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ASA bans property firm's misleading buy to let ad
A buy to let property firm made misleading claims about investing as a landlord in a radio ad, according to a ruling by the Advertising Standards Authority. Aldermartin Baines and Cuthbert (ABC Estates), of Bushey Heath, Hertfordshire, was banned from running the ad again and must broadcast unregulated property investment ads through specialist financial media. The ASA delivered a verdict on the advert broadcast on local radio in January after three complaints. The advert said: “The bank may be the safest place for your money, but Aldermartin Baines and Cuthbert estate agents would argue that it’s not the most sensible place. ?If you have cash on deposit in the bank, you may be getting only half a per cent interest on your money and inflation will be working against you by eroding your savings. So, what’s the alternative? ?Here at ABC Estates we’d like to suggest investing in property, good old bricks and mortar. Put your savings in a buy-to-let investment instead and you could generate a five per cent return on your investment, maybe more. Inflation would then actually work for you by eroding the value of your mortgage debt.? The ASA disagreed and felt the adverts understated the risks involved in buy to let investment. ?We considered the ad misleadingly presented buy-to-let investment as low risk, in that it suggested it was an alternative, or a preferable option, to saving and did not make clear the potential risks associated with such an investment,? said the ASA. ?Ads for investments not regulated or permitted under the Financial Services and Markets Act 2000 (FSMA) may be broadcast on specialised financial channels, stations or programming only. Buy-to-let is not regulated under FSMA but considered the ad, which appeared on a non-specialist channel and emphasised an investment opportunity, promoted an investment. Because the ad promoted an investment not regulated by FSMA, we considered it should not have been broadcast on a non-specialist channel, regardless of whether or not it made clear the potential risks involved in buy-to-let investment.? Aldermartin Baines & Cuthbert claimed they offered properties yielding between 7% and 12%, but had been advised a 5% yield made a better claim in the advert. ?We do not accept the ad misleadingly presented buy-to-let as a low risk investment. The ad did not mention ?low risk? but focused on inflation eroding the value of money, either on deposit or as the debt of a mortgage. This was obvious and would not mislead to anyone. The investments were low risk, because they gave an independent insurance backed rent guarantee,? the ASA was told. ?If a deal was considered risky, banks would not lend on it particularly in the current economic climate.?

Build to let is the way forward for property funds
Low yields and too few quality homes to buy are the biggest barriers to institutional investors entering buy to let, according to new research. Fund managers perceive residential buy to let yields are an average 20% less than those offered by commercial property and the business model of low income and capital appreciation reverses the returns they seek. The seven leading banks and funds approached by property firm Hamptons International also felt that a minimum £500 million investment would be needed to make any residential fund work and doubted the 2,500 or so quality properties required for a portfolio are not available. The largest recent property deal was a 574 home portfolio that changed hands for £75 million. The report concludes build-to-let is the likely solution to encourage insitutional investors in to the UK buy to let market. ?Build to Let will allow 100% private rented blocks to be built efficiently and at scale, offering higher net yields as well as the ability to acquire a large number of units in a single transaction,? said the report. The report also urges the government to promote make the planning process easier for large build to let projects – and to especially look at the demand from local councils for developers to include low-cost social housing in their developments. Adam Challis, head of research at Hamptons International, said: ?This report offers a fascinating insight in to the challenges faced by institutions who are considering investment in the residential property sector, a topic which has long been a focus of the government. ?The results of this report are a clear message to government that if it wants to see institutions invest in the residential market, it needs to make build to let a viable option for investors.  The ability to create modern, efficient and bespoke private rented buildings constructed at scale without the burden of restricted planning policies will have a fundamental and positive impact on institutional investment in residential property.?

7 Common Landlord Mistakes
With so many favourable articles of late proclaiming the positive merits of investing in buy to let properties, a novice landlord might be forgiven for thinking that owning a rental property is an easy way to make cash. But the reality is somewhat different?the potential for earning a healthy profit is almost certainly there, but there are also many pitfalls on the road to becoming a successful landlord. So before you acquire a massive headache, learn how to avoid common landlord mistakes: 1. If you know nothing about letting property, consider paying a professional letting agency to manage your property. The fees will bite into your profit margin but in the event of any problems, they are first in the firing line. 2. Never make the mistake of assuming a bad tenant is better than no tenant?an empty property might be highly undesirable, especially if rental payments are required to cover a mortgage, but a bad tenant could end up costing you thousands in damages, plus they may run up huge rent arrears and then abscond. 3. On a similar note, ALWAYS check references thoroughly. Just because a tenant appears to be nice and respectable, it does not automatically mean they ARE nice and respectable! 4. If your property is subject to a mortgage, ensure the lender is aware you are letting it?this is a common mistake people make when letting their home for periods of time. A failure to do so could invalidate any insurance policy you have on the property. 5. Do not be tempted to cut corners on landlord insurance?a good policy might prove to be essential if you fall victim to #2 on our list. 6. Always ask for a decent deposit to cover the cost of potential damage to the property?expensive cleaning and repair bills at the end of a tenancy are a big problem for many landlords. 7. Overdue rent is a very common issue faced by landlords, so make sure you have a clear tenancy agreement drawn up with the rent due date highlighted to avoid confusion. If a rent payment is late, take immediate action to resolve the problem. This article has been provided by Amer Siddiq from PropertyPortfolioSoftware.co.uk They provide award winning property management software to help landlords get better organised.

