Friday 25 November 2011

The Panic is Starting...

The panic is starting .......No, I'm not talking about doing your online Christmas shopping. Although if you haven't yet started it probably is time to start panicking.  What I'm referring to is the imminent problems in Europe and a worldwide depression.

Every day in the news we hear more countries in Europe are facing financial difficulties. How many people have forgotten about Greece which has been shoved to the background because of the new stories emerging? Their problems haven't suddenly gone away they just aren't newsworthy at the moment.  In a couple of weeks when they are again due to run out of money they'll be thrust back into the limelight again.

The countries currently in the headlines are:

Germany - once thought to be the savious of Europe and the Euro have found themselves out of favour with investors and this week failed to sell their full 6bn euro bonds. They could only sell 3.6bn euros and that was for much higher interest rates than expected. With opportunities to resolve the European turmoil squandered and  rumours circulating that Germany is printing deutchemarks in readiness for the fall of the euro it is no wonder there was a lack of confidence in buying German Bonds.



France - also squandered an opportunity to tackle the european crisis.  Their banks more than any other country have large exposure to sovereign debt.  Any default or break up of the euro would leave them vunerable to collapse. Rating agencies are looking carefully and France and their AAA rating is at risk. So France's attempts to sell French bonds was met with a luke warm market and interest rates were much higher than previous sales.

Other countries - in the headlings this week are Austria, Belgium and Latvia who all have banks in financial difficulties who are likely to need bailouts. Latvia nationalised it's bank but that hasn't helped stop the run on the bank in question

Europe is heading for recession and bar a miracle is probably already in recession and that will impact on Britain and other countries worldwide.

Today the FSA announced that banks need to have emergency plans in place inreadiness for the collapse of the euro. They went on further to say the euro could collapse within weeks.  European banks are frantically trying to sell off assets so they have cash in hand to deal with the crisis.

And what about us as investors? Well, Britain is still a relatively good place to do business.  Opportunities exist if you go looking for them. It is very much going to be every person providing for themselves and not relying on others to do it for them.  Keep building those assets and you will have a better chance of surviving 2012.

Sunday 20 November 2011

Section 8 or Section 21 Notice to Evict

A frequently asked question about evicting tenants is whether to use Section 8 notice or Section 21 notice.

As a landlord for 11 years I used to say go with Section 8 for speed especially when dealing with rent arrears. But over recent years these types of evictions have become more frequently defended and can often cost the landlord large solicitor bills. I now recommend Section 21 in every instance.

Last year, I had a tenant who had totally wrecked a lovely five bedroom house. They were also not paying their rent and so for speed of eviction I decided on a Section 8 notice under grounds 8,10 and 11. On the day of the court hearing the tenants turned up with their lawyers who asked for additional time to put a defence together. The judge told them off for not entering a defence at the correct time but still gave them the extra time to put a defence together. A new hearing date was set a couple of months later.

At the next hearing they claimed the wrecked house was my fault. I was able to prove that the house had been in excellent condition when let to them (I had an independent inventory completed at the time of letting) but it was decided that the matter would need to go to trial. The trial set for several months later. I had to pay up front some court costs.( All the while, the tenant was not paying any rent.)  I was looking at legal costs of around £20,000 to go to trial and if I lost the case I would also have had to pay the tenants legal costs which would easily have taken my costs to £40,000 +. The tenant had legal aid to take this matter to court.



At the time of serving Section 8 notice on the tenants, I also served Section 21 notice. I immediately applied for an eviction order under Section 21. As a result of the eviction order I then had a bargining chip to get the tenants to withdraw their action in return for my withdrawing the eviction order thus saving me the costs of going to trial. I was back to stage one with still no rent coming in and I was now out of pocket nearly £3,000 in legal fees.

I then served another Section 21 notice on the tenant and applied for their eviction. It was granted.

Following this experience, I would recommend to any landlord to use Section 21 notice everytime to evict a tenant. Provided it has been served correctly you must be given possession of the property. The judge normally gives possession within 14 days of the order being granted. If a defence is entered the judge can decided to give the tenant extra time of around 28 days to leave the property.

Your can get a solicitor to do the paperwork for you and serve the notice. To save costs and because Solicitors can be slow and don't always get the paperwork right, I tend to do all the work myself.

It should be remember that under Section 21 you do not give a reason for evicting the tenant. You are only applying to the court for an order asking the court to give you back possession of the property.

If you have outstanding rent you can make a claim through MCOL and if payment isn't received you can get a CCJ and apply for attachment of earnings.

A step-by-step guide to evicting tenants under Section 21 is available for £5.99.  Please contact the writer at rknpublishing@uwclub.net.

Sunday 6 November 2011

Yuk! It's School Time Again

After two weeks of half term holidays it is back to school again tomorrow. The daily grind of up at 6:00am begins again. But this second half term will be different. The clocks have gone back to GMT time and it will be dark when I collect my daughter from school.

