There are two angles to look at here – the point of view from the Tenant and the point of view from the Landlord, so we will look at both. In this article we will look at the impact on the Landlord.
Landlord Problems:
Arranging Finance - Firstly, right back to the start – as a Landlord requiring finance by way of a buy to let mortgage, here is your first problem. Buy-to-let mortgages continue to be more expensive, with many carrying much higher arrangement fees. Many banks are unwilling to take on high-risk propositions from amateur landlords that at the first signs of the housing bust will be the first to throw in the towel and hand in their keys on the crest of a wave of repossessions. Typically banks are now focusing on high equity buy to let loans that require more than a 25% deposit at relatively high interest rates against average rental yields of 5% and/or less in many areas of the UK. Additionally buy to let investors need to satisfactorily demonstrate that rental income will be able to more than cover mortgage interest payments. This means that now only the more experienced and capitalised buy to let players can afford to invest in the buy to let market.
Tenants arrears - The cost of living has steadily increased and unemployment remains a threat. Research from the National Landlords Association (NLA) states that 37% of landlords have reported that a number of their tenants are now in rental arrears.
Monitoring arrears (Private Landlords) - Early detection is vital so that the landlord can take proactive steps to safeguard their residential investment property. With the advent of Internet banking, landlords can monitor their account on a daily if not hourly basis for rental payments received. Hourly monitoring is probably excessive but certainly a weekly glance will ensure that late payments are spotted within days rather than weeks or months.
What do I do in the event of non-payment? (Private Landlords) - If the tenant has genuine financial difficulties, then it is undoubtedly best for you to try and work with the tenant to bring rental payments up to date. You should either speak to the tenant or go round to your investment property and discuss the problem. You then can ascertain the tenants’ situation and the reasons for non- payment and if the tenant can make a payment to bring your account up to date. By visiting the residential investment property it also gives you the opportunity to give the investment property a quick inspection and ensure that your residential investment is still in good repair and nothing untoward is going on.
• What are their reasons for non-payment?
• Do they seem genuine?
• Has there been a change in the tenant’s personal circumstances such as change of job, or unemployment?
You should try and find out as much as possible. It is then a case of agreeing with the tenant a course of action. This could be bringing the tenant’s rental account up to date by a series of small additional rental payments; or arranging for the tenant to make a single payment to pay off the tenants entire rental arrears. Try and get all this in writing & get the tenant to sign it. This written evidence will be useful as part of any audit trail should the case go to court. You may be lucky and your sheer presence is enough to encourage the tenant to pay up the full balance there and then! You should ensure that if you do go round to the tenanted residential investment property that you have given reasonable notice or as required by the tenancy agreement.
Finding a Good Letting Agents Specialist
For finding a good Letting Agent a specialist lettings website such as www.rentright.co.uk is a good place to start, where you can find agents listed by towns or counties. You can also read up on their articles regards guide to letting which includes a checklist for private landlords of what to do before letting your property.
To beat the credit crunch for a guaranteed rental income, companies such as HCR, (www.hcr.co.uk) the UK’s leading Independent Relocation Company, specialise in finding rental properties for some 7300 moves a year. A company such as HCR will not only find the tenant, but will take on the tenancy agreement, ensuring the rent is guaranteed for the term of the lease.