Landlords working with Local Authorities
A leading company in building links between the private-rented sector and local government are launching a range of new products which change the way landlords, tenants and local authorities work together. ?Our aim is create a framework that prevents homelessness, builds sustainable tenancies, and reduces the financial burden carried by government, both locally and nationally?, said Alan Elborough, Co-Director and Founder of Settled Housing Solutions. ?At the moment we see homelessness up by 14% according to the latest Department of Communities and Local Government figures. The use of bed and breakfast accommodation by local authorities has grown by 37% over the previous year. The government has allocated £400 million for homelessness in the current Spending Review period. The private-rented sector is providing more and more accommodation and local authorities are straining under the growing number of people who find themselves without a home or on housing benefit. What we have set out to do is to bring all the various elements together, landlords, tenants, and local authorities so as to produce a system that is coherent and works well at the front-line of housing need?. The first product is Settled Sure. This is a unique insurance scheme to cover housing benefit. Its aim is to tackle the growing concerns of landlords have on providing accommodation for housing benefit tenants by providing an insurance safety net for landlords which protects their income. That helps tenants by releasing properties in the private-rented sector that might not otherwise be available to them. It assists local authorities in tackling homelessness by helping potential tenants into accommodation. A key element is that the insurance premiums would be based on local rental market levels. Settled Tenant addresses those barriers that hamper landlords working with local authorities on housing tenants on lower incomes. Using an interactive workshop format, it helps and trains tenants to consider and recognise their responsibilities within a tenancy and as part of their local community. It encourages them to plan and budget and thus can be used as a form of tenant accreditation. This should help create an environment where landlords have the confidence to negotiate longer tenancies which give security both to them and their tenants. Local authorities gain as fears about the growth of transient populations in some of their areas should be eased and the cost of intervention in tenant-related matters should fall. Settled Agency is a scheme that works to professionalise local authority lettings-services by training, advice and IT software in conjunction with the Guild of Letting and Management Ltd and IT PROz. This should lead to the development of a ?Social Letting Agency? Model that brings local authorities and their local landlords into a more professional relationship. By going this route, rather than the traditional regulatory path, standards could be raised across the sector. Alan Elborough went on to say, ?We believe that these new products could iron out a number of the problems that bedevil the private-rented sector. Taken as a whole package they could build longer and more stable tenancies which is in the interest of both landlord and tenant. For local authorities they will save money by removing some people from the revolving door they face now, going from homelessness to hostel to short-term tenancy and then possibly round again. It helps change the role of local authorities from being enforcers into partners engaging with their local landlord which chimes in the Government?s Localism Act and welfare reforms. We believe that this package offers practical solutions for the problems facing the private-rented sector now?. Settled Housing Solutions are the leading practitioners in building successful partnerships between the private rented sector and front-line local government services. The primary aim of their service is to harness the potential of the private rented sector market so it can play an important role in providing affordable housing for those on low incomes.    

Surely it's better to be with a Safeagent than sorry?
The bewildering complexity of self-regulated consumer protection offered to landlords seems to simply comes down to professional jealousy. Landlords could be forgiven for thinking that the power-that-be at the august Association of Residential Letting Agents (ARLA) extended their concerns about rip off rogue agents beyond a turf war. The cat was let out of the bag by ARLA president Tim Hyatt who candidly explained that his organisation could not work with rivals SafeAgent because a competitor administrated the scheme. That competitor is the National Approved Letting Scheme (NALS). SafeAgent chairman John Midgley immediately grabbed the moral higher ground from ARLA with a conciliatory statement. ?The suggestion that we change the way we are administered could prove very expensive, but would also have the risk that we become just another trade body. That is not our aim,? he said. ?SafeAgent is not about allegiance to any of the existing bodies. We are an independent body and here to inform members of the public. We have no plans to remove NALS. Our view is that it is irrelevant who administers the scheme.? The Safeagent scheme has mushroomed to several thousand members in a short time. Backers include the government, National Union of Students, Shelter, Citizens Advice and the Residential Landlords Association. At stake is landlord and tenant money collected and held in trust by letting agents. Client money protection stops landlords shutting up shop and disappearing with cash either through poor business management or dishonesty. The latest unprotected firm to crash has debts of more than £410,000 in unpaid rents to landlords. Liquidators have told landlords they are unlikely to see a penny of their cash. Hyatt is about to give up at the helm of ARLA and has one big regret – that the organisation does not have an elevator pitch to sell their letting agency licensing scheme that simplifies their service for the public.

UK Economy has Stalled
No sign of improvement in the UK economy as slow or zero growth, the Euro crisis and falling house prices add to the woes. In most parts of the UK, London and the South East being the main exception, unemployment is set to continue rising for the next 5 years. That?s according to forecasting group The Centre for Economics and Business Research (CEBR) that predicts the overall jobless rate could hit 10.7% by 2016, the highest for more than a decade. Although the government says that this view is pessimistic and does not coincide with the views of other economic forecasters, especially as UK unemployment fell by 35,000 to 2.65m between last December and February, CEBR says it could ultimately rise to levels not seen since the early 1990s. Bond traders are warning Tuesday 8th May that the euro could go into freefall over the next few weeks as investors compare it to the sub-prime mortgage crisis. European voters have given austerity measures a clear ?nulls points? and now currency experts are predicting a grim future for the euro, even if some of the countries in the euro can manage their way though the crisis. Early trading has seen the GB pound and US dollar soar against the Euro which will boost the UK pound and the US dollar – good for our “safe-haven” status, but bad for exports which might otherwise boost UK growth. The early January and February 2012 rebound in the housing market has run out of steam according to a Royal Institution of Chartered Surveyor?s (RICS) survey. The records price declines and falling sales across the UK in April, still more evidence of a broader economic slowdown. The RICS report said that 19% more surveyors have reported price falls than price rises, while the number of properties on the books of Estate Agent surveyors rose again. Only London it seems is defying the downturn. Surveyors in the capital report a different picture from the rest of the UK. 86% of London surveyors report prices the same or rising.