Landlord Insurance

Energy Performance Certificates to change

Energy performance Certificates have been around for some time now and most people realise that they are needed as part of the house marketing process. Changes to the EPC are being introduced in April 2012 to make the certificates easier to understand and also to make them part of the government’s “Green Deal”. The Green Deal will offer interest free finance so that people can make energy efficiency improvements to their homes and the EPC will identify those areas that will qualify for the scheme. Typical works will include loft and cavity wall insulation.

Landlord insurance clients should note that it will be the occupier who will be responsible for repaying the loan. If a tenant obtains a Green Deal loan he or she will be responsible for the repayments and these will be added to the utility bill. Businesses as well as individuals can apply for funding.
If you are interested in finding out more about the Green Deal there is quite a bit of information on the web. The Department of Energy and Climate Change is a good place to start.

The other change to the EPC is that the main information will now be shown on the front page so it will be easier to understand.

New Buy scheme aims to help house buyers

Various mortgage lenders are now part of the Newbuy scheme that offers mortgages of up to 95% on new houses. The scheme aims to help buyers who find it impossible to save the large deposit now required by many lenders.. It should also increase the number of new houses being built because developers will be more confident that mortgage offers will be made to prospective purchasers.

The scheme only applies to new build property in England and the builder must be part of the Newbuy scheme. The price needs to be no more than £500,000 and the property must be a main home. Landlord insurance clients will find that it cannot be used to finance properties that will be let out. If you are a UK citizen or have indefinite leaven to remain in the UK you might find that the Newbuy scheme could help you buy a house with a deposit of between 5 and 10%.

The Government and some house builders have agreed to cover a limited amount of losses if borrowers default and the home is sold for less than the mortgage. This means that lenders are more willing to advance loans representing a larger percentage of the houses value.

Anyone thinking about taking out a mortgage should take proper advice and needs to understand that if their home is repossessed they will be responsible for the shortfall between the sale proceeds and the mortgage debt. This is the case with all mortgages but of course if the loan is a very high percentage of the value a small fall in house prices could put the owner into negative equity.

Carpets that Attract Tenants and are Easily Cleaned

A good quality landlords building insurance policy might provide you with a lot of peace of mind, but there are some things that it can’t help you with. One of those is choosing fixtures and fittings that will help make your property attractive to tenants – and within this very wide area, choosing an appropriate carpet. This can be a very time-consuming decision.

For a landlord, there are three things a carpet must be: attractive to the largest number of people possible, durable and easy to clean. Of course, cost comes into it to a degree, but as many landlords have found, cutting corners on carpets can lead to far more expensive costs in the future, such as early onset wear and tear – and fading.

Magnolia, the landlord’s favourite. Used on walls and as a carpet colour choice right across the UK – and probably the developed world. But is it right for your property? True, magnolia tends to be an innocuous colour selection, but it does tend to show the dirt rather well. If you do choose a magnolia or light-coloured carpet, ensure it is of good quality and can be cleaned easily.

Alternatively, you may choose a more dirt-concealing shade, though the dirt will eventually be apparent here too.

If easily-cleaned, inoffensively coloured carpets aren’t your thing, then you can opt for the equally confusing world of tiles and wood flooring, the subject for a later blog.

Accreditation scheme for student homes

If you are interested in the student accommodation business you should take a look at an accreditation scheme launched last year. The scheme aims 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. Some of our landlord insurance clients might be thinking of entering this market and others are already in it.

People have mixed views about being a student landlord- letting houses to young people is not every landlord’s cup of tea. If you have any personal experience why not let us know?

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 buy to let investments in university towns it could be worth checking it out.

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

More trouble for home buyers

People on interest only mortgages are being warned that they may not be offered another one when their fixed term runs out. If you have less than 25% equity in the house you may have to change to a repayment mortgage which will almost always be more expensive each month. If you are trying to buy your first home you will probably find the mortgage lenders insisting on large deposits for interest only loans- much larger than for repayment mortgages.

Until a few years ago interest only mortgages were very popular with both lenders and borrowers but they are much harder to come by now. There is now a general feeling that borrowers should have a mechanism in place to pay off the loan and not just the interest on it. In the days of rapidly rising house prices many thought they could build up equity simply by waiting for their home to increase in value but this does not apply if prices are static or even falling. Landlord insurance clients hope that the gloomy news about house purchase will boost demand for rentals.

