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LettingFocus

Unbiased buy to let, property investment and letting coaching, mentoring, advice and seminars for landlords from top selling property author and media commentator.

Landlords, Rents and Buy to Let Mortgage Loans by LettingFocus.

Richard S, one of the regular attendees at my landlords networking meetings, highlighted the dangers of landlords who have borrowed too much relative to the value of their properties.
Particularly at risk are those investors with high loans to value and who have a special mortgage rate deal (usually a low fixed or discounted rate for a period) which will soon end.

HOUSE PRICES

His opinion is that there is every chance that house prices will remain static, at best, for the foreseeable future.
I’m a bit more positive. I think house price growth will be slow but steady just as long as mortgage financing (high deposit requirements, high margins over base and high fees) remains restricted.
However, I think nil or negative price growth is likely in oversupplied and under populated parts of the country, especially areas which have been hit by significant job losses.
Once mortgage availability becomes better - lower fees, lower deposit requirements and lower margins over base - then house prices will tick up again at a more rapid rate.
This should happen when The Lloyds Group (HBOS and C&G) and Nationwide finally have some real competition in buy to let lending.

BASE RATES LIKELY TO RISE


But right now, the only way for the Bank of England Base rate is steady or up.
So what should investors do?
Well, all investors should be now taking a good look at the sensitivity of their portfolios to interest rate rises.
In other words, they should work out what would happen if the base rate went up from 0.5% to 3% or even 5%?
Even if the base rates does not go up, all investors should know what will happen if and when their mortgage rate comes off any special deal and back onto the lender’s reversionary rate.
Could they survive?
How strained would their portfolio be?
If they are at risk, they should start working on risk strategies right now rather that wait for the rate to rise.
My advice right now, given the real risks the economy faces, is to not go above 65% loan to value across your whole buy to let portfolio - even if you are on trackers linked to base rates – and ideally you should stay under 55%.

BUY TO LET MORTGAGE RATES FOR NEW MORTGAGES

Buy to Let Mortgage financing for new mortgages or remortgages is not getting easier.
Indeed, 2 years after the credit crunch started it is actually getting even harder (even though some residential mortgage rates have now eased a bit.)
For example, for a 75% loan to value mortgage, before Xmas the best rate was from C&G, part of the Lloyds Banking Group.
Natch, like all mortgages these days, it came with a thumping “product fee” but its reversionary rate was 2% over Bank of England Base rate.
The reversionary base of the same mortgage, if you took it out today, is 4.34% over base and it is not guaranteed to track the base rate either.
In effect, with this mortgage over the long term, you will now be paying more than double what you would do pre-Xmas.
It is exactly the same with other lenders which is why people in search of buy to let mortgage financing are finding it very hard right now.

CAN YOU RAISE RENTS TO HELP CASH FLOW?

There is one very good silver lining though.
If mortgage finance remains hard to get AND interest rates rise, first time buyers and other non-landlords will also struggle to get mortgages – which will push even more people into renting.
This will, in turn, increase demand for rented accommodation and push up rents.
So, one possible way out of rising interest rates for lanldords could be to increase rents to offset their rising loan costs.
Whether you can do this or not will depend on the area you have bought into and the strength of tenant demand.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.
I’m David Lawrenson, a landlord and property investor myself for over 25 years, and author of “Successful Property Letting” – which has been the UK’s top selling commercially published property book for the last 3 years.

Services to Businesses and the Public Sector

Primarily I am a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.
For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the broadcast media.

Services for Private Landlords

For private landlords and other investors in the private rented sector, we now do just two London seminars each year.
We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on either a one-to-one mentoring / coaching basis or through our occasional group seminars.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it.
We also show you how to manage tenants properly.
Coaching can be done over the phone.

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Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.

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Bank of China, Mortgages, Defaulting Landlords by Lawrenson of LettingFocus

As you may know from a previous blog post on Monday 6th July, I have recently railed against the fact that in Buy to Let Land the borrower is being carved up by a complete lack of competition among lenders.

BANK ROBBERS
The Lloyds Group (via its C&G and BM Solutions/ Birmingham Midshires brands) and The Nationwide (owners of The Mortgage Works) now now have no competition post credit crunch. (The crunch meant the likes of Paragon and others got starved of funds and Bradford & Bingley and Northern Rock bit the dust for new money.)
Lloyds and Nationwide are charging a minimum of base rate plus 4.2% for buy to let with fees of at least 2.5%.
Outrageous!
So, I’m delighted to see that Bank Of China has now started to market its buy to let mortgages a bit more aggressively.
Finding their mortgages on the Net is hard though.
Possibly harder to find than a story about Tianamen Square on Google’s Chinese operation (Google goes along with Chinese censorship if you did not know – nice people Google eh?)

BANK OF CHINA BUY TO LET MORTGAGE RATES
Their mortgage rates aren’t bad but borrowers must have enough income to cover both their home mortgage, and that of the investment property, in order to qualify.
Also, maximum loan to values are just 65% on freeholds and 60% on leaseholds.
The rates charged depend on if you are buying a freehold or a leasehold property too and how much you want to borrow (whether the property is over or under £250K).
To keep it simple, for what usually I buy - which is freeholds and houses under £250K in value, the maximum LTV is 65% and the mortgage rate is 3.5% over Bank of England base for life.
However, you must take out a 20 year term and they will only do repayment mortgages, there being no interest only option.
The arrangement fee is a reasonable £1495 (and the valuation fees aren’t bad either) though you cannot add these to the loan.
Early redemption penalties only apply in year one and are 1% of the loan which is good compared to UK lenders.
The downsides for many people will be the low Loan to Value, the lack of an interest only option, the fact that your own private (non rental) income is looked at carefully too plus you have to attend an interview at a Bank of China office
Still at least it is some competition for the rogues at Lloyds and Nationwide.

GOOD LOAN TO VALUE DEALS
We, of course, offer some great rates through our affiliation with Mortgage for Business and these DO go up to 75% Loan to Value,
Try Mortgages for Business.co.uk by clicking on Great Rates on Buy to Let Mortgages and quoting LettingFocus for their special offer of £250 brokerage when you draw down a buy to let mortgage - set up especially for us.

