A Very Happy Christmas and New Year

A Very Happy Christmas and New Year from everybody at NetRent.co.uk.

Please note that our office will be closed from 1pm on Tuesday 23rd December and will re-open at 9am on Friday 2nd January.

Exceptional Investment Opportuninty

Imagine an investment that averages over 10% PER MONTH. That’s exactly what our business partners have done this year by investing in Blue Chip companies from the UK Stock Market.

At a time when shares across the world have seen huge losses our business partners have managed a staggering growth throughout 2008. This growth has averaged over 10% each month this year.

This amazing performance has been achieved by investing in some of the biggest names of the FTSE 100, companies like Vodafone, GlaxoSmithKline, Rolls Royce and Tesco.

By adopting a simple but highly efficient investment model they have produced hugely impressive returns for their investors. We are delighted to offer this investment opportunity to you. These Stock Brokers are FSA regulated, based in London and invest in selected companies from the FTSE 100.

If you have Stock Market investments or cash on deposit we believe that you will want more information about how they have averaged over 10% a month throughout 2008.

For more information please ring us now on 01352 759988 or email us at enquiries@netrent.co.uk.

Please note that Netrent Ltd is only authorised to make introductions and past performance is not a guide to future performance.

Time for Action?

In our last email and Blog we called for the Government and Banks to act to help Private Landlords. The response we received was huge as landlords emailed and rang NetRent.co.uk to support our call for the Government and Banks to act now.

Yesterday the Chancellor presented his Pre-Budget speech which he hopes will stimulate the economy and help the UK avoid a long and painful recession. There was a somewhat vague promise to present plans to boost residential mortgages in the April 2009 Budget but there was no direct assistance for the Private Rented Sector.

The banks who just 12 months ago were fighting to secure as much Buy-to-Let business as they could no longer wish to lend. The chairman of the now state owned Bradford & Bingley told the Treasury Committee last week that Buy-to-Let in the UK was now dead. The Skipton pulled out of Buy-to-Let lending completely last week. The number of Buy-to-Let mortgages continues to drop and still there is no action from the Government.

It seems clear that the banks have effectively washed their hands of the Private Rented Sector. It also seems clear that the Government is not going to help either.

Landlords cannot allow the Government and Banks to do this. There would be no benefit to the UK economy in allowing large numbers of landlords to default on their mortgages. This would just make all Buy-to-Let lending increasingly difficult.

It is up to the Private Rented Sector to make the Government and Banks listen and act. NetRent.co.uk is talking to landlords all over the country to determine what positive action can be taken to make the Government and Banks listen and act.

We would welcome your views. If you have any suggestions about how we can together make the Government and Banks listen and act please email us at enquiries@netrent.co.uk or telephone us on 01352 759988.

It's about time the Banks and Government helped Private Landlords

The on-going debate over interest rates continues to dominate the Private Rented Sector. Landlords all over the UK are gradually having to become experts in the previously little known LIBOR rate.

LIBOR is the rate at which banks lend money to each other and it has become clear that this rate rather than the Bank of England rate will determine the medium term future of Buy-to-Let in the UK.

Last week’s huge cut in the bank base rate did have an effect an LIBOR but UK banks hardly rushed to pass on the interest rate cut. The negative publicity they received on Friday pushed many of them into a grudging response but several including Barclays and HSBC virtually ignored the furore. It’s interesting to note that both Barclays and HSBC have not asked the Government for funds over the past few months.

This leaves landlords all over the country in a quandary. According to the Royal Institution of Chartered Surveyors (RICS) house sales are now at the lowest since records began. Many landlords see this as an opportunity to buy more property. At the same time many landlords are seeing their business pushed into the red because they cannot remortgage.

The problem is twofold. First, LIBOR rates are much higher than bank base rates. Bank base rates are 3%, LIBOR is 4.2%. Second, there are very few lenders willing to lend to landlords.

