With so much uncertainty in the employment market
and the bank’s current lack of lending for
mortgages, renting is seen by many families as a
more attractive way of putting a roof over their
head rather than buying.
The
buy-to-let market is the most buoyant it’s
been in generations. The knock-on effect is large
numbers of small to medium private investors, including
ex-pats with surplus funds, are seeing the British
lettings market as a much more productive place
for their money rather than leaving it stagnating
in their low-interest savings account.
Drawback?
Of
course, the big drawback for landlords, particularly
those living overseas, has always been the expense
and impracticality of managing a residential or
commercial property portfolio from a distance. How
do you select reliable tenants, take up references
or deal with debts when you’re living a long
way away from your assets?
The
last thing ex-pat landlords want is to spend their
time, energy and profit ironing out the problems
of bad tenants. Flights and accommodation alone
can wipe the margin out of a years’ rental
income. Most letting agents can find a tenant and
manage when things are going well, but what happens
if things go wrong?
It
doesn’t have to be a problem. Organisations
exist to deal with this precise situation.
Eviction
There are some occasions when landlords, however
reluctantly, have to consider eviction as a business
necessity. Not an easy process to manage from afar.
For
tenant eviction in the UK, a landlord can serve
one of two notices under the Housing Act 1988. A
Section 8 Notice is a 14-day notice seeking possession
due to rent arrears, nuisance or breach of tenancy.
A Section 21 Notice is a two month notice to terminate
a tenancy agreement and seek possession.
An
efficient, professional system can often reduce
the eviction time by up to three weeks, that's a
massive three weeks' rent which can be saved, in
landlords' terms.
An
eviction team will review each situation and give
advice on the fastest route to eviction. This usually
means dealing with the tenant face-to-face, serving
the relevant notices and speaking with contacts
at the local authority to try and have the tenant
re-housed without delay.
It's
all about attention to detail. The majority of eviction
cases which are thrown out of court fail because
the landlord hasn’t completed the paperwork
correctly. Landlords need to ensure eviction notices
are served correctly so that a possession order
will be granted.
Dealing
with rent debt
The key factor in dealing with unpaid rent debt
and arreas is to act swiftly. This is not always
possible if you’re an overseas investor. Having
dedicated in-house licensed and certified bailiffs
certainly helps. The appearance of a bailiff means
the tenant is left in no doubt their overseas landlord
has serious intentions of recovering the sums due
- just as serious as one living ‘around the
corner’.
With
student lets, a bailiff may need to visit the debtor
in their home town, possibly at a parent's address,
and enquire about the money owed. If the debtor
has moved back home, or is working elsewhere, they
will generally co-operate to avoid embarrassment.
In
these circumstances, writing to the debtor to explain
the severity of the situation and giving seven days
to make payment before they are visited by a bailiff
can be very effective. Often a simple letter from
the bailiff highlighting the imminence of a visit
is enough to encourage them pay or at the very least
agree a suitable payment date.
Credit
and ‘past form’ searches
Prevention
of problems is always preferable to later legal
action.
Ex-pat
landlords should always check if a prospective tenant
is capable of paying the required rent, before reaching
a decision on how suitable the tenant is to rent
their property.
It’s
important to have experienced people examine the
personal information held by credit reference agencies
about any prospective tenant. This generally involves
cross- referencing the prospects data against lists
of those against whom rent debt recovery action
has been taken in the past.
Once
all the relevant information has been collated into
a comprehensive report, the investor can take an
overview. It’s always worth landlords reminding
themselves that a transaction worth several thousands
of pounds a year is under negotiation. Data mistakes
and simply relying on ‘hunches’ can
be costly. It is advised that expats to always carry
out a detailed credit check
References
The old standby of a good solid reference from an
employer, bank or previous landlord still carries
weight.
Tracking
down written references from aboard can be a time-consuming
and expensive phone exercise. It needn’t be,
having an efficient team of people on hand to elicit
reliable references can save landlords considerable
time and therefore money.
Hands
on
The UK market presents a real opportunity.
Overseas
investors have the chance to cash in on low residential
property purchase prices, high rentals and the prospect
of capital growth as the UK economy begins to recover.
Even
newcomers to the market can benefit from ‘hands-on’
management of the whole process from acquisition,
to letting, to eventual disposal, irrespective of
their location.
In
practice, it isn’t even necessary to inspect
or visit the properties or personally vet the tenants.
It can all be done by established experts at a distance.
In fact, ‘buy-to-let’ can become a ‘paper’
investment exercise which can be compared with the
many alternatives in strictly financial terms.
The
whole process of property investment can be efficiently
managed from literally anywhere on the planet where
there’s a bank and a phone that works.