LATEST ON EVICTING TENANTS OF DEFAULTING LANDLORDS
Talking of our dumb mortgage lenders, tenants who currently face immediate and unexpected eviction because their landlord faces repossession will be given two months’ statutory breathing space to find a new home, under new government proposals.
You may have seen my email correspondence with the Council of Mortgage lenders on my previous post on 30th May about this.
The problem is because tenancy agreements are deemed unenforceable in cases where the borrower has failed to inform the lender of their intention to let the property.
Under proposals from housing minister John Healey tenants in this situation will be given at least two months to find alternative accommodation, through new powers granted to courts in charge of possession hearings.
Unauthorised tenants will also have the right to be heard at these hearings.
In addition, the government is proposing to force lenders to provide unauthorised tenants with a mechanism to request a two-month delay in repossession from lenders. It also wants lenders to consider other steps instead of repossession, such as appointing ‘Receivers of Rent’ to collect rent and manage occupied properties.
About time too!
Shame the mortgage lenders have had to be forced into this by the Government.
In next weeks’ blog post (out 24th August) I’ll look at the Government’s well meant but silly plans to limit the number of shared houses in some areas.
Link to other posts on today’s post topics:
http://www.lettingfocus.com/2009/05/mortgage-lenders-evict-tenants-too.html
http://www.lettingfocus.com/2009/07/buy-to-mortgage-rates-deviod-of.html
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlord experts.
I’m, David Lawrenson, the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book.
What’s unique about LettingFocus is that I offer independent unbiased
landlord advice seminars covering property investment and letting because unlike most people in the buy to let and property “advice” business I am not linked to a property company, developer, agent or bridging loan financier.
I can tell you where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to make sure you get tenants who are going to pay the rent and how to manage a rental property to make £s at my one to one consulting service.
I can also comment on “No Money Down” Schemes and “Buying Below Market Value” methods too.
I can answer all your questions on letting property too because I have been a landlord and property investor for over 25 years.
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To JOIN our Free QUARTERLY NEWSLETTER simply send an email to [email protected] - Please note we WILL NOT send spam or sell our mailing list to advertisers!
Copyright of Blog: David Lawrenson 2009.
This blog is updated roughly once a week usually on a Monday or Tuesday.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
Over on the right hand side under all the previous blog entries you will see a button saying “Site Feed.” Simply copy the site feed link into your News Reader or News Aggregator.
Even a non techie like me managed to do this and Google is worth a search to tell you more about this.
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Real Evidence property prices have turned says LettingFocus.com

Cripes property prices seem to be turning up a bit in our part of London, at least for family type houses in average nick, which is not good news if you, like me were hoping that low prices would be around for a while.
To give you an example of this I had my beedy eyes on a nice two bed house for a first time buyer client in SE London back in January 2009 which was up for sale by a big landowning estate.
All it needed was £3K in basic redecoration. It would have been lettable right away at a rent of at least £900 per month or the guy could have lived in it himself.
Over Xmas, when all around was doom and gloom, it was actually marked down to £200K from £225K but this time around I was just too cheeky and went in too low at £185K. (I blame THE BOSS for the over-cheekiness!)
But the seller wasn’t budging and he put it on at a property auction in late January where the property fetched 195K, just over the £185K reserve price.
Since then the general economy and the state of the property market has started to look at lot rosier so the buyer put it back on the market in late April - in exactly the same condition - and has just sold it through an estate agent at £245K.
The investor probably paid cash at the property auction which will give him a profit of at least £40K after costs and an allowance for the opportunity cost of his own money.
So good luck to that property investor and well done to him.

PROPERTY AUCTIONS – WHY I AM NOT THEIR BIGGEST FAN
Now I have to say that I am not the biggest fan of buying property at auction and this is usually because… 1) Most times I am not a cash buyer and 2) Most of the property I see coming up at auction is rarely freehold property in anything like a decent condition. (I only buy leasehold flats that are self contained, in good condition and with a good management company where the directors are also the leaseholders – these can be pretty rare especially at auction.)
Property auctions always have lots of run down flats with poor management and duff leases. Where freeholds are for sale they are usually “building projects” (which I don’t have the time for right now.)

IF YOU NEED A MORTGAGE YOU ARE AT A DISADVANTGE AT A PROPERTY AUCTION
However, that property (the one that sold at auction at which sold at 195K) was unusual because it was a freehold house that needed not much doing to it.
Trouble is I didn’t want to chuck half a grand on a banks’ mortgage valuation just to be out bid at the auction.
And that is the trouble with auctions because at a property auction it is much better if you are a cash buyer.
So, I lost out on a chance to make £40K (or if it has been me buying, to get a great rental yield and a super investment)
Never mind, it all ended OK for me.
I went on to buy a similar property just down the road in better condition via my old trusted estate agency route for about the same money - £203K – so honours even on that one.
If you see the potential in flats or building projects and you want to go down the auction route and buy property this way take a look at my article Property Auctions.

WHAT DOES YOUR CREDIT FILE SAY ABOUT YOU?
Apparently, record numbers of people are checking their credit files to find out exactly what their credit record file says about them.
No doubt, the prompt for this is the fact they are all of a sudden being turned down for credit by our newly tight fisted banks and building societies.
Read my article; Checking Your Credit Record for more on how to check your file.

HOUSE PRICES
Finally, on the subject of house prices again, it always amuses me how when commentators talk about this it really gets people incredibly worked up.
Even more worked up than a bunch of guys discussing the England football team. Ok, well not quite that bad.
You can see this from all the vitriolic comments the big papers get in their online edition whenever the subject of the direction of house prices comes up.
Well, as you know, I have stated my colours firmly to the mast.
I think prices of family houses in the range £200k – 600K in London and the South East and many other parts of England and Wales have reached the bottom or near enough.
(Of course another Fred Goodwin type cock up or a flu pandemic will put the tin hat on any increase in prices, but these things are impossible to predict and if you don’t like risk you should stick with National Savings index linked certificates instead of property!)
In my work as a Property Finder I am certainly getting a lot of work right now from people who need help buying in the right areas. And that is a sure sign that people think property prices are going up.

LANDLORDS SUFFFERING SAY THE MEDIA
Mmm, I’m not so sure about that one.
Even if rents were down 20% on the year (which they aren’t for the type of property I buy), as most landlords existing mortgages are down about 50% following big cuts in interest rates, unless I’m “Mr. Dim at Maths” that surely means more profit for landlords?
Unless you have to sell now of course and therefore cop a potential capital loss. However most landlords are in it for the long term so won’t be uduly worried by rents that are down a bit.

