Friday, May 20, 2011

“The calendar was one key reason for these late payments”

Rents reached record high in April, survey says

The average rent paid by tenants in England and Wales matched a record monthly high of £692 in April, according to a survey. Rents rose by 0.8% compared with the previous month and were 4.4% higher than a year earlier, letting agency network LSL Property Services said. Landlords were facing a decline in property values, and the proportion of tenants in arrears leapt, with 11.8% of all UK rent unpaid or paid late by the end of April.

Posted by khards @ 08:02 AM (1527 views)
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5 thoughts on ““The calendar was one key reason for these late payments”

  • “Rents reached record high in April, survey says”

    …But don’t ask for a payrise, unless you kindly ask Merv the Nerve first.

    Over a barrel?

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  • “The calendar was one key reason for these late payments”

    ~ Sorry Mr Landleachy, but the calender ate my rent! Well, it’s original.

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  • OK, lets see how the numbers stack..

    Let’s suppose we BTL a two bed flat in Salford Quays, where they are offered for £185k and rent for £850 pcm.

    We haggle a little, and get our flat or £180k

    We put £45k of savings down as a deposit and get a five year fix mortgage. Adding in the initial fee, the true cost of this loan is 7% p.a.

    So we are forking out £9,450 p.a. to service the loan.

    We offer the flat to let at £850pcm – so our headline rental income is £10,200 p.a. – £750 p.a. profit – yes?

    – No.

    Because we now have to make a few deductions..

    Void periods – not as bad as they once were, but still enough to knock at least 5% of the income

    Down £510 – still £240 in profit.

    Management costs. We’re a bit of a cheapskate, so we get a basic management arrangement to collect the rent etc. This costs us 10%

    Down £969 – now losing £729 p.a.

    Bad debt. Bit of a problem in bleak times, and most landlords have been there at some point. We’ll allow 5%, but claw a bit back off the management fee in lieu..

    Down £440 – now losing £1169 p.a.

    Short term maintenance – general redecoration needed every five years at cost of £2,000

    Down £400 – now losing £1569 p.a.

    Long term maintenance – these flats have fancy kitchens, bathrooms and heating systems that cost a lot to replace. Over 10 years, expect to spend at least £15k

    Down £1500 – now losing £3069 p.a.

    Accountants fees – yes, even with a management agency, you stil have to fork out. We’ll assume the accountant is at the cheap end of the scale.

    Down £150 – now losing £3219 p.a.

    Legal fees. In addition to the conveyance, you will need these people from time to time. Allow £200 p.a. spread over the longer term.

    Down £200 – now losing £3419 p.a.

    Stamp duty. Of course, this flat is your pension. Maybe, but maybe the situation will change. Foolish not to price in 10% of this p.a. and then regard it as a bonus if you keep the flat for more than ten years.

    Down £185 – now losing £3604 p.a.

    Insurance. Yes, as a landlord you need to insure both the fabric of the building and your liability as a landlord.

    Down £500 – now losing £4104 p.a.

    Statutory compliance. You can place fast and loose if you like, and at least flats don’t have gas; but if you don’t send an electrician round once a year to check all is well, your insurers might not be very friendy if something goes wrong.

    Down £100 – now losing £4204 p.a.

    So, you invest your £45k of savings in this little BTL wheeze, and its costing you £4204 p.a. for the privilege.

    Ah, but then there’s the capital growth…

    ..what capital growth!!

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  • Rents 4.4% higher than a year ago. but CPI = 4.5%, RPI = 5.2%. Trouble is, salaries aren’t keeping up so it’s unlikely rental gowth will match inflation without a growth in arrears, which will effectively lower rental growth.

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  • wanderinman says:

    From the article: “However, the calendar was one key reason for these late payments, according to LSL estate agency managing director David Newnes. “The final bank holiday of the month delayed many rental payments, but on top of this, thousands of tenants took advantage of the opportunity and booked holidays, which has impacted on the timely payment of rent,” he said. ”

    What a poor excuse! The vast majority of landlords insist on receiving rent by standing order. So rent will still be received irrespective of tenants being away on holiday.

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