A step by step guide to becoming a successful landlord

A step by step guide to becoming a successful landlord

Whether you’re a property mogul with a to-die-for portfolio of houses, or you’re just renting out your wife’s old flat – you’ll need to get your head around the simple steps of being a landlord.

Getting into buy to let can be a great way to boost your income. And if you play your cards right, you may even be able to make a career of it.

Of course, there’s more to it than just buying a property and finding some tenants to pay the rent – you have legal responsibilities to make sure the home is safe and suitable for the tenant.

This handy visual guide from specialist mortgage providers, Commercial Trust, will help point you in the right direction.

guide-to-being-a-landlord-for-web

Commercial Trust guide to being a landlord

 

Positive sentiment on future house price growth in UK slips to three year low

Household sentiment on future house price growth in the UK has slipped to a three year low, with 23.7% believing that the value of their home has increased over the last month.
Some 4.4% believe that prices have fallen, according to the latest house price sentiment index from Knight Frank and Markit Economics with the reading falling from 61 to 59.7.
Households in the North East perceived that the value of their home fell in June, the first time that households in any English region perceived house prices had fallen since August 2013.
The future HPSI, which measures what households think will happen to the value of their property over the next year, fell to 67.7 in June from 70.3 in May. This is the lowest reading recorded by the index since August 2013.
The gap between sentiment in the North and South of the UK is now wider than at any time since the inception of the index. But some 6.5% of UK households said they planned to buy a property in the next 12 months, up from 5.4% in May and the highest number since August 2015.
‘The decline in the future household sentiment index to a near three-year low coincides with growing uncertainty over the result of next week’s European Union referendum as the debates over the UK’s future step up a gear,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
‘The proportion of households who expect the value of their home to fall over the next 12 months rose to the highest level in nearly two years, but overall households still expect the value of their property to continue rising in the coming year, despite the uncertainty about the result of the vote,’ she explained.

Source: Property Wire

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Asking Prices Hit Record High Despite Looming EU Vote

  • Housing market momentum pushes price of property coming to market up by 0.8% (+£2,320) to new high of £310,471
  • Desire to buy and lack of supply lead to fall in time to sell to 57 days, the fastest ever measured by Rightmove
  • Some signs of referendum-associated uncertainty with fewer new sellers coming to market:
    • newly-marketed property numbers down 5.3% compared to average at this time of year
    • most reluctant are owners of larger homes (four or more bedrooms), down 6.6% on the average

The average price of property coming to market has hit a new high of £310,471 with a monthly rise of 0.8% (+£2,320). There have been price rises every month so far in 2016, showing that the uncertainty associated with the EU referendum has failed to halt this year’s upwards price momentum.

This is in contrast to the run-up to the May 2015 general election, when the electoral uncertainty resulted in a price fall of 0.1% in the month of the election. This year the first quarter buy-to-let surge has exacerbated the shortage of suitable property for sale, and with ongoing buyer demand fuelled by cheap mortgage money, there appears to be greater resilience. The result is that the average time it takes to sell a property is at its lowest level since Rightmove started monitoring it in 2010.

Miles Shipside, Rightmove director and housing market analyst commented:“In many parts of the country, the over-riding factor of supply outstripping demand has so far overcome buyers’ usual reluctance to make major financial decisions at times of political uncertainty. Most seem to be getting on with the certainties they can control, namely if you find a suitable property snap it up. Indeed the figures for average time to sell indicate that properties are being snapped up more quickly than ever.”

The average number of days to sell stands at 57 this month, down from 60 the previous month. At this time last year it was 65 days. While some prospective buyers are putting in offers within hours or days, this is an average for all properties and the timescale is from when a property is first marketed on Rightmove to when the estate agent marks it as “sold subject to contract”.

While most of these headline figures show few signs of pre-referendum distortion, there does appear to be uncertainty among those contemplating putting their properties up for sale. Fewer new sellers are coming to market, with this month’s numbers being 5.3% below the monthly average for this time of year since 2010. The most reluctant are owners of larger homes, those with four or more bedrooms, with 6.6% fewer sellers over the same time period. Given the well-documented structural shortages of housing supply any longer-term reluctance of owners to come to market would be a worrying trend.

Shipside observed: “If you’re debating whether to trade up and make a big financial commitment you naturally might hesitate before putting your property on the market just a few weeks before you know the vote outcome. With mere days to go the number of new listings is still about 95% of the norm for this time of year, so the drop-off is relatively small in spite of what many are calling the biggest vote of our generation. This could mean that people are struggling to assess what the impacts might be, or are choosing to ignore them until they become more apparent. A vote to Remain should mean that the housing market quickly returns to its previous norm, but a vote to Leave would create political and economic uncertainty, which historically has had more serious repercussions.”