AM I RIGHT YET RAY?
About 3 years ago I predicted that the proportion of let property could hit 25% by 2025 (unless the regulatory and tax environment facing landlords changed significantly). A leading commentator said I was naive. Well Ray, as the proportion of property that is let continues to increase rapidly to almost 13%, maybe you might still owe me a drink come 2025.

DON’T SHOOT THE PRESIDENT
I don’t normally do politics but Obama is such a breath of fresh air after the previous incumbent especially on foreign policy that I think some credit for the economic recovery must be attributed to him.
Partly, this must be down to the fact that his words, if translated into action, will certainly make the world a much fairer and safer place for us all. I just hope that some nut case “No Surrender” settler in Israel hasn’t got the poor man in his sights.
More on politics... will someone please get rid of that awful BBC political correspondent -the chappie with the glasses. You're not the news, Mister!
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investment Book. The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, landlord registration and capital gains taxes.
I’m a property expert and property speaker - and I run the well known property blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting to anyone looking to buy property for themselves or to let.
What’s unique about lettingfocus.com is that we offer independent unbiased advice on renting out property because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier.
Find out about some great deals we have arranged at our Property Affiliate page.
For landlords' insurance products such as rent guarantee cover and property insurance click on Ukinsurancenet. Don't forget to quote our reference code, LFOC, to get the best rates from them too.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
Over on the right hand side under all the previous blog entries and the bit where it says “Links” and “Subscribe” you will see a button saying “Site Feed.”
Just copy the site feed link into your News Reader or News Aggregator. Even a non techie like me managed to do this.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require a link to the blog to be included, including also the links in this section. The full article including all links must be available to ALL VIEWERS of your site and not restricted.
WANT TO ADD A COMMENT
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MPs, second homes, capital gains tax and Property Watch by Lawrenson of LettingFocus.com

In my last post I said that one of the real reasons why a landlord register and landlord licensing is on the agenda is that the powers in Westminster think that lots of landlords are not paying their taxes and so a register would give HMRC more info on this.
Of course, the rogue landlords – the ones who fail to repair their properties and treat tenants like dirt - will not be inclined to register and most definitely won’t if it involves making them liable to pay tax, thus registering the whole exercise potentially pointless and making the register just another bit of bureaucracy for good landlords, but hey, that’s another story covered last week.
But how funny it was, then, to to see some legislators caught with their noses in the trough on second homes – as if their generous final salary scheme was not enough.
A lot of this is to do with the definition of what constitutes a principle private residence or PPR (whch are capital gains tax exempt) and the dubious practice of flipping from one house to another to claim PPR on both.
Lots of landlords have already sailed pretty close to the wind on this and I dare say a few MPs will have got the UK’s top selling Property Investment Book to read the very detailed tax chapter which explains in detail how capital gains taxes can be ameliorated by living in a let property for a time.
Now that some of them have rather taken the mickey (to put it mildly) by overusing exemptions like this we may expect to see the whole area of PPR and Private Letting Relief being looked at again.
This could end up badly for landlords.
GUM TREE NOT WHAT IT WAS
Nothing that’s free ever lasts too long and I see landlord friendly letting site GumTree seems to have now altered their system so it’s not so easy any more to refresh ads and still appear near the top of the next days listings.
Also, they seem to have got pretty tight about what constitutes a professional landlord – making pretty well everyone pay for ads as can be seen by the fact theat there are now very few private ads that are now posted at the site.
They even banned a guy I know who has just two let properties! Hardly makes him a pro does it? (He actually complained and they re-instated his ads.)
But on the old internet there is always someone else ready to come along and offer a freebie.
At the site LetUrself.co.uk they have set up a website for landlords who don’t need a high street letting agent and who are happy to do a fair bit of the legwork themselves. A bit like Gumtree in the old days then!
They offer all the same services of a traditional letting agency so you can get your let property on the big portals and if you register before the end of May, then for every property that you upload, you will receive 28 days free advertising on the website.
Sounds good.
PROPERTY WATCH ON BBC
Did you see Property Watch?
Not a bad show apart from the fact that someone had told the usually great presenters to gurn a la Gordon B on Youtube. Didn’t bother me but it annoyed The Boss in our house.
I actually contacted the show’s researcher and had a perfectly successful landlord lined up for them.
He has 60 houses in the north Manchester area. He’s a great down to earth chap who has done very well in buy to let and who has great relations with his tenants too.
Unfortunately, the show clearly wanted someone who made a muck up in buy to let and so despite speaking to my man 8 times they put someone on the show that had made a complete hash of being a landlord.
Typical anti landlord media in other words, but if scare stories like the one they featured keeps out a landlord who doesn’t want to find out how to do things properly by frightening them off, then that may be good for tenants who can also suffer if their landlord doesn’t know the ropes.
Oh, two years ago arch property bear, Merryn who featured on the programme every night and is usually an excellent analyst, said to invest in Japan. I did, and the two investment trusts I put money in are both 40% down.
So the message is make your own mind up.
And if you think these shows could do with some new faces and maybe have the author of the UK’s top selling property book on, do let them know won’t you.
BIG BUY TO LET MORTGAGE LENDER GIVES OUT MONEY
I have a few mortgages with a certain big buy to let mortgage lender.
I pay an interest only mortgage so could not figure out why the final balance on my mortgage statement was higher than the opening balance 365 days earlier.
The geniuses at their call centre tried in vain – “Its daily balances….it’s when the interest is applied that is different from the pay date… blah blah” but could not give me a sensible answer and in the end gave up and sent me a credit for the difference.
I suggest you check your mortgage account statement and if you find the same thing has happened to you, you give them a ring and get your money back.
I’ve phoned the PR department of this lender for their view on this but they clearly can’t be bothered to get back to me so expect to see this in the press soon and the lender named.
On a related point, see also my article on claiming back unfair mortgage exit fees
BUY TO LET MORTGAGES STILL COSTLY
For new mortgages, I see that mortgage lenders have cut mortgage interest rates, “application fees” and deposit requirements for standard residential mortgages.
But over on buy to let mortgages, the rates, fees and deposit requirements are staying stubbornly high.
It’s still impossible to get a buy to let mortgage unless you have 25% of the equity to put in and can also stomach application fees of 3% on your mortgage loan on top.
So, the would-be new landlord is still frozen out.
With a lack of players in the market the lenders who are still involved are getting away with this nonsense.
Surely, the downside risks for the mortgage lenders cannot justify these daft rates, high deposit requirement and exclusions.
Hopefully, a more dynamic lender will be along soon and shake it up.
Come on in, Santander – who seem a lot more savvy than most of our bankers!
If you need help navigating landlord mortgages, try the broker, Mortgagesforbusiness.co.uk. Click on Great Rates on Buy to Let Mortgages and quote LettingFocus for their special offer of £250 brokerage on buy to let mortgages which they have set up especially for us.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property investing experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investment Book.
The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing and capital gains taxes.
I’m an expert property writer and property speaker - and I run the well known landlords blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting and consulting to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we offer independent unbiased advice on renting out and investing in property because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from these sources.
On the contrary, we are often asked to evaluate other property investments.
Find out about some great deals we have arranged at our Landlords Links page.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
It’s easy.
Over on the right hand side under all the previous blog entries and the bit where it says “Links” and “Subscribe” you will see a button saying “Site Feed.”
Just copy the site feed link into your News Reader or News Aggregator. Even a non techie like me managed to do this.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require the full links shown in each blog to be included, including also the links in this section. The full article including all links must be available to ALL VIEWERS of your site and not restricted to members.
WANT TO ADD A COMMENT
The way the technology to add and read comments works with Blogger is a tad illogical, I’ll admit.
To add a comment to this post, you will need to click on “link to this post” then simply add your comment.
To view past comments, once again, you’ll need to click “link to this post” and view the comments which appear at the bottom of the post.
All comments are moderated.

