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Too many people who are new to the private rental market, particularly accidental landlords in London, neglect having the right kind of property insurance in place.

This is according to David Lawrenson, private rented sector expert at LettingFocus.com. He feels that when people decide to let out their own home, they are often under the mistaken belief that the standard insurance they had in place will suffice for their new tenants.

"It doesn't cover all of the risks that would apply when you're letting out a property," he warned." The home insurance would be voided anyway if you are not living in the property and are letting it out - there would be a clause on that."

He added that proper landlord insurance is what needs to be put in place before a tenancy agreement is started as these types of cover indemnify the landlord in the event of things such as malicious damage by tenants and loss of rent if the tenants have to move out due to things such as fire or flood.

Residential Landlords News

Would be landlords should do some research before looking for a buy-to-let mortgage and jumping into the property market.

This is according to Malcolm Harrison, spokesman for the Tenancy Deposit Scheme, who believes that the economic climate in recent years has changed the way the UK property market works and while one area may be buoyant, a neighbouring one may not be.

"You need to take the trouble to work out the location, the kind of people that want to live there and the kind of tenants that you are likely to get,” he advised.

"You need to look for all of the things that you have always looked for when investing in buy-to-let and that is a good mix of economic activity or for it to be on a commuter line or good transport links et cetera.”

He added that the most important thing is to be careful and ensure that you don’t buy a property which is either overvalued or in need of serious further investment.

Landlord and Tenant News

People are looking to stay in rental properties for longer because they are putting off home ownership until later in life.

A new study from Moneysupermarket.com shows that 40 per cent of British adults are planning on staying in their existing rented property until they have saved up a deposit and the average age of a first time buyer is now 37.

Clare Francis mortgage spokesperson for Moneysupermarket said: "While we have seen an increase in the number of mortgages available up to 90 per cent of the property's value, the rates on these deals are still higher than if you can scrape a larger deposit together.

"On the plus side the flat housing market means aspiring homeowners can take their time to build up a deposit as they don't have to worry that prices will become unaffordable if they don't buy now.”

Moneysupermarket revealed that there are currently 209 mortgage products available to first time buyers at up to 90 per cent loan to value (LTV).

First Time Property Buyer News

London letting agents and investors have reason to be cheerful as the property market in the capital and south-east is likely to remain buoyant throughout this year.

The National Landlords Association (NLA) has said that the London housing market has outperformed the rest of the UK in recent years and it sees no reason for that trend to change in the remainder of 2012.

Chris Norris, policy manager at the NLA, said: "Prospects for investment in London and the south-east remain very strong, in spite of the financial downturn of the last few years. House prices in London have fared well, compared to the much of the UK."

He added that with many lenders now re-entering the buy to let market, the opportunity for people to move into property development or expand an existing portfolio will become easier although loan to value (LTV) ratios are still much lower than they were prior to the credit crunch.

London Property Market News

London landlords are currently enjoying the best yields from the private rental sector and are the most optimistic about adding to their stock in the next 12 months.

According to the latest Young Group property index, 46 per cent of investors are currently looking into buying more private rental assets this year, with homes in the capital the most desirable.

Somewhat unsurprisingly, respondents said the reason for this is because the capital offers much greater value growth and rental income yields than other areas of the UK.

Indeed, 41.2 per cent of landlord across the country are looking to add to their stock, but in London the figure is a mammoth 85.4 per cent.

Neil Young, CEO of Young Group and Young London said: “There is clearly a long term commitment to the private rental sector. Confidence in the asset class remains strong, particularly for property in the capital where investors see future tenant demand as virtually guaranteed.”

Parents who are packing their children off to university are increasingly looking for higher quality lets.

This is according to Marcus Roberts, director of student investment and development at Savills, who believes the days of grotty old student properties are over and demand for luxury is becoming prevalent.

He also feels that many parents are looking at better properties because it gives their loved one a nicer place to study and thus improves their grades.

"I think that parental expectations are changing in terms of the type and quality of accommodation that they are willing to pay for. First year [students] generally go into halls of residence and then second and third years typically go into terraced housing," he said.

"Parents are now thinking that actually they would rather pay a little bit more for their son or daughter to be in quality accommodation in an environment that will be more conducive to getting a 2:1 rather than a 2:2 in order for them to be able to compete with their peers."

Savills recently reported that despite concerns over the impact of higher tuition fees, demand for student properties is still high.
 

Owning and running a successful buy-to-let business is about taking the rough with the smooth, it has been claimed.