Source: Rightmove

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Do you know your gas safety responsibilities?

The Gas Safe Register has put together a factsheet outlining a landlord’s gas safety responsibilities

This factsheet explains landlords’ gas safety responsibilities and is intended for both landlords and tenants.

Overview

If you live in rented accommodation, your landlord has legal responsibilities when it comes to gas safety.

Landlords have legal duties for gas safety. These are that gas pipework, gas appliances and chimneys’/flues are maintained in a safe condition. Gas appliances owned by your Landlord which are provided for your use must be checked annually by a Gas Safe registered engineer. These responsibilities are laid out in the relevant gas safety legislation, such as the Gas Safety (Installation and Use) Regulations 1998, in Great Britain.

Requirements

There are three specific duties to keep tenants safe.

Annual Gas safety checks

To make sure that any gas appliances and flue provided for tenants are safe for continued use. Landlords must arrange for them to be checked for safety every 12 months by a Gas Safe registered engineer.

Record

A record of this annual gas safety check will include specific information on the results of the tests carried out. A copy of the gas safety record must be provided to an existing tenant within 28 days of the check being completed or to new tenants before they move in. Landlords must keep copies of the record for two years.

Maintenance

Maintenance arrangements should normally involve a series of regular inspections and any necessary repairs. Landlords must ensure that gas pipework is maintained in a safe condition. Gas appliances and flues provided for the tenants use must also be maintained in a safe condition. Gas appliances and flues should be serviced in accordance with manufacturer’s instructions but if these are not available, annual servicing is recommended unless advised otherwise by a Gas Safe registered engineer.

There are no formal requirements for landlords to keep maintenance records. However, landlords will need to be able to show, if asked, that regular maintenance of the flues and appliances and any necessary repairs have been undertaken. Landlords do not have to provide maintenance records for tenants.

These duties do not extend to appliances in wholly non-residential buildings or parts of a building. For example, if you live in a rented flat over commercial premises, landlords’ duties will apply to the gas appliances, pipework and chimneys/flues serving the flat. Landlords duties will not apply to gas appliances, pipework or chimneys/flues used exclusively in the non-residential commercial premises below.

Landlords do not have an obligation to have any checks carried out on gas appliances owned by their tenant(s). Tenants are responsible for the maintenance and safety of their own gas appliances. Gas Safe Register recommends that tenants should have their own gas appliances serviced and checked for safety annually by a Gas Safe registered engineer.

What should I do to make sure my home is safe?

Access

Landlords need to ensure that they take reasonable steps to gain access to their properties in order to meet their legal responsibilities.

If you are a tenant you should allow the Gas Safe registered engineer appointed by your landlord access to your property to carry out maintenance or safety checks on appliances and/or chimneys/flues that the landlord provides for your use. Remember to ask to see the engineer’s Gas Safe register ID card to confirm they are registered and qualified to carry out the necessary work.

Tenants own appliances

You are responsible for the maintenance and safety of your own gas appliances. The landlord is still responsible for the maintenance of the gas pipework. However, if your Gas Safe registered engineer advises you of an issue with the chimney/flues in the property under other legal duties.

Remember whenever having any gas work carried out, always use a Gas Safe registered engineer holding the relevant qualifications for working on your gas appliance. To find or check a Gas Safe registered engineer go to GasSafeRegister.co.uk or call our free helpline on 0800 408 5500 or 01256 341514.

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Extended mortgage age limits show changing property culture

Changes in policies announced by leading lenders including Halifax and Nationwide to increase the maximum age limits on mortgage lending mean that borrowers could find it easier to get on the property ladder.

Many older borrowers have struggled to secure a mortgage into their pension years, even with guaranteed final-salary pension income.

Despite the default retirement age being phased out in 2011, and the rise in people living and working for longer, most lenders have stuck to the state pension age.

The announcements in May that Halifax and Nationwide were raising upper age limit to 80 and 85 respectively has been broadly welcomed by the property industry.

Mortgage lending in general surged just before March as second home buyers rushed to beat the stamp duty increases. The British Bankers Association said lending rose to £17.1 billion in March 2016. But overall mortgage lending remains with historically low levels.

The move to raise the threshold of the age limit offers property buyers extra flexibility and is believed it will help homeowners who have not cleared interest-only mortgages, and older ‘silver splitter’ couples divorcing and looking for new homes.

Abandonment issues – new laws to help landlords

Over a third of UK landlords have had a property abandoned by tenants before, according to new research from the National Landlords Association (NLA).

