New Law to Protect Tenancy Deposit
April 2007

From April 6th 2007 landlords across England and Wales will have to join an Assured Shorthold Tenancy (AST) scheme that will safeguard any deposit paid by a tenant to a landlord.
This will see landlords taking the deposit from the tenant notifying the scheme administrator that the deposit should be protected.
If the landlord then needs to withhold the deposit, under the new laws they must give details to the tenant about the scheme being used within 14 days.
However, landlords who do not join an AST scheme could be fined three months rent on each tenancy.
"This is one of the most important changes in the private rented sector for many years," said David Salusbury, chairman of the National Landlords Association (NLA).
"There are 2.5 million households that rent privately in England and Wales, representing nearly 12 per cent of the total – that's one in eight households.
"The vast majority of British people live in rented homes at some point in their lives, so anything that affects tenants is a major concern to the media and to consumers generally."
Government figures show 19 per cent of deposits are returned in part, and 11 per cent are withheld, with 17 per cent of those not getting all their deposit back saying they felt it had been held back unjustifiably.
"In many of these cases the tenant has caused damage to the property or failed to clean it, and the landlord has quite legitimately withheld the tenant's money," Mr Salusbury added.
"However, we recognise that there are rogue operators in the sector, and we want to see them rooted out. It is because of the malpractice of a small minority that the government has decided to act, by introducing mandatory tenancy deposit protection."
Mr Salusbury strongly advises landlords to be prepared in advance of April 6th by selecting a suitable AST scheme.
More information about the AST schemes and the new laws is available from www.mydeposits.co.uk and www.communities.gov.uk

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Buy-to-Let Secrets Revealed
March 2007

With this in mind, property millionaire Ajay Ahuja is sharing his expertise in the form of ten golden rules buy-to-let investors should think about.
Ten golden rules for a successful buy-to-let investment
1 - Do your research
Before buying investors should ask themselves if buying to let is right for them.
Questions investors should ask are: "Do you have the determination, perseverance and self discipline for a long-term project? Can you budget well, can you deal with people from a range of different backgrounds, do you really like property? Are you responsible?"
Mr Ahuja added: "Remember that buying a property to let is not just about your needs, by renting a property to others you are affecting their lives and have a role of responsibility."
2 - Raise the initial investment
"Most people think that to become a professional landlord you need mountains of cash, this is just not true, I started with a mere £500," Mr Ahuja explained.
"The key is a good knowledge and understanding of the financial products available to you. Of course it is ideal if you do have some personal funds to invest but if not consider the 100 per cent loan-to-value residential mortgage."
3 - Find the right buy-to-let mortgage provider
With so many buy-to-let mortgage products available, how do investors know the right one for them?
"The traditional buy to let mortgage requires 15-25 per cent of the purchase price as a deposit, the larger your initial investment the more you are able to borrow," Mr Ahuja said.
"Do your research as you would for a standard mortgage by comparing interest rates, repayment structures, fees and penalties etc. It is often advisable to approach a provider with whom you have a good financial history or a buy-to-let mortgage specialist."
4 - Find the right property
"I see many people buying in 'up and coming' areas only to be disappointed by the rental returns on their investment," said Mr Ahuja.
"My property choices are based in price, price, price. Getting to know a local market will give you the knowledge to spot if a property is a bargain or not.
"Speak to local agents and establish the rental value of different property types so if you see a cheap property which could command the going rental rate for the area then you know it's a bargain."
5 - Look to achieve 12 per cent rental return
"Some landlords are happy to receive eight, nine, or ten per cent rental return however I feel that a 12 per cent return is achievable and that is my benchmark," Mr Ahuja explained.
"I use the simple 'rule of 12' when deciding if a property is worth investing in; take the purchase price, divide by 100 thus giving the monthly rental figure that needs to be charged to obtain a 12 per cent gross yield.
"For example if a property is priced at £100,000, divide by 100 giving £1,000. If the monthly rental figure (£1,000) can be achieved in the area then go for it."
6 - Don’t spend unnecessary money refurbishing your property
New property investors should not spend time and money refurnishing a property as it inevitably causes stress.
"Instead just make sure your property is neutrally decorated and clean. Don't personalise it with your taste as this can put off potential tenants. Let them feel that your property is a blank canvas for them to make a home," Mr Ahuja advised.
7 - Find the right tenant
Investors should match the ideal tenant with the property type, and then advertise for that type of tenant alone.
"It is important to meet your tenants and feel comfortable as they will be living in your property," Mr Ahuja recommended.
8 - Minimise void periods
The key ways of minimising void periods is by having neutral decoration, investing in high demand areas, seeking a new tenant as soon as notice is given and investing in a property type which is in high demand in the area.
9 - Work with an agent
Managing more than one property outside your local area may be an inefficient use of time and resources, whereas a local letting agent can who knows the area well could be sourcing tenants, collecting rent and undertaking any repairs on the property.
Forming a strong relationship with an agent is essential, Mr Ahuja says.
10 - Expand your portfolio
The majority of buy-to-let landlords own more than one property, Mr Ahuja says.
"The key to expanding is the ability to release the equity in your property through remortgaging. Be careful though, building a portfolio can increase risk if not managed properly."

