New Tool for Universal Credit Tenants

Since the introduction of Universal Credit, many landlords don’t accept tenants claiming benefits. Under the old system, housing benefit was paid directly to the landlord so it was impossible for a tenant to fall into arrears. Universal Credit has changed all that and under the new system, the housing benefit component of Universal Credit is paid directly to the tenant. Not surprisingly, the new system has caused landlords many headaches and a recent Residential Landlords Association found that 25% of landlords with UC tenants were chasing arrears.

Tenants and Money
If the tenant is responsible with their money, they hand it over to the landlord when the rent is due, but if they prefer to blow their cash down the pub, the landlord has to wait two months before they can request that an Alternative Payment Arrangement is put in place.

Tenant Budgeting Resources
Often, tenants fall into arrears because they are not good at managing their money. The Department of Work and Pensions (DWP) has created a new online budget tool for Universal Credit claimants. The DWP says the tool is not intended to replace face-to-face contact, but it is available 24/7 and is full of useful information for tenants.

Vulnerable tenants and people without access to the internet will still have access to resources and help in the usual way. However, whether this extra resource will persuade landlords to take on UC tenants is debatable.

Buy for Uni Scheme turns Students into Landlords

A new mortgage deal from the Loughborough Building Society lets students take on the mantle of landlord while they study for their degree. The ‘Buy for Uni mortgage offers 100% finance towards a property worth up to £300k. It mirrors a product sold through the Bath Building Society, but as tempting as it might sound to students who are keen to take a step on the property ladder, it should be approached with caution.

Student Mortgage Terms and Conditions
Any student aged 18 and over is eligible. The property must be located within 10 miles of the university where they are studying and a guarantor must be provided for mortgages with a LTV of 80% or more. The mortgage will revert back to a standard mortgage after three or four years.

Since most students can’t afford mortgage payments, the only way they can earn enough money is by sub-letting rooms to other students. This effectively turns students into landlords. In theory this is fine, but if something goes wrong, for example interest rates rise or the student has a problem collecting rent, the guarantor will be forced to step in and cover the mortgage payments.

The Stress Test
Some critics have described the mortgages as ‘elitist’, as only parents with substantial equity in their home will be able to act as guarantor. Rental income earned from subletting rooms also needs to be enough to cover the mortgage payments plus a bit extra.

Landlord with Mortgages are Struggling

According to research carried out by the Council of Mortgage Lenders, mortgage arrears amongst buy to let landlords are on the rise. The number of people in arrears rose by 6% in the third quarter of last year, which is the first time this has happened since the CML started monitoring the situation two years ago.

Stamp Duty Tax
The government has introduced several key changes in the last year, one of the largest being an introduction of a 3% stamp duty levy on anyone owning a second property. This came into effect in April 2016, which caused a large spike in sales completions in the buy to let sector. Many landlords considering investing in buy to let property rushed into buying in order to beat the 3% charge. Experts believe that at least some of these people made an investment they really couldn’t afford, which is what has caused the rise in mortgage arrears.

Mortgage Interest Tax Relief
The concern is that more landlords will fall into mortgage arrears when new tax rules come into effect next April. From April 2017, mortgage interest tax relief is being phased out, so landlords will pay more tax on their income from rental property. It has been estimated that around 440k landlords will be pushed into the 40% income tax bracket, many of whom will have no choice but to pass their extra costs on to their tenants.

Are you one of these landlords? If so, let us know in the comments section.

Osborne’s Tax Reforms are ‘Immoral’ Says Landlord

A landlord who owns nine buy to let properties has blasted George Osborne’s property tax reforms as ‘immoral’. Chaplain William Ruddle has invested in nine properties over the last eight years, but he is now faced with the prospect of having to sell up to four of them, whilst hiking the rents on the remaining properties.

Landlord with a Social Conscience
Reverend Ruddle doesn’t charge full-market rent for his properties. Instead, he keeps his rents around 10-15% below local market rates. He deliberately targets low income tenants, who would not be able to afford the rents charged by other landlords. This strategy has worked well for Reverend Ruddle and he has enjoyed a respectable income of £15k a year.

