There has been much discussion of late concerning the cost of renting a property in London. Although rental prices have risen in many parts of the UK, which is a reflection of the demand for rental homes, rental costs in London are far higher than anywhere else. In London, demand outstrips supply. As a consequence even tiny studio flats barely large enough to house a hamster are £700 per month. But by any standards, the next property is a little bit more than just ‘expensive’.

Exclusive Knightsbridge Penthouse
A six-bedroom penthouse apartment in exclusive Knightsbridge, overlooking Hyde Park, is available for short term and long term lets at a staggering £260k per month. Although if you need a roof over your head for a longer period of time, say for a year, then the cost of renting this apartment drops to a far more reasonable £25k per week.

Lifestyles of the Rich and Famous
The property is perfect for A List celebrities, Qatari billionaires, Russian oligarchs and visiting royalty. It has a beautiful bespoke designed interior, five bedrooms, five bathrooms, a library, a screening room, a gym, a massage room, several large terraces, and two reception rooms. You can even enjoy his ‘n’ hers bathrooms as part of the extensive master suite.

Nearby amenities include Harrods – you could even order in your groceries instead of mixing with the riff-raff in Harrods Food Hall – the West End, and of course Hyde Park should you wish to enjoy a spot of fresh air.

Student accommodation pods have been heavily marketed in recent years as the ideal way to take an initial step on to the property investment ladder. The deals often sound very attractive and many amateur landlords are seduced by the idea of a guaranteed rental income with none of the hassle involved in managing a buy to let property. Many are sold as a ten-year investment with guaranteed rental yields, but are these deals really too good to be true?

Reasons to Invest in Student Pods
One of the main selling points of student pods is that instead of having to deal with irksome student tenants, landlords can buy a property and then hand over the day-to-day management to an agent while the money comes rolling in. Student pods are also sold as investments with great capital growth potential.

Disadvantages of Student Pod Investment
There are some considerable downsides to investing in student pods and investment specialists are warning landlords to take predictions of capital potential and income with a large pinch of salt.

Landlords Beware
Student pods cannot be bought with a buy to let mortgage and developers eager to sell often overstate rent predictions. There is also a large question mark over capital appreciation since student pods are typically leasehold and therefore their value will depreciate over time. In fact student pods are very highly priced when compared to other residential properties and have no re-sale value, so landlords need to consider whether such an investment is right for their needs before they hand over cash to a persuasive developer.

Joint research carried out by Endsleigh Insurance and Trustmark has revealed that a surprisingly high percentage of UK landlords do not consider their lettings business a commercial enterprise – which could go some way towards explaining why so many of them have yet to file a tax return declaring their rental income to HMRC!

Accidental Landlords Booming in the UK
The study found that nearly 85% of the 1500 landlords currently operating in the UK are ‘accidental’ landlords. Many end up letting a property out because they can’t sell. Others start letting a property because they have moved in with a partner, moved abroad, or relocated with work and would like to keep a base to come back to at some point. Only 17% of landlords questioned say they began a buy to let venture with the express aim of making money. Of these, 15% bought a buy to let property as an investment for another family member.

Beware the Risks of becoming an Accidental Landlord
Becoming an accidental landlord is, however, not a risk-free venture. If the property is financed with a mortgage, it is very important that you tell your lender you are letting it to tenants. Although being upfront about it could mean you are switched to a higher interest rate loan, if your lender finds out you have breached your loan contract, they could demand you pay the outstanding balance in full. Don’t assume the lender will never find out – many are checking online to make sure borrowers are actually living at the property. Letting a home without the permission of the mortgage lender will also invalidate your insurance policy.

Green Deal funding has only been available for six weeks, but already the sums on offer to landlords and private home owners has already been slashed by the government. At the start of the scheme, people could apply for a maximum of £7,600 towards energy saving measures. However, despite the fact that the take-up was extremely high – £50 million of vouchers was claimed in the first few weeks – the Department of Energy & Climate (DECC) has reduced the amount of money households can claim.

NLA Critical of Government Funding Slashed
“Just as the Green Deal looks like it will finally succeed, the Government seems determined to sabotage its own policy,” says the National Landlords Association.

Solid wall insulation offers the biggest incentives. Solid wall insulation is mostly found in older properties, and with the biggest number of properties containing solid wall insulation in the private rental sector, landlords are going to lose out with the reduction of Green Deal funding.

Solid Wall Insulation in the Private Sector
“Lowering the incentive for solid wall insulation to £4000 will increase the contribution that the landlord will have to make, and inevitably push more projects beyond the capacity or willingness of the landlord to fund them as a result. As the greatest proportion of solid wall properties are in the private rented sector this move therefore risks exempting a significant proportion of homes from meeting the energy efficiency targets set by DECC.”

The NLA is advising all landlords with a draft Green Deal plan “to act immediately”. You have until the end of July 24th to claim your cash back.

