Welcome to the winter newsletter fromLobster Lettings. Since our last newsletter in theAutumn we have seen some crucial changes

within the company in aneffort to keep us at theforefront of the lettings andproperty management in-dustry.

We have moved offices tomuch more suitable loca-tion with a more functionalwork space.

All of the staff havemade massive contri-butions towardskeeping a function-ing operation sowe can maintainour high levelsof customerservice.We hope wehave beensuccessful

and no major disruption was noticed by any of ourclients.

With the Christmas season approaching we havethemed our latest newsletter with a seasonal tone.All the staff and directors of the company wouldsincerely like to wish all our valuable clients the verybest wishes for the season. We hope you will enjoysome fantastic family time and the chance to relaxand enjoy the festive period.

As with the last newslet-ter affectionately named‘Leemo’s News’ we aimto deliver topical andpertinent informationthat will help you as alandlord.

We have also entered into the social media side ofbusiness with a fantastic Facebook page and Twit-ter account.At any time you can drop by the pages to getinvolved and see what your favourite letting agent isup to. We really hope to see you there!

Why not visitLobster lettingson Facebookand Twitter?

Winter 2012

In this edition

� Guaranteed Rent

� Platinum Cover

� DSS Tenants

� HMOGuaranteed rental schemes are becomingpopular but what are the real cost? You maybe surprised by the findings. Looking forpeace of mind? Insure yourself against loss-es and legal cost with Platinum cover.

Why not secure a brand new attractive highyield property with our BMV deals on page9 and 10? HMO is it a chance to makegreater yields or just an unnecessary has-sle?

Lobster Lettings wants to wish all our clients a veryhappy Christmas

Platinum Management Guaranteed Rental

When a product comes along that offers to change the waylandlords make income from renting their properties it makesone sit up and take notice. The thought that conventionalletting agencies are falling short of their ability to effectivelydo what they are paid to do by these schemes is blatantlybeing challenged.

A good letting agent will be able to maximise your rentalincome, still take their fees and all, for less than theseguaranteed rental schemes, that’s the theory anyway.

For those who don’t know, these schemes work by loweringthe rental value the landlord receives from an agent andspreading that fixed lower payment over a twelve monthperiod. The difference in what the agency keeps and what ispaid to the landlord is hopefully the agents profits. And ingeneral it is, and very healthy they are too.

If you have ever looked at these schemes or spoken with anagent whom offers them then you will be aware that not allproperties and situations will qualify for a guaranteed rentalscheme. Properties are assessed by an assessor whom willvisit the property, look at the surrounding area and deter-mine whether they can make enough money from you for therisk.

Yes it is a risk for the agent as they could potentially have tocover the rent for a maximum of 12 months should a tenantnever be found. Of course this is a worse case scenario butit highlights perfectly that these companies look to maximisetheir income and substantially lower your yields.

Lobster Lettings looked into this by means of mystery shop-ping certain agents offering the scheme. For our test we tooka property with a known value in rental income and present-ed it to the agent.

In our case the agent didn’t offer a site visit and was happyto give a price over the telephone. The rental value wastypically £450 pcm and the guaranteed rental scheme of-fered us 12 months rent for a much reduced £325 a massive

32.5% charge for the privilege. With top end ‘normal’ man-agement fees running at 15% this is a substantial hit on yourprofits and could potentially leave the property void of anynet income profit all together.

When you really drill down into the figures they just don’t adup unless you are the agent of course. With rental yieldsbeing evermore squeezed down landlords need to be morethan ever more vigilant with the income ability oftheir property. Even if you can factor in aregular void period and a tenantfind fee you are still more likelyworse off with this than traditionalmanagement fees.

We looked quite closely at introduc-ing in this type of service but basedon many factors including all theabove we decided that it was not inthe landlords best interest to doso.

As agents we typicallyfind tenants within twoweeks and chargestandard manage-ment at just 10%,proving that thetraditional meth-ods are still thebest way togenerate rent-al income.

