Refurbishing your rental property: what to consider before

Refurbishing your properties is always a good move, especially when you need to attract high quality tenants and are competing in a tight market. There are a lot of points that need to be considered if you’re thinking about doing up your property. Below are a few pointers to consider if one of your properties is in need of an update.

How big is the refurbishment going to be?
If you need to replace a window or even a shower, this can probably be done with your tenants living in the property. However, if you need to replace the entire bathroom then it’s best to wait until your tenants have moved out as this can be both time-consuming and stressful for all parties. If you are doing work with the tenants in situ, try to do it when they’re on holiday so you don’t have to rebate the rent or find somewhere for them to stay while the work is completed. Normal maintenance works, such as fixing a leak or damp proofing one wall, should be done as soon as possible after you’re alerted to the problem.

Refurbishing your rental property is always a good move, especially when you need to attract high-quality tenants and are competing in a tight market.

There are a lot of points that need to be considered if you’re thinking about doing up your property. Below are a few pointers to consider if one of your properties is in need of an update.

Current Buy to Let lending rules

  • How big is the refurbishment going to be?

If you need to replace a window or even a shower, this can probably be done with your tenants living in the property. However, if you need to replace the entire bathroom, then it’s best to wait until your tenants have moved out. In fact, this can be both time-consuming and stressful for all parties.

If you are doing work with the tenants in situ, try to do it when they’re on holiday. So, you don’t have to rebate the rent or find somewhere for them to stay while the work is completed.

Instead, normal maintenance works, such as fixing a leak or damp proofing one wall, should be done as soon as possible after you’re alerted to the problem.

Red flags of tenant screening

  • How much is it going to cost?

Do your research on costs before you start looking at anything else. You can find comparisons for fittings and fixtures through a quick Google search. You may be able to negotiate special deals with local suppliers.

Do ask people you know who have recently had work done on their property about cost expectations for builders and other tradespeople you should have. Bear in mind that it’s better to spend more to ensure a high-quality job.

There are generally two pricing methods with builders:
  • fixed
  • or flexible.

Fixed pricing may seem more expensive initially, but the builder will have added contingencies and you won’t be faced with any unexpected costs.

With flexible pricing, the builder will provide you with an estimate. Then, they will adjust it depending on what they end up doing. This may work out being as cheap as the estimate, but there is potential for the work to cost well over your initial budget.

Read more: Tips on how to refurbish rental properties

  • Are you getting the right people involved?

Have you used the builder and tradespeople before? If not, have they done any work for friends, family or neighbours? Make sure you get people you can trust to be professional and ensure the work is completed to high standards.

Using a guarantor for renting: when we advise it

  • Who is going to be the project manager?

Will you do this yourself or will you get the builder to do it? If you haven’t had any experience in project managing a building project, then it may be best to leave it to the experts. However, it is your property, so you need to be happy with the work that’s being done.

How to get it right as a first-time landlord

  • What design considerations do you need to make?

This can vary depending on the type of tenants you’re trying to attract, however, it will need to have a user-friendly layout regardless. If you let to students or families, there could be a greater level of wear and tear than if you let to professionals. So, keep this in mind if you’re doing any decorative work. If you need to re-carpet, look at getting one with stain-resistant properties as it will mean less cleaning and you probably won’t need to replace it as often.
Once you’ve thought about these, getting started should be easy. Keep an eye on the details of the project to prevent extra costs and time to your refurb.

What is West London Property Networking

If you have any questions on property management, please contact Pelin Martin to book a 30-minute free consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk

Buy To Let Loans: Current Rules

Buy To Let Loans have new lending rules since January 2017.

The Prudential Regulation Authority (PRA) introduced them, but they can make it more difficult to get Buy To Let Loans.

Changes to buy to let mortgage interest relief

Lenders will have to carry out the affordability assessments that will take into account:

  • Landlord’s costs including tax liabilities,
  • verified personal income
  • possible future interest rate increases

Company letting vs AST

This means that the Landlords will be subject to a ‘stress test’ which requires them to prove that if the loan interest increases, they will be capable to continue to pay their monthly instalments.

When setting the expectations for future interest rate increases, the PRA reviewed the standards in the industry. Also, they considered the impact of changes in interest rates, and measured the stressed rate on landlords accordingly.

There is also a warning for the “portfolio landlords”. The PRA defines as “portfolio landlords” the ones with 4+ mortgaged buy-to-let properties. With these changes, they should be assessed using a specialist underwriting process.

How to build a buy to let portfolio

The new rules for Buy To Let Loans may not have a substantial effect as many lenders were already complying with them.

However, few more lenders may tighten their requirements. Also, landlords seeking to borrow against groups of properties may find lending criteria harder to meet. These rules will phase in and so you should give careful consideration to them. They also apply to re-mortgage. So, if you obtained lending under old criteria, that may be difficult to refinance.

