In an attempt to drive up the standards of student properties in the city, Oxford City Council has changed the rules for landlords of smaller HMOs (houses of multiple occupancy). The new licensing scheme for shared houses is the first to be introduced in the UK, and since at least four thousand smaller properties in Oxford are currently let to groups of students, a lot of landlords will be affected by the change.

Each landlord of a small HMO must register his or her property with the council or risk being fined up to £20,000. Upon registration, a council team will then inspect the property to make sure it meets fire, health and safety regulations, and if it does, a HMO license will be issued. Tenants of smaller HMOs will also be given the opportunity to report their landlord if they deem their living conditions to be less than acceptable, and if a landlord is subsequently found to be in breach of the tough new guidelines, they could end up being taken to court and awarded a hefty fine.

Whilst some landlords might not be too pleased at the new scheme, it is definitely a step in the right direction for tenants living in Oxford. Houses of multiple occupancy have long been associated with sub-standard living conditions, which only serves to tarnish the reputation of decent landlords. Hopefully now the days of damp, squalid, and dangerously unsafe properties operated by cowboy landlords will soon be a dim and distant memory because, as one local councillor said, “there is nowhere left to hide…”

According to the BBC news, landlords with properties in Brighton could soon be forced to pay £450 if they choose to let their properties to students. This move is part of the local council’s bid to expand the current Houses in Multiple Occupation (HMO) licensing scheme as a way of controlling noise and litter pollution in student areas of the city and improve the overall level of student accommodation.

Under the current rules, a HMO license only applies to three story dwellings with five or more sharing the living accommodation, but Brighton council wants to expand this to include smaller properties in specific areas of the city. Unsurprisingly, student representatives are not too happy about the proposal. The president of the student union at the University of Sussex thinks local landlords will simply pass on the increased cost to their student tenants and rents will go up, which will force students out of the city in the search for affordable student accommodation.

However, the local council leader, Bill Randall, is adamant that the proposal will benefit the local community and reduce the number of incidents related to students living in the city, although he is quick to point out that not all students are the cause of problems in Brighton.

Personally, I’m not sure how charging landlords of smaller properties for a HMO license will solve noise and litter issues as some students are always going to cause problems, irrespective of where they live. What it WILL do is discourage smaller landlords from letting their properties to students.

There have been a few important changes made recently in the way LHA benefits are paid and, as I have discussed on previous blogs, many landlords with social housing tenants have been experiencing difficulties with rent payments. According to recent research, more than 87% of UK landlords with social housing tenants have had problems with late rent payments, and in some cases no rent payments at all.

Obviously, with the current economic conditions so dire, issues with rent are not restricted to the social housing sector (more than half of all landlords are seeing an increasing number of tenants struggling to pay their rent), but the problems are definitely more pronounced with social housing tenants.

Changes to the way housing benefit payments are being made are obviously having a negative effect on many tenants’ ability to pay their rent; in some cases payments have been reduced and the tenant is being forced to fund the difference. The government also changed the way payments were calculated last year and for many the shortfall between rent payments and housing benefit payments increased.

How is this affecting elderly tenants?

Elderly tenants are amongst the most vulnerable in the private rental sector. Many of them have no additional income and no way of earning extra cash, and if they are relying on income from savings, interest rates have plummeted in recent years, causing diminishing returns in investments. This, coupled with rising fuel and food bills, has led to increasing hardship for the over 60s in social housing. So if you have elderly tenants and they are struggling to pay the rent, it might be a good idea to cut them some slack.

When a tenant moves into a property, landlords have an obligation to inform the utility companies (gas and electric) about their tenant’s identity, so if the tenant subsequently does a moonlight flit leaving unpaid bills behind, the utility company has a record of who they are and is in a good position to trace them. At the moment, however, this is not the case with water companies and there is currently estimated to be around £1.6 billion of water debt caused by absconding tenants. The water companies are becoming increasingly fed up with this state of affairs and the Government’s Environment Minister has now decided to look at ways to tackle the problem in a bid to reduce the water debt.

One suggestion put forward is to make landlords legally responsible for passing on information about tenants to the water company, with the alternative being to adopt a more voluntary approach and hope that landlords do the necessary.

This might seem like a pain if you are a landlord with a high turnover of tenants, but it is in everyone’s interests to try and reduce the water debt left behind by irresponsible tenants. A great deal of debt has been written off thus far, but the water companies have to recoup their losses somehow, and inevitably this leads to price hikes across the board — which affect all of us.

What can landlords do to help?

Always inform the utility companies (including the water company) about a change in tenants at any of your properties and include personal details and a forwarding address if possible.

If you own any properties in an area at risk of flooding, you could be facing the prospect of being unable to find insurance cover on them fairly soon. Thanks to the Government’s “statement of principles” the insurance industry is being forced to insure properties in high-risk flood areas until June 30th 2013. This will inevitably cost them a great deal of money in insurance claims since around 25% of properties in the UK have been built in high-risk flood areas. Consequently, insurance companies are now frantically trying to get rid of any flood risk properties on their books in order to minimise the potential costs involved.

How will this affect you?

Should you own a property on a flood plain, or one that has previously been affected by flooding, you could find yourself facing an astronomical renewal premium on your buildings insurance. Some property owners have reported that their insurance company has offered to renew the buildings insurance, but only if they are willing to accept an insurance excess of £20,000. Others have been unable to find an insurance company willing to insure them at all.

What happens if I can’t get insurance on my properties?

Without insurance, you risk being in breach of any mortgage on the property and if you want to sell at a later date, the overall value of the property is likely to be considerably reduced.

So always check whether a property is a known flood risk before you buy, and if it is, walk away!