Landlords’ Property Income Slashed
Now, with the government’s proposed tax reforms coming into play, Reverend Ruddle’s income will fall to less than £500 per year by 2020, and worse still, he will lose his entitlement to Child Benefit because his rental income will push him into the higher rate tax band.

“Some landlords will see their effective tax rate go up to more than 100 per cent. I’ve got to make people homeless. I’m really angry on behalf of my tenants,” he says.

“At least seven out of my nine tenants believe they have no realistic prospect of being able to buy a property. Having to displace low-income tenants doesn’t seem to be very fair. They don’t have any other options. What’s going to happen to rents?”

Credit Agency Sounds Warning about UK Buy to Let Sector

So far, the chancellor’s tax relief and stamp duty changes have not made any difference to landlords’ behaviour. The sector is still going strong and despite dire warnings, there does not appear to have been a mass property sell-off from landlords. However, credit ratings agency, Fitch, is warning that within two years, the cracks will start to show.

Changes Will Affect Landlord Behaviour
Fitch says the UK PRS is currently in a strong position, with low arrears and voids, combined with a shortage of new housing stock. Despite this, the agency says the recent changes will soon start to affect landlord behaviour and the PRS is unlikely to be as healthy within two years.

According to a report Fitch has made to its investors: “Industry surveys suggest that existing landlords are less likely to add new properties when the tax changes take effect, and some may look to sell. Our gross new mortgage lending forecasts for UK incorporate the potential for the announced changes to slow the growth in BTL origination.”

Bank of England PRS Proposal could Curb Landlords
Fitch is also concerned about a recent proposal put forward by the Bank of England to ‘rein in’ landlord lending, in an effort to control potential instability in the sector.

“The proposal does not set limits on loan-to-value, debt-to-income, or interest coverage ratios [but] if these were adopted, this could make BTL less attractive for landlords if rental yields do not rise sufficiently to offset the impact of such affordability rules,” Fitch says.

Young Brits Resigned to a Lifetime of Renting

75% of young Brits believe they will never be able to afford to buy their own home, according to a survey carried out on behalf of Shelter and British gas. So even though the majority of young people aspire to own their own home, most now recognise that this is an impossible dream and living in the private rental sector is the only way forward.

Housing Shortage in the UK
Not surprisingly, the Chief Executive of Shelter, Campbell Robb, is vocal on the subject:

“We are seeing a generation of people now in their 50s or 60s who are looking at their children, and their children will be worse off than they are. That is the first generation since the Second World War that we seeing that happen to, and that is primarily because of the housing market.”

13 Years to Save for a Deposit
House price inflation is now at 50% whereas wages have only risen by 22% during the same period. Without assistance, it now takes the average single buyer around 13 years to save up a 15% deposit for their first home. In cheaper parts of the UK, this wait drops to around 8 years, but in London, a single buyer would have to save up for 46 years before they could afford to buy a home. Couples are in a better position, for it takes them less time to save up. Two people saving together can realistically expect to have enough money saved in 3.5 years, although in London it would take 8 years.

Are You Protecting Your Deposits?

You might be protecting your deposits, but not all landlords are. According to a survey carried out on behalf of, 284,000 landlords haven’t bothered protecting tenants’ deposits, despite the fact that they are obliged to. This is around 15% of all landlords in the UK, which is an astonishingly high figure.

Landlords at Risk
Landlords who don’t protect their tenants’ deposits are leaving themselves at risk. It is now mandatory to place deposits in a government backed deposit scheme within 30 days of receipt. Landlords also have to give their tenants information about where their money is deposited. And if something goes wrong, the deposit scheme gives landlords (and tenants) access to a dispute resolution process.

Renting is a money minefield and with troubled times ahead for the buy-to-let market, the problems caused by ‘dodgy landlords’ are only likely to get worse,” says Hannah Maundrell from

“While many landlords are doing the right thing and protecting deposits in one of the official government backed schemes, a worrying amount of money is falling through the cracks and far too many tenants are being left vulnerable.”

Compulsory Landlord Register
She is calling for the government to step in and take action, by introducing a landlord register that lists every landlord in England and Wales. Such a scheme is already in place in Scotland and Wales and she believes there is no reason why it shouldn’t work equally as well in the rest of the UK.

Landlords – How Would You Answer This Question…

As we approach the end of the current tax year, it is a time when landlords should reflect on their property business and plan for the year ahead.