Lenders must now take every property in landlords portfolio into consideration when they apply for a new mortgage, rather than simply assessing their overall balance sheet.

Where to invest in property?

When landlords apply for additional borrowing, the monthly rental income on each of their properties must cover at least 125% of their mortgage payments, tested at an interest rate of 5.5%.

This calculation is known as the ‘interest cover ratio’. Some lenders have chosen to test affordability at ratios up to 145%, meaning landlords with heavy mortgages or those with low rental yields could struggle to obtain a loan.

What is West London Property Networking

If you have any questions on property management, please contact Pelin Martin to book a 30-minute free consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk

Red Flags of tenant screening

How to spot the red flags of tenant screening…..

Credit Score
Credit score does not indicate that the tenant will pay rent and will pay on time. You can look at it as more of a personal responsibility score. You can say that a person who doesn’t pay their bills and has a bad credit score has an entitlement mentality. Stay away from a tenant with an entitlement mentality and risky behavioral patterns.

Credit score will tell you the tenant’s desire to pay rent and will be an indication of future personal behaviors.

The single predictor of tenants who will pay their rent on time is their credit report and credit score. A bad credit score is a deal breaker in itself.

How to spot the red flags of tenant screening…..

Credit Score

Credit score does not indicate that the tenant will pay rent and will pay on time. You can look at it as more of a personal responsibility score. You can say that a person who doesn’t pay their bills and has a bad credit score has an entitlement mentality. Stay away from a tenant with an entitlement mentality and risky behavioral patterns.

Credit score will tell you the tenant’s desire to pay rent and will be an indication of future personal behaviors.

The single predictor of tenants who will pay their rent on time is their credit report and credit score. A bad credit score is a deal breaker in itself.

Using a guarantor for renting

Low income.

It is clear if tenants are not making enough in their monthly paycheck, they will not be able to pay the rent. In general, look for a minimum income that is at least 2.5 to 3 times the monthly rent.

How to get it right as a first time landlord

Criminal history.

A criminal conviction can be a huge red flag. Get more information and evaluate carefully.

How to deal with a damp and mould at a property

Bad landlord references.

This should not be your main indicator for determining the eligibility of applicants. Far too many landlords ask tenants to leave, only to give them a great reference. Few tenants can ask friends to pretend they are a landlord and say great things about them. Still, sometimes you can get important information.

Was the entire deposit returned? If not, why? Not getting most of the deposit back is a huge red flag. Late payments are a problem. Terminating a lease early can be an issue. Not giving proper notice is an issue.

Section 21 eviction notice and how to avoid an invalid one

Aggressive or large breeds of dogs.

Tenants who own pit bulls, rottweilers, chows, Akitas, any cross-breed with a wolf, or any mix of the above could be a problem. There have been studies about what kind of people are likely to own these breeds, and these people tend to favour riskier lifestyles. If your tenant applicants have an aggressive breed of dog, avoid them at all costs.

Landlord and tenant relationship tips

Asking to pay the deposit after move-in.

If tenant applicants don’t have the full deposit at move in, do not rent to them. You will likely never get the full deposit. And you will have a very risky situation.

Renting to students: rules and tips

Looking to move in less than a week.

If tenant applicants need a place right away, it may not be a godsend for your vacant property. Instead, it could be another red flag. Why do they need a place so soon? You need to find out the answers and check if they are convincing.

Accidental landlord tips

Living with relatives or in a motel.

When people are living with relatives or in a motel, it is a red flag. This can be a common theme among people who are getting evicted. They move in with relatives and try to save money. After a few months, they attempt to move out. Solid tenants always have a place, and it is usually not with friends and relatives.

Assured Shorthold Tenancies

Needy, demanding.

If your very first interactions with tenants leave you wanting to pull out your hair, just imagine what it will be like when they have a legal right to the property. Save yourself the headache.

Expenses you can offset against as a landlord

Planning to move mid-lease.

If their rental application shows they are looking for a place well in advance of their current lease termination, they may repeat the pattern. Find out more before taking it further.

How to handle bad tenants?

Not likely to follow your rules.

If you smell cigarette smoke on applicants who are renting a non-smoking unit, or they are covered in cat hair but swear they don’t own a pet, you have a problem. Casual liars make bad tenants.

Unexpected costs of being a landlord

Changing jobs too often.

Always prefer applicants with careers, not jobs. Look for applicants who are employed at places that have paid vacations, sick days, health insurance and paid holidays. Otherwise, you may find rent late due to Christmas, kids getting sick, taking time off to go to a wedding, etc.

What is West London Property Networking

If you have any questions on property management, please contact Pelin Martin to book a 30-minute free consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk