More Unpaid Rent

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I’m still waiting for the court date for my unpaying tenant, so that I can eventually get them out and get new tenants who DO pay rent in. I’m trying not to think about it too much as its not very nice to throw someone out of their home. But the fact is I really don’t want to pay any for them to live there every month, they should be paying me. The courts have set a date for Jan 2008, hopefully all will go well then.

More Rent Arrears

Just to pee me off even more another tenant who has had payment problems in the past has stopped paying rent, even though they are only meant to pay £85 per week, they can’t even afford that. I can’t believe it. They have about 10 weeks worth of arrears now. I must be strong and send them their final warning.

I feel really bad sending them notices when its so close to Xmas as they really shouldn’t be thinking about losing the roof over their heads during their Xmas holiday. Christmas is a time when we should celebrate with our family opening presents, eating turkey and all sit round the TV to watch the queen’s speech.

Hang On…

Do they think about me?? Do they think if we don’t pay our rent then our landlord may not have money for Xmas?? NO THEY DON’T The fact that they haven’t come to me with anything not even excuses has made me realise that I should not be considerate to them as they are not too me. I run a business and I should be business like. No matter what time of year, if tenants haven’t paid then I need to be procedural and proceed like clockwork. Get the warnings out to them, get the notices out, get them bad tenants out!!

HM Treasury want Sell and Rent back

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The HM Treasury have contacted me as they would like more information on the Sell and Rent Back type of business. They sent me a letter asking me to fill in a questionaire as the media have shown concerns in these types of transactions.

This is the letter they sent me:
HM Treasury

The wording of the letter:

As you will be aware there has been some recent interest in the sale and rent back market. Mortgage industry representatives and consumer groups have expressed some concerns about the experience of consumers considering these types of products.

Her Majesty’s Treasury, the Department for Business, Enterprise and Regulatory Reform, the Department for Communities and Local Government, and the Ministry of Justice, working alongside the Financial Services Authority (FSA) and the Office of Fair Trading (OFT), are therefore seeking to establish further and better information on the sale and rent back market, and the role that these schemes play in the UK housing market.

We would be very grateful for your response to the attached questionnaire, which will help us to understand the market from an industry perspective. We would be happy to discuss this issue with you directly.

HM Treasury Concerns

Their concerns are totally understandable and I will help them in everyway they can to learn more about “sale and rent back” transactions. With many horror stories from families who have sold their homes to rent them back its no wonder that these transactions have been highlighted by the media.

I reported recently about Repossessions Stopped going into liquidation and getting their tennants evicted. I’ve also heard of other horror stories of families who have sold their homes at big discounts to rent them back, but only to find their homes in the next property auction listing to be sold on by the investors.

Lets Regulate

As the industry is unregulated there are many unscrupulous and unethical operators who are just out to make a very quick buck out of desperate and naive people. Anything that can be done to weed these operators out will be welcomed by the handfull of ethical and hard working landlords. It is very annoying that us honest and ethical landlrds have to be tarnished with the same brush as the cowboys of the industry.

Some of the good landlords in the industry are dishearted that the FSA cannot regulate sale and rent backs as they are not a financial product as such, they are property trancactions. They are working together to set up a trade body for which a code of conduct must be followed. I welcome the move, I am however concerned that a trade body will not get rid of the cowboys as mandatory membership cannot be enforced. Not yet at least.

Interest Rates Down to 5.5%

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Thats right Interest rates down to 5.5% and I’m about a week late to report this but is it really news?

The Bank of England last week dropped their base rate to 5.5% the first drop in rates in 2 years. Economists predict that rate will reach 5% by mid next year.

Save £21, Merry Christmas!!

On a mortgage of £100k the annual interest is £5750 at the old rate. At the new rate it would be £5500. Thats a whole £250 cheaper a year, on someones monthly mortgage payments thats a whopping £21 cheaper every month. Nothing really to right home about, thats less then £1 per day cheaper.

