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NLA Rent Protect | National Landlords Association
It covers you for up to £2500 per month in unpaid rental income and it covers legal costs to help you in the recovery of unpaid rent.
Buy-to-let (BTL) is a great form of investment which can yield some good returns and is relatively low risk compared to other forms of investment. Nonetheless there is still risk involved and it is important that that is considered.
Running a lettings business is a long term project, not least because the typical mortgage is lent for 25 years. This means that you need to give some consideration towards movements in interest rates over that time.
Interest rates may have been at an all-time low for the past five years, but that will not last forever. Recently there has been a lot of talk about when the rates will rise: the consensus is that there will be rises when the economy is stronger, but the question remains as to how strong? But whether this year or later on, in reality interest rates will only go in one direction – up.
When interest rates do eventually rise, any landlord with a mortgage will have to make sure that they are able to cope with the rise. 72% of landlords have interest-only BTL mortgages. Our findings suggest that a third (32 per cent) of landlords worry about their ability to meet mortgage repayments if interest rates were to increase.
A helpful guide
As part of the NLA’s Rent Risk Resolve campaign the NLA has created a guide to help you mitigate the risks associated with interest rate rises by creating a contingency plan so that you know what to expect and are prepared to deal with the consequences.
The increases, when they come, are expected to be incremental, probably in 0.5% steps, and are predicted to rise to between 2.5% and 3% by 2017. It is advisable for you to prepare for this by knowing what effects rising interest rates can have on you and what action you can take if need be.
How will it affect you?
The most obvious effect will be higher repayments. Most BTL mortgages have a ‘product interest rate’ which is based on the Bank of England base rate. Therefore you will need to ask yourself if you are able to afford to pay higher rates. Interest rate rises will also affect a lender’s consideration in approving a remortgage or the purchase of a new property.
The worst case scenario would mean falling into arrears and ultimately repossession. This would not only affect you, but also your tenants. You will therefore need to address the issue as soon as you feel you might have difficulties meeting the repayments.
How can you prepare?
There are a variety of options to consider when dealing with higher repayment costs. First of all you could look into paying off your mortgage early or, if you are not tied in, consider switching to a better deal. There has certainly been a growing demand for 5 year fixed rates and NLA Mortgages currently has over 100 such products available from over 10 different lenders, so there is a fairly wide choice.
Another option could be to increase the rent, although this may not be the best way to go, as there is the risk of pushing out good tenants.
If you don’t think there will be much benefit from keeping the property, then perhaps disposal of the property might be the best option.
Of course there is also budgeting. If you have budgeted for the eventuality, the stress and burden of an increased interest rate is going to be more manageable. One way to do this is to save some of the profits. Budget for savings in your initial business plan makes sense not only because it helps with unforeseen costs, over and above routine maintenance and repairs, but can also help smooth out the cost of the higher rates.
Understanding interest rates, how they are set and the impact that they can have on your repayments is essential. NLA Landlords Guide to Interest Rates outlines the important areas which should be looked and how you can prepare yourself. The NLA would strongly advise any landlord with a mortgage to download the guide for some useful advice on how best to prepare for the inevitable interest rate rise.
Filed under: Campaign, tips Tagged: advice, budgeting, Campaign, guide, interest rates, Rent Risk Resolve
NLA Forms | National Landlords Association
NLA Associates receive full access to our expanding range of editable online tenancy agreements, forms and letters for FREE.
Avoiding rental arrears | National Landlords Association
The accidental landlord: joining the landlords' army is a minefield
Seven per cent of British adults are now part-time landlords, according to new figures from one insurance provider, and most of them have “accidentally” ended up in that position, as opposed to having
Recent research from Ofgem, the energy regulator, found that three-quarters of bill-paying tenants have never switched electricity or gas supplier in order to get a better deal. One in five tenants aren’t even aware that it is possible to switch provider despite the fact they could save up to £200 and renters are only half as likely to switch compared to homeowners.
Good landlords may want to encourage tenants to shop around for the best deal, and remind tenants to consider the total cost of living in a property, including the bills, rather than just the rent alone.
The Be An Energy Shopper Campaign has recently highlighted the rights of tenants to switch energy suppliers if they are responsible for paying their energy bills directly. You can find out the facts here: (www.goenergyshopping.co.uk/en-gb/tenants)
Some rental contracts can stipulate that tenants inform the landlord before switching energy supplier, but the point to remember is that where a tenant is directly responsible for paying the energy bill they have the right to choose their own energy supplier. Even if there is a clause in the tenancy agreement that says tenants can’t switch suppliers, if the tenant is responsible for the bills in the property then they should be free to decide which suppliers to use.
With good communications between landlord and tenant, the landlord will be kept informed of any change and the tenant will return the account to the original supplier at the end of their tenancy.
www.goenergyshopping.co.uk provides all the information required to help people be an energy shopper and, if your tenants aren’t online, there is a printable “easy guide” which you can give new tenants.
Of course, there are some landlords who offer their properties for rent inclusive of bills and, in this case, the tenant will not be able to switch, because it’s the landlord who has the contract with the energy company, not the tenant.
