Currently viewing the tag: "credit check"
Reena Malra Can Show You How To Make 5 Figures A Month From UK Property!

Reena Malra Can Show You How To Make 5 Figures A Month From UK Property!

Here’s How To Make 5 Figures A Month From UK Property

Let me ask you a quick question…

Would you like to discover how to make a 5 figure monthly income from the UK Property market…

  •   WITHOUT having to take out a mortgage
  •   WITHOUT needing to pay any kind of deposit
  •   WITHOUT having to borrow any money, and…
  •   WITHOUT the need for even a simple credit check?

Oh, and I almost forgot…

WITHOUT the need for ANY experience whatsoever?

You would?!

Then you can find out how to do it yourself right here

Our friend Reena Malra – the self-made property millionaire and leading creative strategist, has been helping people just like you to make a 5-figure income each and every month using her secret underground creative strategies – with some truly spectacular results!

Take a look for yourself here:

But crucially for you, she’s now opening up the doors for a select few attendees only!

Continue reading »

With newspaper reports of rising rent arrears and tenant rent defaults, many landlords want to protect against the loss of rent. There are a number of specialist products available for landlords to use including Rent Guarantee Insurance.

Here Legal 4 Landlords, the UK’s leading provider of specialist products and services to landlords and the lettings industry, explain the benefits of rent guarantee insurance, as well as looking at some of the smaller print.

How it works

The Truth About Rent Guarantee Insurance

The Truth About Rent Guarantee Insurance

In theory, rent guarantee insurance can be a landlord’s proverbial best friend: if your tenant fails to pay their rent, the insurer will pay you instead.

The outstanding amount is then recovered by the insurance company from the tenants directly.

Of course, in some instances you may agree with your tenant to accept a delayed payment because of financial problems or other extenuating circumstances, and therefore would not need to make an insurance claim.

On the other hand, landlords may face difficulties of their own some months, and for around £120 a year rent guarantee insurance offers you piece of mind that your rent will be paid on time and in full when you most need it.

Relief for legal costs and void periods

Most good insurance policies will also include legal cover for the eviction of the tenant. Landlords should note that the eviction process can be a lengthy and costly period of time, the legal cover provides landlords relief in terms of time and money.

What’s more, as long as the eviction process started within the policy period, the insurance company will continue to pay your legal costs up to the policy limit even once the policy has ended.

In addition, most policies will pay 50% of the rent for up to 3 months after eviction whilst you find a new tenant. However, if policy ends during the eviction process you will of course have to renew the policy in order to receive this and your monthly rental payment.

The small print

Tenants need to be thoroughly referenced and credit checked in order to be granted the policy. Landlords should have had these checks done before the tenant moved in so there should be no additional costs.

Some insurers won’t allow claims for the first 3 months of the policy, and there may be an excess to pay that is equivalent to one months’ rent and landlords won’t receive anything without renewing if you are in the last month of an active policy.

It also means that there is little point in claiming for rent that is a month late unless you are sure the tenant will continue to not pay and/or you want to evict the tenant.

With only 30 days to claim after the rent became overdue, this can be a difficult judgement to make as your tenant may well intend to pay.

If you do agree to delay payment by more than 30 days, make sure you keep all your correspondence otherwise you won’t be able to backdate the claim if the tenant doesn’t end up paying.

Not only do you then lose another month’s rent on the excess, but it could void your policy altogether in some instances.

Policy renewals are not guaranteed. Unless eviction proceedings begin immediately, any tenant defaulting towards the end of a policy could stop you from being able to renew and so the eviction costs could have to be met by the landlord

The way that some other rent guarantee policies are set up means that the odds are stacked in favour of the insurance company.

Despite this, in a recessionary environment with decreased job stability even tenants with a good credit history may face financial difficulties, so it is very worthwhile for landlords to take action protecting against rent default.

Tenant Referencing Is Crucial For Landlords

Tenant Referencing Is Crucial For Landlords

Most tenants are complete strangers, who as a landlord, you may meet once or twice before granting a tenancy agreement to or handing over the keys to the rental property.

If using a good letting agent, the landlord may not even meet the tenant until after they have moved in.

This leaves the landlord with a few questions, including:

  • What are the tenants like?
  • Have they rented previously?
  • Have they always paid their rent on time?
  • Why do they need the property?
  • Do they look after their home?

As a landlord, if you were approached by a person on the street and asked for the keys to your rental property on the promise that a stranger would look after it, would you hand over the keys?

Surely the answer from experienced landlords and clued up property investors should be a resounding NO!

But the scary thing is some inexperienced landlords are not far off doing this exact thing when renting out property to tenants.

