Why you must track your portfolio!
Hey guys,
It doesn't matter how many properties you have in your portfolio, there are some things that you just have do which are as important as paying the mortgage each month or receiving the rent. You see, when you buy leasehold property, you'll normally have two other things that you must do: pay the Ground Rent and Service Charge.
Recently, I had a new client, Tina, who was about to start investing with us when she received a County Court Claim Form in the mail. It was from a property she had bought 18 months previously but for which she had never paid (or been instructed to pay) service charges. So, "out of the blue" she received a County Court Claim Form.
That's the form that you receive right before you end up in court for non-payment and have the dreaded CCJ or County Court Judgement against your name.
Now you may be saying why didn't the management company just send an invoice? Well they had. Directly to the property's address, not to Tinas' home address. The invoices and reminders simply never got to her.
The reason the claim form got to her was because the County Court uses electoral roll data and this is why it is so important to be registered on the electoral roll.
Let me say that again a little clearer: you need to be registered on the electoral roll so that you can correct problems or defend claims. And here's why: even CCJs can be removed permanently as long as you pay it within 30 days of it going on your file, thus saving your valuable credit report from years of tarnish and torment.
Once you go over the 30 days that's it it will be on your file permanently and mark my words it will make it very hard to borrow for anything.
So how did Tina's mail go to the property address of her buy to let and not to her home? Well, either the solicitor didn't instruct the correct address or in this case, the property company and broker that Tina used got her a 95% mortgage on a residential basis not on a buy to let basis. So the solicitor did the correct thing in this case.
They are some valuable lessons here. Ground Rent, Service Charges and buildings insurance should always be paid and always make sure that you know who is responsible for the management and approximately when you will be required to pay them. More often than not you will be paying either by monthly standing order or every 6 months.
So, if you've bought a property in the past 6 months and you have not received a bill and/or you don't know who manages the ground rent or service charges then may I suggest that you call the aftercare number of the developer or speak with your solicitor and find out?
Live with passion,
Brett Wood