Interesting things are happening on the new mortgage side of things though. Confidence in lower interest rates for the near future is high. Fixed rates are falling, lenders are lowering their fat arrangement fees, things in general are looking better for investors. The best rate for investors at the moment is from..

Yup you guessed it BMS. Birmingham Midshire Solutions have released a 5.09% 3 year fixed rate with only 1.5% arrangement fee. This is THE best rate to come along in months so I bet investors will be scrambling to get it. I would love to take advantage of the new rate, but i’ve got to find a house to buy first!

No Bubble in Technology

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I’ve seen this video about a possible technology bubble on several sites and still think its well funny.
Why not put it on my blog too too:

youtube took down the original due to some silly lawsuit. Its still on another site though:

Is there a technology bubble? Is face book really worth $15 billion?
I’m not too sure about that but this video sure is funny i like the part about the sausage fest.

Home Information Packs – waste of money

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As of December 14, 2007 any property that is being advertised for sale in England and Wales are going to require a Home Information Pack (HIP).

Purpose of the Home Information Packs


The Home Information Packs were introduced by the British government in an effort to lessen the rising amounts of incomplete house sales. Before the Home Information Packs was introduced, most of the details needed by the purchaser could not be gotten until an offer to buy had been made. This situation created issues for the buyer in relation to the state of the property and the legality of the documents presented by the seller. In most cases money would already have been spent before this information is received. The result of this is usually an attempt by the purchaser to renegotiate the sale agreement with the seller, which can lead to delays in closing the purchase and eventually the deal falls through. These failed transactions have been estimated to have incurred losses for buyers of over £1,000,000 every day.

The different costs associated with housing purchases include legal fees, searches and valuations. In order to bring about a reduction in the level of losses, both financial and in resources used, when a housing transaction is terminated, the government has sought to speed up the process through reducing loss time. A good idea in theory, the execusion though has been rather poor.

The searches performed on a property are usually only done by the purchasors solicitor, but now these have to be done as part of the HIP from the seller. This is a good idea however the drawbacks are that these searches are only valid for 6 months and there is NO OBLIGATION on the purchasors solicitors side to accept these searches, thus duplicating cost as the purchasors solicitor does their own searches.

Contents of the Home Information Packs


The Home Information Packs contain vital information about the property being sold, including the following:

• Contents index
• A statement which summarises the terms of sale
• A new homes warranty if needed
• Proof of title
• Energy Performance Certificate
• Completed searches, which includes local authority, drainage and water search
• Commonhold documents if needed
• Any leasehold documents if necessary

If there are items that should be in the Home Information Pack that is not there, then the contents index should give an explanation for their omission. If there is an agreement to provide the missing documents later, it must be done within twenty-eight days.

HOW buyers and sellers should benefit


Buyers should benefit because the Home Information Pack gives them vital information on the property they are contemplating buying, without having to pay for it and any unexpected surprises when they buy the property. Sellers should also benefit as they avoid the delays associated with misinformation about the property, so the buyer will be making their decision based on adequate and accurate information.

It will take time, but in the long run the HIP’s should benefit buyers and sellers of property.

The Home Information Packs are available from your estate agent and the cost will be added on to the sale fee.

Zhang Zhilin – Miss World 2007

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Zhang Zhilin is Miss World 2007

Zhang Zhilin Miss China Miss World 2007

Miss China Zhang Zhi Li has won the title of Miss World 2007 on 1st December 2007. It’s the first time that an east asian has won the contest, but the secretary from Beijing was a firm favourite to win. This year the contest was hosted in Hainan Island, China.

Miss Angola, Micaela Reis, came second, while Miss Mexico, Carolina Moran Gordillo, came third place. Check out the video of the final from youtube.

I’m not sure what you guys think, but i think Miss Zhang standing tall at 6feet looks kinda alien like with long arms and fingers. Still I’m so happy for my fellow yellow lady to have won the beauty contest.