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Rental Market going Strong
March 2007

Figures from the National Association of Estate Agents (NAEA) show from October to December 2006 rents continued to rise at an average of 1.5 per cent each month.
This is almost double the rate of rental growth recorded for the same time last year of 0.72 per cent over the same period.
The NAEA explains the rise was likely to be down to interest rate rises being passed on to tenants.
The research also shows there has been an extra demand for rental property due to increased immigration, particularly from Eastern Europe.
Additionally, the market has also benefited from potential first-time buyers staying in rented accommodation for longer as their typical buying age rises.
"The market is looking particularly healthy, aided by rising property prices and increased immigration in 2006," commented Jan Bartlett, lettings expert at the NAEA.
"Interest rate rises are a concern as many landlords may choose to sell and 'cash in' on their investment at the threat of increasing expenses.
"However, I am confident that there is still significant return to be gained from buy to let property and I hope that the initiation of the tenancy deposit protection initiative will not deter investors."
In the last quarter of 2006 the average time taken to let properties saw a small increase on the previous quarter, up from 12 to 13 days, which the NAEA said was due to people reluctant to move home before Christmas.

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7 Per Cent Rise in Student Rent
February 2007

Student rents have risen seven per cent across the UK in the last year, new research reveals.
Accommodation for Students' survey finds since the same time last year the average weekly student rent has risen from £56 to £60.
London remains top of the table at £102 per week, followed by Cambridge (£84 per week), Guildford (£83 per week), St Andrews (£82 per week) and Oxford (£79 per week).
The Scottish university cities of Edinburgh and Glasgow were also well above the UK average for weekly rents at £70 and £68 respectively.
However, England's redbrick universities of Birmingham, Manchester, Liverpool, Sheffield, Nottingham, Newcastle and Leeds all had below average weekly rents.
The cheapest student rent is in Crewe, costing just £37 per week on average.
Also very cheap are the towns of Middlesbrough (£38 per week), Stoke (£40 per week), Wolverhampton (£42 per week), Bradford (£43 per week) and Sunderland (£44 per week).
"Now that students are accumulating large borrowings to subsidise their study the cost of accommodation has become a critical factor in their choice of university and our UK-wide league table for rents is a valuable tool for new students in assessing their university options," commented Simon Thompson, Accommodation for Students co-founder and director.
"Although southern universities are still more expensive for accommodation, with London way out front, some increasingly popular university locations have seen a corresponding rise in rents: Durham, Warwick and Loughborough are three good examples."
Accommodation for Students' average weekly student rents
1 - London £102.11
2 - Cambridge £84.36
3 - Guildford £83.18
4 - St Andrews £81.96
5 - Oxford £78.72
6 - Exeter £75.97
7 - Brighton £72.35
8 - Kent £72.33
9 - Canterbury £70.47
10 - Glasgow £69.50
11 - Eastbourne £68.89
12 - Bristol £68.67
13- Bath £68.50
14- Edinburgh £68.39
15 - Chester £67.68
16 - Chichester £67.31
17 - Bournemouth £67.07
18 - Durham £66.97
19 - Warwick £66.67
20 - Winchester £65.74
21 - Reading £65.43
22 - Loughborough £65.33
23 - Colchester £63.27
24 - Plymouth £60.38
25 - Lincoln £59.64
26 - Luton £59.52
27 - Southampton £59.38
28 - York £59.22
29 - Nottingham £59.09
30 - Devon £58.46
31 - Leeds £58.01
32 - Portsmouth £57.62
33 - Aberdeen £56.47
34 - Norwich £56.41
35 - Newcastle £56.40
36 - Sheffield £56.17
37 - Swansea £55.74
38 - Stafford £55.66
39 - Cheltenham £54.95
40 - Cardiff £54.87
41 - Manchester £54.72
42 - Birmingham £53.67
43 - Huddersfield £53.27
44 - Dundee £53.20
45 - Leicester £52.11
46 - Northampton £51.97
47 - Derby £51.82
48 - Preston £50.61
49 - Lancaster £50.16
50 - Bolton £50.15
51 - Blackpool £50.13
52 - Coventry £49.46
53 - Bangor £49.07
54 - Liverpool £48.14
55 - Salford £47.86
56 - Carlisle £47.08
57 - Hull £46.82
58 - Pontypridd £46.64
59 - Belfast £45.30
60 - Sunderland £44.45
61 - Bradford £43.21
62 - Wolverhampton £42.35
63 - Stoke £40.25
64 - Middlesbrough £37.85
65 - Crewe £37.22

 

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