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Landlords are smiling at lower buy to let mortgage rates by David Lawrenson of Letting Focus. Just as long as they don’t need to raise new money!

Every now and again some smarmy old wage-slave former work colleague rings me up and says something like, “Boy, you landlords must be suffering at the moment.”
I reply, “Well, if you call a huge downward hike in my borrowings, suffering, then yes, I guess I am.”
You see, things are not as bad for us wiley old landlords as many people (fed by a constant media diet of hapless novice landlords losing thousands on now worthless Thamesmead flats) like to claim they are.
Take mortgage rates for instance.
Lots of landlords, myself included, opted for Bank of England (BOE) base rate tracker mortgages. I also have some lifetime trackers – at .75% above base and .85% above BOE base for life. Oh how I recall baulking at the set up fees at the time – a whopping £650 - which of course, is a pittance of a mortgage fee in today’s terms where 2 or 3% of the loan amount is now the norm.
Quite a few of my tracker mortgage deals which weren’t for life are coming out of their “special discount periods” in 2009. But even then it won’t be so bad.
Why?
Well, many buy to let mortgage lenders said in their contracts that at the end of special discount periods, the mortgage rate would switch to a set amount above the Bank of England’s base rate.
Now, one of the biggest players in buy to let lending was the Mortgage Express. But in the case of many of the Mortgage Express’s deals it seems the default mortgage rate will be 1.75% above BOE base. And Mortgage Express was not alone in doing this either.
Now that kind of rate actually looks superb when compared to current Standard Variable Rates – which is the normal default mortgage rate for domestic residential (non buy to let) mortgages coming to the end of THEIR special discount or fixed rate period. These are typically 4% above base.

NEW MORTGAGE DEALS
The problem for us landlords – and here we are just like everyone else - is how to get new mortgage money to buy new property.
The new mortgage deals are at a margin of at least 3% above base rate even if you put in 30% equity and they come with huge “arrangement fees” too - a misnomer if ever there was one. And there are long redemption penalties to make sure you don’t walk away easily too.
And that is why, when it comes to buying property cash is king at the moment! So, if you are set on buying property now at “below market value” prices to take advantage of the credit crunch you’ll need a lot more cash to do it.

GOOD LETTING AGENTS
I was quoted last Saturday in the Daily Telegraph giving a summary of the year 2008 and my outlook for 2009. Click here to view my comments and those of other talking heads - http://propertyclub.telegraph.co.uk/Page/View/465/3
I would like to qualify my comments in “The Tory” by saying that most letting agents are very good – they do a good job and work very hard.
For those of you who have read my book you’ll know that I really save my venom for our mortgage lenders - the banks and the building societies – many of whom I think were guilty of lending recklessly on worthless new build flats from 2001 – 2005 and now not lending at all, even on good property and to good borrowers.
However, there are a few letting agents who are slapdash with your property, inclined to cut corners and with whom you have a good chance of ending up with the tenant from hell. They let down the whole industry. For more information on how to find a good letting agent, read my article on Choosing A Letting Agency
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ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord and property letting advice experts.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition 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 sale and rent back.
I’m an expert freelance property writer, property speaker and I run this well known property letting and investment blog
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice for anyone looking to buy property for themselves or to let out.
In my work as a consultant I help private individuals with any aspect of buying property or buy to let. What’s unique about lettingfocus.com is that we are independent property investment advisors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2008. This blog is updated once a week.
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OFT weeds out rogues in Sale and Rent Back Market - by Letting Focus

I’ve just been up to Soho to do a podcast for the Motley Fool website at http://www.fool.co.uk/ where I was interviewed by David Kuo who in real life is as entertaining as he appears in the wee early hours on BBC Breakfast.
Ahead of these podcasts, the guys at Fool invite readers of their site to put questions to the “podcastee.” For example, “Isn’t buy-to-let dead? Why are you still flogging a dead horse? Aren’t landlords horrible people who should be shot at dawn?"
These were just some of the questions that we dealt with on the podcast. (Actually, I made up the one about landlords being shot at dawn). Look out for the podcast here soon.

BUY TO LET IS ALIVE AND KICKING
Well, buy to let is very much alive and kicking as you will see if you read the other posts at this blog.
However, it has undoubtedly got a lot harder for the new entrant landlord today.
Typically, right now you will need at least 25% deposit to put down in order to get a buy to let mortgage. And you can expect to pay anywhere from a 1.5 to 3% fee to the mortgage lender as a fee too.
And we will be stuck with these high entry costs for as long as the credit crunch is with us.
Sure, there are some clever financing techniques you can use to cut the amount of your own cash you need to put in – sometimes to nil - but many of these schemes have proved to be made of sand.
For example, there will be many landlords now ruing the day they bought a shiny new build flat off plan in one of the city centres only to find that despite the clever financing techniques that allowed them to acquire the place with none (or very little) of their own money down, they had actually massively overpaid for a property that is now proving very hard to let out because few tenants want to live in that kind of property.
For a long time it has been my view that the activities of the property companies that marketed these schemes to novice investors need to be regulated.
This should be looked at urgently as it is clear that some people have lost large sums of money. Sure, some of these investors were greedy and yes, many were naïve too. And if you were very uncharitable you may think, “Well, they got what they deserved.”
But even if you are a non landlord you ought to be concerned that the activities of the companies that marketed many of these worthless flats led to many of our inner cities being clogged up with the kind of property that as a country we don’t actually want.
And as the effects of the lack of housebuilding today translates into an even worse shortage in two years time that ought to be something that bothers all of us.

