Landlord Insurance

More companies in “financial distress”

Insolvency specialist Begbies Traynor is reporting a 24% increase in the number of companies facing “critical” levels of financial distress in the fourth quarter of 2011 compared to the same period in 2010.

Many key sectors of the economy faced significant rises in critical financial distress, including:

Automotive – 14% increase
Construction 13% distress
General retailing 13%increase
Professional services 61%increase
Travel and tourism 56% i9ncrease

Of particular interest to landlord insurance clients will be the result for “Property Services” where a 30% increase in critical financial distress was found.
Even the South East of England is not immune to the general malaise. The Red Flag Alert shows that there was a 33% year on year increase in critical distress in this area of the country. In London the figure was 19%.

Few will be surprised to see that the retail sector fared so badly. Small/medium sized retailers were hit particularly hard. Landlords of small shops are often between a rock and a hard place. If the tenant defaults and moves out the landlord normally has to pick up the business rates. This means that for many landlords it is better to charge no rent as long as the tenant will pay the rates.

Begbies Traynor is a rescue, recovery and restructuring specialist. They publish their Red Flag Alert each quarter to provide a benchmark of “company distress”.

House prices in 2011

Mortgage lender Halifax has published its House Price Index for 2011. The main points are that in the final quarter of 2011 prices were 0.1% below the figure for the previous quarter. Between November and December prices dropped by 0.9%

For the year as a whole house prices dropped by 1.3% which means that the average house was worth £160,063 at the end of 2011.

Halifax believe that if the UK can avoid recession house prices should be reasonably stable in 2012. However they point out that there is uncertainty regarding the prospects for the UK economy. Their housing economist Martin Ellis added “The extent to which households chose to reduce their debts will also affect growth. As a result, the outlook for house prices is also uncertain”.
If you are one of our landlord insurance clients you will probably have mixed feelings about these figures. If you bought a buy to let for cash several years ago you are probably sitting on a tidy profit. Equally, if you have borrowings your interest rate is probably quite low. The people who will be suffering are those who for various reasons are forced to sell now, in a very difficult market.

The National Association of Estate Agents has a view on the Halifax index. The Association believes that there is no such thing as a national housing market in the UK. Instead, they say it is a “landscape of micro-markets”. Their Chief executive Peter Bolton King says: “even towns and cities have micro-markets across different neighbourhoods”. This shows how careful you have to be if you are thinking of buying a let property – doing your research is absolutely crucial.

New powers to deal with anti social tenants

The Courts make 3,000 eviction orders for anti-social behaviour against social tenants each year but the process is very slow and often expensive. On average it takes seven months from applying for a possession order to obtaining one and the landlord often has to prove repeatedly that the tenants have behaved badly in the past.

Landlord insurance clients often find themselves dragged in to cases of anti-social behaviour, especially if neighbouring households know the landlord concerned. It can also cause a problem when selling a house because prospective purchasers might be put off if they found out that the area is plagued by bad behaviour.
The Housing Minister Grant Shapps has announced proposals to speed up the process. There will be a new mandatory power for possession, which could be triggered by a record of previous convictions for anti-social conduct. The new procedure will apply to both social and private tenants. If you have any experience of anti-social behaviour by your tenants please let us know what you think of these proposals.

Cut benefits for anti-social neighbours?

The Daily Telegraph (Dec 30th) reports that more then 23,000 Westminster residents have been sent warnings that they risk having their council tax benefit cut if they engage in bad behaviour. Landlord insurance clients often find themselves dragged in to situations where tenants have behaved badly. The size of the reduction would depend on the severity of the anti-social behaviour with criminal activity resulting in the most severe reductions.

In 2013 local authorities will take control of council tax benefit and it is possible that others will follow Westminster’s example. Westminster is also thinking about reducing council tax benefit for people who do not make an effort to obtain employment.

Big rise in tenants behind with rent

The website MyMoney24.co.uk is featuring the news that there are nearly 79,000 tenants in England and Wales at least two months in arrears with their rent. This may be worrying for those landlord insurance clients who depend on rents to meet mortgage repayments.

The position has got a lot worse since this time last year and the number in arrears is now the highest level since the third quarter of 2008.

The report was compiled by Templetons LPA, chartered surveyors. They believe the position will get even worse as we go through 2012 and will mean more people facing eviction.

If you would like information about insuring a let property visit click4quote.com insurance

Changes to Assured Shortholds

Landlord insurance clients at the high end of the market need to be aware of changes to the Assured Shorthold threshold. From 1st December 2011 in Wales the threshold increased from rents of £25,000 to £100,000. This follows the same increase that took place in England in October 2010. This means that virtually all rentals in England and Wales will become subject to the Assured Shorthold regime because very few houses are rented for £100,000 or more.

Landlords will need to make sure that their documentation and procedures are up to date.
One important point is that landlords must protect the tenants’ deposit and must issue written details to the tenant to explain how this has been done.

If you need information about the changes there are plenty of websites to choose from. If you need landlord insurance visit www.click4quote.com

EU threat to buy to let mortgages

If you are a landlord insurance client with a buy to let mortgage you need to be aware of EU plans to curtail this type of lending. The Residential Landlords Association has spoken out against a proposed EU directive that they believe would seriously damage the private rented sector. The draft directive is aimed at curbing irresponsible lending on mortgages following property booms and busts in countries like Spain and Ireland. If it came into force lenders would not be able to take account of rental income when assessing the ability of the applicant to afford the mortgage repayments. The proposal is aimed at “consumers” but it could catch small landlords with just a few properties.

Alan Ward, the chairman of the RLA said “This directive is nothing short of a disaster for housing in the UK. The RLA is working hard to have it aborted. It would effectively kill off buy to let mortgages”.

If you need landlord insurance visit www.click4quote.com insurance

New accreditation scheme for student homes

Landlord insurance clients interested in the student accommodation business should take a look at a new accreditation scheme. The new scheme has been launched to establish benchmark standards in student accommodation to provide reassurance to students and their parents. The people behind it are UNIPOL and AFS. UNIPOL is a charity working nationally to improve standards in student housing and AFS runs a search engine for student homes. A code of practice combines landlord training with verification visits.

The scheme is voluntary and aims to set standards that are easily understood by people using the AFS website to look for accommodation. If you are thinking about entering this market it could be worth checking it out.

For more information visit www.unipol.org.uk/afsunipolcode

For information about landlord insurance contact click4quote insurance

Weather related claims up 200 percent in three years

Landlord insurance clients keen to keep up to date with the latest financial news should visit the This is Money website. It contains all kinds of information about money matters and recently carried a feature on household insurance claims.

One of the insurers quoted said that household claims caused by adverse weather had doubled in the past three years. Perhaps this is not so surprising given the last couple of winters. Many of the claims relate to roof damage so it makes sense to make sure that your roof covering is in good condition. Other items that can easily be damaged by storms are garage and shed doors and gates so make sure they are securely fastened.

For more information visit www.thisismoney.co.uk

For landlord insurance visit www.click4quote.com

Changes to deposit protection

Landlord insurance clients should take a look at changes to the deposit protection rules introduced by the Localism Act. It has been the law for some years that the tenant’s deposit must be protected but there has been some uncertainty about the way the scheme operated and this has led to recent court cases.

The new rules will allow the landlord 30 days to protect the deposit and issue the “prescribed information” to the tenant about the way the deposit will be handled. If the landlord fails to comply he risks an award against him of up to three times the value of the deposit. Another penalty for the landlord is that he will not be able to rely on a S21 notice if he is in breach of the time limits- unless the deposit is returned in full.

If you need information about landlord insurance visit click4quote.com insurance

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