New Buy to Let loan numbers fall

According to The Council of Mortgage Lenders (CML) new buy-to-let loans fell to 144,600 in the first half of 2008, an 18% dip compared with the previous six months, and the first fall for three years.

CML director general Michael Coogan said "We expect the rental market to remain underpinned by strong demand, partly because some people who would like to buy a home are being forced to carry on renting for now".

But the decline was not as steep as in the wider mortgage market - which saw a 28% drop in home loans in the first half of 2008 compared with the previous six months.

Some 0.16% - or 1,800 out of more than one million - buy-to-let homes were repossessed during the first six months of the year, up from 0.11% during the previous six months.

The average loan was an 83% loan-to-value offer during the first six months of the year.

CORGI regulations for flats

Corgi have issued regulations to its members that from 1st January 2008 all gas cooking appliances for use in flats and other multi-dwelling buildings cannot be installed unless they contain Flame Supervision Devices.

What is a Flame Supervision Device.?

A Flame supervision device is part of the gas burner system and detects if the flame is extinguished and cuts off the gas supply.

What type of properties does it affect?

The description from Corgi states Flats and Multi-Dwelling buildings. This includes buildings that include a number of individual dwellings for domestic purposes only together with dual-purpose properties such as flats above shops and offices. It does not include properties that are for commercial use only or detached, semi detached, terraced houses and houses with loft conversions.

What happens if a Corgi engineer identifies a gas cooking appliances installed in a flat or multi-dwelling building without a suitable flame supervision device that was installed prior to 1st January 2008?

The appliance will be classified by the engineer as "Not to Current Standards". This does not mean that the product needs to be changed immediately but is to advise the consumer that when when they come to change their appliance that they need to buy a model with a Flame Supervision Device.

Does this apply to dual fuel models?

Yes. It applies to anything that has a gas hob or oven

Does this apply to built in gas ovens?

Yes

For more information please visit the CORGI Landlords website

Energy Performance Certificates

From 1st October 2008 landlords offering property for rent in England and Wales will be required by law to provide prospective tenants with an Energy Performance Certificate for their property.

Landlords with property in Scotland will have to provide an Energy Performance Certificate from 4th January 2009.

The certificates (EPCs) will have to be provided free either when (or before) any written information about the property is provided to prospective tenants or a viewing is conducted. They will not have to be provided if the landlord believes the prospective tenant is unlikely to have sufficient funds to rent the property or is not genuinely interested in renting, or the landlord is unlikely to be prepared to rent the property to the prospective tenant.

A new certificate will not be required on each let since, in the case of rental property EPCs will be valid for 10 years.

The requirement is being introduced to comply with the EU’s Energy Performance of Buildings Directive (EPBD) which applies to all property, including rented property.

Failure to comply will mean you are liable to fines and loss of ability to let your property.

Don’t wait until the rush starts in October. EPCs last for 10 years. Save money and time by acting now.

Through NetRent.co.uk you can order Energy Performance Certificates at a discounted rate of just £60.00 plus VAT for all properties up to 6 bedrooms. This offer ends on 31st August 2008.

Take advantage of this special offer now to make considerable savings. The Sunday Times recently quoted the Residential Landlords Association as suggesting that an EPC is likely to cost approximately £200 once the law comes into effect. In addition demand will be high. An important factor to consider is possible delays caused to the landlord in the marketing their properties for rent because they do not have an EPC in place. It will be a busy time for Energy Assessors and so delays in turn around of the EPC could result in a loss of rental income.

For more information ring us now on 01352 759988 or email us at enquiries@netrent.co.uk or complete this form Energy Performance Certificates.

To see more information from the Government please visit their website Department for Communities and Local Government.

Scams Affecting Landlords

In our last Newsletter we highlighted some of the scams designed to catch out unwary Landlords. We also asked Landlords to let us know if there were any particular scams they had been subjected to. The response was interesting to say the least. A whole range of scams are targeted at Landlords from the obvious to the not so obvious.

There appears to be a lot of faith ministers keen to send their daughters to the UK, along with promises of various cheques drawn on a range of both UK and foreign banks. One Landlord caught by this scam found the cheque bounced weeks after he thought it had cleared his account.

A variation on this is the number of models claiming to be coming to the UK to further their careers – including a number quite willing to send Landlords their photos.

As we reported in the last Newsletter there has been an increasing number of Landlords who have found their property used as cannabis farms. Quite apart from the damage that these ‘tenants’ cause to your property it seems that some local authorities and police forces have chosen to be robust in their dealings with the Landlords concerned. One landlord reported to us that well over £7,500 of damage had been caused to his property plus loss of rent.