SALE AND RENT BACK
Talking of regulation, the Office of Fair Trading (OFT) has just called for tighter controls of Sale and Rent back
So far, there has been no regulation of these schemes where firms buy homes from cash strapped owners at a big discount and then allow them to continue living in the property as tenants.
The OFT has found that customers of these schemes, many of them highly stressed and facing imminent repossession, were sometimes misled over the value of their homes and in some cases were told that they could stay in their home for years whereas in reality the tenancy was only guaranteed for 6 or 12 months.
The OFT has recommended that there should be more clarity about the initial valuation, sale price, terms of tenancy and amount of rent to be paid. They also say that Sale and Rent Back firms should tell people about free independent advice available to them before they decide to sell.
I completely agree with these recommendations and any decent operator in the Sale and Rent Back market should too.

SMALL PRIVATE RENTED SECTOR
The UK still has a small private rented sector – only about 10% of all homes are privately rented today. This is very small by current European standards and is low compared to the UK’s 50% post war level.
Independent surveys continue to show that increasing numbers of people prefer to rent property even if they could afford to buy - and for these reasons alone we DO need a really well regulated private rented sector.
I would say that most new regulations that landlords have had to face over the last few years have been for the greater good of society (though The Licensing of Houses in Multi Occupancy or HMOs
could be improved) and the tenancy deposit schemes are still too clunky.
The new recommendations for Sale and Rent Back are a welcome addition, will make for good regulation and will make fewer people say that landlords should be shot at dawn.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - landlord experts.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property title - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition 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 sale and rent back.
I’m an expert freelance 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 provide general property education, training & advice for anyone looking to buy property for themselves or to let out.
In my work as a consultant I help private individuals with any aspect of buying property or buy to let. What’s unique about lettingfocus.com is that we are independent property mentors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role, I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2008. This blog is updated once a week. WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
It’s easy.
Go to the bottom of this post, and click on “Link to this post”
Our home blog page should then open & you should then see my smiling profile. Then page all the way down and on the bottom right it will say “Site feed” - click there and away you go.
You then just copy the link that comes up into your News Reader or News Aggregator. Even a non techie like me managed to do all this.
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Uninformed Media Comment about Bradford & Bingley could kill off many would-be landlords says David Lawrenson of Lettingfocus.com

Who would have imagined that a large proportion of the UK’s landlords would end up with their properties ultimately owned by the Government?
This came about as a result of the State taking over Bradford & Bingley’s mortgage book - of which the Mortgage Express was the buy to let specialist (and for a long time the biggest buy to let lender in Britain.)
The fall from grace of Bradford & Bingley is a shame because for a long time Mortgage Express was the only player who really understood buy to let mortgages. They even had truly radical things like a customer mag containing useful tips for landlords and call centre staff who even knew stuff like what a tenancy deposit scheme was.
So, they were streets ahead of their mates at the other high street banks and building societies whose staff could not tell you anything much beyond what their interest rates were.
I even wrote for the Mortgage Express mag myself too on quite a few occasions so I do have soft spot for them.
Where it all went wrong was really on the funding side.
Bradford & Bingley were, like many other banks, in that they were a bit reckless in the way they sought funding from the money markets. They also made things worse when they bought some duff mortgage books from other players.
There is another story too about B&B too and which the press has missed out on. This was the way that Mortgage Express must surely have picked up quite a lot of poor buy to let mortgages by being “the last lender standing” in the curious “remortgage off the back of bridging loan finance” market. Click here to see my post at the beginning of June for more on this: Did Mortgage Express Catch a Cold on Same Day or Next Day Remortgages
MEDIA NONSENSE
The great thing is that this is all being melted down in the media and the spewed out as “How Awful Buy to Let Is as An Investment” – with struggling landlords and high arrears being well to the fore.
Er, not true actually – Ordinary residential mortgages have worse arrears than buy to let mortgages and many pro landlords have done very well and continue to make a lot of money.
But the way some in the media have reported B&B’s fall will put off the novice investor from getting involved in buy to let thus leaving the way open over the next two years for professional landlords with access to finance to gobble up more residential property at fire sale prices.
The “pro landlords” will not seek to correct the misreporting in the press – they will want novice investors to stay out of the way.
However, mortgage borrowing even for the pro landlords has just got a whole lot tougher because I don’t expect the government will be dishing out attractive re-mortgage terms at the newly nationalised banks.
The really smart landlords will be those who followed my advice and went for lifetime trackers two or more years ago – trackers tied to Bank of England base rates for life.
They are laughing all the way to the bank - and the best bit is, the banks must hate them.
Unfortunately, Mortgage Express never really did lifetime base rate trackers so pretty well anyone who has a buy to let loan with them will probably have to shop around for a new Buy to Let Mortgage when their mortgage deals expire and will almost certainly have to re-mortgage onto higher rates from the dwindling pool of lenders. That is going to hurt many landlords.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property experts.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” which for the last 3 years has been the UK’s top selling property title - Buy Successful Property Letting - How to Make Money in Buy to Let. The new edition 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 provide general property investment advice
My works as a consultant helps private individuals with any aspect of property investing or buy to let. What’s unique about lettingfocus.com is that we are independent landlords mentors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
We give one to one unbiased advice and are often asked to evaluate other property investments.
In my corportate consulting role, I also help banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice, property training programme at my website.Copyright: David Lawrenson 2008. This blog is updated once a week.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
It’s easy.
Go to the bottom of this post, and click on “Link to this post”
Our home blog page should then open & you should then see my smiling profile. Then page all the way down and on the bottom right it will say “Site feed” - click there and away you go.
You then just copy the link that comes up into your News Reader or News Aggregator. Even a non techie like me managed to do all this.
Please note if you are thinking of reproducing material here - that’s fine but we DO require the full links shown in each blog to be included including also the links in the section “ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON” Please contact us via the Contact US button at our main site http://www.lettingfocus.com/ if you have any queries about this.