Another reason to look to China for the future, they have lovely women. Well done China!!

Repossession Stopped – Are Stopped!!

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A Property buying company trading as Repossession Stopped and Retail and Domestic Properties have this April gone into liquidation. They owed £19million to mortgage lenders on 230 properties.

They had been operating the sell and rent back system long before other property investors got in to the game. I remember seeing their advertisments in the local papers going back a good few years. You may have seen the red postage stamp sized ad with the hand to stop repossessions.

repossession stopped

repossession stopped

I always thought that they would have been really sucessfull in what they do as they seem to appear in most local papers around the midlands. On occasions we did go head to head with some of my clients telling me they had also called repossession stopped. Sometimes we beat them and did deals with clients, othertimes they beat us but I guess that is just business. I think they must have bought some properties for very low prices whilst they were the only company doing the sell to rent back scheme.

They must have run in to some pretty serious cash flow problems to go into liquidation. Some of their tenants were evicted from their homes even though they had always paid rent on time. Richard Dewsbury states on the BBC website:

he’s devastated this situation has arisen and it was never the company’s intention to cause distress to tenants. He says although the Wilkinsons paid their rent on time, lots of other tenants didn’t, causing the business to struggle. He says there are still investors who may purchase their properties, reducing the likelihood of evictions.

link to article

He stated that lots of tenants were not paying their rent, which is no surprise to me. They were facing repossession for whatever reason, usually because they were very bad at handling their own finances. So now they’ve been helped out one last time by an investor buying their property and renting it back to them. More often then not they get back into old habits, falling behind with their payments on rent rather than mortgage.

£19 million Debt

What are the monthly payments on 230 properties and 19 million worth of debt?
If average interest rate is 5% assuming they bought the bulk of the properties when the rates were lower and fixed the rates.
That would make the annual payments a mere £950’000.
The monthly payments would only be a whopping £79’167.
The monthly rental income should be around £102’000 assuming £100 average coverage on each property.
If a third of the tennants didn’t pay properly the rent recieved per month would be £68’000.
Leaving a monthly deficit of £11’000. or annually £132’000.
It’s no wonder they went into liquidation..

70% Below Market Value

If like most investors of this type I’m guessing they would have bought most of their properties at 70% of the true market value. Homes they bought a few years ago would have been purchased for even less. They then remortgage them to 85% of the market value pulling out the equity to reinvest (or spend).

If the £19 million owed was only 85% of the value of their potfolio.
They must have owned over £22.3 million worth of property.
Purchasing them all for around £15.6 million.
Releasing around £3.4 million of equity in the process.

Part of the released funds will have been used to pay the monthly deficit and part will have been spent on a lavish lifestyle?

Thats must have been some lifestyle!

Buy and Rent Back system

If Repossession Stopped were using the buy and rent back system and they failed, should I be more careful? I think so, I think it may be wiser to do more traditional buy to lets. Buy to lets with more ordinary tenants are sought rather than those with financial problems.

I’ll also I’ll be buying more properties to do up and sell on. Which means I’ll need to find those cheap builders again.

Brits get rich in China

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I wrote about this documentary ages ago about 3 brits that risk it all to go and invest their money in China. Well today I found it on youtube so i thought i would post the 1st part up.

This documentary introduces you to 36 Year old Tony Caldera and his failed Mersyside cushion business. He is taking his operation to China in a true if you can’t beat em, join em. He has borrowed £2 Million to build his factory in a paddy field.

You also get to meet 70 year old Peter Williams who has spent all his savings on an energy saving switch for aircon units. He risks everything to sell the device to the Chinese with hundreds of millions of aircon units.

