Tag Archives: Renting Property

10Jan 2012

Property Landlord advice: Utility Warehouse still getting it wrong.

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By Steve Roulstone

Last year I had cause to write a Blog about the manner in which Utility Warehouse try to invoice Landlords when they have closed their account and the Tenant has not sorted the new supply out to their satisfaction. Not because they had not been contacted, not even because they had no contact details for the Tenant, no, purely because they were not satisfied with the manner in which the new account had been opened.

12 Months on?

No change, even though at the time, I had several long involved conversations with them about the letters I was receiving, even though the Tenant was doing everything possible to pay for their own account, Utility Warehouse continued to write to me as if the outstanding invoice was my responsibility. I can assure you the resulting phone calls were many and heated, but it took something like six weeks to straightened matters out and confirm the new Tenant was in deed, responsible for their own costs!

Time for another letter.

It was not that they had written again or even the consequences of the content of the letter that has dismayed me this time, but the fact that they had failed to close my account, even though their operatives tried to tell me they had (strange because the letter had my name and the same old account number on it!) Well, I say my name; they had managed to change the spelling and actually written to my next door neighbour therefore having the wrong address.

Unbelievable arrogance.

The letter was a request to set up a Direct Debit because mine had just been closed and whilst I have to admit that when I first called, my temper was not at its best, I did not take kindly to the UW representative trying to tell me they must be correct and that I was wrong in my assumptions, even when I asked what dates they had on the account and she confirmed it had closed in August 2010, the penny did not drop. I left her to work out that if the account had been closed in 2010 there was no longer any need for a DD to be set up!

Human error or system.

I called again! The excuse for the error, for error it obviously was, was what really gets to me about such organisations, because they tried to tell me that the letter with the old account number on it, with the change of spelling of my name and my next door neighbours address, must have been a technical error. Now is it me? Or is it blindingly difficult for a computer to randomly contact me a year after our last contact, with the name spelt wrong and at the wrong address? No, to me this must be human error and it just raises huge questions about the manner in which they operate.

Do they care?

The reaction that you receive from UW confirms without doubt that the answer is no, they really don’t, I laughed sarcastically at their representative when he said it was computer error and he indignantly asked me why I was laughing. Well the actual answer is the frustration of dealing with them, what he got was me asking if he wanted to know the full story of my dealings with them because then he might just understand! No they do not care and I would love somebody to convince me differently, because as all Letting Agents are aware, the most difficult and unorganised companies we have to deal within our day to day dealings would be confirmed by everybody as Utility Companies!!

 

29Dec 2011

Tenant advice Rents falling?

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By Mike Edwards

Asking rents have dipped for the first time in ten months, according to a November rent index. The drop is only a tiny 0.4% and so hardly means upgrading the Xmas dinner from turkey to a leg of beef, and means that on average so far this year rents have gone up by 3.5%. This means the average UK rent is now £717 a month but this of course masks massive regional variations, especially in London where the average rent is now 1,033 a month in London. In the index from LSL there appears to be a slight improvement in tenant finances, with 9.3% of all rent late or unpaid at the end of November, compared with 10.1% at the end of October.  Again welcome though this improvement is it is a very small change.              

Interestingly the survey estimates average yields for landlords at 5.3% but warns that landlords stand to make a loss on their properties. The average total annual return per property in November was 2.2%, compared to 1.4% in October. In cash terms, this was an average of £3,726 – equivalent to £7,700 in rent with a capital loss of £3,974. More worryingly despite these times of apparently insatiable tenant demand as would be buyers find themselves frozen out of that market, if property prices maintain the same trend as the last three months, an investor could expect to make a total annual loss of 0.7% over the next 12 months – equivalent to £1,144 per property. In terms of the arrears position although there are fewer tenants actually behind with their payments in some shape or form this in part is almost certainly down to a tougher line being taken by Landlords who themselves are finding their finances under pressure, so they are taking action sooner to ensure any new arrears cases are dealt with promptly.   