The problem was worst for Northern Landlords, with over 51% having experienced the problem – with more than half of North Eastern landlords (58%) having experienced an abandoned property.

A much lower 31% of landlords in the South West have had a property abandoned before, and a mere 33% in London.

Abandonment is when a tenant vacates a property before the tenancy is over, but fails to inform their landlord. As the tenant often leaves without paying outstanding rent, this poses multiple problems for the investor – compounded by the fact that it’s a criminal offence for the landlord to take any steps toward preventing the continuation of the tenancy, because the tenant still has the legal right to return and take up residence at any point.

Instead, the landlord is forced to go through a lengthy legal process in order to regain the abandoned property, which can take months.

The new Housing and Planning Act, which contains measures that aim to tackle the problem, recently received the Royal Ascent. The new measures also contain proposals allowing local councils to keep hold of the proceeds from prosecuting rogue landlords, as well as introducing more rigorous penalties and banning orders for serious or repeat offenders.

CEO of the NLA, Richard Lambert, said: ‘The process of recovering an abandoned property is too long, frustrating, and costly for landlords at the moment. Many people will be shocked by just how common this problem is, and landlords will be relieved to know that the Housing and Planning Act will create a new process to deal with the issue, giving them far greater security and peace of mind when recovering properties they believe to have been abandoned.’

Home-owner house purchase lending in Wales up year-on-year

Home-owner house purchase lending in Wales up 25% year-on-year in first quarter says Council of Mortgage Lenders (CML).

  • Home-owners borrowed £850m for house purchase, down 16% quarter-on-quarter but up 29% year-on-year. They took out 6,600 loans, down 16% on the previous quarter but up 25% on quarter one 2015.
  • First-time buyers borrowed £330m, down 20% on the fourth quarter 2015 but up 22% on the same period last year. This totalled 3,000 loans, down 19% quarter-on-quarter but up 20% year-on-year. The average age of a first-time buyer is now 29 years old.
  • Home movers borrowed £530m, down 12% on the fourth quarter 2015 but up 36% compared to a year ago. This totalled 3,600 loans, down 14% quarter-on-quarter but up 29% year-on-year.
  • Remortgage activity totalled £420m, down 2% quarter four but up 20% compared to a year ago. This came to 3,700 loans, down 3% quarter-on-quarter but up 12% year-on-year

Julie Ann Haines, CML Cymru chair, commented:

The first quarter of the year typically sees a seasonal lending dip, but the year-on-year growth in activity in all lending types is encouraging. That this is the best first quarter performance for all lending types in Wales since 2007 suggests a growth period for the market. With affordability improving this quarter, supported by a generally favourable economic backdrop, we would expect further growth in lending as we go into the summer months.

Wales house purchase and remortgage lending in the first quarter

While seasonal factors generally cause activity to be lower this period, this is the highest number of loans and the most borrowed for house purchase in the first quarter of the year since 2007. This was also the case for first-time buyer, home mover and remortgage activity.

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Chancellor says house prices could fall by up to 18% if UK votes to leave EU

House values in the UK could fall by up to 18% if people vote to leave the European Union in the June referendum, warned the Chancellor of the Exchequer who is a firm remain campaigner.

George Osborne, speaking at the G7 finance ministers’ meeting in Japan, revealed that the forthcoming Treasury analysis on the short-term economic consequences of a leave vote will suggest a wide range of possible negative impacts on families and businesses, including the housing market.

The report concludes that by 2018, home owners may be hit as growth in Britain’s housing market may reduce by at least 10% and up to 18% compared to what is expected if the UK remains in the EU, as heightened uncertainty generated by Brexit hits financial markets, consumer confidence and home values.

Independent authorities, including the International Monetary Fund, have warned that if Britain votes to leave the EU then mortgage interest rates would also rise because of financial market instability, meaning fewer people being able to get a mortgage and mortgage costs rising for all.

The Treasury conclusion follows warnings from Virgin Money’s Chief Executive, the CEBR, S&P, Fitch and Deutsche Bank about the potential negative impact on Britain’s housing market from a vote to leave the EU.

The Chancellor said finance ministers from other G7 countries attending the summit in Sendai confirmed that in their assessment, leaving the EU could cause significant financial market turbulence.

The Chancellor also challenged the idea that negotiating a new relationship with the EU would be easy if the UK votes to leave.

In the coming days the Treasury is going to publish analysis of what the immediate impact may be. Osborne also said that mortgages may get more expensive and mortgage rates may go up.

‘If we leave the European Union there will be an immediate economic shock that will hit financial markets. People will not know what the future looks like. And in the long term the country and the people in the country are going to be poorer,’ Osborne said.

