Friday, August 01, 2008
Accidental landlords are coming to an area near you soon says Lawrenson of LettingFocus.com
Accidental landlords are coming to an area near you soon says Lawrenson of LettingFocus.com
Ah, another week of more bad news on house prices.
I see the likes of the Telegraph and other right leaning papers are whipping up the bad news in an attempt to sink what slim chances the Labour government will have at election time, though one of their most pessimistic writers at the Tory, Ed Conway did break ranks recently to suggest that there may now be bargains to be had for credit rich investors.
Perhaps he has been reading this property blog.
Still, despite Mr Conway’s recent comments, the fact is that because of all this negative house price news, we are also seeing more signs of the re-emergence of the “accidental landlord” -this is the person who can’t sell their property (for the price they want) and have chosen to rent it out instead until such time as house prices improve.
Actually, a lot of this kind of thing happened in the last property recession in 1989-1995. Indeed, many of today’s property millionaires started back then – they rented out their first property through default rather than choice.
However, for each millionaire today there were many back then who “had a go” at being a landlord, had a bad experience and then gave up and cried off hurt.
And so it will come to pass, once again, that we will see many novice accidental landlords sign up with letting agents to find them a tenant.
Nothing wrong with using an agent of course!
But, they will happily sign contracts with the letting agent where they will end up paying big letting agent fees forever -and long after they have found them their tenant.
This is particularly likely in London and the South East where high and ongoing renewal fees are standard practice for some agents who regularly foist them on novice landlords who know no better and can’t be bothered to read the small print of the letting agent’s contract.
Hopefully this practice will be outlawed very soon once we have the judgment in the Foxtons case.
Also, there will be many an accidental landlord who gets a tenant from hell because he or his letting agent did not do proper and thorough tenant reference and background checks on the tenant. Others will not know they must lodge tenants’ deposits or how to do a good property inventory.
And there will be quite a few who will adopt a Rigsbyeque approach to being a landlord which will ensure they quickly lose their good tenants and end up with someone far less suitable.
However, some will prosper. They will have done their research – some will even have read my own book - and will do well.
Despite these accidental landlords coming into the market and adding extra supply to the stock of properties to let, there has so far been absolutely no sign of rents coming down in my patch of south London and Kent.
And that is not surprising really if you listen to the independent experts.
But the chances are you won’t have read what they have to say because on the subject of experts, the likes of the independent academics haven’t really got the hang of PR and all that jazz.
You are far more likely to hear from Nationwide, Rightmove and the like about house prices and rents than you are from the independent Joseph Rowntree Foundation.
But in an interesting report that only the FT picked up, the Joseph Rowntree Foundation - which is pretty independent – pointed to the fact that today’s first time buyers may be less interested in buying property and more into having a good time. The report is called, “Housing market recessions and sustainable home ownership.” It is well worth reading.
I agree with Rowntree on this and a lot of other stuff they say as well and I also think the peak of house ownership in the Thatcher years is now over.
I think that in the future there will be lots of people CHOOSING to rent - and hence lots of tenants for landlords (outside the city centre identikit buy to let ghettos, of course)
And on the subject of independent minded thinkers, another report by Professor Michael Ball of Reading University predicts that outside the buy to let ghettoes rents could increase 10-15% in both 2008 and 2009. It is called the “Modern UK Housing Market - origins and prospects”. Another good read that you wont have seen in much of the press though.
So there you go. As I always say, listen to the independent property experts and try to ignore the headlines that the rest put out and the papers gobble up. There are many vested interests out there - some of them political and most of them commercial.
Instead, listen to the independent voices if you can.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of landlord experts’ lettingfocus.com.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” which for the last 2 years has been the UK’s top selling property title - buy the UK's top selling property investment book.
It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property below market value.
I’m an expert property journalist, property speaker and a well known buy to let blogger
I contribute to newspapers and a host of property websites, write a number of columns in the press and I can provide landlords advice
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services and am a regular speaker at property shows.
You can read more of my blog & find details of my networking, advice, property mentor programme at my website.What’s unique about lettingfocus.com is that we offer you help as an independent property coach because unlike most people in the buy to let and property “advice” business we are not linked to a property company, a developer, an agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2008. This blog is updated once a week.
Want to be kept updated on our blogs?
It’s easy. The link to the RSS feed is at the bottom right of the blog. Simply click where it says, “Link to this post.” Once you have done this, this will take you to the latest blog which will have a 'Subscribe' button at top of the page.
Once clicked, this link is added to your Bookmarks (or Favourites) drop down menu in the top toolbar. Thereafter, every blog published automatically appears in this drop down menu.
This means you won't have to visit the site to pick up latest blog, the headline of which will appear in your toolbar menu.
You can then click the headline and copy and paste the full article or a synopsis into your Latest News section - some software may be able to automate this process.
Or, you can close this blog and go to any archived blog and click on the RSS feed there – which is in the bottom right of the page.
Please note we require the full links shown in each blog to also be shown at your site. Please contact us via our main site http://www.lettingfocus.com/ if you have any queries about this.