When we are on British Summer Time (BST) our after school activities include walking the dog along the canal to a local playing field where he gets a run; bike rides around the boating lake or up to the Open Hearth Pub; Walks around Tredegar House Park. The activities only last half an hour or so but it is wind down time for all of us. For me it's the end of a busy day and my chance to get out of the house. For my husband it marks the time to switch off the phone which rings non-stop everyday and relax with the family.  For my daughter it's a break before starting homework. For the dog it's his chance to be let off the lead and have a free run. Sadly, due to the darkness, these activities become reserved for fine weekends only until it starts getting light again..



The other thing I dislike about school is the whole school system.  Don't get me wrong, school is important as our daughter needs to learn the basics reading, writing and arithmetic but unfortunately school is aimed at producing the next generation of employees and not the next generation of entrepreneurs or investors. Although only 12 years old our daughter already has a long list of business opportunities she wants to develop. Some will be consigned to the waste bin within a year or two but most have real potential to be outstanding businesses of the future. Her knowledge of investing is growing and will I've no doubt, exceed mine within a few years. (Especially now we have Junior ISA's which allow her to become her own investor). To me school holidays are the time when we work on the skills she will need to run a business or become an investor or both. While having fun we manage to plan, organise, research our trips. Play games that encourage investment and creativity such as monopoly and cashflow. All the while her business list ideas gets longer and her knowledge becomes greater.

For us school holidays are such and important time. As a family we decide what we will be doing each day of the week for the duration of the holidays with contingencies if the weather isn't appropriate for the planned activity. We schedule a morning a week for dealing with work after that it is total activities. These holidays we managed along with our bike rides and walks, mini golf at Celtic Manor; Halloween Party; Cinema; Guy Fawkes party; Visits to Fleet Air Arm Museuem; Haynes Motor Museum and Cadbury World. Two home movie nights and numerous games of Cashflow; Monopoly; Frustration; Articulate and Charades. And our ladies trips to the beauty salon and hairdresser. And while they seem simple enough activities they are building entrepreneurial skills which we hope will support her in her future career whatever it might be.

And so we are back to the school routine tomorrow.  The count down to the Christmas holidays has began.  Six weeks and we're back on holiday again. Six weeks and we are back into the realm of business, investment learning and fun again.

Monday 31 October 2011

National Adoption Week

65,000 Children in care in the UK. 65,000 is too many children in care.  Of these 65,000 kids, 3600 are babies and only 60 were adopted last year. National Adoption Week is the once a year chance to highlight the plight of these kids who really just want someone to care for them and love them.

The worst part of all this is that often it is not the lack of people wanting to foster or adopt these kids it is the very system that is suppose to protect them that is really letting them down.  The result of which is that many of these children spend their informative years in care and then go on to become tomorrows criminals.

I remember six years ago, my husband, Ron and I were having dinner with some friends. It was National Adoption Week and the publicity had made them think about fostering a child. Ron and I said we had always thought about adoption but as we had travelled so much it never seemed an appropriate time to adopt. We now considered ourselves too old to which they replied there is no age limit anymore. The next day we contacted our local council for information.

It took 5 months to get the first appointment with a Social Worker from the Council and another year to go through the screening process before finally being approved to adopt. We just needed the official notification of approval. That took another 3 months to come through. After receiving the notification another few months went by during which time we heard nothing from anyone.  We received no information about kids available for adoption and no communication from our Social Worker or Council.  So we notified our Council we wanted to go on the National Register. This went down like a ton of bricks.  'We like you to wait 12 months before going on the register' was the reply. We were now 2 years into the adoption process and not getting any younger so we insisted we be put on the National Register. We never went on the register as  surprisingly a couple of days later a child was available for us to consider adopting.  She was 8 years old. She lived in North England. We said yes and a few days later the Social Workers representing her came down to see us. Yes, we thought, things are starting to move now.

It took the North England Social Workers six months to decide if we should be put forward to a matching panel to consider if the now 9 year old girl should be allowed to move in with us.  Once she had moved in it was another 15 months before we were given their support to file for the adoption to be made final. This was only after we contacted NSPCC for a Child Advocate to represent our daughter. (another story to be told at another time)

Our 12 year old daughter is an absolute delight. She is witty and intelligent. Has a very caring and loving nature. She has wound around her little finger not just us but all our friends, family and even the teachers at her school who all describe her as adorable. She has her demons though not only from her past before she was taken into care but from the trauma of being in care. Moved between Foster Carers(most of whom do a wonderful job) and having numerous Social Workers, this comes out in the nightmares she endures. Once a nightly event they now rarely occur. Something we like to think is because we are providing the love and stability she needs.

It is National Adoption Week and I am sure there are many loving and caring families able to provide a nuturing home for one or more of the 65,000 kids who find themselves in care if only the system and the workers within the system will give them a fair chance.

http://www.giveachildahome.co.uk/

Wednesday 19 October 2011

October Book Review - Surviving 2012

Four years ago in 2007, in unprecedented scenes, Northern Rock had a run on it's branches which saw Northern Rock Bank become nationalised. It was the forerunner to the 2008 Credit Crunch.  Now four years later banks are still in financial difficulty. The almost daily notification of downgrades in credit worthiness of banks comes as no surprise. Countries which printed or borrowed endless money used to bail out their banks are themselves on the brink of bankruptcy.  The implementation of severe austerity measures as countries try and reduce their debt and GDP ratios has only contributed to high inflation, high unemployment and low economic growth. The world is on the brink of a depression unlike anything we have ever seen. Worse than the 1930's Great Depression.  Governments don't know how to solve the problems. They keep fighting with the same old tools that got us into the situation we currently find ourselves in. Instead of improving things it makes them worse. We are facing an enormous disaster and very few people are aware it is coming.

