The Opinion on HIP’s is Still Very DividedRecently the Independent had an interesting article on HIP’s (Home Information Packs) and how the new legislation involving them has been greeted by the industry.

For those of you who are unaware. HIP’s became compulsory for all homes being sold in England and Wales in December 2007. Reaction to the current legislation appears to be very mixed and the fact that the rules regarding these things are soon set to get even tighter just makes the situation even more interesting.

Essentially these HIP’s were introduced to try to make the sometimes tricky transaction of selling your home a bit simpler. They currently contain key information about the property such as the local authority, utility searches, copies of titles and Energy Performance Certificates. In a short time they will also contain information buyers often enquire about such as risk of flooding.

It is easy to see, at least theoretically, that these things should be useful but a lot of people in the industry have branded them a monumental waste of time. “They are good in theory but the execution has been so bad – frankly, they are a bit of red tape,” says Alan Thompson from conveyance specialist Act Legal. Continue reading →

Most of you probably know that Paragon Mortgages launched its quarterly survey of highly experienced landlords back in 2001. Since then it has become highly respected in the industry so when we read that their recently released fourth quarter report contained a big warning for landlords, we should all take note.

 

Highly experienced landlords have reported that tenant demand is still strong for their properties. Even better, 40% are of the opinion that this demand will be even higher in twelve months time, very heartening indeed.

 

Rising rates of return are also reported with the average yield across a landlord’s portfolio standing at 6.1% though nearly a third report even higher figures than that. So the doom and gloom is not total in our sector by any means.

 

One figure that should provoke a bit of gloom, however, is the really rather large number of landlords who indicate that they still have not obtained Energy Performance Certificates for all their properties.

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It is great to see the London boroughs of Hammersmith and Fulham being really proactive in their approach to improving social housing.

Some people that have previously been contributing and tax paying members of our society will, at least temporarily, fall on hard times. It is important that we have enough decent social housing to cope with this increase comfortably. This is clearly an issue that should bother us all in this economic climate.

Hammersmith and Fulham Homes (H&FH) have joined together with Northgate Public Services, who are well known for their innovations, in what they claim is a unique public-private arrangement. Their goal is to ensure local people benefit from the Government’s Decent Homes programme to provide people with high quality and sustainable social housing.

They are trying to create a scheme linking fees to performance and prioritising the transfer of skill to employees.
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Most of us would probably agree that this is not the ideal time to try to sell off properties from our portfolio, sadly, however, some landlords are being left with little choice.

If they cannot find a tenant in today’s climate of high vacancy rates especially if they are struggling with outstanding debt, then they may be forced into the sales market. Michael O’Flynn of the website FindaProperty.com has some advice for these landlords.

Firstly, he points out that statistics show overwhelmingly that quick sales of properties are very difficult to achieve. Apparently it now takes 45% longer for the average house to sell in Britain.

The only answer to this, according to Mr O’Flynn is competitive pricing of your property. It is a fact that home values are continuing to fall with a further 1.9% decline between December 08 and January 09. So what Mr O’Flynn is trying to say, as nicely as possible is, if you want to get rid of your property it is going to be at a bargain basement price.

Clearly this is best avoided; I would think you would only consider it an option in the most dire of circumstances. If, however, you are unlucky enough for it to be unavoidable then industry advice it that it is better to sell in the winter when competition is less.

Don’t forget, if you really don’t want to sell, then rather than heavily discounting your property sales price, try dropping your rents a little to try and entice tenant.

I, for one, am actually quite pleased to see that the OFT is launching an investigation into some sale-and-rent-back-firms. These firms offer a scheme where the home owner sells their home at a discount in exchange for tenancy rights.

It is not because I think these types of schemes are inherently bad, on the contrary, they may have great potential, but I feel it is very important they are well regulated.

According to James Meikle of the Guardian, the OFT is taking steps to make sure this happens. The watchdog organisation has issued 16 companies with please explain notices regarding their advertising practices.

There is some concern that these companies may have been misleading people who are in desperate financial straits and scared they are going to lose their homes.

The OFT has given the 16 companies, who have not been named at this stage, fourteen days to substantiate the claims they have made in their advertising or face sanctions that may include prosecution.
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Seventy percent of landlords think fees of around 11% for renewing properties on a let only basis are unfair. Many letting agencies still charge these kinds of fees and landlords seem fairly united in the idea that it is not any kind of reflection of the amount of work the letting agency has to put in.

The problem seems to be fairly confined to London and the South East, other regions tend not to have these fees which only emphasise the unfairness. Presumably they would not claim that the work that goes into renewing a property in London is anymore than in say, Manchester. That would just be ludicrous.

The National Landlord Association (NLA) released two statements regarding this issue, the first is directed at landlords themselves. John Socha the vice chairman of the NLA had this to say

“ Landlords get no added value from letting agents on ‘let only’ deals once a tenant has been secured. Why should they have to pick up the tab just to keep the same tenants?
It is crucial landlords check the small print of all contracts before they sign on the dotted line. Any clauses which cause concern should be negotiated out of the contract.”
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We seem to be in very interesting times for landlords. Some people give an impression of all round doom and gloom but actually recent findings released by leading specialist market research agency, BDRC show two very distinct camps.

The BDRC came about in 2006 and its function is to canvas the opinions and expectations of Britain’s landlords. They do this by surveying a control group of 500 landlords every quarter. In the last quarter of 2008 their survey uncovered a major split in the fortunes and attitudes of the two different types of landlords operating in Britain.

The report, for the first time, distinguishes between what it calls the amateur landlord market and the professional ones. It puts anyone with fewer than five properties in the former category. The report states that these landlords are struggling in the financial climate with seven percent saying they are making a loss at the moment.
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It is a sad fact that many people are currently really feeling the pressure financially. There can be little doubt that many people are finding it difficult to pay the rent or mortgage on their home.It is not pleasant but as a professional landlord you will sometimes have to evict people. No-one wants to have to do it but the truth is if you don’t you may soon join them in financial dire straits. But what happens when they won’t go? Stephen Parry of Landlord Assist said "There has been a marked increase in the number of people being repossessed and then re-entering their former properties as squatters” This is clearly not good news for us as landlords. Obviously as a human being we often have a huge amount of sympathy for these tenants, especially those that have previously been good payers but have fallen on hard times. As business people though we cannot afford to have our properties filled with non paying tenants. It is to be noted that most squatters are pretty savvy about knowing their rights these days, it is paramount that you know yours. Before you attempt to evict any squatters you need to thoroughly research the law and make sure you do everything by the book. Continue reading →