It’s difficult to imagine how we ever got by without news, sports and entertainment all available at the touch of a button and TV has really brought a lot of pleasure to people’s lives. For landlords, though, TVs can cause a few issues and providing a TV and the appropriate connections can be quite a challenge.
Digital, Satellite or Cable
There are lots of ways to receive TV but digital, satellite and cable are the most popular. Both digital and cable require a physical connection to an outside network via an aerial which will usually be routed down from a loft or attic. Satellite TV uses a similar system but you’ll need a physical dish to be mounted upon your roof, too. All are options for landlords and it is your responsibility to provide a basic, but not necessarily satellite, connection as they can have expensive set-up costs. Check, also, that your landlord insurance covers your TV connection.
Costs of Subscriptions
Freeview is obviously free for tenants to receive and is the simplest way of offering a TV service. Some tenants will want, however, a Sky or Virgin Media subscription and this is usually a cost that you’ll ask your tenants to pay if they want to sign up to such a service. If you’re offering a holiday property, though, Sky can be a selling point, so don’t rule out paying a subscription yourself – just make sure it adds value!
Maintenance
It’s good to give tenants autonomy to fix service problems themselves so leave them the phone number of an engineer and the details of your provider, whoever it might be. It sounds trivial but if you’re thinking of providing a physical TV too, make sure you leave the manual! Tenants can find technology surprisingly difficult to operate!
A TV subscription is best left to your tenants but you’ll need to make sure you have the appropriate cabling and aerial set up. You should make sure that your tenants consult you in the event of changing provider because you certainly don’t want a bill after they leave – make sure they fully sign off their contract.
You’ve probably heard over the last few months a number of institutions highlighting the importance of taking out good insurance, but often it’s difficult to know how to compare different policies.
It’s all very well taking out the cheapest landlord insurance policy, but if you’re not covered in the event of an emergency then, really, it’s worthless! Here’s a guide to choosing the right landlord insurance policy.
Major Coverage
The cost of repairing property after something like a flood, a fire or malicious damage is astronomical and often comes to tens (if not hundreds) of thousands of pounds. Most landlords just haven’t got the funds to cover this sort of damage and even if you have, it’s totally detrimental to any potential your investment might have had. Do check your policy for even unlikely things – lightning strikes, riots or earthquakes might sound like unlikely risks but landlords every year are affected by these very problems: make sure you’re covered!
Minor Coverage
The smaller things that happen day-to-day are often more irritating than expensive but cover for things like glass breakage, breakage of aerials or TV equipment or miscellaneous contents is just as important. The financial difference might be the difference between a good margin and a loss one month but in terms of time saved, insurers can be great at solving problems! Your insurance premium is a small price to pay!
Defaqto
Defaqto are an independent financial advisory body who rate on a star basis different insurance covers and other financial products. These guys really are the experts and their advice is really something to bear in mind. Anything less than a five-star rated product is unlikely to really provide the value that you need.
Here at Just Landlords we can’t stress the importance of good insurance cover enough; don’t just assume that the cheapest is the best. Ensure you’re covered for each specific property, ensure the key risks in your area are addressed and do take note of the Defaqto ratings, they are the best place to go for independent advice.
You might have spotted an article in the news feed last week, or perhaps on a press release from the NLA about the number of landlords who are planning to use their property investments as a retirement fund. The NLA claims that over 81% of landlords are looking to use their property portfolio to help their finances after they stop work and with economic confidence so low at the moment, it’s a plan that is capturing the imagination of lots of landlords.
The Retirement Portfolio
Even with a modest amount of money available (perhaps as little as just a deposit) it’s possible to save for retirement with property. If you can work out a balance and find a particular property which enables you to offset a mortgage exactly with your rental income over the course of the investment (say, 30 years or so) then it works very much like a pension and you end up, ultimately, with a mortgage free property. Growth on your investment comes from capital growth and, providing that this is above inflation, you stand to gain.