As the sayinggoes ‘if it aintbroke don’ttry to fix it’…..Wise wordsindeed..

The offer looks amazing, a guaranteed rental income for landlords whether your prop-erty is empty or tenanted. To good to be true or just a fancy scheme that will damageyour yields?

Guaranteed Rental IncomeA solution to avoid voids or a stealthy way to increase profits?

Do you have a clear picture of where your cash is going?

CautionUse your head

Do you have a clear picture of where your cash is going?

For a landlord what could possibly be better than rental income even if the property is empty?

As landlords there are certain things thatshould, in the ideal world be a given. Theseare, the tenant will pay the rent on time and infull, and should the worst happen you canremove them and replace them with a bettertenant.

Of course this ideal world is not always thecase and when things do go wrong there’sreally just one looser… That’s you the land-lord. In law the tide has turned to protect thetenants rights more and more leaving land-lords even more exposed than ever, and moreat risk from financial loss. These laws, as mostwill know were brought about to stop rogue orslum landlords from holding tenants to ransomand evicting otherwise honest tenants be-cause there circumstances have changed. It

seems that it has had a detrimental effectthough.Losses to landlords could become more prev-alent as the country continues to remain stag-nant just teetering above recession. Thereare many tenants who know the system verywell and just how to get the most out of you.

But take heart there is something you can dothat can help you recover most of your costswhen the worst does happen.

Insurance policies can be purchased to helpgive piece of mind and hopefully limit a land-lords expose to financial loss. These policiescan be purchased and can cover,

● Rental Income● Legal Costs

Did you know you can insure your rental income against lossand non payment? Did you also know the true cost of evictingan errant tenant legally?

Don’t get caught out with astronomical legal fees. Keep more of what is rightfully yours

Rental income insurance is becoming more andmore popular with savvy landlords and of coursegives them, complete piece of mind and the abilityto budget for all scenarios.

Landlords can reclaim almost all of their rentalincome, less a policy excess of course. Even fac-toring in this small additional cost the prospect ofloosing months of rent and subsequent legal costmakes it a real no brainer for some.

Policies are underwritten and there is a qualifyingcriteria too for the tenant. Most policies can beissued on the tenants criteria alone but failing thatissued on a suitable guarantor.

As well as insuring your rental income you cancover your legal costs which, in the event of anyeviction or legal action will most definitely run intothousands of pounds in costs to you.

We are all very aware that legal cost are very hardto swallow but also any action you undertake as anindividual must be deemed legally sound or it’sback to square one with the tenant still in theproperty and the rent still not paid. It thereforemakes very sound sense to cover yourself for aneventuality that is becoming more common in theindustry.

Charges are very reasonable and cost as little as3% of the monthly rental income. For the level ofcover and peace of mind given it’s a very affordableoption you should consider. Another benefit weoffer as a leading agent is, we pay the full policycost on your behalf then spread the repaymentsover the remainder of the year.

We can upgrade a landlord onto the scheme on anynew tenancy, call the office to find out more.

Platinum cover for just 3%per year!

Don’t get caught out with astronomical legal fees. Keep more of what is rightfully yours

Lobster Lettings - Customer Service That’s Out Of This World

Tenants on benefits, are they a DSSaster?

At some point being a landlord you will come across prospective tenants who arefor whatever reason claiming some form of benefit and not working. Question isare they still a good tenant or a nightmare waiting to rear it’s head?

For any landlord there are some key areasthat wipe out the net yields and cause noend of heartache, I am talking of courseabout property voids rent arrears and mali-cious damage to name a few.

As landlords the mere mention of any of theabove would normally send a shiver downthe spine. As more and more people fall onhard times there aremore people relyingon the benefit sys-tem to enable themto have a home. It isgenerally regardedthat those on bene-fits are a risk but isthis thought process totally un-just?

Of course there are many landlords whomalready take DSS tenants. Typically theyields are greater as the properties are gen-erally cheaper stock than normal.

