Category Archives: Property Management

Comments, articles and discussion by landlords and investors

Landlords Responsible for Misappropriated Tenant Deposits!

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Eric Walker, managing director of Bushells, has come out and stated what many of us have been thinking; there are massive flaws in the tenancy deposit legislation.

Any system that holds one person financially responsible for another’s wrongdoing must be inherently unfair. Most people would agree with this but it does not stop the government holding landlords responsible for tenants’ lost deposits even when it is clearly the letting agency that is at fault.

Mr Walker makes a very good point when he recommends that the letting agents should have to submit to regular auditing. Anything less, potentially, puts the poor landlord in an invidious position.

He said “The real time-bomb is where agents hold the money in their own account and register it with a scheme, then for whatever reason cease to be members of that scheme. This leaves the landlord with a huge liability in the event that the tenancy is extended or renewed, as the deposit is legally no longer registered.”

Clearly this is not a situation that can be allowed to continue. Letting agents are getting away with losing, spending or just vanishing with tenants’ cash and landlords are being left holding the financial baby. It is nonsense and can surely be fixed.

Excellent Advice Regarding Sub Letting!

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Mr. Paul Shamlina, of Landlord Action, has many years’ experience dealing with the issues of sub letting and overcrowding. They are often part of the same problem and he has some great advice for landlords on the subject…

His first recommendation is to foster a good relationship with neighbors and caretakers around the property. It is these people that will notice if there is anything fishy going on, and they are much more likely to keep you informed if you have a good relationship with them. Vigilant observers are your friend!

As I said in the last post, it is a very bad idea to approach the sub tenants for money directly but Mr. Shamplina has this to say on the matter:

“I would suggest that if they (landlords) are happy for them (sub tenants) to remain, they cut out the middle man by going through the proper procedures to have the tenancy negated, then draw up a new tenancy for each resident. Under no circumstances should they accept payment of rent until the matter is sorted.”

I could see the cutting out of the middleman part of that advice being very satisfying.

The last piece of advice that Mr. Shamplina has to offer concerns avoiding getting into this situation in the first place. Only deal with people with photo ID. This is not foolproof, of course, but a lot of these false tenants are involved in organised crime so they will not be keen for you to know who they really are.

Sub Tenants a Nuisance for Landlords

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The recession sure has a lot to answer for in the property market. In the last 12 months there has been a fifteen percent rise in the number of overcrowding cases that Landlord Action have had to deal with. London is the worst hit and, not surprisingly, the director of Landlord Action is blaming the economic downturn.

Paul Shamplina says “The most common cases appear to be organised gangs looking for an easy money making scam. They take out a tenancy and then sublet to multiple occupants. The worst case we have dealt with was a three bedroom, one bathroom, semi detached house in North London which was found to have had 53 occupants, all illegal immigrants.

He goes on to describe frankly horrifying conditions including mattresses stretching from wall to wall.

Other terrible cases he talks about are enough to send a shiver down any landlord’s spine, with one woman finding that 18 bunk beds had been put into her lovely property and it was being used as a youth hostel. A website in China was advertising a space in the flat for £20 a night.

Mr. Shamplina highly recommends caution if you are a landlord who finds their property being put to these kinds of uses. Clearly you will be outraged but approaching the sub tenants themselves and asking for payment may open you up to a legal nightmare.

Mr. Shamplina has a lot of good advice for landlords on how to avoid this situation, and I think it is worth spending a little time on so I shall elaborate in my next blog.

The Rise of the Professional Landlord

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CHL Mortgages released its quarterly survey last week to reveal a growing confidence in the property sector that has seen the return of the professional landlord.

The survey is designed to canvass opinion among landlords on a regular basis and allows us to see how they are thinking about the current state of affairs and the future. Of those that responded to this quarter’s questionnaire eighty one percent were keen to express the opinion that the future looks fairly rosy, as far as they are concerned.

The most interesting part of this attitude is the reason that they gave for this change. In the opinion of those surveyed, the credit crunch has lead to the BTL market shedding its ‘get rich quick’ image and returned to being a domain for professionals.

They believe that pressure was put on the market by amateur landlords flooding in to try and make a quick buck but has been relieved by the recession, and many are grateful for that much at least.

The survey revealed that 58% of respondents considered their property portfolio to be a profession rather than a hobby, and it also showed a strong preference for managing their properties themselves rather than allowing a letting agency to do so.

It is a good feeling to know that at a time where the buy to let sector is set to become very important it is in the hands of professionals

Let’s Follow EU Guidelines on VAT!

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In the UK many of us do not always see eye to eye with some of the recommendations of the EU. But when it comes to their recently agreed maximum 5% tax rate for renovation and repair work, landlords are right behind them.

The UK Government needs to implement this as soon as possible. This is a unique opportunity to encourage landlords to get properties up to spec. Given that a lot of the PRS (private rental sector) deals in older properties could do with a little work, this has to be viewed as a very good thing.

Of course, it is not to be ignored that a drop in tax, which will lead to an increase in renovations, will also stimulate the economy by providing work. Tradesmen have had a hard time of it lately with many people shelving any plans that they had for home improvement when the crisis hit. This would get a lot of these businesses back on track. Not to mention the huge boost that will be given to the manufactures of all kinds of building supplies.

The Government needs to stop dragging its feet on falling in line with the EU requirements. There is much to be gained and very little to lose. I am sure they can find a way to recoup any monies lost through the drop in tax.

They usually do!