In my fifth book, Surviving 2012, due for release in January 2012, I discuss ways of improving your financial education and preparing for the biggest economic disaster of our lifetime. If you are looking for a know it all answers for everything type of book then this is not for you.  This book has been written as a basic financial book for beginners giving some fundamental information that could can help you survive 2012 and beyond.  The greatest financial disaster of a lifetime is almost upon us. Those with financial education will make it through the coming storm, not unscathed, but in a better position than those not prepared for it. 

As the financial world we know changes forever a great transfer of wealth is beginning and Surviving 2012 can help you share in it.

Surviving 2012 by Karen Newton due for release in January 2012.

Friday 23 September 2011

September Book Review

Unfair Advantage - The Power of Financial Education by Robert Kiyosaki

If you follow my tweets @newydd105 you will know by now I am a big fan of Robert Kiyosaki. I was introduced by a friend to his books in 1999 and have read every book written since. Unfair Advantage has all I have come to expect from Robert and more.

It covers the traditional information such as building assets; defining what is an asset and liability; gives examples of the investments that Robert has completed and how you can do the same. It also has updated information on the different types of investor which was originally covered in 'Cashflow Quadrant' the second book in Robert's Rich Dad, Poor Dad series.

In my own life I have treated the different investor levels as my personal version of a promotion each time I have moved up from one level to the next. The rewards have been greater investor knowledge, more confidence, better lifestyle and increased cashflow and net worth. The expansion of investor levels in 'Unfair Advantage' has given me more challenges to expand my personal growth and financial understanding over the coming years.

Each book contains historical information which helps put into perspective where we stand economically today.  'Unfair Advantage' looks at the current topic of bank bailouts.  It was fascinating reading about the number of bank bailouts that have taken place since 1971.  Each time the bailouts are bigger and bigger but really only became public knowledge following the credit crunch of 2008.  As I write this we are on the verge of yet more bailouts which could eclipse those of 2008.

In my tweets and blogs I have advised of the coming financial storm.  the storm is brewing and it is a storm so great and powerful it will make the Great Depression of the 1930's seem inconsequential. The aftermath of the storm will affect millions of people.  'Unfair Advantage' is your chance to learn how to get some protection against the disaster about to engulf all our lives.

Unfair Advantage - The Power of Financial Education by Robert Kiyosaki is available in paperback or as a kindle download.  The kindle version is available using the link on the right of this page. If you don't own a kindle, free apps are available for computers, ipads and ipods from Amazon books using the same link.

Wednesday 7 September 2011

Action Man Needed!!

Three weeks ago I had a flood in one of my rental properties caused by faulty workmanship done under a Government Grant Scheme.

An Engineer was required to assess the damage and do an official report.  He was quickly on the scene, within a couple of hours, a 12+ page report was completed.  He informed me that the installation had just run out of the installers guarantee but was still covered under the scheme's guarantee.  It should take a couple of days for his report to go through the appropriate channels and work would then commence to make the house habitable again.

Three weeks later, nothing has happened except I've run up my telephone bill with daily calls and being passed from one organisation to the other each refusing to accept responsibility and do any work.  The gist of the problem being that EAGA, the company running the scheme for the government lost the contract in March and say they don't have any funding available to honour the guarantee.  The new company, NEST, who took over the management contract in April insist EAGA has been paid and therefore it is not their responsibility.

Yesterday, I decided on a new tact.  Find a person who could apply pressure in the right place.

My first call was to Torfaen Council. ( A few years ago they had approached me to start using grant funding. Their problem that all this money had been put in place for landlords to upgrade their properties but no landlords were using the funding.  As I was the largest private landlord in Torfaen they wanted to show they were supporting landlords and encouraging the use of the grants.) While the female operator empathised she could only give me NEST's phone number.

My second call was to NEST and again I was told  EAGA were responsible and I should try being more forceful with them. As if I haven't given them a hard time over the last 3 weeks. The female operator empathised and suggested I contact my MP.

My third call was to the Welsh Assembly where I was finally put through to David. Off came my business woman hat and on went the helpless female hat. David listened to my sob story. 'Well, the buck stops here' he said. 'I'll ring you back within 2 hours'.

Two hours went by - nothing.  Three hours - nothing. Four hours - nothing. Five hours later and my phone is ringing non stop. NEST, EAGA, British Gas, the installation company all eager to get my property rentable again.

In 3 weeks David is the first male I have spoken to apart from the Engineer. Although he didn't manage the two hours timeframe he got action within a day. Is he good at his job? I don't know but how refreshing to talk to someone who would take action and not try fobbing me off.