up in the wake of the RBS collapse) that room was £333 p.m, and could have been £250 p.m if we had rented the fourth bedroom out, again, a landlord who realised that £1000 p.m for as long as you want is better than months and months of voids if you ask for £2000. This was a number of years ago, the so called height of the boom, and if you spent time looking the deals were there. Can`t see a bright future for BTL in the UK to be honest.

Edited April 5, 2013 by dances with sheeple

[dances with sheeple]

Rentals always strikes me as a risky business.

You are providing an expensive service to people who, on average, don't have much money.

Unless you buy the house very, very cheap i.e. less than 2 times the local average wage then I don't think you've got much wiggle room.

BTL, where people have been buying houses at > 5 local wage, strikes me as abut a good a business as suing people with no money.

Or in some cases have more money than the average stretched landlord/debt junkie mortgage borrower

[RufflesTheGuineaPig]

Or in some cases have more money than the average stretched landlord/debt junkie mortgage borrower

The thing with being a landlord is it's a relatively safe place to park your money that will keep pace with inflation over the long term, where-as interest rates are currently BELOW inflation.

Over the long term, with property, you will ALWAYS get your money back... over a long enough term.

[dances with sheeple]

The thing with being a landlord is it's a relatively safe place to park your money that will keep pace with inflation over the long term, where-as interest rates are currently BELOW inflation.

Over the long term, with property, you will ALWAYS get your money back... over a long enough term.

Not if you borrowed/bought at the peak of the bubble? The flat I rent now IMO should sell for about 60k in a realistically priced world, in fact I spoke to someone at work a few years ago who had paid about 60k for a similar flat (different area of the city), just before the property ponzi really got started, he was happy with that price level and comfortable in the knowledge that he could make the payments and clear the loan in a reasonable time, that mental comfort was denied to those who bought after him because similar flats were soon 120k, and I think some similar to mine were going for 170K just at the peak of the madness. It was based on, "good postcode", "safe area", "Great transport", "Near a good school". No one stopped to consider where the money came from, and if that money supply could be turned off, so IMO, for the sort of flat I rent, the coming cuts, change in sentiment, unemployment, lack of students, higher rates, less mortgage availability etc etc will make it hard to shift one for more than 60 - 70k, so if you bought into the bubble you lose IMO, because there are just too many similar flats in a city like Edinburgh, and they are all "near the castle" and "near lovely green space", in other words, nothing special, nothing out of the ordinary.

[Frank Hovis]

The thing with being a landlord is it's a relatively safe place to park your money that will keep pace with inflation over the long term, where-as interest rates are currently BELOW inflation.

Over the long term, with property, you will ALWAYS get your money back... over a long enough term.

Why single out property? Gold, rice, stamps, antiques, fine wine. Buy in a bubble and then if you wait long enough inflation means that the nominal will eventually rise to the price you paid. You've still lost money but can kid yourself that you haven't. If you're holding property then add in rates, insurance, voids (if renting) and the crippling cost of major repairs such as re-roofing or anything structural. Happy BTLing.

[spyguy]

The thing with being a landlord is it's a relatively safe place to park your money that will keep pace with inflation over the long term, where-as interest rates are currently BELOW inflation.

Over the long term, with property, you will ALWAYS get your money back... over a long enough term.

No. I strongly disagree with that statement.

You are making quite a lot of assumptions.

1) Do you have finance on the house?

2) Maintenance can be very expensive esp. with an empty house.

Ever been in a house where the pipes or water tank have burst and nobody has noticed for a few months?

Ever tried getting rid of squatters?

Ever seen the state of a new build thrown up in the late 80s?

I have, they need knocking down.

All houses eventually fall down.

3) Demand changes.

Go to Grange Town in Middlesbrough (or Wakefied or Salford or Stoke or Basingstoke, etc).

Companies and work move on.

30 odd years ago, the concept of ICI or British Steel not employing >10,000 in Middlesbrough would have seemed as unbelievable as the City of London not employing that many people in 2020, or China funding the USAs 7% spendign deficit.

Things change, and not always for the better and to your advantage.

[dances with sheeple]

No. I strongly disagree with that statement.

You are making quite a lot of assumptions.

1) Do you have finance on the house?

2) Maintenance can be very expensive esp. with an empty house.

Ever been in a house where the pipes or water tank have burst and nobody has noticed for a few months?

Ever tried getting rid of squatters?

Ever seen the state of a new build thrown up in the late 80s?

I have, they need knocking down.

All houses eventually fall down.

3) Demand changes.

Go to Grange Town in Middlesbrough (or Wakefied or Salford or Stoke or Basingstoke, etc).

Companies and work move on.

30 odd years ago, the concept of ICI or British Steel not employing >10,000 in Middlesbrough would have seemed as unbelievable as the City of London not employing that many people in 2020, or China funding the USAs 7% spendign deficit.

Things change, and not always for the better and to your advantage.

Good points. Being stuck with a property no one wants to buy must be very frustrating, and even scary for the owners? A bit like being caught in a Bail-in you had plenty of warning about but need someone else (a Greater Fool) to help you liberate the money? I will only buy once I`m sure I could break even when/if selling on, but the way I see sentiment going over the next few years, houses will need to be plenty cheap to make the gamble worth it.

[RufflesTheGuineaPig]

No. I strongly disagree with that statement.

You are making quite a lot of assumptions.

1) Do you have finance on the house?

2) Maintenance can be very expensive esp. with an empty house.

Ever been in a house where the pipes or water tank have burst and nobody has noticed for a few months?

Ever tried getting rid of squatters?

Ever seen the state of a new build thrown up in the late 80s?

I have, they need knocking down.

All houses eventually fall down.

3) Demand changes.

Go to Grange Town in Middlesbrough (or Wakefied or Salford or Stoke or Basingstoke, etc).

Companies and work move on.

30 odd years ago, the concept of ICI or British Steel not employing >10,000 in Middlesbrough would have seemed as unbelievable as the City of London not employing that many people in 2020, or China funding the USAs 7% spendign deficit.

Things change, and not always for the better and to your advantage.

My comment clearly related to cash purchases, as I reference the interest you would earn on your money otherwise.

Over a long enough term inflation would erode your savings and raise land values.

Land is land. We aren't making any more of it. If you own it, it's your forever.

All that matters is the length of time you are prepared to wait to get your money back.

It's simply a matter of maths.

[dances with sheeple]

My comment clearly related to cash purchases, as I reference the interest you would earn on your money otherwise.

Over a long enough term inflation would erode your savings and raise land values.

Land is land. We aren't making any more of it. If you own it, it's your forever.

All that matters is the length of time you are prepared to wait to get your money back.

It's simply a matter of maths.

The majority of BTL/private buyers don`t buy for cash, meaning that when rates go up the cash buyer who bought at peak will have his/her investment pot reduced as others default on their loans adding to downward price pressure? Buying with debt into the ponzi was daft, buying in with cash was suicidal