A lot of DSS are victims of circumstance,perhaps single mums, have social or mentalhealth issues keeping them in the system.There is a general belief that all DSS ten-ants are potential trouble waiting to pounceand destroy your faith in the industry all to-gether.

Thankfully this is not really the case at alland all DSS claimants should not be tarredwith the same brush.

At Lobster Lettings we have dealt with manytenants whom, by the landlords viewpointwould not make ideal tenants at all. But ofthose landlords that have put trust in ourability to properly vet the tenants these haveturned out to be very good stable tenantsindeed.

As with any walk of life you get good andbad but you also get some wonderful ten-ants who’s circumstances have changedand they are now forced to rely on the stateto live, perhaps short term perhaps longer.

There is still a stigma about the unem-ployed, those with mental health issues andof course those who just do not want to workand are stuck in the benefit cycle. But it’smostly unfounded hearsay, and yes thereare occasions when a tenant or tenants willcause damage but it’s certainly not limited tothose on benefits.

When landlords maintain their property welland have them clean tidy and warm mosttenants will respect the property much bet-ter. Everybody wants a home and wants tomake a place a home so a little care andrespect for the tenant can pay big dividendsfor landlords.

Just because somebody is unemployeddoes not mean they have lost pride or selfrespect.

Risk Averse OrWilling to AvoidThat ProlongedVoid?

DSS as tenants would you?

With your investment?

is occupied by more than one household, and where more than one household shares – or lacks – an ameni-ty, such as a bathroom, toilet or cooking facilities

is occupied by more than one household and which is a converted building – but not entirely self-containedflats (whether or not some amenities are shared or lacking)

is converted self-contained flats, but does not meet as a minimum standard the requirements of the 1991Building Regulation, and at least one third of the flats are privately rented

What is an HMO?A House in Multiple Occupation (HMO), is a building, or part of a building, such as a flat, that:

HMO properties need to be licensed, the exactcriteria for the issue of the license differ with thelocal authority (council) where the property issituated.

Licenses are required because larger HMOs,such as bedsits and shared houses, often havepoorer physical and management standardsthan other privately rented properties. There isa significant risk of dying or being injured in afire in such properties. The people who live inHMOs are amongst the most vulnerable anddisadvantaged members of society. As HMOsare the only housing option for many people,the government recognises that it is vital thatthey are properly regulated.

Licensing is intended to make sure that

Licensing

landlords of HMOs are fit and properpeople, or employ managers who are

each HMO is suitable for occupation bythe number of people allowed under thelicence

the standard of management of theHMO is adequate

high risk HMOs can be identified andtargeted for improvement

As with anything there are risk and rewards. Of coursethe rewards look very favourable, a single propertysplit into four can return a substantial yield with fourindividual rents being required instead of just one.

But of course the type of properties that are operatingas HMO dwellings tend to lend themselves to individu-als who may not considered ideal tenants by somelandlords. This could lead to damage, rent arrears andnuisance behaviour that can aggravate other occu-pants. But it doesn’t have to be the case. Any personat any time can become less than ideal as a tenantand many HMO properties are incredibly good at brin-ing in substantial rental yields.

Limiting your risk with proper background checks andaccountable guarantors is the way to go and any goodagent will be very aware of the importance of such dili-gent activities and can best advise you on a case-by-case basis.

Certain situations can be better secured by taking op-tional insurance to cover the rental payment and legalcost in the event of an errant tenant. Costs can soonmount up and quickly destroy your profits. Of coursemany of these insurance schemes have quite strictcriteria which could make finding the idea qualifyingtenant a little more difficult, this can also be alleviatedif the tenant has a strong guarantor.

Keep it legal!A Norwich landlord fell foul to prosecution and became the first in the country to be prosecuted by the proceeds ofcrime act. He was successfully fined for substandard and potentially dangerous living conditions in one of his HMOproperties. Failing to provide heat and hot water to certain rooms along with in-effective fire doors and hangingwires that could threaten life. He pleaded guilty to nine offences under HMO regulations and was fined a total of£53.500.