But again the picture looks bleak with a deteriorating labour market and unemployment at a 17-year high and likely to rise further. As it climbs, a growing number of tenants’ household finances (and Landlords?!) will come under strain, and overall tenant arrears are likely to climb in the coming year. 

There is no doubt that life for landlords is not as sweet as it looks and although not as hard for buy-to-let investors to secure mortgages as it is for first-time buyers, it is still very difficult. Indeed the apparent increased readiness of lenders to fund BTL again with higher LTV mortgages only make that market look healthy when compared to the residential mortgage market which in historic terms is all but flat lining. But even allowing for a slightly healthier look on the BTL front lending to property investors is still very low by historic standards. There were 34,500 buy-to-let loans in the last quarter this year compared to the same three months in 2011.

22Dec 2011

Current Property News: Housing stock stuck in the mud?

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By Mike Edwards

Mortgages could become harder to get, with one in ten borrowers currently eligible for a mortgage being turned down in future. The Financial Services Authority has now published its long-awaited Mortgage Market Review. Its own impact assessment says that the proposed reforms could strip £2.9bn out of the economy because it would mean fewer people buying and selling homes, and lead to a dramatic drop in mortgage lending, affecting one million borrowers. The FSA’s final consultation paper is designed to put a permanent end to the lending excesses that were prevalent pre-credit crunch. But the crackdown could have a severe impact on the already ailing housing market. Among its many recommendations is a new ‘affordability’ regime, which will include looking at a borrower’s household spending plus a ‘stress test’ for how a borrower would cope if interest rates went up.

The incomes of older people, those aged 50-plus and coming up for retirement, would be particularly put under the spotlight. In effect the responsibility for checking affordability passes from mortgage adviser to lender, and most mortgage sales will have to be advised rather than simply executed.
The FSA’s proposals also stipulate that borrowers will not be able to factor in the possibility of future house price rises, but must be able to show other, more robust ways of being able to pay back their mortgage. In an environment where lenders are already being extremely cautious with their lending criteria and indeed cherry picking there is a danger that by placing all affordability assessments at the doors of lenders’ risk teams, this could create an even stricter lending environment.
For mortgage prisoners in negative equity, there is a ray of hope in the proposals, which suggest that the usual affordability tests are waived for such home-movers provided they have a solid track record of repayments.

However it is not just first time buyers who are suffering, next-time buyers are having it even tougher than first-time buyers, says a startling new report from Lloyds TSB.  It says that the housing market has become the most unaffordable for ‘second-steppers’ in 24 years. Many bought at the peak of the housing market in 2007 but are now unable to move on, having seen the value of their home fall by an average of 23%, leaving them £10,000 in negative equity. The second-steppers, typically aged between 25 and 34, also need to earn more than first-time buyers in order to make their move – and persuade someone to give them a mortgage. In the South-East, the average price of a second-time home means  a second-stepper would have to borrow nearly seven times average earnings – which of course the SA proposals above would not allow even if a lender was foolish enough to offer such a loan..   

Even in the Midlands – the most affordable region for second-time homes – someone trying to move up the property ladder would have to borrow four times their average salary. The home affordability ratio has risen to 5:2 for second-time buyers – the highest level since records began in 1987. The ratio for first-time buyers is 4:1. In 2007, the reverse was the case. The issue of second-stepper affordability is a key one in trying to get the housing market moving again, with the current difficulties in this segment of the market restricting the supply of starter properties for first-time buyers as well as preventing many of those who need to move from doing so.

19Nov 2011

Current Property News: Rents rise in September.

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By Mike Edwards

There is no relief for tenants as rents rise in all regions for the first time on record, according to the latest buy-to-let index from LSL Property Services plc. September figures show the average monthly rent in England and Wales rose by 0.7% to £718, surpassing the previous record high of £713 in August. With annual rental inflation at 4.3%, the average rent is now £29 per month higher than September 2010.