David Lawrenson, private rented sector expert at LettingFocus.com, says that things are good for the majority of landlords at present with record yields and a steady stream of people looking to rent properties out there to be had.

However, he points out that it isn't all plain sailing for people who have invested in the rental market and sometimes as a landlord you'll have to deal with issues which may make relations with your tenant tense.

One such situation is when the tenant has lost their job and is struggling to pay their rent as a result.

Mr Lawrenson believes that when this kind of issue comes up the most important thing is communication between the two parties.

"Most landlords ought to be supportive in trying to find a solution," he said. "The key thing is to make them aware of the issue and to try to find the solution, which might be perhaps paying less rent.

"It might be the landlord just being aware of it and just agreeing that they will make [up the shortfall in rent] when they find a job, or it might be them leaving and the landlord allowing them to leave early without making them pay to the end of the contract. It is about finding solutions like that with a flexible landlord."

He added that, faced with unemployment, tenants should make sure that they find out all the facts regarding what level of support they could be entitled to through the Department for Work and Pensions as they could potentially be eligible for things such as housing allowance.

While this probably will not rectify the issue entirely, the support potentially available will go someway to covering the cost of rent.

A weak economy can be a good thing for landlords or people looking to take out a buy to let mortgage, it has been claimed.

Michael Banks, commercial director for Upad, believes that despite the economic climate being gloomy at present, it is boom time if you have a property to let out.

"There is still confidence going forward. The whole idea of the extended double dip recession has rescinded, so people aren't as afraid anymore,” he said.

"The lack of job prospects should increase rental buoyancy because people are less willing to buy when there are question marks [about jobs]. The rental market runs contrary to the economy generally; the more uncertain the economy, the more buoyant the rental market."

His comments echo those made recently by Stuart Law, chief executive of property firm Assetz.

Mr Law said that despite the state of the economy, the private rental market will “continue to grow”.

Recent years have seen a rise in the number of accidental landlords in London, but many mortgage lenders are clamping down on the practice.

Becoming an accidental landlord is where a person who wants to move house but cannot sell their existing home elects to rent it out to facilitate the move.

Figures released by the National Landlords Association (NLA) show that the number of people letting because they cannot find a buyer rose from 5 per cent to 7 per cent in the third quarter of last year.

To do this, borrowers will normally have to go back to their mortgage lender and either remortgage to a buy to let product or apply for what is known as "consent to let". Additional charges are usually levied, but increasingly lenders are frowning on the process as they see it as people who cannot sell attempting to play the system.

David Hollingworth from brokers London & Country told the Telegraph: "Things have toughened up. You are on your knees in front of your lender, hoping you'll be allowed [to rent out your property].

"If there is even a sniff of you needing to move in with Mum and Dad because you are struggling financially, they are likely to be very nervous. If you are relocating for work they are more likely to be understanding."

The Association of Residential Lettings Agents (ARLA) have this week issued a list of handy tips which people looking to rent a home for the first time should take into consideration.

At present there are more people looking to rent than there is stock and demand is continuing to grow. Indeed, 55 per cent of ARLA members have reported a surplus of potential tenants on their books.

This means that in many parts of the country there is severe competition amongst would-be tenants for any property which becomes available.

But ARLA's operations manager Ian Potter has warned that people should not rush into tenancy agreements without first being aware of a few key points.

He said: "First time tenants - young or old - should remember to keep the process as focused and simple as possible. Keeping to some simple guidelines can help tenants navigate the process from property hunting to signing a tenancy agreement."

ARLA's tips are as follows:

1.     Research your desired postcode: Find out all you can about average rental prices in your desired area to avoid any surprises. A letting agent will be able to give you a better idea of what is available within your budget range.

2.     Look at approved letting agencies: The rental industry is not subject to any government legislation, meaning that anyone can set up as a letting agent or landlord. For peace of mind, you should seek advice from a letting agent which is part of a professional organisation like ARLA.

3.     Deposit security: It is a legal requirement that the landlord or lettings agent protects the deposit through a tenancy deposit scheme, such as the TDS, which guards against possible misappropriation of monies. Ensure that this is done.

4.     Make an inventory: A well prepared, detailed inventory helps in reaching fair decisions with your landlord at the end of your tenancy. Make sure that you check the inventory given to you thoroughly.

5.     Understand the tenancy agreement: Many shared tenancies contain a joint liability clause and this means you are responsible for the actions of your co-tenants for the duration of the tenancy. This includes covering their share of the rent if they were to unexpectedly move out or not pay.