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Record keeping for landlords in buy to lets – from LettingFocus.com

The cut in base rate today will be a shot in the arm for the housing market. And the news that the biggest mortgage lenders will be passing on the cut in full is better news still.
As you may know, I have all my mortgages linked to the Bank of England’s base rate, not to the lender’s arbitrary SVR rate – the SVR is, of course, only adjusted when the mortgage lenders feel like it or when competitive pressure forces a change on them. Many people have found this to their cost recently!
And in recent years I have tended to opt for lifetime base rate trackers too.
The reason I like lifetime trackers is that I tend to hold my properties for a long time and the hassle of switching to a lower mortgage rate is something I can do without.
Being on a lifetime tracker also ends up costing less in the long run as you won’t have to pay the mortgage companies ever steeper “application fees” every few years.
Shorter term variable rates mean you have to change to a different mortgage deal to avoid the dreaded SVR every time your deal expires -each time costing you money in fees.
What about the housing market?
Well, house prices are going down and bargain properties are there to be had. I know, I’m out there and there are bargains galore to be had.
As you know, I don’t think the downturn will be that hard for well located bread and butter type properties where tenant demand is strong, so it is now time to get out there and negotiate good deals.

RECORD KEEPING
Before I go, just a quick note on landlords record keeping….
As landlords, we can be so busy running about building up our property portfolios and then managing them that it is often all too easy to forget the paperwork or leave it “to another time”
However, keeping up to date with your records is essential.
Here are my tips.
At the start of a tenancy you will have the tenant’s application form and / or references combined with any background checks that you do on them. Keep these until the tenancy has run its course because this is gold dust if you need to trace a tenant.
Get into the habit of keeping a written record of when something happens on each of your properties. This might be as simple as a record of a phone conversation where you agreed to do (or not do something) or it could be a written record of a report of say, a physical inspection or a gas or electrical certificate or an estimate for a repair or a change to the inventory.
Landlords who don’t have a thorough and up to date inventory which lists the state and condition of the property and everything in it –right down to the colour, make and model number of each item – risk losing out when the tenancy comes to an end.
Another good idea when decorating is to keep a note of the paint colour used in each room in case you need to “touch it up” at a later date.
Right now I’m advising a landlord who let a property without doing an inventory and who has now fallen out with his tenant. In the worst case the tenant could take all the furnishings that were in the property when the tenancy agreement was entered into. If that were to happen the landlord would have a very difficult job to recover any losses to his inventory.
Keep records for the taxman too. This would include records of allowable costs incurred, rents charged, dates that the property was let out, bank statements, invoices and receipts.

HMRC INVESTIGATIONS
HMRC could, if they were doing an investigation, ask you about any payments made into your bank account so it is useful to make a note of what these are for as well.
These sorts of records should be kept for six years if you are self employed or running your rental property as a sideline to your main job or seven years if you have a limited company.
Some records should be kept for longer than six years for capital gains tax purposes. Where you sell a property you may be liable to CGT so you will need a record of the dates you bought and sold it and the prices paid until you sell.
Look out for me in the Daily Mail on Friday and Daily Telegraph on Saturday.
I’m David Lawrenson from property investment mentors lettingfocus.com.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title. buy the 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 below market value. I’m an expert on the UK property market and a well known property investment blogger and I contribute to newspapers and a host of property websites, write a property investment blog, a number of columns in the press and run a landlords advice service.
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.You can read more of my blog & find details of my networking, advice, buy to let networking programme at my website.What’s unique about lettingfocus.com is that we offer independent property mentoring 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. Permission must be sought before using the material in the blog.

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The credit crunch means it is time to make offers in the UK property market says Lawrenson of Letting Focus

Ah, the credit crunch continues to spook the market!
The number of house buyers on estate agents’ books dropped from an average of 276 registered per agent in January to 243 in February 2008, the lowest recorded since the survey started. And the difference between asking and sales price has risen again this month – to 4.5%.
Today, if you want to buy a property either for yourself or to let out and you have not got a decent deposit to put down or you have a bad credit record things will be looking a bit bleak for you.
In fact, things have become quite a bit tighter for everyone.
Just 2 weeks ago Lloyds TSB, their C&G subsidiary and the Royal Bank of Scotland (RBS) reduced their maximum loan to value back down to 90%.
And Alliance & Leicester and the Britannia have pulled their 95% loan to value mortgages. These moves follow hard on the heels of the Halifax who have just raised their interest rates again.
Lenders are “pulling” mortgage offers suddenly and without warning proving how hard it is for them to get funds.
So, it seems the days of cheap money have disappeared for a while and we can see the back of six times income multiples at least for a year or two.
Does it matter –well, yes.
The problem is made worse because about 150,000 people in 2007 borrowed over 90% of their property’s value. So, this clampdown on loan to value really does have the potential to reduce demand for houses and could hit prices harder than we have seen so far.
Naturally, the best deals in the standard residential market are available to those borrowers who have to borrow the least. Nationwide has said its best mortgage rates would now only be available for borrowers who put in at least 25% of a property’s value!
So far, we have only seen a gentle tailing off in house prices. The Nationwide said that February marked the fourth month in a row of house price falls with annual growth down to just under 3% annually.
Mortgage approvals are also low - at 75,000 for January - which is the second lowest figure for 12 years.
Also, a lot of people - most estimates put it at 1.2 million - are coming off fixed and discounted deals taken out two to three years ago and are facing big increases in their mortgage rates this year.
Sounds bad?
Well, yes it does, but so far, whilst repossessions are going up, they are still only at about one third of their 1991 peak and less than they were at any time in the 1990s.
But it is possible that things will get worse and property values could fall more sharply. We will see!
It has also got tougher for buy to let borrowers. Moneyfacts.co.uk recently calculated that UK landlords need to find about £5,500 more of their own money to buy the average buy to let property than they would have had to one year ago.