If this applies to you, it’s not just tenants who can shop around for a better deal on gas and electricity. As a landlord with your own energy bills to think about, you should also shop around for the best deal
TOP TIPS FOR BUDGET-CONSCIOUS LANDLORDS AND RENTERS
- Ask your tenant to take meter readings when they move in and out of rented accommodation and send them to the energy supplier
- Highlight any supplier tie-ins upfront to your tenant,
- Ensure your tenants know if the contract obliges them to let you know if they intend to switch supplier
- Remember: if the tenant is responsible for paying the gas and electricity bill, they are entitled to switch at any time, and you can’t unreasonably prevent them from doing so.
It’s never been easier to be an energy shopper so visit goenergyshopping.co.uk and you could save up to £200!
This content has been provided by Ofgem
Filed under: Guest blog, Ofgem, tips Tagged: advice, Budget, energy, guest blog, money, Ofgem, saving, top tips
Get financially fit and save over £2000 in 2015 | Ofgem
Ofgem Be An Energy Shopper campaign teams up with personal finance expert Jasmine Birtles to provide tips for getting ‘financially fit’ in 2015.
Possession – A landlord’s right
There are approximately 4 million homes rented privately in England and it is predicted that the private-rented sector will reach 20% of total households by 2016. It is therefore not a big surprise...
There are approximately 4 million homes rented privately in England and it is predicted that the private-rented sector will reach 20% of total households by 2016. It is therefore not a big surprise that things sometimes go wrong and a landlord will need to seek possession of their property or recover lost earnings.
In the event that a landlord has repossessed their property for whatever reason landlords should make sure that they do it by the book and according to the law. There are a number of reasons for terminations to be aware of.
1) Major renovation
Properties do get worn over the years or a property could be hit by weather damage, subsidence or a number of other unfortunate problems and sometimes the only way to make sure that the property is fit for purpose is to do major repairs which means the property may need to be empty.
2) Selling the property
You have the right to sell the property when the time comes to do so.
If you experience arrears you must make sure that you deal with the situation quickly, otherwise it could spiral out of control leaving you out of pocket.
Abandonment is a difficult situation, and thankfully doesn’t happen very often, but when it you must make sure that the property has definitely been abandoned before entering and re-letting the property.
5) Bad tenants relations
Another unfortunate situation is when relationships between tenant and landlord break down. This can leave you in a very difficult situation and if you don’t deal with it quickly and professionally you could lose out on a lot of rent as well as upsetting neighbours.
What to do
Regaining possession of your property can be costly, aside from losing rent there are also the costs associated with getting the property back, from court costs to legal advice.
You have a few options available to you should you need to gain possession of your property. There is the Section 8 notice, this is not an ideal route as it is both costly and time consuming and in cases such as arrears where a tenant need to be two months behind, if some of the rent is then paid during the process of seeking a court order you will have to wait and start again.
The more common option is a Section 21 notice. This will need to be served with two month’s notice either leading up to the end of the AST or after the AST has run out. You must also ensure that you have followed the law and protected the deposit properly.
This is just a snap shot of what can happen and what you can do. The NLA is constantly looking for ways to make things simpler and easier for you. The NLA has therefore launched two new services. The services have been set up to help landlords who have the unfortunate duty of repossession.
The first aims to help landlords regain possession of their property while the other looks to recover lost rent.
- NLA Property Repossession: a service for landlords looking to legally evict their tenants and repossess their property.
- NLA Rent Recovery: a service to help landlords recover any losses in rent from past or existing tenants.
Both services will be hosted on one website: www.nlarepossessionandrecovery.org.uk.
- Fully automated online ordering system for property repossession and rent recovery.
- Online case management system to track all cases/orders.
- Free Support Line.
- Fixed price solutions, no additional costs.
- Accelerated eviction times through High Court Sheriffs.
- Discounted prices for NLA Full Members.
The service provides FREE property repossession and rent recovery advice for registered users. The telephone number is 0845 030 5175 should you require it.
Filed under: NLA, Service Tagged: NLA, Rent recovery, Repossession, Service
Judicial reviews explained | National Landlords Association
A judicial review recently exposed Enfield Borough Council’s unlawful consultation process when attempting to introduce a selective licensing scheme across the area.
Indesit, an NLA Recognised Supplier, is currently offering NLA members a 15% discount on fridge freezers until the end of Jan 2015. All members need to do is provide their membership number at the time of purchase.
(Standard 10% discount on all other major appliances still applies)
Indesit | National Landlords Association
The Indesit Factory Graded Centre is an innovative new supplier of household appliances at competitive prices to suit any rental property.Our dedicated sales teams in our Peterborough, Gateshead and Yate stores can advise you on the most suitable products for your tenants; whether you cater to the s…
NLA Rent Recovery | National Landlords Association
If you are looking to recover any losses in rent from past or present tenants, our NLA Rent Recovery service can assist you.
NLA Property Repossession | National Landlords Association
If you are looking to legally evict your tenant(s) and get your property back as quickly and as simply as possible, then contact our NLA Property Repossession team, who can help alleviate the pressure on you, and avoid elevated costs.
Electrical Testing Equipment | National Landlords Association
National Landlords Association | to promote and protect the private residential landlord
National Landlords Association Landlord Library and Resource, Accredited Landlords and Foundation courses
Full Individual Membership | National Landlords Association
Join the UK's leading independent organisation for private residential landlordsEver changing regulations, increasing competition, loss of rental income and problem tenants are just some of the issues which you could be facing as a landlord.