Happy Christmas & Earn £100 referral fees

I'd like to wish all current (and future!) customers a Merry Christmas and all the best for 2011.

There won't be a blog update next week, but I'll start early in the New Year with "Top 10 Tips for buying rental property", which covers the theme that has been most requested since I started this blog.

Over the Christmas period, we'll also be updating our list of landlord who want to buy in 2011 - Let us know if you're not on the list, and want to be.

Finally, we're short of properties to rent, and are paying referral fees for the first time since 2007! If you know anyone with a vacant property in Rugby or Northampton, or is struggling to let it with another agent, REFER THEM TO US - we'll pay you £100.00 if we successfully let their property. This is valid for all referrals received before the end of February 2011. Please refer to myself - richard.baker@belvoirlettings.com.  

What's the point of an inventory?

A landlord will often ask if he really needs an inventory. "It's unfurnished, yes? So there's nothing to list" is a response we often hear. However an inventory doesn't just record things that are in the property, it also records the condition in which the property has been given to the tenant, which can be really important when the tenancy comes to an end.

The reason for this is that the law now assumes the tenancy deposit belongs to the tenant. If a landlord wants to claim on a deposit, he must be able to prove that the condition of the property has changed during the course of the tenancy. If there's no record of the property condition at the start of the tenancy, its more or less impossible for a landlord to claim the condition has changed at the end. It has been this way since new deposit rules came in in 2007.

For this reason, a landlord without an inventory is on weak ground. I had a landlord with a 2 bed apartment who insisted they didn't need an inventory - the property was unfurnished and they had never had one previously. The tenants didn't trash the property, but they did cause damage to a couple of carpets that the landlord wanted replaced. The tenants however claimed the carpets were in poor condition at the start of the tenancy and as such hadn't been damaged by them. When the deposit dispute went to adjudication under the new rules, the adjudicator was unable to decide which party was correct and as such awarded the full deposit to the tenant by default. The landlord thus had to pay for his own new carpets. 

To further enhance the landlords position, good inventories these days are done with a video camera. This eliminates the potential for argument over what a written inventory actually means. "Painted door with small mark towards bottom" is ambiguous. A video showing exactly what that small mark looks like can't really be argued with! We introduced video inventories in Northampton in 2007, and in Rugby in 2010. They cost the landlord a bit more, but since their introduction none of our landlords who has taken one has ever lost a deposit claim to a tenant. As such there's an argument they are money well spent.

Richard.

The importance of an exit strategy.

Recently I was chatting to one of my landlords who has property in a number of UK towns. The three he has in Northampton, he told me, will be sold in 2017 and 2018. This was interesting, because the guy had genuinely planned to the ‘nth’ detail how he was going to exit the investment property market. How many of my other landlords, myself included, could honestly say they had thought this far ahead?

Well I hadn’t, but of course I knew I should. I asked a couple of other people I happened to speak to in the next 48 hours when they would exit the rental market, and got the sort of answers I expected – “in a few years when prices are higher” or “never, I want the income instead of a pension”. Some will get lucky and earn a few pounds in the process, while others will make less than they should have. The ones that make the most when they sell, will be the ones that have done proper research, made proper plans, and tied their property portfolio in with the rest of their financial affairs. Things they will look at include:

• What will it cost me to sell my portfolio?
• Will I incur loss of rent during the sale process?
• What are the mortgage implications (redemption penalties etc)?
• Are there leasehold implications (will I need to renew the lease before I sell)?
• What are the capital gains tax implications?
• Could there be an inheritance tax issue?
• What will happen to the proceeds of sale?
• Is it beneficial to move the house into joint names prior to the sale?
• How does this fit with other financial issues such as maturing investments, pensions, etc.

These are probably areas in which it’s not good to dabble! When you buy an investment property, you talk to ‘experts’ regarding what is or isn’t worth considering. When you sell a property it should be no different - If you exit the market in a planned manner, you’re likely to be far more successful than if you exit quickly because ‘something has come up and I need the cash’!  Advice can be sought from Financial Advisors or Wealth Managers – Belvoir has good contacts in these areas if you don’t know people yourself. It’s another area that will separate the professional landlord from the novice.

Richard.