Tuesday 15 May 2018

Your Credit Score Explained


Credit Score:

Landlords rely on credit scores, among other things, when selecting and verifying their new tenants. This article on credit scores gives an insight into what’s involved when we check our personal credit scores, and what we all need to do to make sure we get a good score.

This article gives an insight into what landlords and agents should to be looking for when they do a credit check.
My Personal Credit Score


Have you recently paid a credit reference agency to get your credit score checked? Or maybe you’re having your credit score checked by a specific lender, such as a bank or mobile contract provider. You’re probably wondering what makes up and what can impact your credit score.
So, what do credit reference agencies look at when calculating your credit score?
When checking your score, credit agencies will take a wide range of different factors into account. These include information that has been directly provided by you, information the lender may have about you, as well as any information they lender may obtain from other organisations.
Keep in mind that different lenders are looking for different things, so you may get scored differently when you apply to a different one.
What can impact on your credit score?
A large number of things can have an impact on your credit score. First and foremost, having high levels of debt can have a significant effect on the result of a credit check. There are numerous other important factors, such as not being registered on the electoral roll at your current address and missing bill payments, which remains on file for six years.
‘Financial association’ is another big one. This means sharing assets, an account or credit (e.g. mortgages) with someone who has a poor financial record.
It might come as a surprise to you, but even factors like moving home frequently and not having a home phone number can have a negative effect on your credit score. This is due to the fact that some lenders might consider these factors as signs of an unstable living situation.
Improving your credit score
If you have a poor credit rating, there are a number of things you can do to try and improve your it. These include:
  • Paying all your bills on time
  • Getting registered on your electoral roll
  • Meeting monthly minimum payments on credit cards
  • Cancelling unused credit cards
  • Alerting your credit reference agency to any mistakes on your credit report as soon as possible
  • Applying to be disassociated financially with another individual
  • Limiting the amount of credit applications you make
  • Keeping the balance on your credit card accounts low: borrowing less than 25% of your balance shows lenders you don’t need to use credit too often
  • Regularly checking for suspicious activity on your credit report.
At the end of the day, the lender still has the final say about whether or not to give you credit and how much they will charge for it. For helpful tips on understanding your credit score and how to manage it, check out the following guide to credit scores from Sainsbury’s Bank.
This handy visual guide demonstrates how financial organisations, lenders and utility companies usually use credit scores to determine if your application will be approved.

Thursday 10 May 2018

What do renters look for in a rental property?

For landlords, it is not always easy to guess what prospective tenants are looking for when getting a vacant property ‘rental ready’.

From furniture and lighting to bedding and tabletop items, there is a lot that can be done to improve a property’s internal appearance and give it that homely feel; helping to showcase the impressive features available and maximise the use of space, ensuring that the home is perfect for family buyers or busy professionals.

But research looking at what matters to tenants has found that for the majority of renters cost remains the most important deciding factor when choosing a rental property.

In a resent survey it was found that 77% of respondents say cost is the determining factor when choosing a rental property.

Some 68% identified location as the most important factor, while having a garden is important to almost half - 48% - of renters.

Consent to keep pets in the property was identified as the fourth most important factor at 32%, followed by ease of parking at 23%.

The number of tenants seeking rental homes that accommodate animals is growing rapidly, suggesting that more landlords may wish to consider accommodating pets.

In February, Labour said it wanted to implement a default right for tenants to keep a pet in their rental properties. It appears that the party has found this is a popular choice for tenants and would be seen as a vote winner.

Regardless, landlords may want to consider their own policy on pets to see if it could help rent their properties now - or they are forced to change their policy by potential new government legislation.

Tuesday 8 May 2018

BTL landlords urged to ‘embrace’ tax changes and ‘watch their portfolio thrive’

A combination of tax reform and stricter regulation for landlords is slowing the growth of the private rented sector (PRS), but private landlords are being encouraged to accept the changes and focus on long-term gains. 

Despite a challenging time for the buy-to-let market, characterised by tax and regulatory changes, investment in buy-to-let continues to outperform most major asset classes, and property investors must not lose sight of that fact.

No-one said being a private landlord was an easy way to make money – tax changes and moving legislative goalposts are keeping landlords on their toes.

However, individuals looking to make longer-term investments are finding limited choices are available to them – interest on savings continues at historically low levels, and the volatility of the stock market provides uncertainty in both the short-and longer-term.

The private rented sector is a growing market, and both past performance and the key economic indicators are all positive.

Here's five reasons why landlords should embrace change, and watch their portfolio thrive:

+ Rising energy standards can help increase property values

On 1st April new Minimum Energy Efficiency Standards regulations went live.  This new requirement is aimed at raising energy efficiency in the private rented sector.  Before a new tenancy can be granted, landlords must ensure their properties adhere to minimum energy efficiency ratings.  Properties must have a minimum rating of E, which means that a new tenancy cannot be granted if the SAP point score is 38 or lower.

However, homes which are more energy efficient will be more attractive to tenants, and any improvements which need to be made to comply are only likely to add capital value.

+ Regulation drives up standards

The Department of Housing, Communities and Local Government announced the introduction of a so-called ‘Rogue Landlord Database’ in a bid to expel landlords who fail to comply with regulation or who rent out substandard accommodation.  This is a move to be welcomed as we believe all tenants should have the right to live in safe, comfortable homes.  So-called ‘Rogue Landlords’ give our industry a bad name and as we continue to provide homes for an increasing population of tenants, the service we provide should be respected and valued.

+ Property values are rising

As a long-term investment, property remains attractive. Recently released figures from the Office for National Statistics showed that average property values in the UK increased 4.4% versus March last year.  In real terms this is growth of £9,000 – or the equivalent of £750 each month.
The majority of landlords are making a modest profit from rental income on a monthly basis – and when combined with a continued rise in average property values this is positive return.

+ Rents remain in line with earnings

According to the latest Rental Index from HomeLet, rents are continuing to rise across the UK at 0.9% - which is far lower than the growth in average weekly earnings, at 2.8%.  For tenants this will mean their monthly rental payments will be feeling more affordable in real terms.  The good news for landlords is that if tenants are less likely to struggle to meet their monthly rental commitments there is a reduced risk of arrears - and of course, happy tenants will often stay in their home for longer.

+ Private rented housing is in demand

The UK continues to have a shortage in the provision of social and council-owned homes, and the upfront cost of home ownership remains prohibitively high for many.  Private landlords are now providing homes to over 20% of UK households – a number only set to grow over the coming years, with some predictions that private rented homes will account for approximately 25% of all households by 2021.

With landlords enjoying a combination of portfolio growth, rental price growth and growth in the value of their properties, the overall experience for many remains positive.  Reduced tax relief and tightening legislation haven’t deterred smart landlords from carefully strengthening their portfolio, to match the increased demand.