‘That affects the value of people’s homes and the Treasury analysis shows that there would be a hit to the value of people’s homes by at least 10% and up to 18%. And at the same time first time buyers are hit because mortgage rates go up, and mortgages become more difficult to get. So it’s a lose-lose situation,’ he claimed.

Critics of the new Treasury analysis are likely to point out that the fall in prices is only compared with where they would have been if there was no vote for Brexit. The independent Office for Budget Responsibility predicts a rise of 9.4% over the next two years and a further 5% over the following year.

However, most home owners have seen the price of their home rise by 9% in the last 12 months so the government forecast actually suggests that homes would be worth between 0.6% and 8.6% less in cash terms than they are now.

Source: Property Wire

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UK landlords looking for cheaper properties due to stamp duty surcharge

Landlords in the UK are looking for cheaper properties in response to the new 3% stamp duty charge on additional homes, according to the latest lettings index to be published.

The average price paid by investors in April fell by 8.3% month on month, from £194,000 to 178,000 and London saw the biggest change in behaviour with landlords buying homes costing 16.4% less than the previous month.

At the same time, the number of homes sold to first-time buyers increased by 19% between April 2015 and April 2015, while the number of homes bought by landlords halved, the data from the Countrywide Lettings index shows.

The index also reveals that average UK rental growth continued to slow. The rise of 2% in April was less than half the 4.7% recorded in April 2015.

London saw the biggest fall in average price paid, down from £436,000 in March to £365,000 in April. While overall house prices in London rose 13.9% over the last year, the capital’s landlords paid an average of 8.2% less than they did in April 2015.

However, generally lower priced markets saw a less marked response from landlords with average prices paid by investors rising month on month in the North East and Yorkshire.

April also saw fewer landlords purchasing homes, after a spike in activity in the first three months of the year. Landlords rushed to complete on their purchases before April 1st, in order to avoid a bigger stamp duty bill with 61% more landlords buying in the first quarter of 2016 compared to the first quarter of 2015.

The report points out that many sales which would otherwise have normally completed in April were pulled forward into March. Around half the number of landlords bought in April 2016 compared to April 2015. The number of sales to first time buyers rose by 19% over the same period.

Average rents increased 2% over the last year, leaving the average monthly UK rent at £932. Rental growth is now half the rate it was in 2015 and the report suggests that affordability constraints and the increase in the number of homes coming onto the rental market continues to slow rental growth.

‘April’s fall off in investor activity seems to be the consequence of landlords bringing forward purchases to beat the stamp duty deadline. Rather than being dissuaded by the new 3% charge it seems that landlords are already adjusting their behaviour. In response to the extra purchasing costs many are choosing to buy cheaper homes that offer a higher yield and of course a lower stamp duty bill,’ said Johnny Morris, research director at Countrywide.

‘There’s early signs that first time buyer numbers are increasing in as investor activity has declined. But it’s too early to tell whether this is simply the after effects of the stamp duty rush or the start of a longer term trend,’ he added.

Source: Property Wire

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Weird pets and lack of charm are a turn-off for landlords

A pet giraffe could be a problem – landlords rely on gut instinct when choosing tenants

Insecure income and failed credit checks are the obvious tenant turn-offs, but new research from BDRC, the UK’s largest independent research consultancy, says that bizarre pets or bad attitude can be equal deal-breakers.

BRDC’s respected Landlords Panel survey revealed that would-be tenants should dress smart and be open and honest. Enthusiasm for the property came out as a strong plus. Proof of income, references and your employment history could all help landlords choose you as the ideal tenant, said the Panel.

“The study also focussed on the major turn offs for landlords. The factors which raised the most alarm bells were having bad or no references, a low, irregular or non-existent income and failing a credit check,” explained a BRDC spokesman.

“Despite this, the tenant’s own character was still very important, with almost a fifth of landlords citing a lack of manners or simply the look of the tenant as causes for worry. Almost three quarters of landlords said they would trust their gut instinct when deciding on new tenants,” he said.

Pets also played a part in the landlord’s relationship with the tenants. Only one in ten were always happy to allow a dog to take up residence. “Many worried that the pooch might damage the property, annoy the neighbours or leave a lingering smell,” said the spokesman.

As well as showing that financial security and a little charm come out on top, the research also held the spotlight up to some of the more peculiar tenant requests regarding pets. Requests range from cats and chickens through to the more problematic pigs, snakes and iguanas, with landlords even getting requests to let in most of the animal kingdom as room-mates.

“While a tenant’s tarantula might shock a squeamish landlord, “can I keep my horse in the kitchen?” is a request which is presumably too impractical for anyone’s consideration,” commented the BDRC of their findings.