Tenants can potentially cause expensive problems that can cost even more to put right and the risk of this increases if landlords haven’t vetted them properly.

As much as everyone would like to live in a world where people can be taken at their word, in terms of their character and reliability, unfortunately the truth is somewhat different. The unfortunate reality is that no-one can be taken at face value and it’s advisable to have a reputable tenant referencing company carry out checks on all potential applicants, which will include credit checks, employer references and previous landlords’ references.

Tenant referencing should be completed before offering a tenancy agreement or allowing tenant’s to move in.

The credit check will detail the tenant’s credit profile via credit reference agencies to determine any adverse history such as missed payments or CCJs (County Court Judgements).

A tenant with a low credit score may not be all bad! They may have had problems in the past making payments on finance, or they may have been assessed by the credit reference agency as a risk because of difficulty making payments.

A low credit score doesn’t necessarily mean that you are dealing with a bad or unreliable tenant – an example would be students who have little or no credit history and as such may possess a bad score.

Legal4Landlords offer specialist services for landlords and letting agents

Legal4Landlords offer specialist services for landlords and letting agents

In situations like this, as long as the other aspects of the tenant reference are adequate, a guarantor can be sought for the tenant. However, the guarantor will have to undergo the same referencing procedure.

The tenant reference should detail

  • The performance of the tenant during the course of their previous tenancy.
  • Payment history
  • The condition of their previous rental property at exit
  • Whether their previous landlord would rent property to them again

This should help the new landlord get a good indication of the applying tenant’s track record.

The employment reference determines

  • Tenant’s employment status
  • How long they have been employed
  • Salary.

This information will enable the landlord to determine if their wages are enough to cover the rent, bills and associated living costs and also the stability of their employment, i.e. whether they are permanent or temporary employees.

Even tenants in long-term employment could be at risk of redundancy in the current economic climate, and landlords should take advantage of rent guarantee insurance, which protects the landlord should the tenant default on their rent.

It is advisable for landlords to offer a 12 month contract (AST) with a 6 month break clause to allow for flexibility in case things do go wrong during the tenancy.

One month’s rent should be taken in advance from the tenant along with a damage deposit equivalent to 6 weeks of rent.

This allows for a financial buffer in case the tenant fails to pay the last month’s rent at the end of the tenancy or if there is damage to the rental property.

Tenant Referencing by Legal4Landlords

Tenant Referencing by Legal4Landlords

The Financial Services Authority (FSA), are urging people seeking mortgage advice to ensure they obtain the correct type of mortgage product for their residential property purchase.

The FSA have said that Buy to Let Mortgage applications are rising, but a growing number of applications are fraudulent.

Would be homeowners and borrowers who, for whatever reason are unable to meet the strict lending criteria now demanded for a UK residential mortgage, are attempting to fraudulently use Buy To Let (BTL) mortgages as a means to purchase property, despite having no intention of being a landlord or ever renting the property out to tenants.

Buy to let mortgages are not regulated in the same way as residential mortgages and the borrowing criteria are more relaxed.

This means that buyers who fail to meet the income and credit check requirements of a residential mortgage can still get approval for a similar sized buy to let mortgage.

The FSA believe that intermediaries and financial advisors are involved in the fraudulent applications.

When asked about the rising levels of deception an FSA spokesman commented: “We are seeing anecdotal evidence of unregulated buy-to-let mortgages being used fraudulently as a replacement for regulated residential mortgage contracts, as borrowers and intermediaries seek to circumvent more stringent income and affordability checks.”

According to The Residential Landlords Association’s news service,rising numbers of tenants in London are failing to pass their reference checks because they do not met the salary requirements being demanded as rents soar.

Instead, they are having to use guarantors who do pass the checks or put down up to a year’s rent.

Most credit referencing companies now insist that a prospective tenant earns around 30 times the monthly rent, or two-and-a-half to three times the annual rent. A tenant’s savings are not taken into account.

Rents have risen by as much as 20% in parts of London, according to agents Ludlow Thompson.

Lynn Hilton, partner for residential lettings at Cluttons agents, said that one in five tenants is now failing a credit referencing test. Four years ago, fewer than one in 20 failed.

Of those who fail, around half are opting to fork out a bigger deposit instead – up to a year’s rent upfront – or produce a rent guarantor whose financial ability satisfies the referencing firm.

The problem of tenants failing the checks is even catching wealthier individuals because, for example, they do not have assets listed in this country for tax reasons, or while they have savings, they do not have jobs.

Join the RLA today!

Tagged with:
 

There Will Never Be A Better Time To Invest In Property

MyPropertyPowerTeam.co.uk helps property investors and landlords build their own property power team to enable them to profit from property - Visit our main site now!