We spoke to one major broker yesterday and this is the criteria they are now demanding:
Maximum loan to value 70%
Interest cover 125%
No HMOs
No freehold houses converted into flats
No new build, especially flats
Minimum income £25,000
Deposits must be proved

And yet there are more tenants than ever, more demand for rented property than ever. Rents, on average, are rising.

It seems that the banks and the Government are prepared to watch a huge proportion of the Private Rented Sector slip into debt and repossession without lifting a finger to help.

At the same time landlords who have run excellent businesses cannot expand those businesses because they cannot raise the finance to buy more properties.

The Government now effectively controls the largest proportion of the Buy-to-Let lenders and yet they show absolutely no sign of helping this vital sector of the UK housing market. The banks they have supported with our money are now effectively washing their hands of an industry that just 12 months ago they were desperate to lend to.

There are over 800,000 landlords in the UK. It is about time that landlords started to make their concerns known to Government and the banks. It is time for landlords to demand action to support an industry that owns around 1 in every 9 homes in the UK.

If you have any comments you would like to make or any suggestions please email us at enquiries@netrent.co.uk or phone us on 01352 759988.

If you would like help with a mortgage or remortgage please click here Mortgages Through NetRent.co.uk

Win an £8million Property Portfolio

Here's a chance to win £8million worth of property - and support the Great Ormond Street Hospital charity at the same time.

MIA Developments Ltd are running a competition for one lucky person to win a portfolio of property worth £8million and at the same time they aim to generate £600,000 for Great Ormond Street Hospital.

With 'Win a London Pad' you simply buy an MP4 player from 'Win a London Pad', £3.00 will be donated to Great Ormond Street Hospital with the aim of raising up to £600,000 to fund a new purpose-built 4 bed ward in the new Cardiac Daycare Centre - and at the same time you will be entered into a draw to win an £8million property portfolio.

For more information click here Win a London Pad

Bank Base Rates Cut by 1.5%

Will today’s 1.5% cut in the Bank Base Rate affect the Private Rented Sector? There’s no doubt that any cut in Bank Base Rates is good news but is a 1.5% cut enough to help landlords?

Before the announcement by the Bank of England John Cridland, deputy director general of the CBI, said “The recession into 2009 will be both longer and deeper than expected” as he called for a big cut in interest rates.

The Halifax also announced today that house prices fell a further 2.2% in October pushing the annual fall to 13.7%.

The problem for the Private Rented Sector is that most Buy-to-Let mortgages are linked to LIBOR not the Bank Base Rate. LIBOR is the rate at which banks lend to each other and this has stayed consistently high during the Credit Crunch and still stands around 6%. As long as LIBOR remains high cuts in bank base rates will have little or no effect on the cost of borrowing money for landlords and other businesses.

Yesterday in Parliament the Prime Minister said “We want the banks and building societies to pass on the interest rate cuts to their mortgage holders”. Given that the Government now has substantial share holdings in so many major banks the question has to be why isn’t the Government telling the banks to lower their rates?

We believe that even if this rate reduction was passed on to borrowers it will have little or no effect on landlords. Will the Government really encourage lenders to support the Buy-to-Let market in preference to first time buyers and businesses? We don’t think that they will.

Lenders are under no pressure to support Buy-to-Let and with so many major Buy-to-Let lenders disappearing from the market the remaining lenders are taking the opportunity to significantly raise their costs and interest rates. We do not see this changing in the short or medium term.

Landlords have found that the cost of borrowing money has risen sharply over the past few months. Today’s cut in Bank Base Rate is very unlikely to reduce this cost. We believe that this situation will last throughout 2009 and well into 2010.

Our advice to landlords remains the same – concentrate on cash flow. Don’t expect Buy-to-Let interest rates to fall in the near future. Lenders will continue to charge high arrangement fees. The only viable offers are at 75% loan to value and below.

For more information on Buy-to-Let mortgages click here Mortgages through NetRent.co.uk.

The Rugg Report

The long awaited report Review of Private Rented Sector Housing, commonly known as the Rugg Report after one of its authors Julie Rugg, has been published.