Mark Durban, senior lettings negotiator at Paramount Properties, advised: “ARLA’s tips are very useful of course and indeed all tenants should adhere to the points.

"However, tenants can now go one stage further and read reviews of the estate agents they are dealing with on the All Agents website. By doing this, tenants will quickly realise which letting agents provide the best overall experience when the need to find a property arises. Moreover, excellent customer service, such a topical buzzword in these challenging times, will also provide a focus for tenants.

"At Paramount we have attained an outstanding and consistent level of customer service across all areas of the letting process and this extends long into the tenancy when management queries arise.

"We are proud of what we have achieved - it has taken many years to get to this point - but now we are here we want to stay at the top!”

The student rental market is growing at a rate of knots, but there simply is not enough housing stock to service the demand, it has been claimed.

Marcus Roberts, director of student investment and development at Savills, believes that despite student numbers falling this year, the sheer lack of suitable properties coupled with the fact that many universities are scaling back or even closing their own halls means that demand still way outstrips supply.

"Rental growth is still very much there – probably between three and five per cent on average across the UK,” he stated.

“As an investor you are looking at the fundamentals [of] the supply-demand imbalance and the rental growth as being key to the success of the sector over the last ten years.”

People looking to invest in student accommodation in London were recently advised to consider doing so in new or recently constructed buildings by IPINGlobal.com as they are generally easier to manage and often avoid some of the regulation attached to older properties.
 

Demand for property from potential tenants is continuing to grow, a new survey suggests.

The Private Rental Sector Trends study from Paragon shows that 44 per cent of landlords had seen an increase in interest from people looking to rent a property during the first quarter of this year.

In contrast, just seven per cent said that they have seen a decline in the number of people approaching them, while the remaining 46 per cent said that levels had remained stable.

Looking forwards, 56 per cent of landlords said that they believe demand will continue to grow throughout the year, while 36 per cent felt that things would stablise.

Nigel Terrington, chief executive of Paragon Group, said:  “Levels of tenant demand have for the most part remained steady throughout the first quarter of the year. This shows the continuing importance of the private rented sector as the tenure of choice for many people.”

More and more people are choosing to share their house or flat rather than live alone because it has become more socially acceptable.

Matt Hutchinson, director of SpareRoom, believes that during the 1970s and 1980s the idea of taking in a lodger attracted a certain image which made it appear like something only people at the lower end of society would do.

However, it is now common practice amongst professionals keen to keep their outgoings at a reasonable level so that they can then enjoy the finer things in life.

“People don't see it as a Rising Damp situation anymore; it is now seen much more as young professionals sharing,” Mr Hutchinson explained.

“The small move towards legitimising it a bit has given people more confidence in it. The need is there and also, as more people do it, it becomes an easier thing to do and a more acceptable thing to do.”

The cost of buying a home rather than renting one is cheaper in 84 per cent of towns and cities in the UK.

A new study from property website Zoopla.co.uk says that the cost of servicing a mortgage is less expensive than the average rental cost in 42 of the top 50 places in the country.

However, this represents a fall from three months ago when it was cheaper to buy in 47 of the top 50 towns.

The site says that a shortage of suitable mortgage products plus the challenge first time buyers face when it comes to raising a deposit has led to a swelling in the private rental market and as a result rents are now costing 16 per cent more on average than buying.

In London, the cost of buying a property far exceeds anywhere else in the UK, but it still beats the cost of renting by an average of 29.6 per cent.

Nicholas Leeming of Zoopla.co.uk, told MyIntroduer.com: “Despite a recent increase in first-time buyer activity, demand from remains strong and is keeping rental levels at historic highs. This, along with historically low borrowing costs, makes it as good a time to buy as it ever has been.

“However many buyers are still unable to take advantage of these conditions because of their inability to secure a mortgage.”

Swansea, Oldham and Cambridge are the three area where it is still cheaper to rent a home rather than buy one. At the opposite end of the scale, Milton Keynes is where it makes the most sense to buy because rental prices are 38.8 per cent greater than the cost of paying a mortgage agreement.

Further figures released by Zoopla shows that the average rent in Britain is £1,470 per month, while the average house price stands at £255,037.
 

A new study shows that there is growing culture of long distance landlords in the UK at present.

According to the Association of Residential Lettings Agents (ARLA) there are almost twice as many rented properties in central London than there are landlords which themselves reside in the capital.

Long distance landlords are also prevalent in Scotland, where there are 1.74 rented properties for every one landlord living in the country.

In contrast, the South East and South West has the least long distance landlords, with ratios of one in 1.13 and one in 1.18 respectively.