Rents rose in all regions of England and Wales for the first time on record and as a result rents hit record highs in six regions. Not surprisingly rents increased the fastest in the South East and the East Midlands, where they rose by 1.8% and 1.1% respectively compared to August. The smallest increases were in the West Midlands (0.2%) and the North East (0.3%). However, over the course of last year, London’s rents have risen at a faster rate than any other region, increasing by 5.8%. However the appetite for UK property investment outside of the capital also remains subdued, with 12.5% of investors looking to acquire over the coming year.

LSL also report that annual returns on rental property dropped back in September after property prices fell annually. The average total annual return in September was 1.8%, the equivalent of £2,995 being £7,661 in rent, with a capital loss of £4,666. However, property prices in the last quarter have held up better than in the previous twelve months, and if this is maintained, a property investor could expect to make a total annual return of 8% over the next year.

Rising rents may prove to be a headache for tenants, but they are improving the outlook for investors – which may in turn encourage further investment in the private rented sector. Despite capital losses after house prices fell annually, growing rental incomes means returns are still in the black. The average yield rose from 5.2% to 5.3% in September, the highest level since the housing downturn, and outstripping many investments. So with house prices yet to resume their upwards climb, there are opportunities for prospective investors to secure profitable bargains.

Figures this week from Hamptons show that investors in the shape of cash buyers are being enticed back to the market. They have reported a yearly increase in cash buyer applicants (from 11.86% in September 2010 to 12.46% in September 2011) emphasizing the perceived strength of residential property as an investment asset. Marc Goldberg, head of sales at Hamptons International says: “Due to the long-term nature of property as investment class, many of our buyers prefer to invest their cash in bricks and mortar rather than more uncertain assets such as stocks and shares. Although the current economic downturn may have caused uncertainty, vendors can take heart that we’re seeing an encouraging increase in cash buyers ready to complete quickly.”

However, this picture of positivity jars with the appetite for investment seen in the latest Young Index figures, which appear to more accurately reflect the wider sentiment of continuing economic uncertainty. This quarter’s figures show a fall in the proportion of investors seeking to acquire property in London over the coming 12 months to 33.3% (from 46.3% in the previous quarter and 59.3% in Q4 2009).

04Nov 2011

Current Property News: Trapped renters equal half of the UK rental sector.

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By Mike Edwards

This information is taken from Rightmove’s Quarterly Consumer Confidence Survey out today. Trapped renters, tenants who would like, but cannot afford to, buy, make up 55% of the rental sector, with one in four of them over the age of 40, according to the portal’s latest Consumer Rental Forecast. Thus, this group faces the prospect of having to choose between a heavily reduced mortgage term to pay off any mortgage they do eventually take before they become pensioners, or continuing to pay off a mortgage into their 70s and beyond.

In rough terms recent surveys show that over half of those in rented accommodation would like to buy now, but can’t make the sums add up and, as a result, are trapped. The global economic woes that have left first-time buyer numbers at record lows will shatter the goals and aspirations of many as they face the reality of renting for far longer than they originally planned. Indeed those trapped and still renting when over the age of 40 could face the prospect of being an OAP mortgagee, or face difficulty getting a 25-year mortgage term if it takes them beyond lenders’ retirement age criteria. Generally most front line lenders will take age plus mortgage term to a maximum of 75

There is also a growing gap between demand and supply and demand continues to set records. But available stock is down 5% on the last quarter as the supply of new rental properties remains muted and tenants stay in properties for longer. The lack of supply means renters are resigned to paying more, with 53% of them expecting rents to rise in the next 12 months and 39% can see themselves still renting in three years’ time. On an Assured Shorthold Tenancy a properly served Section 13 notice to increase the rent leaves tenants with little option provided the newly sought rent is in line with local market levels for similar properties. The other danger for longer tenants is that it does not matter how much the rent is increased by, only that it reflects current trends. So any tenant that has been enjoying a fairly soft rent might find themselves with a nasty surprise if the Landlord or their agent monitors local rent and increases levels accordingly.