Investment Decisions
Of course, the equation isn’t nearly that simple and economic forecasting over a long period of time is very difficult. There is nothing to say that confidence in traditional bonds, equities, hedge funds and other confusing financial instruments might return in the next year or so and there might be better gains. The difficulty with buy-to-let property is that you stand to incur costs which are often unpredictable and, of course, you expose yourself to varying interest rates when you borrow on a mortgage.
Buying for Retirement
If you’re relying on the price of your property to increase for a return on your investment then you need to be sure that the price of your property does increase! A good landlord insurance policy can help you keep your property in good condition, renovations and repairs taken over the term of the property can help keep things up to date and, ultimately, don’t be afraid to address any structural problems that occur. You might regret it if your property suffers a severe decrease in price in the long run.
It’s no wonder that investing for retirement is popular with landlords at the moment and the economic climate definitely lends itself to property. It’s important, though, to remember the costs of being a landlord – 30 years of property management is a lot of work!
We’re midway through what’s been a pretty wet winter so far and as we come in to spring more and more landlords will start seeing problems with mould affecting their property. Though it is seemingly harmless, mould can affect both the integrity of your property and your tenants’ health and is a problem that needs to be addressed immediately.
Common Areas
Mould, as you’d expect, likes wet and warm conditions. Temperatures of between ten and twenty-five degrees are ideal for fungi to breed so places like bathrooms, behind kitchen sinks and above radiators tend to get most affected. Mould can only spread along surfaces, though, it won’t jump or travel from room to room so if you have a particular area which is affected then keep it contained.
Solutions
The best solution is prevention and that only really comes from keeping affected areas well ventilated so that they dry quicker. Extractor fans are very useful and even just requesting that your tenants open a window while they’re in the shower can help. If you are affected, though, there are lots of anti-fungal agents that are very nasty indeed but do the job well. You’ll have to leave most of them on for twenty-four hours or so but they should kill most spores.
Responsibilities
Mould is something that needs to be dealt with on an ongoing basis and it’s just not practical for you to be checking up. Your tenants will have to be in charge but make sure they know it’s their responsibility. Some landlords like to write a clause into the contract about mould control and if you find it does affect your property because your tenants have been negligent you may have a right to claim damages on your landlord insurance.
During the summer months when things are a bit hotter and dryer, mould doesn’t tend to be such a problem. For now, though, keep your eyes peeled and perhaps give your tenants a ring to check that everything is going okay.
If you’re taking deposits for a rental property in the UK then the procedure is well known: if your rent is between £25,000 and £100,000 a year then your tenant’s deposit needs to end up in a deposit protection scheme, a safe account which is guaranteed by the government. However, you’ll still want to take deposits if you’re letting rental property and it can be difficult to deal with the administration.
Using Deposits
Most holiday lets will require two deposits: a prepayment to secure the booking and a security deposit. Your security deposit will be useful to cover any damages that you do not wish to claim on your overseas property insurance. The amount of these varies according to property size and the value of your booking but security deposits of four or five hundred Euros are not uncommon.
Cash or Cheque
Some landlords like to keep things simple and ask tenants for cash or a cheque on arrival which can easily be refunded at the end of the week. Unfortunately, this method is a little outdated and some tenants might not be too happy coughing up cash; especially if they’re only staying for a week or so. Cheques can be a bit more secure but they’re being phased out in the near future so you may need to look for a more permanent solution.
Electronic Payment
A more secure way of taking a deposit is through an electronic payment scheme. PayPal is one good example as it gives both buyer and seller (in this case tenant and landlord) security and it can act as an intermediary in the event of a debate. It can be a little more expensive to use electronic payment schemes and some card providers will charge you per use, but it does give you that extra bit of security you need.
Working out what you need to take is half of the job, working out how to take it can still be a challenge. Whatever your solution is, make sure that your tenant’s deposits are secure but somewhere that you can have easy access to them just in case.
