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Rent arrears fall again in 2012

More UK Landlords Using Rent Guarantee Products

Private Rented Sector (PRS) rent arrears dropped in February with 9.3% of all rent late or unpaid at the end of the month, down from 10.7% in January.

With household bills increasing, UK unemployment still rising and the whole country still struggling to avoid a double dip recession as a result of the Eurozone crisis, together with the government’s welfare reforms and public sector belt tightening, there hasn’t been a great deal of optimism around, especially from landlords.

However, figures released by LSL property services show that UK landlords have a little less to worry about, with the amount of rent arrears and late payments falling again.

Either private sector landlords are having an excellent run of good fortune, having tenants who are able, paying the rent in full and on time, or they have become smarter and are now utilising the range of Rent Guarantee products that are currently on the market, to ensure they get paid and their monthly cashflow doesn’t suffer.

Being a landlord and letting a property in the UK means there will always the risk of the tenant not paying the rent, (rent default).

Even the best tenant referencing service cannot predict if a tenant will lose their job and fall on hard times and not be able to pay their rent.

How do landlords cover their expenditure if this happens?

In today’s struggling economic climate, many UK landlords are finding their tenants struggling with rising unemployment and increased bills. Often leading to the rent not being paid and the tenant facing eviction when the amount of rent arrears exceeds 8 weeks.

Recovering arrears can be difficult and costly for landlords, without any guarantee of success.

At Legal 4 Landlords, our Rent Guarantee Insurance will cover landlords against their tenant defaulting or failing to pay the rent.

UK property repossessions increase

UK Property Repossessions are forecast to increase 22% in 2012

UK Property Repossessions are forecast to increase 22% in 2012

Economists expect the recession and rising unemployment to squeeze the already stretched household finances of thousands of struggling families this year and are warning UK homeowners and landlords of a sharp rise in residential property repossessions.

Record low Bank of England (BoE) interest rates and lower than expected unemployment figures kept property repossessions to relatively small numbers through the worst days of the first half of the recession and they eased again as the country struggled into a tepid recovery.

However, with a double dip recession inevitably looming, workers incomes failing to cover spiralling household costs, the Government’s economic cutbacks and welfare reforms starting to bite whilst the beleaguered private sector fails to replace jobs lost in the public sector, economists are fearing the worst.

The Council of Mortgage Lenders (CML) had already forecast a 22% rise in UK property repossessions for 2012 increasing the annual property repossession figures to around 45,000.

The property repossession figures include private residential properties where mortgage payments have lapsed and Buy-To-Let properties where landlords did not have <a title=”Landlord Insurance” href=”http://www.legal4landlords.com/rent-guarantee/” target=”_blank”>Rent Guarantee Insurance</a> and have been unable to keep up with their buy-to-let mortgage repayments due to their tenants not paying the rent.

Read the full article here

Property investors need to research before they buy in 2012

UK BTL property investors urged to be thorough with Due Diligence

Property investors are being urged to thorough research in order to be very selective about the areas they choose to purchase investment property in during 2012.

Poor returns from savings and the continuing strong demand for rental property will be the driving factors behind an increase in property investment in the UK buy to let (BTL) market.

However, taking a gamble on certain locations could be risky for would-be Buy To Let landlords with unemployment rising, Government welfare reforms and the fallout from the Eurozone crisis still looming.

UK property investors are urged to seek to purchase Buy-To-Let properties in popular residential areas with a good infrastructure and a strong employment market, such as upmarket commuter hotspots around all major cities.

Buyer and tenant demand will continue to outstrip the current supply of UK housing stock, supporting property price growth.
Property investors should avoid areas that are reliant on manufacturing or the public sector, during 2012 as these areas may face high levels of unemployment, and with the cap in housing benefit payments now in effect, rental yields may not be as healthy. Such areas are expected to see relatively low property transaction levels in 2012 and a fall in house values that could be more than 5%.

By conducting thorough Due Diligence property investors can purchase Buy-To-Let properties in strong locations that will deliver a reliable rental incomes and a good supply of quality tenants, in addition to a modest capital growth

A list of useful Due Diligence sites to aid property investors in their search for the best areas can be found here

Private Rental Sector property rents are expected to continue growing strongly in most areas, hopefully, in the region of +5% this year, due to continued restricted mortgage lending and poor employment prospects leaving a whole generation of potential first time buyers (FTB’s) with little prospect of buying a home.

To ensure rental income remains constant throughout the duration of a tenancy, landlords can utilise Rent Guarantee insurance to keep a regular income coming in from their buy-to-let property.

Policies offered by Legal 4 Landlords include 6 and 12 Month Rent Guarantee insurance policies designed to protect landlords whose tenants default on rent payments.
Rent Guarantee insurance can also provide additional cover to meet the cost of legal proceedings for the eviction of defaulting tenants from rented properties.

Property Valuations In UK on the Increase

UK Residential Property Values Increase Across the UK

According to Nationwide 9 out of 13 regions in the UK recorded residential property price rises in 2011, with London the best-performing region (+5.4%) and Northern Ireland the worst-performing region (-8.9%).

Property prices in Scotland are down 0.8% on the year, having remained steady in the final quarter of 2011, in Wales prices ended 2011 up 1.5% despite having lost 0.9% in the final three months.

For the UK as a whole, the typical value of home stood at £164,785 in December, following a 0.3% increase during Q4 which helped produce an annual price rise of 1.1%.

However, at 5.2, the average house price to earnings ratio remains above the long-term average of around four, although down from a peak of 6.4 in 2007.

Due to continued property price falls, Northern Ireland is now the cheapest UK region in terms of average prices, and also the most affordable relative to average earnings.

The North remains the most affordable English region, while annual price growth of 5.4% has consolidated London’s position as the least affordable region, with a house price to earnings ratio of 7.4.

In 2012 the market is likely to be dominated by fears over rising unemployment, the squeeze on household incomes and the Eurozone finance crisis.

Forecasts for 2012 are for property values to remain stagnant at best.

Shortage of suitable property supply should continue to underpin the market, although Halifax recently reported that there were only 187,000 First-Time Buyers (FTB’s) in 2011 – the lowest annual total since the lenders’ records began in 1974.

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