This is essential reading for everyone involved in the lettings industry. The report was complied on the instructions of the Department for Communities and Local Government so it is very likely that this will form the basis for future Government legislation affecting the private rented sector in England.

The Executive Summary can be found here The Private Rented Sector Executive Summary.

The full report can be found here The Private Rented Sector: its contribution and potential.

A Review of Buy-to-Let Mortgages

In the past few days we have witnessed unprecedented intervention in the Banking sector by central governments both at home and abroad with more to follow. The result is that we will have fewer market participants and reduced competition. From over 2,000 BTL mortgages just over a year ago there are now only around 262 BTL mortgages from just 27 lenders.

Banks, in real terms, will be cash poor and will look to make strong returns on the money they lend. Banks will not look to attract any business that is deemed risky and will look increasingly at the strength of the applicant, their current commitments and ability to service those commitments.

Political pressure could mean sweeping changes to the availability, structure and pricing of BTL mortgage products as the Government and legislators take an active financial stake in the banking sector.

With some politicians and commentators blaming the BTL sector as a major contributory factor in the recent boom in house prices, it is not too outrageous to assume that the Government may seek to distance themselves and the banks that they support from active participation in the BTL sector. It is difficult to imagine the Government allowing banks that they have poured £billions into to lend that money to BTL landlords in preference to first time buyers and small businesses.

Rather the Government may look to capitalise on the current unrest in the housing market by encouraging and promoting wider social housing provision via large scale players in the private rental sector. It is notable that some of the larger developers have already concluded deals with housing associations to take up unsold stock.

All this turmoil leaves the BTL mortgage market in serious disarray. Today BTL interest rates range from 5.39% to a staggering 15.9%. Application fees have soared and can be as high as £2,000. Arrangement fees that were virtually unknown just 12 months ago now range from £690 to as much as 3.25% of the loan.

Today there is just one lender still offering an 85% loan to value BTL mortgage, just 6 companies are left offering 80% loan to value mortgages. It is only at 75% loan to value and below that there is anything approaching genuine choice.

Two lenders are actually paying BTL borrowers to take their mortgages to another lender. One of them has offered a staggering 30% rebate to one landlord to encourage him to find another lender.

Lenders who offer competitive rates find themselves swamped with enquiries and quickly withdraw them as their internal systems clog up. It is increasingly likely that lenders will offer limited tranches of money.

Landlords looking for good mortgage or re-mortgage products need to plan ahead. To ensure that you get these deals as they become available you need to start building a good working relationship with a specialist BTL broker now. Otherwise, by the time you find out that that a good deal is available, make an enquiry and complete an application form the chances are that the money will have gone. Some mortgage deals are now only available for just a few hours before they are withdrawn.

Some of the best BTL brokers are now charging small, upfront retainers. They are choosing to work only with experienced, serious landlords who are willing and able to plan ahead, and act quickly as attractive rates become available. Landlords who are waiting for the market to turn are beginning to find that they are being left behind and are finding that they are missing the best deals.

It is now more crucial than ever that landlords plan ahead. Many landlords are seeing their current mortgage deals coming to an end and need to ensure their cash flow is maintained.

At the same time growing numbers of landlords are taking advantage of the drop in house prices to increase their portfolios. History tells us that many successful landlords often made their most astute purchases during times of economic turmoil and as ever preparation is everything.

To be successful in securing funding in the coming months, Landlords must be able to demonstrate:

· A positive income stream be it rental, earned or a mixture of both (Landlords need to be able to evidence this income with tax returns, pay slips or confirmation from an accountant)
· Modest levels of unsecured personal debt (large credit card balances coupled with personal loans will not encourage lenders to extend further loans).
· Clean credit profile, commitments have been met to date
· Application process is key. Submitting an application with missing or incorrect information will almost certainly mean the application will fail.

It is highly unlikely that there will be an increase in the number of BTL mortgages in the coming months. Many experts are now predicting that little will change before the end of 2009 or even well into 2010. Similarly it is unlikely that BTL interest rates will fall any time soon. But there are still BTL mortgages available and those who plan ahead will get the best and most attractive rates.