BUY TO LET LOANS
Also, buy to let borrowers will now have to find at least 15% of the property value -the days of 10% have long since gone.
Woolwich, never the most gung ho of lenders, has just cut the amount it will lend landlords to 75% LTV.
Most other lenders are also now demanding 125% or 130% rental over interest and many brokers I spoke to think that this will soon be the norm (again)
A survey by Savills said that about a quarter of landlords would be unable to make further purchases because of this tightening in credit criteria.
But despite all this, recent Council of Mortgage lenders showed buy to let lending continuing to grow fast, no doubt chasing the increasing rental returns caused by so many would be homebuyers becoming tenants.
And what do I think?
Well, I viewed some properties during the Easter weekend and have put in one offer.
So, I’m not scared.
I figure that whatever happens over the next few months, we will still have a shortage of the right kind of housing.
The fact is that we simply don’t know what further bad credit crunch news awaits us.
And we may not know fort a long time yet.
So, sod it, I’m jumping back in and making offers.
If you need more advice on investment property or buy to let investments in general please ask me.
I’m David Lawrenson from property investment mentors http://www.lettingfocus.com/
I’m the author of the buy to let book “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title.
Buy the new edition here: http://www.amazon.co.uk/Successful-Property-Letting-Right-Plus/dp/0716030195/ref=sr_1_1?ie=UTF8&s=books&qid=1203933977&sr=1-1
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 below market value. I’m an expert on the UK property market and a well known property investment blogger and I contribute to newspapers and a host of property websites, write a property investment blog, a number of columns in the press and run a landlords advice service.
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.You can read more of my property investment blog and details of my networking, advice, buy to let networking programme at my website http://www.lettingfocus.com/My next London property investors networking meeting is coming soon. Click here for details: Property Investment Advice
What’s unique about lettingfocus.com is that we offer independent property mentoring because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, 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. Permission must be sought before using the material in the blog.

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Credit Crunch Bites - It's a mad world in buy to let says Lawrenson of Letting Focus

A contact of mine in the north recently became aware of someone who had bought 7 off plan apartments (1/2/3 bed) in a block of 30ish apartments about 10mins Manchester Centre which completed 6 months back for a total of just over £1 million as his first property investment.
No money down, naturally and allegedly 15% gifted deposits from the developer.
The developer promised to pay interest payments for 6 months max, or until they were let, but he cannot now be contacted.
The interest only monthly mortgage payments come to £6000 per month but only three have been let - at much less than what was promised and they are bringing in £1485 per month in total leaving a shortfall of £4515 per month. Ouch!
You have to ask who on earth would lend this man this money on the figures involved - they do not add up whichever way you look at it। It is madness!
More craziness from our financial services friends। When I called in at my local Nationwide -who took over Portman – they said “Sorry, computer says no -we don’t do buy to let mortgages anywhere in the Nationwide group.” Funny that, just the other day I got a call from the Mortgage Works (part of Nationwide) themselves – they are still very much into buy to let. Someone should tell the berks at the branches.

Hapless Housing Association
Also, this week, the hopeless London housing association to whom I let one of my properties on a private lease scheme called me. Their in house boiler people said I would need a new boiler -and it was going to cost me £2600. I got my own man in to fix it – cost £60, which just proves the value of getting a second opinion.
Finally, it continues to look very grim in the financial markets and I feel sure that this must surely spill over into even further tightening on mortgages. Property prices will continue to drift off this year and in a slow market that means there are bargains to be had - though many vendors will no doubt refuse to accept the new reality for a while yet.
I notice that Mortgage Express have raised their margin over bank base rate by another 0.8% above what was available last year.
They appear to have been caught out more than most because they have raised a lot of capital on the money markets using these awful debt instruments.
So, I’ll leave them well alone for now. There should be better deals around. I suggest you go to a good broker who knows which lenders who are less exposed to Le Crunch and who still have decent mortgage rates.
If you need more advice on property investing or buy to let property in general please ask me.
I’m David Lawrenson from property investment advisors http://www.lettingfocus.com/
I’m the author of the buy to let book “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title.
Buy the new edition here: http://www.amazon.co.uk/Successful-Property-Letting-Right-Plus/dp/0716030195/ref=sr_1_1?ie=UTF8&s=books&qid=1203933977&sr=1-1
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 below market value. I’m an expert on property investing for profit and a well known property freelance writer and I contribute to newspapers and a host of property websites, write a property investment blog, a number of columns in the press and run a landlords advice service.
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.You can read more of my property investment blog and details of my networking, advice, buy to let networking programme at my website http://www.lettingfocus.com/My next London property investors networking meeting is on March 12th. Click here for details: Property Investment AdviceWhat’s unique about lettingfocus.com is that we offer independent property mentoring because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, 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 at least twice a week. Permission must be sought before using the material in the blog.

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Mortgage Rates & Repossessions are up but not that much says Letting Focus

So the Monetary Policy Committee, (MPC), bowed to pressure and cut the Bank of England Base Rate by another quarter point to 5.25%.
For borrowers on tracker rate mortgages linked to the Bank of England Base Rate this is of course good news.
But given the current credit issues many lenders may decide not to pass on the full interest rate cuts as they struggle with their own profitability levels meaning many borrowers on products linked to lenders own standard variable rates will lose out again.
However, the good news is that there are still many lenders actively looking for remortgage business from people with good credit records and the coming months and falling base rate will give those previously worried about remortgaging and extra fillip to do so, especially as valuation and legal costs are sometimes included in many of the remortgages now available.

Good News
I think the rate cut is good news for Buy-To-Let landlords who are enjoying the current conditions.
With property prices easing off, rates falling and rents going up fast, this is rightly seen by many as a year of opportunity.
Yesterday I did a quick “trip” around the mortgage lenders. I found that once you spread the typical ubiquitous “application fee” over the average three year term, you are now finding that mortgage rates come in about 0.95% above BOE base for the bog standard buy to let loan - which is a wee bit above the .75% above BOE last time I did the maths back in the summer and before the credit crunch really hit.
So, not that bad, all in all!
However, loan to values much over 80% are pretty scarce and if they do come, they come at a higher interest rate.
As usual, apart from the likes of Bradford and Bingley and a few others, most mortgage lenders on the high street are still completely clueless about buy to let other than, “Here is your rate mate.”

Clueless Mortgage Companies
When I asked about tenancy deposit schemes, two of the biggest lenders on the high street said, “We don’t do those, sir.”
Oh how I laughed!
One day, their staff will get some training on this. One day.
So, if you are a high street lender and you don’t understand buy to let, I’m one consultant who would love to help you!
Today, we got the latest mortgage repossession figures. Again - not too bad really!
OK, the 2007 repossession figures are up on last year but still massively down on those seen in the early nineties, when nearly 80,000 were recorded in one year compared with 27,100 last year. The figures today are reportedly, slightly lower than those of 1999 so this is by no means the worst the market has seen. Still, the media gobbled it up with glee as more proof that the housing market is set to implode.
I still am not convinced of that at all.