ARLA Operations Manager, Ian Potter said: "It is a common phenomenon for landlords to let properties in different parts of the country and it is likely that trend will grow, for example as owners increasingly opt to let out a property rather than sell when the time comes to move on."

He added that anyone who owns property away from their home town or city needs to bear in the mind the challenges which can come in managing a long distance relationship with a tenant.

A growing number of people across the country are choosing to rent out the home they own and then move into a separate rented property themselves, it has been claimed.

We've all heard of 'let to buy' (or accidental landlords as some have dubbed them) but this way is effectively 'let to let' and creates a situation where someone becomes both a landlord and a tenant at the same time.

According to research conducted by Townends, the phenomenon has become particularly common in some parts of the south east.

Malcolm Harrison, spokesman for the Tenancy Deposit Scheme, said that while he hasn't come across it too often, people who find themselves in this kind of situation should ensure that they are working closely with a professional letting agency.

"I would give the same advice to anybody renting in any way, they should use a regulated letting agent. They have to register their deposit with an authorised scheme," he said.

"They should do everything that they can to ensure that the tenancy is properly arranged because a well organised tenancy is probably going to be a happier tenancy and a happier tenancy means less problems."

Take up of buy to let mortgage products is set to grow faster than any other type of home loan, it has been claimed.

Lee Grandin, director of Landlord Mortgages, believes that mortgage deals for property investors are increasingly becoming more available because lenders are beginning to realise that it is one of the few areas where market is still growing.

Indeed, a recent study conducted by Mortgages for Business found that three in five landlords are looking to extend their portfolios this year, while 63 per cent will need to refinance their existing properties.

"I think the market will start to increase proportionally more than any other mortgage sector. It is definitely a sector in the growth phase again," Mr Grandin said.

"Availability is there, but maybe there is just a shifting of lending towards buy-to-let as opposed to other types of mortgages. Lenders seem to be very keen to lend to landlords as opposed to residential property owners."

People who are new to the property letting game could find themselves soon encountering problems if they do not follow a few simple rules, according to LettingFocus.com

Research conducted recently by specialist mortgage provider Platform shows that 20 per cent of all buy to let transactions it carried out in December and January were for accidental landlords, who are looking to recent out their own home while they search for a new one.

David Lawrenson, private lettings sector expert at LettingFocus.com, said that these people, due to their lack of experience, could come across issues if they failed to do the basics such as choosing tenants carefully and ensuring proper reference checks are carried out.

He also stated that any first-time landlord should also take time to ensure that they have a property in the best possible location if they are to attain the maximum yields possible.

"The key thing is choosing an area and choosing a type of property – particularly look out for any areas of oversupply," he said.

"They have got to pick an area which has got a strong economy behind it and where there is strong demand from tenants."
 

The Association of Residential Lettings Agents (ARLA) has said that the upcoming Budget is an "open goal" for chancellor George Osborne to encourage more investment into the Private Rental Sector (PRS).

In a Budget submission, ARLA has called up on Mr Osborne to support growth in the sector by helping to remove some of the barriers which prevent more people becoming professional landlords.

Ian Potter, operations manager for the body, said that landlords should now be seen as "entrepreneurial businesses" and helping to support them extending their portfolios will also provide a significant boost to the UK economy.

He added: "Demand for private rented housing continues to grow, with 3.4 million tenants living in the private rented sector - an increase of over one million tenants since 2005. The tax system can be used by the government to incentivise investment in housing stock in the PRS, and therefore improve the conditions in which those 3.4 million tenants live."

Proposals put forwards by ARLA include treating rental property as businesses for Capital Gains Tax purposes, re-introducing roll over relief for landlords looking to invest, and re-assessing the current stamp duty structure.

Three in five property investors will look to extend their portfolios over the next six months, claims Mortgages for Business.

Strong performance from the private rental market plus the availability of new mortgage products has give landlords the incentive to add new homes to their books.

Despite this, many still feel that lenders are not doing enough to help them.

Mortgages for Business' inaugural Property Investor Survey found that 62 per cent of the 185 landlords questioned believed that banks and building societies could offer them more support than they do at present.

Of that number 20 per cent feel that lenders should look to reduce their product fees, while 18 per cent believe that deals with high loan to value (LTV) ratios should be made available.

David Whittaker, managing director at Mortgages for Business, said:  “Landlords remain confident about the future of the private rental market and plan to expand their portfolios over the coming months.

"However, more and more investors are exploring which options will give them the best returns on their investment."