If you would like to discuss your mortgage requirements with an expert BTL broker please follow this link Mortgages through NetRent.co.uk or call us now on 01352 759988.

Letting Agent shames tenants who refuse to pay rent

Merseyside letting agents Sutton Estates have come up with a novel and daring way to name and shame defaulting tenants.

"Rent Dodger Lives Here" signs are affixed to the property of tenants who fall into serious arrears and refuse to discuss or acknowledge the problem. Rob Downey, a partner in the letting agent, told us that they were targeting individual cases and this was "not about persecuting people".

So far just two signs have been used and the tenants have now left in both cases. Rob told us that in one case they also had to call in the RSPCA. Neil Heffey, a partner in Sutton Estates, said he was sick and tired of being “avoided” by those who refused to pay for their living accommodation, provided by or through his company. He added “They can avoid us, but not their neighbours. Now, every time they walk in and out of their door, the neighbours will be laughing at them.”

The Liverpool Daily Post newspaper reported that Mr Heffey said recent changes in how benefits are paid, which are intended to give tenants greater control over their rent payments, had seen more and more people falling behind. This also comes as the credit crunch sees property owners finding it more difficult to maintain mortgages.

The Liverpool Daily Post quoted John Tuson, head of commercial property at Kirwans Solicitors who said the estate agent’s signs could potentially open them up to legal action. Among the areas for concern, he pointed out, were the possibility of defamation, incitement to assault or affray, harassment, breach of the tenancy agreement, or even trespass.

Mr Tuson said: “There is also confidentiality, in that the landlord should not expose information about the tenant to a third party, and there’s the issue of privacy under Article Eight of European Convention of Human Rights, along with data protection issues. And I dread to think what the consequences would be if the signs were accidentally put on the wrong houses.”

Rob Downey from Sutton Estates claimed that there was no legal precedent and he said that no-one was sure what the legal implications were.

There is little doubt that many landlords and letting agents would support this kind of action against tenants who abuse the system without regard for the consequences. Many landlords who have responded to our Petition Against Changes to Section 21 Notices have called us to complain that their human rights are being infringed by tenants who simply refuse to pay their rent.

It will be interesting to see how this form of direct action by Sutton Estates develops.

HMRC in new clampdown on Landlords

HMRC (the Taxman) is set to target Landlords in a new clampdown on Buy to Let rental income.

New powers will give Government inspectors the right to turn up and inspect Landlords records in their own homes. Letters have been sent out by HMRC warning Landlords about new measures which come into force next April.

Earlier this year HMRC sent out 500 letters to Landlords to test whether there was a case to specifically target Landlords. HMRC routinely requests details from local government authorities, its Stamp Office and letting agents about rental income and the sale of properties - and that this information will be "data matched" to identify individuals who have not made the appropriate tax returns.

Some newspapers have even claimed that HMRC will be checking property to rent adverts in local shop windows in an attempt to identify as many Landlords as possible.

HMRC are reported to be especially concerned that many Buy to Let investors have incorrectly assumed that they can offset the full cost of a repayment mortgage against their profits for tax purposes. With over 1 million Buy to Let mortgages in the UK there is a lot of potential for investigation.

It is claimed that many landlords do not fully understand the tax rules surrounding their investments, which allow them to offset only a certain proportion of their mortgage payments against their tax bills. Only the interest payable on a mortgage loan can be offset against tax, so any landlord with a repayment mortgage is liable for tax every time they pay off part of the capital they have borrowed.

Our experience suggests that most Landlords opt for interest only mortgages which can be offset against tax, but our advice is to carefully check what you are allowed to claim. HMRC have advised all Landlords to check with their website to ensure that they correctly reporting their status to them. For more information click here HMRC Website. We recommend that all Landlords should seek professional tax advice and correctly declare all your earnings. If you don’t HMRC could be knocking on your door.