A popular way to save towards paying off the mortgage was to take out an endowment policy and pay into it each month with the expectation that the policy would grow in value and produce a lump sum at the end of the term. However the bad news is that some endowments now coming to their maturity have not performed nearly as well as expected- leaving home owners with a shortfall to make up at the end of their mortgage term.

All of this helps to explain why so many people are renting rather than buying and why buy to let seems to be here to stay.

If you are looking for cheap landlord insurance get in contact with click4quote

More mortgage deals now on offer

If you are starting out in the buy to let business or thinking of expanding your let property portfolio you will know that access to mortgage funding is an essential element – unless of course you are lucky enough to be sitting on a large pile of cash. The shortage of mortgage deals in the aftermath of the credit crunch is one of the reasons often cited for the sluggish property sales market, but at the same time the lettings market has been booming. A visit to the comparison websites could be a good way of checking out the loans market to see if you might be able to raise the cash for a buy to let venture.

One comparison site (moneyfacts.co.uk on 4th Feb 2012) is showing a large number of buy to let offerings from a diverse range of lenders including building societies like Notttingham, Leeds, Mansfield and Market Harborough. Landlord insurance clients might find that a few minutes on sites like this is time well spent. It certainly looks as though there are lenders out there.

Another issue often blamed for the slow market is the problem that first time buyers are being asked to come up with large deposits. However there is now some evidence that more lenders are prepared to offer 95% loans to value. Does this mean that prices are about to rise as buyers come back to the market?

Landlords to be liable for tenants unpaid water bills?

The water industry is facing a massive debt collection problem. For 2010-2011 something like £1.6bn was outstanding from its customers. This is estimated to add £15 to the bills of those who do pay.

The worst offenders are tenants in rented properties and unlike the gas and electricity industries there is no requirement on the landlords to give the tenants’ names to the water companies. This means that many tenants are not pursued for unpaid water bills and the level of bad debt in the water industry is now some three times the level of the energy sector. This is despite the fact that water bills are far lower than energy bills. The average water bill is around one third of the average energy bill. Landlord insurance clients may well have been involved in situations where the tenant has absconded leaving unpaid bills behind.

The government has launched a consultation in England to explore ways of tackling the problem. One option would be to make landlords liable for the water bills if they fail to supply the tenants’ details. The other possibility would be a voluntary scheme asking landlords to supply the tenants’ details. No doubt landlords will not relish the idea of picking up the tab for tenants who disappear without leaving a forwarding address.

If you would like to find out about the consultation visit the DEFRA website www.defra.gov.uk

Scottish let property site sees strong growth for landlords

Property lettings website Citylets have published some very impressive search engine results for 2011 with visitor traffic up 22% on 2010.  Enquiries to agents also rose by 21%.

Experian Hitwise reported that Citylets averaged rank 74 in the property category (based on UK visits). This category does not just feature dedicated residential lettings sites but includes other property related sites as well.

Citylets are based in Scotland and Northern Ireland.  They say they are delighted to have maintained their strong growth trajectory of recent years and they are confident that the results reflect not just a growth in the rental market, but also growth in their market share.  This just goes to show the strength of the internet as a marketing tool.

Let property insurance clients often use their own websites to attract potential tenants but find it hard to get noticed in such a crowded sector.  One reason to use a letting agent and/or a specialist website is to take advantage of their web presence and higher search engine rankings than a private landlord with a small lettings business could hope to achieve.

If you are expanding your business we recommend protecting your property with a specialist landlord insurance quote.

Cheaper to buy than rent?

There has been a lot of media comment recently about the high price of renting compared to paying a mortgage. According to Halifax, if you took out a new mortgage in the second half of 2011 your mortgage repayments would be at a record low as a proportion of disposable earnings.  You would have to go back fourteen years to see repayments at such a low percentage of earnings.

This is very good news for those would be house buyers who have managed to find a deposit and can secure a loan.  Perhaps landlord insurance clients might be worried that the buy to let business is about to turn down if more people are now looking to buy rather than rent?  Of course, if you are a landlord with no mortgage or a loan at a low interest rate you are probably not too worried.  In fact you may be thinking that if more people try to buy houses this may help the capital value of your buy to let portfolio.

Purchasers looking for a long term fixed rate are being targeted by Norwich and Peterborough Building Society who are offering a ten year fixed rate mortgage.  This is a good example of the market reacting to consumers’ needs and may well encourage some people to start thinking about buying their own home.  Always make sure you obtain professional advice before you enter into any major transaction like a mortgage.

If you are a property owner looking for buy to let insurance contact click4quote.

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”.

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