This of course is all good news for investors holding the type of property in demand especially in sought after locations. This combination of high tenant demand and upward rental pressure will be particularly appealing to long-term investors. Many investors say that attractive yields from rental returns, compared to returns on their other investments, are their main reason for investing in property. With the stock market continuing to offer the certainty of a stressful rollercoaster ride and safe cash investments delivering below inflation returns the solidity of bricks and mortar combined with high tenant demand and rising rents has growing investor appeal as a physical asset that could prove to be a better long term hedge against inflation.

14Oct 2011

Current Property News: Rental services being stretched during difficult times.

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By Steve Roulstone

At our office in Stafford, we are seeing many Landlords reviewing what they pay for our rental services, this is to be expected when everybody has to look at their expenditure very closely and where possible make savings. We have seen whole families change from a Fully Managed service to Tenant Find only and we hope that what they have witnessed over the last seven years whilst we have managed property on their behalf, will stand them in good stead, and of course should they need professional help then we will be available to assist wherever possible.

Review prices.

What we have done to assure our Landlords that they are getting good value for money is to look at what we charge for all of our services, by breaking down the different facets of what makes a Fully Managed service and price them individually.

Comprehensive cover.

 This of course makes quite a list, from Initially finding a Tenant through checking them in to the property, dealing with maintenance issues, visiting the property on a regular basis, collecting rent and paying via statement and of course chasing and pursuing arrears, as well as finally checking Tenants out of the property, which leads to where we normally started, with a review of the home and advice pre renting again.

Value for money.

Of course when you look at the charges broken down in this manner, then the overall average charge to a Landlord under Full Management no longer looks out of place, and at times we need to be aware of what saving a Landlord would make set against paying individually. Not that I believe Landlords are wrong to review what they pay, far from it, this is what  they should do as would I for regular occurring expenses, especially under the current financial restraints that everybody is feeling.

Review services.

What we should be able to do as Agents is be aware of the possible financial restraints our customers are going through and be ready to assist the process, which means we need to review every section of our service and ensure we can offer each separate part in a professional and cost effective manner. Because even though Landlords may wish to make savings, there are still bound to be parts of what we do that would make better sense and that Landlords would still prefer to be dealt with by others, just look at Property Visits, or of course Rent collection and arrears chasing. There is no doubt in my mind that just like any other organization in these difficult times, we need to be ahead of the game on our Landlord’s behalf, as the financial situation is not going to change (as my Father would say) ‘just yet a while!’

30Sep 2011

Property Landlord Advice: Rents rising in August.

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By Mike Edwards

Rents rose by 1.2% in August – the largest monthly increase in a year – but tenant arrears increased for the first time since April, according to the latest buy-to-let Index from LSL Property Services plc. The average rent increase to £713 per month across England and Wales in August, surpassing the previous record high of £705 in July. This is the largest monthly increase since August 2010 with rents rising fastest in Wales and the South East, where both saw increases of 2.1%, closely followed by London (1.5%) and the South West (1.3%).

The only regions to see a monthly fall in rents were West and East Midlands where prices dropped by 0.4% compared to July. Annual figures show that London has seen the highest rental figures, with rents hitting a new record high of £1,025 per month in August, an annual growth of 6.6% equivalent to £63 per month. According to even more recent figures the average rent in Greater London according to tenant referencing specialist HomeLet has now increased to £1,202. This is an increase of 12.2% compared to the same time last year but over the same period; the average salary of tenants in the region has increased by just 2.4%.

LSL also report that annual returns on rental property improved in August after annual decreases in property prices slowed. The average total annual return in August rose to 2.6%, as capital losses diminish. However, there are signs that tenants are already feeling the strain of the rent rises as tenant arrears increased for the first time since April, with 10.7% of all UK rent unpaid or late by the end of August. This is up 9% compared to the previous month. Unpaid rent totaled £300 million across the UK in August, up 19.5% from the £251 million unpaid in July.

