The continuing boom in the buy-to-let property market has attracted many first time venturers into the market. The poor returns offered by bank saving accounts and the dire problems encountered by the stock markets across the world this week will convince even more speculators to put their cash into property.
Research will reap rewards
It is vital for any landlord new to the business to have a good understanding of his costs. While it is impossible to become an experienced property investor overnight it is not impossible to do plenty of research before you take the plunge into a new project. It is fairly simple to get a quick understanding of the costs involved in setting up and a bit of diligent research will soon pay dividends when it comes to saving money.
Although it is not as easy as with some other types of insurance, a quick perusal of the internet will find a few insurance comparison sites that offer landlord insurance quotes.
Regulation compliance a must
Adhering to fire and safety regulations is an absolute must and is not an area where you should think about cutting corners. Make sure your gas appliances are thoroughly checked by a fully authorised gas engineer, and don’t just take his word for it, ask him for identification and proof that he is qualified to certify your appliances. It is your responsibility to check that everything is in order. Fire and safety regulations are absolutely essential and don’t forget accessories like furniture, carpets and curtains must adhere to set standards.
Speak with professionals
Even though finding landlord insurance quotes can be easy, choosing a letting agent can be complicated and expensive. If you are entering the sector with the idea that you will expand and eventually become a professional landlord then you will probably want to avoid the expense of an agent. If that is the case make sure you join a professional body such as the National Landlords Association. The cost is minimal compared to the advice and experience that can be passed down to a newcomer, and special deals organised by professional bodies will probably recoup joining fees in no time at all.
The prospective dilemma facing investors holding residential property insurance and their young tenants in the coming 12 months just will not go away, and now an organisation created to look after the interests of landlords is letting their voice be heard.
Shared accommodation rate now applies to under 35’s
The National Landlords Association (NLA) has backed up concerns voiced by housing charities such as Crisis and Shelter who say the impending change in the shared accommodation rate of benefit could lead to thousands of young people being made homeless. The changes will come into force next January and specify that any single person claiming housing benefit under the age of 35 will only be paid the average rent charged for a room in a shared property. The drop in benefit rates could mean many landlords will find themselves letting out property to tenants who can no longer afford to pay the rent.
Survey reveals the problem
Although the changes don’t come about till January the change is already having an effect. Crisis and Shelter’s prediction that private landlords will refuse to take on single tenants under the age of 35 has been corroborated by a survey carried out by the NLA. The survey asked landlords who already let properties to tenants on housing benefit what their future plans would be in regard to whom they let their properties out to. Almost a third said they had already stopped offering new tenancies to people claiming Housing Allowance. Less than 1% said they intended to take on more and it’s fairly plain to see why.
Landlords can afford to look elsewhere
The risk for landlords who are always keen to avoid property insurance claims is just too much and the survey indicated they would advertise elsewhere to find new tenants. In the current situation they should not encounter too many problems. Tenant demand all over the UK is proving to be extremely strong in the current financial climate. The NLA also backed the housing charities on their assertion that there are definitely not enough shared properties in the country to house the number of people the change in benefit will affect. The Welfare Reform bill still seems to have some way to go before it satisfies its many critics, from both sides of the fence.
As landlords across the UK report tenant demand is stronger than ever, speculators are beginning to question whether 2011 will mark a sea change in how the British Public at large view home ownership.
The latest letting agent to report burgeoning business, Paragon Rented Sector say that only 4% of landlords reported a drop in tenant interest and the survey showed that landlords are only averaging void periods of 2.9 weeks per year. The figures are eye opening and one can imagine landlord insurance providers being inundated for quotes from eager investors rushing to get on the gravy train.
Banks to blame?
Experts agree that the restrictive mortgage terms offered by lenders since the bank crisis of 2008 is more than a little responsible for the glut of tenants on the lookout for accommodation. Also of course the thousands of job cuts in the public sector have shaken the confidence of house hunters dramatically.
Are we ready for change?
The question now being asked by many in the industry is will today’s seemingly unusually high demand for rented accommodation be the norm from now on? The answer may well be yes. The 20th century saw a great majority of working class people suddenly become homeowners. The selling off of council housing cheaply was the greatest contributor to this, but it could not have happened without the relaxed lending terms unleashed across the financial sector, access to borrowing was the key.
The depressing figures released by the Council of Mortgage Lenders over the last 2 years shows that the opposite is now happening. Thousands of homes for sale are attracting bids from prospective buyers only for the sale to be scrapped once the vendors go to arrange a mortgage and find they can’t borrow the cash. If interest rates are pushed up by the Bank of England in the coming months many housing experts believe the sales sector will crumble and letting agents will become king. Rented property insurance will be on offer from all major insurance companies.
Figures already show that the average age of new homebuyers is in the 30’s it will not take much more before young couples abandon the idea of scrimping and scraping to raise the money to buy their own home and just settle for long term renting instead