As you may have been following, the government is taking steps to make sure squatting becomes a criminal offence within the next few years and, if passed, the controversial Clause 130 of the Legal Aid, Sentencing and Punishment of Offenders Bill will make squatting punishable by a maximum of a £5,000 fine and up to a year’s prison sentence.
What does this mean for me?
If these changes go ahead then the legal process surrounding eviction of squatters will change. Instead of the bureaucratic system which currently requires landlords to undertake a lengthy set of legal orders out against tenants, the police may now get involved in cases of squatting. If your property is affected then the resolve should be much quicker, allowing you to get your property back on the market as soon as possible.
Will this put an end to squatting?
Though this change in the law is probably a step in the right direction, many squatters live outside of the law anyhow. Though making squatting illegal will probably deter the casual squatter, there are plenty of serious and professional people who target unoccupied properties with precision. Squatting is a lifestyle choice for a lot of people and the threat of criminal charges will only spur many squatters on to finding different ways of evading legal proceedings.
How can I protect myself?
The best protection comes in the form of unoccupied property insurance and eviction of squatters cover which will give you cover against eviction costs and any damages that your squatters cause. This is no substitute for good security, however, don’t leave windows or doors open or even unlocked when the property is empty, don’t publicise that you or your tenants are away and think about installing a good security system to prevent unwanted visitors even entering the building.
Squatting will still be a danger for landlords even if these changes to the law are accepted. Though it will be easier to evict squatters and landlords will be able to bring criminal charges against unwanted occupants it doesn’t reduce the danger of being targeted as much as you might think.
Valentine’s Day tends to divide opinion amongst most of us – if you’re in a happy couple then it can be a lovely opportunity to spend some time with the one you love, but if you’re single it tends to be a bit of a reminder that you are still single! However, all is not lost and even if you haven’t yet found the one for you then don’t despair – just feast your eyes over our Valentine’s guide on letting to couples!
A good starting point
A lot of landlords start off letting to young couples and it’s not a bad place to get into the buy-to-let property market. Younger professionals tend to have a bit of disposable income (as they’ve not yet got round to buying pushchairs and nappies!) and so well priced properties in good locations tend to be the most popular choice. These tend to be properties which will accumulate good capital growth over time and the increases in yield tend to be quite steep.
Fashion conscious and secure
Couples, firstly, tend to have a bit of an ideological view about the places they’d like to live and are making the most of trendy furniture and white walls before the children come along. This means your tenants are likely to look after your property well! Equally, younger couples don’t usually have the borrowing power or income of older families and they might well be inclined to stick around for three or four years in your property.
Break-ups
Unfortunately, couples do split up and as a landlord you do need to look out. Couples with joint incomes are frequently unable to pay the rent without each other so you need to come to a contractual agreement that states that both parties are still liable as individuals. Rent Guarantee Insurance can help you cover any shortfall.
A small flat or apartment suitable for a young couple could be a great Valentine’s Day investment and a great way to dip your toes in the buy-to-let property market. And, of course, whether you’re off for a romantic rendezvous or you’re just looking forward to a night in front of the Champions League, have a very happy Valentine’s Day from us here at Just Landlords!
When a rent payment slips through the net for whatever reason it can be pretty detrimental for a landlord. If a mortgage payment that is usually covered by a direct debit bounces then it can mean heavy fines and interest based penalties which are usually very steep indeed. How can you avoid being stung by these sorts of fees?
Set up a safety-net
Banks will let you do lots of clever things with credit so it’s worth asking about your options. A low-interest overdraft might give you a bit of breathing space if your rent doesn’t come in one month and there will usually be less interest on this provided you pay it off quickly.
Plenty of people, though, use credit cards to transfer a balance to an account for one month and pay it off the next. This cycle can give you a bit of leeway but be careful – if not paid off after one month a credit card gets very expensive.