About LettingFocus
If you need more advice on where to buy investment property ask me. I’m David Lawrenson from independent property investment experts www.lettingfocus.com
I’m the author of the landlords bible “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title.
I’m an expert on property letting and a well known writer on buy to let and I contribute to newspapers and a host of property websites, write a property investment blog and run a landlord and tenant advice service.
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.
You can read more of my landlord blog and details of my networking, advice, property investors seminar programme at my website www.lettingfocus.com.
What’s unique about lettingfocus.com is that we offer independent property investment mentoring because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, 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 at least twice a week. Permission must be sought before using the material in the blog.

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Higher Mortgage Loan To Value Ratios Are Coming on Buy to Let and Expect More Rejection for The Riskier Property Deals

One of the results of the credit crunch is that the mortgage lenders are getting more choosy about the type of property they will lend money on.
On Saturday the FT carried a story that said it was thought that Northern Rock had pulled out of some agreed mortgage offers on high rise flats, though NR claimed it hadn’t.
Basically, the banks are now dead scared to lend where they are concerned a property might be hard to sell on should it become repossessed – the risk of that has, of course, increased along with the rise in central bank base and more recent rises in inter bank lending rates.
Indeed, last week Victoria Mortgages, went into administration. They had a lot of what might be called non-standard properties. Other lenders are scared of going the same way.

Wary Lenders
As I said in previous blogs, lenders are also more wary of lending to people with poor credit records and anyone with a chequered income history may also find it harder - that will include the self-employed, people reliant on bonus payments or even landlords who are overly dependent on a rent roll.
Also, I cannot now see mortgage lenders being very keen to lend to novice property investors (those with no experience of being landlords) to buy property with “no money down” on the back of closed bridge loans or to buy new build flats against a developer’s supposed “discount”
Borowers will have to expect more scrutiny of their deals and be prepared to face outright rejection.
Unless, that is, the borrower is prepared to pay a much higher interest rate.
Perhaps we may now actually see the end of the rather daft “Become a property Millionaire in 6 Months” nonsense ads.
Yes folks, this is the era where sensible lending will be back. In fact, I expect lenders on buy to let to revert to a maximum 75% loan to value rate for all but the most experienced portfolio landlords.

ABOUT LETTINGFOCUS
I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years. I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased advice and seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
Unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider and as such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price.
I can also explain how to reduce the risk of getting a bad tenant.
I can tell you how to avoid the many scam artists that plague property advice.

Our Events only take place twice a year.
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS for landlords too, Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
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BMV Property Bargains Among the Panic (It Will Help If You Have a Good Credit Rating and Lots of Cash!)

Once the BOE had to step in to help Northern Rock, there was always going to be more than a whiff of panic in the financial system
At least with retail price inflation coming down the BOE could hold the base rate at 5.75%.
But now, the whole world seems spooked because along with expected mortgage rate rises, the stock market has been hit hard – especially the banks and in particular the lenders reliant on the money markets to raise money for mortgage finance. Stand up Paragon and B&B - who also all have a a fair bit of buy to let lending
What a change from earlier in the year!
Only yesterday, lenders had been busy relaxing their lending criteria with borrowers for non buy to let mortgages getting higher multiples of earnings, higher loan to value ratios and landlord borrrowers getting softer rent to interest calculations.

Lax Lending regime Over
Now, it looks like this laxer lending regime has ended – at least as long as the credit crunch lasts
The crunch has also come at a really awful time, because back in late 2005, according to the Council for Mortgage Lenders (CML), over a half milion people took out fixed-rate mortgages, mostly for two years, at an average interest rate of just over 4.5 per cent.
Since then the Bank of England has raised base rates five times. If you add the effect of rises in rates due to the currrent crunch onto all that and you can see how people may really suffer over the next month or two.
Are there any silver linings for property investors and home buyers?
Yes. This will all mean that there could be a lot of “distressed property sellers” out there over the Autumn.
So perhaps this is an opportunity for people to buy property cheaply and more people will decide to return to renting or put off buying a house – thus pushing up rents.
The only trouble is, mortgage finance will be hard to come by, so those with a cash pile to invest and snap up property will do well, while those with none and / or with blemished credit records will be ruing their highly leveraged or bad credit position.

LETTINGFOCUS.COM
We are LettingFocus.com - the property lettings expert and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
As a landlord and property investor myself for over 25 years we can offer independent unbiased
seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
Property “advice” is unregulated but as I am not linked to a property company, developer, estate agency or bridging loan provider I am one of the few who can offer unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.

CHECK OUT THESE PAGES AT OUR SITE LETTINGFOCUS.COM:
Our Events only take place twice a year.
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS for landlords too, Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to [email protected] - Please note we WILL NOT send spam or sell our mailing list to advertisers!


IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?

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Copyright: David Lawrenson 2007. This blog is updated at least twice a week

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Standard Variable Rate Mortgage Payers in For a Nasty Surprise

In my book “Successful Property Letting” I say..... “I also like tracker mortgages. With these, there is a guarantee that the mortgage rate will never be more than a set amount above the central bank (Bank of England) base rate.
If the rate is not linked to the central bank rate, the company will be free to set any rate and call that “the standard variable rate (SVR)” This might be uncompetitive, and if you’re tied in, you may be stuck on a very uncompetitive rate indeed.”
Well folks, as the credit crunch gets worse, the poor fools who did not heed that advice and took out mortgages linked to the lender’s SVR are now seeing their mortgages go up straight away. Abbey have raised their rates today.
The message is clear - always link to bank of England base rate not some woolly SVR.

ABOUT LETTINGFOCUS.COM
We are LettingFocus.com - the independent property experts and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
At LettingFocus we offer independent unbiased seminars for buy to let investors and landlords as well as one to one consulting advice covering all aspects of being a landlord and investing in property.
Unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
As such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.

CHECK OUT THESE PAGES AT OUR SITE LETTINGFOCUS.COM:
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS for landlords too.
Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to [email protected] - Please note we WILL NOT send spam or sell our mailing list to advertisers!

IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?

TO VIEW RELATED POSTS select a “Category” at the bottom of this page.

Have you seen the article on how to get a guaranteed rent by leasing to a local authority or housing association? Click here....
http://www.lettingfocus.com/pages/myarticles_guaranteed_rent.html

WANT TO ADD A COMMENT OR VIEW OLD COMMENTS?
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Copyright: David Lawrenson 2007. This blog is updated every week

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