If I was to ask you the following question, what
would your answer be?

“Do you have an idea of how much tax you will be paying for profits made in the current tax year?”
Will the answer be:

a) No, I will find out when my accounts are done – probably in January next year. 🙂

b) I have a rough idea.

c) Yes! I know what both my profits are and what my tax liability will be.
Unfortunately, from feedback I get, the typical answer to the question from too many landlords is a).

This answer is very dangerous and can put landlords in a right pickle, especially if their
rental profits are much higher than what has been anticipated. The last thing you want to find out is that you have a tax bill that you can’t afford or will struggle to pay!
Remember: Forewarned is forearmed.

This is where our award winning ‘Landlords Property Manager’ software can help. It does all
the number crunching for you, tells you your profits and your tax liability too just by the
click of a button!

The only thing you need to do is enter your income and expenses!
Not surprisingly, the answer to my question by our Landlords Property Manager customers is c).

Take a look here at the short one-click tax report video demo that is produced from Landlords

Property Manager. I guarantee no other solution on the market will produce a more complete set of records:

You can also download a copy of a sample report here:

Show this to your accountant (if you use one) and he’ll do one of two things:
– Get grumpy because you’ve slashed the amount you’ll be paying him and come up with some *excuse* to keep you paying his fees!
– Be delighted because he can focus more of his time on more interesting tax work (and probably earn more).
Either way, Landlords Property Manager is here to help you get better organised and boost your profits so you can do more.
This article is written by Amer Siddiq, founder of

Want more time and money saving tips for your property business?
Go here to get a free copy of Amer’s Landlords Insider Secrets Report.

7 Golden Tips to Buying your First Home in the U.K

If you are reading this now, I say a big congratulation; I can easily deduce that you are at the verge of buying that befitting home and perhaps start a family – if you haven’t yet. There is no iota of doubt to the fact that buying and living in your own property will give you more rest of mind and increase your chances of getting bank loans and a host of other perks.

Buying a new home in the U.K can be very tricky especially if you are not too familiar with the terrain and business/negotiating modalities involved. Below are some of the most valuable tips that would save you a lot of headaches and make the process smooth.

1. List out (in a piece of paper), all the things you would like to have in the property – and carry this paper along during each tour. This is quite important considering that there a thousand and one available properties online and offline to choose from; you don’t want to spend all day touring

2. Have a clear time-frame for your search. Organize the number of houses you want to see per day or week. Try not to extend it to more than two weeks because the more you see the more indecisive or confused you become.

3. Look at photos from each house and invite your spouse/friend/relative to contribute in eliminating them one after the other.

4. Don’t be over ambitious. The location you desire to live in would generally determine what you’ll find, so remember that always.

5. Buy at once. If you – and your spouse/friend/relative think you have found the perfect house, never procrastinate, just buy immediately; chances are there are others pleased with property and willing to buy too.

6. Before releasing your hard earned cash, make sure to check all amenities that may need fixing and factor it into the price – that’s a wise step to adopt.

7. Don’t throw you money away; make sure the estate agent is genuine by checking with the local council and other regulatory bodies.

If I were to continue, I’d probably be ending up writing a book on what to do or otherwise when buying a home for the first time in the U.K. however, these 7 golden tips would surely see you through any property purchase; just be smart!

Top Tips For Students Renting

As I said in the last blog the DPS (Deposit Protection Scheme) and the NUS have banded together to produce a guide for students renting accommodation. It is full of top tips and I highly recommend you grab one if you or your child is going to be heading off to college this year. For those who are interested in knowing the kinds of things the guide covers I thought it a good idea to give you the top few hints it contains.

  • Never sign anything that does not clearly state how your deposit will be protected and what the process is for repayment.
  • Ask for written proof that the landlord belongs to a Government approved deposit scheme before you hand over a penny.
  • Tell you landlord you expect to receive a receipt for your deposit within 14 days. (Tell them nicely, of course.)
  • Make sure your inventory contains a condition signed and dated and preferably with clear photos.You should be present when this condition report is signed and dated.

It is my strong belief that most landlords are decent people who have the best intentions. But even so these kinds of precautions also prevent misunderstandings. They are  good common sense suggestions.