Landlord’s Support Review of Water Debt

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As most landlords are no doubt aware, disconnection of water for non-payment has not been an option in this country for over a decade now. While most of us understand why that is the case, there is no doubt that this law has led to a massive rise in bad water debts. The figures are in the region of a rise from £684 million to a whopping £1.2 billion.

No wonder then that The Residential Landlords Association is backing the Walker Review’s proposal for sanctions against non-payers. They are also vocal in their support of changing the rules so that water users are obliged to give their personal details when applying to be supplied.

“The statistics show the ridiculous state we have reached,” says Richard Jones – lawyer for the Residential Landlords Association

The RLA are, however, quite concerned as to how the new sanctions will be implemented. Though delighted that the Walker Review listened to the many recommendations of the RLA and most significantly agreed that landlords should not be held responsible for water charges in shared houses, they are concerned that the Government is taking the wrong tact with the sanctions.

The Walker Review indicated that non-paying tenants could be pursued and ultimately jailed for failure to pay for their water. This has met with disapproval from the RLA.

“At the moment our prisons are overflowing so it does not seem a good idea to add to the prison population when there is a far better alternative. It is possible to install trickle valves to reduce the water supply to a property while still allowing a sufficient supply for hygiene purposes.” Mr Jones said.

It will be interesting to see how this progresses.

Electrics Safety A Must!

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According to Government figures there are 30 deaths in the UK each year due to faulty electrics. Statistics show that 20 percent of fires are also started by electrics on the blink.

Figures for the fires bring the total deaths last year, blamable on faulty electrics, to 47 with a shocking further 1000 injured. These are clearly very significant figures and the fact that they are highly preventable just makes them all the more tragic. Landlords in the UK are being urged to carry out comprehensive and regular checks on their electrical systems in a bid to try and reduce the figures.

The number of electric appliances in rental accommodation has risen steadily over the years, with everyone having personal stereos and TVs plus an increase in the number of electric stoves. That is why PAT, or Portable Appliance Testing, has become such a vital part of every UK landlord’s responsibility.

As well as preventing tragic accidents, it pays landlords to bear in mind it is very possible that their house insurance will be void if these tests are not carried out on a regular basis.

Nobody wants a preventable accident taking place on their property and PAT will help you to eliminate the chances of this happening. It is well worth the extra hassle to make sure that you have peace of mind on this subject.

New Laws Will Govern Landlords in 2010

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We have known it was coming for some time but the news that laws governing landlords are nearly upon us.

These laws, which are designed to provide a better service for council tenants, will come into effect in April 2010. They are apparently supposed to make sure that the landlord gives the tenant more rights over the management of their homes, keeps maintenance to a pre-arranged schedule and, quite bizarrely in my opinion, does more to tackle anti-social behavior.

I will have to investigate further exactly what this means but on the face of it landlords being responsible in any way for anti-social behavior sounds like nonsense. I could have sworn that is what the police were for and that the government we elected should be responsible for making sure it is done.

Apparently, the Government has appointed the Tenant Services Authority (TSA) to keep check on the new laws. Peter Marsh, Chief Executive of the TSA, said:

“We welcome the Government today confirming that our powers will be extended and the standards we’re developing for landlords will apply to local authorities as well as housing associations from April next year.”

This seems very handy for the government and does smack a little of a huge washing of hands. I may stand corrected once I have learned a little more about it. I will keep you up to date on this one.

Causing A Stir: Controversial ‘Empty Property Tax’!

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British Union boss, Brendon Barber, has come up with a highly innovative and controversial proposal designed to ward off the housing crisis that many believe Britain is heading for.

Under the terms of the radical proposal that Barber is believed to have put forward for the consideration of Alistair Darling, properties that are allowed to stand vacant will attract an ‘empty property tax’. The clear purpose of this proposed new tax is to encourage landlords to sell or rent their property as quickly as possible, thus reducing the housing shortage.

The proposal would affect nearly a million properties in the UK and if present figures were to remain the same then the tax would be set to raise 5 billion in additional revenue. One can only hope that that revenue would then be put back into the property industry in an endeavour to head off the predicted shortage. It is hard not to have doubts on this point, however.

If the goal of the proposal was achieved then it is to be assumed that the tax revenue raised would be much lower than anticipated but that a lot of living space would be bought back into the market earlier than the owner had planned. This does presume, however, that people are choosing not to rent or sell their properties rather than being forced into that stance. It is a troubling thought that landlords who cannot find anyone to rent a vacant property could also be forced into paying out more money in tax. It will be interesting to see how this proposal is greeted by Mr Darling.

Letting Franchisee Gets Tough

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In recent months the number of letting agencies has been on the increase. It is not surprising as property sales have been at the low end and there have been more accidental landlords entering the market.

However, be warned that being a letting agent is not another ‘get rich quick scheme’.

One of the leading Franchises has recently been terminating franchises because the franchise owners haven’t been playing by the rules.

The license of Rochdale franchisee has been terminated by Martin & Co for allegedly failing to make timely rental payments to landlord clients.

It happened when Martin & Co managing director Ian Wilson and a team of colleagues, visited the franchisee on October 1, which is when his license was terminated. It was claimed the  franchisee was taking longer than the seven working days which is the standard time the company requires franchisees to pay clients.

Before this was the license termination of the network’s Chester franchisee, who Wilson alleges is responsible for the removal of client funds.

So, in short, if you are thinking of becoming a letting agent or are thinking becoming a franchise then make sure that you know what your responsibilities will involve!