Several Landlords contacted us to tell us about problems they have had with guarantors when the tenants defaulted on their payments. All of this is in addition to the more run-of-the-mill problems that Landlords can have with some tenants. For example, one Landlord told us that the tenant had stolen all the internal doors. If you have been offered half a dozen wood veneer doors we know a Landlord who wants them back!

Unscrupulous Letting Agents have also caused problems for Landlords. One so-called agent who arranged tenants for a Landlord failed to credit check the tenants, despite billing the Landlord for this service. The result was 6 months lost rent and considerable costs in removing the tenants. None of this money could be recouped from the agent. On the other hand there are also a great number of highly reputable Letting Agents who do a tremendous job for Landlords.

There is no easy solution to these problems. We strongly advise all Landlords to check the tenant completely before handing over the keys to an investment often worth hundreds of thousands of pounds.

NetRent.co.uk has just launched a brand new service called Check My Tenant. This service is provided through Experian, the leading credit referencing agency. Experian have over 25 years experience and offer you a greater selection and quality of data than any other credit referencing agency. They are a global company offering market leading information and fraud prevention.

Through Check My Tenant you can reference your tenants for just £14.50 + Vat for an Instant Report and £24.75 + Vat for a comprehensive report. This service is open to all Landlords and Letting Agents. It is available on-line right now. Most tenants expect to pay you for their credit reference and we strongly advise every Landlord and Letting Agent to use this service.

If you have any immediate questions please click Check My Tenant or ring NetRent.co.uk on 01352 759988.

The Truth About Buy-to-Let Mortgages

Figures released by the Bank of England show that the banks provided fewer than 42,000 new mortgages in May down a staggering 64% from May 2007. These are figures for all mortgages, not just Buy-to-Let.

The recent bleak news from major housebuilders like Persimon, Barratt, Taylor-Wimpey, Redrow and others have highlighted the stark fact that whilst there is a demand for homes and a willingness from would-be purchasers to buy there are simply not enough reasonably priced mortgages to satisfy the demand.

The Royal Institution of Chartered Surveyors claimed that transactions in the housing market are at the lowest for 30 years. They blamed the lack of mortgages as a major cause. So what is the truth for Landlords wishing to either raise a mortgage or re-mortgage an existing property?

Major lenders like Paragon and Mortgage Express have effectively stopped lending. Paragon have arrangements for existing borrowers such as a LIBOR plus 1.75% deal but their well documented problems mean they are giving existing borrowers coming off fixed deals very few options. Mortgage Express (part of the troubled Bradford and Bingley) will lend in theory but in practice it’s tempting to argue that they are pricing themselves out of the market. One of their best deals is 6.74% with a 2% arrangement fee – but only on loans of less than 75%. Over 75% the rate jumps to 7.74% complete with the 2% arrangement fee.

Some good news is beginning to filter through. Birmingham Midshires (part of the HBOS group) reduced it’s margins by 0.2% last week and now offers a 6.09% deal with 2% arrangement fee – but only up to 60% loan to value. Mortgage Works (part of the Nationwide) is offering a 5.39% 2 year discount mortgage up to 70% loan to value but with a 3% arrangement fee.

The major banks are all very cautious and the market remains fearful of further fallout from the American Sub-Prime market. The troubles exposed in the delightfully named US lenders Fannie Mae and Freddie Mac are hardly likely to increase confidence, it will just make things worse.

In the midst of all this confusion and uncertainty the recently released Modern UK Housing Market Report showed that UK rents have risen 40% since 2000 and predicts that rents will rise between 10-15% in 2008/9.

At NetRent.co.uk we are seeing rents rising, sometimes quite steeply, as tenant demand continues to increase. The truth seems to be that many lenders have taken the opportunity provided by the Credit Crunch to significantly increase not only their interest rates but especially their charges.

For Landlords with low loan to value borrowing there are a range of options to choose from. Landlords with higher loan to value borrowing should concentrate on cash flow and accept that any switching of mortgages is likely to incur significant costs in arrangement fees. According to industry people we have spoken to in the last few days the expectation is that this situation is unlikely to change significantly before Autumn 2009.

Any Landlord wishing to review their lending should seek advice from specialist Buy-to-Let Advisers. A word of warning though. It is probable that the number of Financial Advisers specialising in Buy-to-Let will drop quickly. We have already seen a number leave the industry and this trend is likely to increase.

In the midst of all this turmoil the Spanish banking group Santander, which owns the Abbey in the UK, launched a £1.3 billion takeover bid for Alliance & Leicester. Clearly someone thinks that the banking sector has a future. Would it be too cynical to believe that whether times are good or bad the banks always seem to do well?

For more information about available mortgages please click Mortgages through NetRent.co.uk or telephone us on 01352 759988. Please note that not all the available deals can be shown on our website because of daily market changes. For immediate assistance and advice please ring us.