Ah, another week of more bad news on house prices.
I see the likes of the Telegraph and other right leaning papers are whipping up the bad news in an attempt to sink what slim chances the Labour government will have at election time, though one of their most pessimistic writers at the Tory, Ed Conway did break ranks recently to suggest that there may now be bargains to be had for credit rich investors.
Perhaps he has been reading this property blog.
Still, despite Mr Conway’s recent comments, the fact is that because of all this negative house price news, we are also seeing more signs of the re-emergence of the “accidental landlord” -this is the person who can’t sell their property (for the price they want) and have chosen to rent it out instead until such time as house prices improve.
Actually, a lot of this kind of thing happened in the last property recession in 1989-1995. Indeed, many of today’s property millionaires started back then – they rented out their first property through default rather than choice.
However, for each millionaire today there were many back then who “had a go” at being a landlord, had a bad experience and then gave up and cried off hurt.
And so it will come to pass, once again, that we will see many novice accidental landlords sign up with letting agents to find them a tenant.
Nothing wrong with using an agent of course!
But, they will happily sign contracts with the letting agent where they will end up paying big letting agent fees forever -and long after they have found them their tenant.
This is particularly likely in London and the South East where high and ongoing renewal fees are standard practice for some agents who regularly foist them on novice landlords who know no better and can’t be bothered to read the small print of the letting agent’s contract.
Hopefully this practice will be outlawed very soon once we have the judgment in the Foxtons case.
Also, there will be many an accidental landlord who gets a tenant from hell because he or his letting agent did not do proper and thorough tenant reference and background checks on the tenant. Others will not know they must lodge tenants’ deposits or how to do a good property inventory.
And there will be quite a few who will adopt a Rigsbyeque approach to being a landlord which will ensure they quickly lose their good tenants and end up with someone far less suitable.
However, some will prosper. They will have done their research – some will even have read my own book - and will do well.
Despite these accidental landlords coming into the market and adding extra supply to the stock of properties to let, there has so far been absolutely no sign of rents coming down in my patch of south London and Kent.
And that is not surprising really if you listen to the independent experts.
But the chances are you won’t have read what they have to say because on the subject of experts, the likes of the independent academics haven’t really got the hang of PR and all that jazz.
You are far more likely to hear from Nationwide, Rightmove and the like about house prices and rents than you are from the independent Joseph Rowntree Foundation.
But in an interesting report that only the FT picked up, the Joseph Rowntree Foundation - which is pretty independent – pointed to the fact that today’s first time buyers may be less interested in buying property and more into having a good time. The report is called, “Housing market recessions and sustainable home ownership.” It is well worth reading.
I agree with Rowntree on this and a lot of other stuff they say as well and I also think the peak of house ownership in the Thatcher years is now over.
I think that in the future there will be lots of people CHOOSING to rent - and hence lots of tenants for landlords (outside the city centre identikit buy to let ghettos, of course)
And on the subject of independent minded thinkers, another report by Professor Michael Ball of Reading University predicts that outside the buy to let ghettoes rents could increase 10-15% in both 2008 and 2009. It is called the “Modern UK Housing Market - origins and prospects”. Another good read that you wont have seen in much of the press though.
So there you go. As I always say, listen to the independent property experts and try to ignore the headlines that the rest put out and the papers gobble up. There are many vested interests out there - some of them political and most of them commercial.
Instead, listen to the independent voices if you can.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of landlord experts’ lettingfocus.com.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” which for the last 2 years has been the UK’s top selling property title - buy the UK's top selling property investment book.
It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property below market value.
I’m an expert property journalist, property speaker and a well known buy to let blogger
I contribute to newspapers and a host of property websites, write a number of columns in the press and I can provide landlords advice
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services and am a regular speaker at property shows.
You can read more of my blog & find details of my networking, advice, property mentor programme at my website.What’s unique about lettingfocus.com is that we offer you help as an independent property coach because unlike most people in the buy to let and property “advice” business we are not linked to a property company, a developer, an agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2008. This blog is updated once a week.
Want to be kept updated on our blogs?
It’s easy. The link to the RSS feed is at the bottom right of the blog. Simply click where it says, “Link to this post.” Once you have done this, this will take you to the latest blog which will have a 'Subscribe' button at top of the page.
Once clicked, this link is added to your Bookmarks (or Favourites) drop down menu in the top toolbar. Thereafter, every blog published automatically appears in this drop down menu.
This means you won't have to visit the site to pick up latest blog, the headline of which will appear in your toolbar menu.
You can then click the headline and copy and paste the full article or a synopsis into your Latest News section - some software may be able to automate this process.
Or, you can close this blog and go to any archived blog and click on the RSS feed there – which is in the bottom right of the page.
Please note we require the full links shown in each blog to also be shown at your site. Please contact us via our main site http://www.lettingfocus.com/ if you have any queries about this.
Labels: accidental landlords, Joseph Rowntree, letting fees, Michael Ball, new landlords, property inventory, tenant checks
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