Find out why you were not paid
Chase, chase and chase is the best advice. Sometimes the problem is that a bank transfer didn’t work or a direct debit wasn’t quite set up properly. In this case your tenants will probably be wondering why their bank balance is looking so healthy anyway! Sometimes, though, the problem is that your tenants just can’t pay. If this is the case then you’ll need a longer term solution and you’ll have to plug the gap yourself if you’re not covered by Rent Guarantee Insurance.
Standing orders
A good way of ensuring your tenants pay on time, every time, is to get them to set up a standing order. This way if they don’t have the funds to pay then their account is likely to charge a penalty and this is a big deterrent for tenants who are a bit unreliable. In most cases its free so look into it!
Missed payments are expensive for everyone so think about putting the liability on your tenants to ensure they pay on time. Some tenants will just be unable to pay, though, so ensure you have a good safety net of possibly two or three month’s rent and definitely invest in that Rent Guarantee Insurance policy you’ve been thinking about – it’s too big a risk to take lightly.
To make money out of buy-to-let property you need to be thinking about long term growth and there are two main ways in which your property can grow. If you’re a landlord with a large portfolio, or are perhaps thinking about becoming a landlord, then it’s vital to have an understanding of the way you can make your investment pay off.
Income Growth
The simple equation is that if the cost of your mortgage (and things like repairs and landlord insurance) are less than your income, you’ll be in profit. That’s great, but it’s a situation that few landlords are lucky enough to experience from the off. Most rent prices tend to increase in the long run whereas the cost of borrowing can fluctuate. Income growth is the closing of the gap between costs and income and over a period of, say, ten years you should find yourself in a situation where total income has exceeded total borrowing costs, even if you’ve made losses in particular years.
Capital Growth
The selling price of your property, much like rental income, tends to increase over time and in a long period you should find that your property price has increased far beyond what you paid (and borrowed) for it. Eventually you’ll be able to release the equity through a sale and convert it into a decent lump sum of profit.
Total Profits
Over the course of a let the figure that really matters is total profit. The total value generated by your income growth and your capital growth is your total profit, divide it by the number of years of your investment and you’ll have a rough guide to your ‘return on investment’. This is something that’s a useful evaluator for new properties and it’s worth checking out the prospects of your buy-to-let investment over and above an alternative.
It can be confusing to think in such terms but looking at growth in two ways can help you understand your pricing strategies better and can help your banks in understanding your prospects. The better you understand your project, the more chance there is of getting a decent loan and making it a success!
How many landlords does it take to change a lightbulb? Well none, hopefully; changing most bulbs is very simple and all tenants should be able to do it but there are a few cases when things can get confusing and need a landlord’s attention.
Energy Saving Bulbs
The UK is in the process of changing from old-fashioned filament lightbulbs to new fangled energy saving bulbs. The old lightbulbs are more or less unavailable in shops and so if your tenants are looking for a like-for-like replacement they’re unlikely to find anything.
The wattages are different, too, and an energy saving bulb is worth roughly one fifth of the power of an old-style bulb so a 20W bulb will suffice as a replacement for a 100W filament bulb.
Strip lights
Strip lights are common in properties like HMOs: they tend to last a long time and can be very bright for the amount of energy used. Given this, they’re relatively cheap to run and replace but it does take some effort to install and find strip bulbs. Usually it’s wise to return to the original manufacturer of the light to find a replacement and this is something you might want to do yourself.
Electricity is a dangerous beast and your landlord insurance will almost certainly be invalid if you neglect proper procedures.
LEDs and Halogen Bulbs
Even though the energy-saving bulb is dominating the market at the moment there are a couple of good replacements. The LED claims to have forty times the lifespan of an ordinary bulb and halogen lights are especially bright which make dark or small rooms look a good deal bigger. Both are tools at your disposal and do consider using lights as a way of minimising your costs or attracting tenants to your property.
If it’s not quite as simple as you were expecting then it’s worth having a look at the lighting in your property. It could, potentially, be a little outdated and due a replacement and the next time your tenants ring up about a lightbulb, make sure you know what you’re talking about!
Copyright 2009. Just Landlords. All Rights Reserved