According to a recent survey carried out across UK landlords, those who accepted tenants in receipt of housing benefit were struggling to collect regular rent payments and nearly 90% of those surveyed reported serious issues with late or non-existent rent payments in the last year.

Why is this happening?

The government recently changed the housing benefit rules to give tenants more freedom over how they receive their benefits payments. Housing benefit used to be paid directly to landlords, but tenants are now entitled to have their money paid directly into their own accounts, which puts the onus on them to pass the money on in the form of rent. Clearly this is not happening in the majority of cases and landlords are struggling to deal with late payments or tenants who simply do not want to pay their rent at all.

And to make matters worse, the local authority will not pay housing benefit payments directly to a landlord until the tenant is at least eight weeks into arrears—which is not much use if the rental payment is intended to cover a mortgage!

How can you prevent this from happening to you?

If you choose to accept tenants in receipt of housing benefit (and around half of those surveyed said they preferred not to rent their properties to tenants on benefits), it is worth insisting on a larger deposit up front to reduce the risk of rent arrears. Alternatively, ensure the tenant has a guarantor in place in case they decide not to pay the rent at some point in the future.

The number of landlords looking to invest in buy to let properties is set to rise again this year, which means there is increasing pressure on the existing housing stock in the UK. Consequently it is much harder to find attractive properties in good condition at the right price, so more and more landlords are being forced to consider older properties that require work before they are suitable for letting.

Should you be wary of older properties?

It is very easy to be seduced by a cheaper older property. Years of DIY property development programmes have convinced lots of us that doing up an older house is a fast track way to make a fortune, but unless you have the knowledge and available funds to fix the potential problems you might encounter, you could find yourself seriously out of pocket with a house that needs so much work it is likely to be uninhabitable for months.

The RICS has recently issued a warning to landlords about the potential dangers in investing in older properties. Issues such as dry rot, fractured support beams, subsidence, rising damp, and a host of other problems common in older properties can cost tens of thousands of pounds to put right—and that’s before you have even thought about adding a modern new kitchen or bathroom!

Personally I love older properties—they have a lot more character than a modern estate house—but if you are considering investing in an older house in need of modernisation, make sure you pay out for a buildings survey before you buy. It will cost you money up front, but it could save you thousands in the long run.

We all know the importance of a thorough inventory but, according to the Association of Independent Inventory Clerks, many landlords are submitting inventories at deposit scheme adjudications that are next to useless, which inevitably leads to them losing their case—and the deposit.

So what makes a good inventory?

Photographic and video evidence is simply not enough. You must include a detailed written report alongside photographs and/or video evidence of the condition of the property, before and after the tenancy. It is also useful to keep copies of invoices deducted from the deposit for cleaning contractors, gardening contractors, and any other tradesmen you employed to restore the property back to its original condition.

What else should landlords do?

An inventory should be signed and dated by the tenant when they check-in to the property, although an undated inventory might still be accepted by the adjudicator if there is evidence to show the tenant was given a copy when they checked in to the property. The inventory can then be used at check-out to establish an accurate snapshot of the property condition. If you or your letting agent fail to do a thorough check-in and check-out, you will not have a leg to stand on if your tenant decides to take you to court in an attempt to get their full deposit back.

How can new landlords ensure they have an adequate inventory?

If you are a new landlord, it is probably a good idea to have your inventory compiled by a professional inventory clerk, which is what the tenant deposit schemes recommend.

So far this winter we have been very lucky with the weather—apart from some gale force winds. The average temperature has been fairly mild and we have had very few frosty mornings as a result, but judging by the weather forecast today, we are in for a cold spell within the next few days, so before you end up cleaning up the after effects of cold-related damage, think about taking some simple steps to protect your properties from the cold weather.

Plumbing is a major disaster area when the mercury falls. Inadequately insulated pipes freeze up and then burst once the temperature rises. The end result of this state of affairs is usually a flood, which can cause thousands of pounds worth of damage and leave a property uninhabitable for months. The best way to prevent a burst pipe is to ensure any vulnerable sections of pipe have plenty of insulation on them, but if the property is vacant for any length of time, it is a good idea to leave the heating on, albeit set to a lower temperature than normal. This will help to prevent any burst pipes indoors.

If the worst DOES happen and you are faced with a flood in one of your properties, contact your insurers and try to organise remedial repairs as soon as possible. The longer you dither over sorting the problem out, the more long term damage will occur—wet carpets can be dried out, but if they are left untreated for too long, they will go mouldy and rot the floorboards beneath.

On the face of it, 2012 looks like it could be another bumper year for buy to let landlords, whether you have been in the property game for many years, or you are just about to buy your first investment property. But although the rental market is definitely increasing as more and more people decide to rent rather than buy, it is worth remembering that the current difficult economic conditions could have a number of knock-on effects as time goes on.

The credit crunch is affecting all of us. The cost of living is increasing almost daily, but even more significantly, the level of unemployment nationwide is also increasing. Jobs are no longer safe, and of course this will inevitably have a negative effect on the buy to let market.

Despite the general feeling that buy to let investment is a fantastic opportunity in the current market, there is also some suggestion amongst a few experts in the industry that the struggling UK economy will eventually lead to a rise in rent arrears caused by rising unemployment, evictions, and a fall in the average rent across the board, and since rental income services buy to let mortgages, landlords might end up in arrears themselves if they are unable to meet their monthly repayment on the loan.

Recent figures indicate that rent arrears were up by 20% at the end of 2011 and rental payments are becoming more expensive than mortgage payments, so keep a close eye on the fluctuating market conditions in the buy to let market as the outlook might not be so rosy in the long term.