There’s no home without HMO - Risk Or Reward?

News Board

The new office bringstogether important mem-bers of the team into amore open plan environ-ment that just wasn’tpossible within the spaceof the old building.

Our aim is to have moreinformation sharing be-tween departmentswhich was much moredifficult before. Our aimis to give our clients abetter service.

The building will servemany purposes and inaddition to the previouslymentioned it will providesuperb training and fran-chisee management fa-cilities too.

A new Beginning

With our new space wecan do so much more forour clients with integrat-ed operations and mod-ern facilities, the movewas a coordinated mas-ter piece with very littledisruption to both servic-es and data. It all start-ed with the staff packingup the whole office onthe Friday before themovers came in to man-age the heavy items onthe Saturday. It was nosmall undertaking either.

The following Mondaywe all returned to workat the new location andhad a functioning opera-tion by the end of thatday - very slick indeed!

Lobster HeadOffice hasMoved!

As you will haveheard we havemoved. Our oldpremises on Pow-ell Street was inneed of renova-

tion and didn’t meet the plans of the company goingforward. Our new office space is both new, vibrantand very modern and we hope will serve the busi-ness needs for a long time to come.

New Appointments

This last month the company welcomed two newstaff members to the team. In Warrington JoanneHill will provide the negotiation role and head of-fice welcomes Jacqueline Dyas also as negotia-tor. Welcome to the team guys!

Franchise Update

In our last newsletter we announced that wewere adding yet another string to our bow andchanging our legal status by becoming a fran-chise operation. Well just last week all thehard work came together and the transitionwas completed. Lobster Lettings Franchise isnow active and available for interested partiesto take up their very own agency under ourexpert guise.

Franchising by means oflicensing our modus op-erandi should give poten-tial franchisees theconfidence that they toocan have a successfullettings agency business.

Interest has started to grow and we have sentout franchise prospectuses in response to theenquiries. Our licences are being discountedfor a first 5 franchisees by 25% and this willalso be VAT free too.

A 25% discounton our standardfranchisee feefor the first 5licences andVAT free too.

April 2013 – launch of Universal Creditpathfinder

Starting in April 2013, DWP, HMRC and localauthorities, will introduce Universal Credit toclaimants within certain areas of the North-West of England. This “pathfinder” stage willhelp gauge if Universal Credit is ready to golive across the rest of the country later in2013. UC will cover all levels of benefits in-cluding housing benefits so it will effect land-lords in certain circumstances.

SearchLobster Lettings

on Facebookand Twitter to

keep up with thefun and games.