However, August figures always show an increase in arrears because the holiday season often takes its toll on tenant arrears, with many households squeezed by summer holiday spending. While arrears may be expected to fall back into line in the short-term, the growth is indicative of the mounting pressure facing tenants. With rents rising so quickly, soaring inflation and an uncertain economic outlook as evidenced by the recent turmoil yet again in the markets, over the long-term one can only anticipate that rental arrears will become a growing financial problem for landlords.

23Sep 2011

Blog Review: Advertising Property on the Web – slowly slowly!!

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By Steve Roulstone

For my second Blog review, I have chosen one that I posted last July under the Property Landlord advise banner ‘Advertise on the Web or in the Press’ Not difficult to work out what is was about and my conclusion at that time was that if we wanted to continue to be visible to our Landlords, we needed to continue to advertise in the press, even though Tenants would almost exclusively use the Web.

Location Location.

One factor that I did not mention in the original Blog, is that for the majority of Tenants, the local press is not an option, as they find themselves moving to an area that they are unfamiliar with and of course local papers, which are the media for Property advertising are only available locally! Therefore when you are re-locating, the web is the only answer.

Few changes.

In fact, what has happened in the last year has hardly affected our decisions in this area at all. It is still the case that we need to advertise in the press so that Landlords can see that we are active and of course, the larger the advert (number of properties) the larger the image of the Company! This is especially important where we are in Stafford, because we have a large Farming Community and the importance of the local paper is not difficult to envisage. Interestingly, in Stafford, this has now developed such that it is the free papers that carry the Property sections. Therefore when we check with Landlords, it is the free papers that are being read and through which we are located.

Close second

Just behind that is of course what every Agent would wish for, recommendations, which still play a massive part in supplying new Business, but being located on the Web and I am happy to confirm, because of our postings through these pages, is growing year on year, but this has bought about a different scenario which cannot be ignored, when we decide where we are going to spend our hard earned advertising budget!

Where did they go?

In these austere times, the image of all Companies has to be considered. Any change has to be trumpeted and well planned as it is far too easy for potential customers to come to the wrong conclusion. I well remember when I started, the Agent who boasted of being the ‘biggest in town’ started to run in too problems. How did I know, well instead of taking a full page advert every week, they reduced in size, until eventually taking a quarter page. Good saving you may say, but what they did was reduce the size of the print, so that the advert read exactly the same but on a quarter scale!

Conclusions drawn.

The conclusion was clear for all to see and that is why I asked if they were for sale and indeed they were. After many gallons under the bridge and a decision not to purchase, the Company no longer exists and all local agents took a share of there portfolio when they closed (the cheaper option!) but the message was clear, manage all changes and be aware of your image. So to stop advertising in the press at all and those potential customers I mentioned, may come to the wrong conclusion and what we do not need is for that conclusion to throw doubt on either our remaining existence, or indeed our financial capabilities. Consider this, Landlords do not want us to earn an excessive return (Never a realistic proposition) but will also go elsewhere if they think you are in financial difficulties. Not a rumour I would like to be involved with, so the advertising in the press continues, but without doubt, its days are finally numbered.

30Aug 2011

Rental Issues: Holding a property for rent.

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By Steve Roulstone

It has been a week of issues that repeat themselves at differing times in our Stafford office and the length of time that we are able to hold property has once again come to our attention.  We always receive calls from people who have decided to rent for a period after selling a home and the advice is usually the same. ‘Call us back at the most, six weeks before you are ready to move’. I have written before about the differences between Renting and selling property and what must be appreciated to understand the Landlords and agents requirements but there is still a lot of misunderstanding about how long a Landlord will hold a property for a prospective Tenant.

Change of mind.