My Favourite though is Vance Miller aged 42, the kitchen gangster from Rochdale. He has been all over China to get his kitchen parts at rock bottom prices. He is a character, really funny, but also has nerves of steel (watch part 2 and the quarry)

Brits get rich in China – Part 1

Brits get rich in China – Part 2

Brits get rich in China – Part 3

Brits get rich in China – Part 4

Brits get rich in China – Part 5

Brits get rich in China – Part 6

Brits get rich in China – Part 7

nofollow – No more. WordPress Hacked

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I’ve uploaded a new theme today and somechanges to my blog.
Don’t worry I don’t think that ugly picture of me will be staying for too long.

One major change, that will hopefully temp more people to comment on this site is that I’ve removed the “nofollow” from the comments. By doing this I’m making the links that my visitors leave when they comment count towards backlinks for their site. The more “real” links that you have to a website, the better for the site as search engines count these links towards the sites popularity and it may help boost the sites page rank too.

you comment i dofollow

So if you’ve been shying away and not posting comments on here, now is your chance. Post a comment, leave a link to your site and it will count towards your sites popularity.

I’ve tried to do this before by using a plugin for WordPress, but couldn’t get it working. Instead this time I’ve directly hacked the code for WordPress. Only 1 line, but hacked it nonetheless.

Here is the hack from Douglas Karrs site.

Removing WordPress rel=nofollow on Comment Text

Links in the actual comments are a little tougher to find. However, I was able to track down where the filter was applied in wp-includes/default-filters.php on line 125. To disable the filter, you need only to remark the link out by putting two forward slashes in front of it. Edit

add_filter(‘pre_comment_content’, ‘wp_rel_nofollow’, 15);

like this:

//add_filter(‘pre_comment_content’, ‘wp_rel_nofollow’, 15);

Voila! No more punishing your users for generating great content on your blog! The advantage of doing it this way is that you’re not applying more code later in a plugin to remove the code that was there in the first place. The disadvantage of doing it this way is that you’ll have to update it each time you upgrade WordPress on your site.

I take no credit for this i only found his site via a google search.

I think this is thoroughly worth doing to encourage comments to your blog, I may think again if I get too much comment spam. Meaningful comments that encourage discussion will always be accepted by me.

Longer tenancy agreements

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I often get asked for long tenancy agreements of 3 to maybe 5 years to give my tenants long term security. Don’t get me wrong I would love nothing more to be able to give them a 25 year tenancy agreement and have the tenants agree to rent the property for 25 years. However the terms and conditions of the BTL mortgages we use stipulate that the tenant must be given an AST (Assured Shorthold Tenancy) of usually no more than 12 months.

12 Month AST

But why only 12 months?
This is to protect the lenders interests as well as yours. If in the worse senario you couldn’t meet the mortgage payments either because you were not getting the rent or maybe you’ve spent it all on holidays. The bank to protect its loan would seek to evict the tenants, take the property back and sell it on to payback the loan.

Evicting tenants

Tenants can only be evicted if the contract has elapsed or the tenants are in breach of contract (usually for non payment of rent). I’ve learn’t the hard way that even when you want to evict tenants the process is long and messy.

The Banks unwanted Situation

With a longer tenancy a situation could arise where you are not paying the mortgage, but the tenants cannot be evicted as they are not in breach of the tenancy. You would still be collecting rent, but not paying the mortgage. I suppose the bank may be able to take over ownership of the property, and keep the tenants on as their own? This would be a bit of a legal minefield therefore its understandable most banks insist on 12 month AST’s

Long Term Tenants

I always prefer long term tenants, but with conventional BTL mortgages it is difficult to offer longer tenancy agreements. How do you get around this? On one hand we want long term tenants, they want to be long term tenants, but we are not able to offer them longer tenancies.

I always make a point of telling my future tenants about my portfolio and my plans for it. I put it to them that I am a landlord, this is what I do, I buy property to rent out. If they pay the rent and behave why would I not rent the house to them?
I also make a point to tell them that if they pay on time in full they will almost never see me again, I will leave them alone. BUT if they do not pay me then I will be on to them.