�

Location Type Asking Discount % Saving Sale Price

Bolton 2 bed apartment + parking £147,995 £28,599 19% £119,396

Bolton 1 bed apartment + parking £97,995 £18,599 19% £79,396

Bolton 1 bed apartment + parking £97,495 £18,499 19% £78,996

Bolton 2 bed apartment + parking £118,995 £22,799 19% £96,196

Bolton 1 bed apartment + parking £98,495 £18,699 19% £79,796

Bolton 2 bed apartment + parking £119,495 £22,899 19% £96,596

Bolton 1 bed apartment + parking £97,995 £18,599 19% £79,396

Bolton 1 bed apartment + parking £98,495 £18,699 19% £79,796

Bolton 1 bed apartment + parking £98,495 £18,699 19% £79,796

Chorley 4 bed detached single garage £219,995 £42,999 19.5% £176,996

Chorley 4 bed mews house £154,995 £29,999 19.3% £124,996

Chorley 4 bed mews house £149,995 £28,999 19.3% £120,996

Chorley 4 bed mews house £149,995 £28,999 19.3% £120,996

Chorley 4 bed mews house £161,995 £31,399 19.3% £130,596

Chorley 4 bed mews house £164,995 £31,999 19.4% £132,996

Chorley 4 bed mews house £164,995 £31,999 19.4% £132,996

Chorley 4 bed detached + garage £249,995 £48,999 19.6% £200,996

Hyde 1 bed apartment + parking £95,995 £18,199 19% £77,796

Hyde 2 bed apartment + parking £111,995 £21,399 19% £90,596

Hyde 2 bed apartment + parking £110,995 £21,199 19% £89,796

Middleton 4 bed mid terrace £186,495 £36,299 19.5% £150,196

Radcliffe 3 bed end mews £151,995 £29,399 19.3% £122,596

Radcliffe 4 bed mid mews £156,995 £30,399 19.3% £126,596

Radcliffe 4 bed mid mews £156,995 £30,399 19.3% £126,596

Radcliffe 4 bed end mews £158,995 £30,799 19.3% £128,196

Radcliffe 3 bed end mews £163,995 £31,799 19.3% £132,196

Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996

Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996

Below is a list of the properties we currently have on oursystem. These are time sensitive purchases and the vendoris looking for exchange of contract by 21st December 2012.

To find out more please contact us

Available Property

Don’t forgetwhen you’ve

purchased yourBMV property

to get your ex-pert manage-ment servicesfrom Lobster

Lettings

�

Location Type Asking Discount % Saving Sale Price

Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996Radcliffe 2 Bed semi + parking £124,995 £23,999 19% £100,996St Helens 3 bed det & garage £170,245 £33,049 19.4% £137,196St Helens 3 bed end mews £153,245 £29,649 19.3% £123,596St Helens 3 bed det & garage £170,245 £33,049 19.4% £137,196St Helens 4 bed semi £146,245 £28,249 19.3% £117,996St Helens 4 bed semi £146,245 £28,249 19.3% £117,996St Helens 3 bed det & garage £184,995 £35,999 19.4% £148,996St Helens 4 bed semi £146,245 £28,249 19.3% £117,996Thornton Cleveleys 4 bed detached & garage £219,995 £42,999 19.5% £176,996Thornton Cleveleys 4 bed detached & garage £219,995 £42,999 19.5% £176,996Thornton Cleveleys 4 bed detached & garage £239,995 £46,999 19.5% £192,996Tyldsley 4 bed det with det garage £241,495 £47,299 19.5% £194,196Tyldsley 4 bed det with det garage £207,995 £40,599 19.5% £167,396Tyldsley 4 bed det with det garage £209,995 £40,999 19.5% £168,996Tyldsley 4 bed det with det garage £233,495 £45,699 19.5% £187,796Tyldsley 4 bed det with det garage £241,495 £47,299 19.5% £194,196Tyldsley 4 bed det with det garage £234,995 £45,999 19.5% £188,996Tyldsley 4 bed det with det garage £224,995 £43,999 19.5% £180,996Tyldsley 4 bed det with det garage £241,495 £47,299 19.5% £194,196Wigan 4 bed det double garage £304,495 £59,899 19.6% £244,596Wigan 4 bed det double garage £370,995 £73,199 19.7% £297,796Wigan 5 bed det double garage £356,995 £70,399 19.7% £286,596Wigan 3 bed semi £199,950 £38,990 19.4% £160,960Wigan 3 bed semi £167,950 £32,590 19.4% £135,360Wigan 3 bed mews £164,950 £31,990 19.3% £132,960Wigan 4 bed det & garage £249,950 £48,990 19.3% £200,960Wigan 4 bed detached & garage £219,995 £38,995 17.7% £181,000Wigan 3 bed mid terrace £119,995 £18,995 15.8% £101,000

Don’t forgetwhen you’ve

purchased yourBMV property

to get your ex-pert manage-ment servicesfrom Lobster

Lettings

�

Yield Calculation based on £80,000

Deposit £25%Hence mortgage £60,000 (75% LTV)Typical Fixed Term Rate 4.39%Annual Mortgage Payment £2,634

Property Income CalculationRental Yield £450 PCMAnnual Rental Income £5,400

(£80k/100=£800 - £5400/£800) = 6.75%

Lobster LettingsAtlas House, 1st Floor Suite 7 & 8Wigan, WN3 6XU

0845 257 0058www.lobsterpropertygroup.com

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