One of the issues that rarely gets mentioned, is the way in which the law operates for Tenants and the fact that they can proceed with the intention of moving in to a property for months, and then have a change of mind for whatever reason, the day before without any penalty. What needs to be understood is that the Landlord has to start the process all over again and stand the loss of rent caused by the Tenant pulling out of the commitment. Experienced tells us that the shorter the period between the Tenant choosing a home and the day they sign the agreement (the day they move in) the less chance of a change of mind.

Normal circumstances.

It is also accepted by the majority of people renting, that apart from the need to give notice in the house they currently rent, by far the majority will move within a three week period. In fact it is still far more common for us to have Tenants wishing to move within one week than Tenants wanting to move in over six weeks! So the market itself produces a normal scenario and this is what most Landlords will expect. Therefore, when we do get asked to hold a property for a longer than normal length of time, as we must always ensure we follow the Landlords wishes, it is very rare for a Landlord to agree, rather, allowing any subsequent Tenants who wish to progress at an earlier date to rent the property instead.

Risk is inherent.

It is when a Landlord does indeed choose a Tenant wishing to move at an earlier date that the problems arise, because even though we confirm that we cannot accept the application for an extended wait, advising people that they have lost the property concerned understandably causes upset. We always ensure that we do not take any payment or accept referencing forms until we are able to commit any Tenant to the process, but even then, by following the Landlords wishes, as we are bound to do by our contract with the Landlord, as the Agent it is our staff that get the brunt of the disappointment, but it does explain why we always try to stop people looking for anything more than six weeks before they wish to move.

19Aug 2011

Current Property News: Evicted Tenants to look in the private sector.

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By Steve Roulstone

So Councils are considering evicting Tenants from Public sector rented property because of the involvement of family members in the recent disturbances. (I will not call them riots because to me it was criminality and opportunism of the worst kind, so to avoid any link or possible connection with any kind of justification what so ever, let’s call a spade a spade!) It will be interesting to see exactly how any such person coming from the Public sector will fare with the referencing system (by professional referencing Companies)in the Private sector, because they have been sheltered from the harsh realities of requirements both financial and procedural by being in Council housing.

Referencing.

The main reason people fail professional referencing is the inability to afford the rent payable, and without the knowledge of the individual circumstances surrounding this particular case as reported above, if they were Benefit recipients, then at the very least a Guarantor would need to be provided, before a Landlord would even consider accepting Tenants on Benefit payments. The main reason is quite simple and nothing to do with the standard of Tenant, but because the Council pay in arrears, in four weekly instalments and because the Tenant has to continually confirm their own circumstances in order to continue in receipt of Benefits. Too often I have witnessed payments stopping because of this requirements and it can take up to six months to resolve in the worst cases and with the slowest Councils.

Payments.

The other significant difference will be the need to supply a full deposit. At this point I would add, not a Council supported system where no money changes hands, because despite the Council being happy to confirm that they will honour problems when the Tenancy starts (in order to get the person of their books!), all they actually do is create another barrier to the Landlords ability to re-let, by arguing at every opportunity and in one case, just refusing to pay because they did not agree with what the Agent had confirmed. Well excuse me, but we do not need any further hurdles to jump when seeking recourse when Tenants damage or mistreat property! But also rent in advance and paid by standing order, in advance from then on. This can be a barrier, especially for Benefit applicants, because the system just will not make the allowance and pay in advance for those seeking property from the Private sector.

Eviction.

I also note with interest the reference to problems in getting cases through the courts. The system of using Section 8 notices is of course designed to get action quickly and there is no doubt that the courts let Landlords down time and again, but there are other ways and other notices, such as a section 21 notice, which can be issued at the start of the Tenancy to protect the Landlord, because the courts have no choice but to award possession to the Landlord under a section 21, but once again, unless the notice is current, some courts will not allow them. But the final point I just cannot resist making, is what the courts reaction would be to a Landlord wishing to evict in the Private sector if a Tenant was found guilty under similar circumstances? Just a small bet on the BBC reacting through one of its typical early morning sound bites, raising concerns on behalf of Tenants!