Despite the fact there are believed to be an estimated 1.4 million landlords in
the UK at the current time, only 500,000 have contacted HM Revenue & Customs to
register their income. Many of the landlords own second homes or holiday homes,
which they let out to generate some extra income, but this doesn’t excuse them
from paying tax on their profits.

HMRC Targeting UK Landlords
UK accountancy firms are warning landlords that HMRC is targeting them. The
government is concerned about the estimated £550 million in unpaid tax and is
trying to do everything in its powers to recoup the money. Landlords who have
failed to register with HMRC face being investigated and fined if it is found
that they have unpaid tax.

Many buy to let properties have been bought in the recent property boom and
although first time buyers are finding it hard to secure funds, older buyers and
those with a large deposit have had very little problem. Landlords purchasing a
property with a buy-to-let mortgage only have to provide a decent deposit and
show that they can afford the repayments based on the estimated rental income of
the property.

Bank of England to Look at Buy To Let Lending
However, the Council of Mortgage Lenders is warning that landlord mortgages
could soon be coming under the scrutiny of the Bank of England. There are also
tough new EU rules coming into effect soon, which will also affect buy-to-let
lending, so landlords may soon find it a lot harder to secure funding.

According to the National Landlords Association (NLA) there are three types of landlord: professional, amateur and accidental. Amateur landlords run their property portfolio part-time, typically using this extra income to supplement their main job. However, research carried out by the NLA has revealed that there are now more amateur landlords in the UK than ever before.

What is the Profile of a Part Time Landlord?
A typical part-time landlord has four properties and enjoys an annual gross income of £31k, of which a quarter is spent on maintaining his properties. More than 40% of amateur landlords have bought their properties using buy to let mortgages and most of them say that it is now easier than ever to secure finance.

Boosting the UK Private Rented Sector
An army of private buy to let landlords currently boosts the UK housing market to the tune of £20 billion and thanks to historically low interest rates many more are likely to be jumping on the bandwagon soon. Indeed, buy to let investment is viewed as a good way of supplementing a pension and/or saving for the future, but despite the apparent buoyancy in the buy to let market amongst amateur landlords, the NLA has a few words of warning to impart:

Being a landlord can be very rewarding but it’s vital that anyone considering a move in to buy-to-let, or indeed looking to expand their portfolio, is thoroughly researched and aware of what it involves. A part-time landlord typically has a day job so it can be a very challenging task to keep on top of managing and maintaining homes for people whilst juggling the demands of daily life.”

An MP for Brent is trying to table proposals in Parliament that will aim to prevent landlords from evicting tenants in retaliation for complaining about properties or asking for essential work to be carried out. She argues that too many landlords are using ‘retaliatory evictions’ as a way of getting rid of tenants who complain. But is this true and what would happen if the proposals go ahead?

Section 21 Notices Could Be Withdrawn under New Proposals
MPs say that retaliatory convictions are a real problem and security of tenure is at risk. If the government agrees with the proposals, there is a danger that Section 21 notices will be withdrawn and landlords will find it increasingly difficult to evict problem tenants.

The Role of the Tenant in Evictions
The RLA is concerned that the subject of retaliatory evictions is not as clear-cut as MPs would like to believe. As a result of a survey carried out on RLA members to find out the reasons why landlords evict tenants, as you might expect the most popular reason for evicting a tenant is because they haven’t paid their rent. But the next two most common reasons for evicting tenants are anti-social behaviour and property damage.

It is already hard enough to remove problem tenants who threaten neighbours/landlords and cause damage to properties. Removing Section 21 notices will only make the process of evicting problem tenants more difficult and could discourage would-be landlords from entering the buy to let market, which is bad news for tenants and bad news for the UK property market.

An infamous payday loans company has been in the news in the last few days after it emerged that the company had been sending out threatening letters from a fake law firm. HMRC doesn’t need to send out fake letters – real letters from them are normally threatening enough, so if you are a landlord who has received a terse letter from HMRC reminding you to report unpaid tax, it is a good idea not to ignore it!

Property Let Campaign
HMRC is running a Let Property Campaign. There is a disclosure channel for landlords who wish to come clean and sort out their tax affairs. If you use it, you can take advantage of reduced tax penalties for declaring previously unpaid tax. This channel is available for landlords until next summer. Landlords who have sold property or gifted property are the main targets of the campaign, but it also applies to owners of holiday lets or second homes.

The taxman has all kinds of methods at its disposal for collecting information on property investors and landlords. It trawls records from letting agents, the Land Registry, Housing Benefit records, and many other sources.

HMRC Comments
According to an HMRC spokesperson: “The message to property owners who have not paid their tax is HMRC knows about you and will make sure you pay the right amount of tax on rental profits or chargeable gains – and if you don’t tell us the penalties will be tougher if we have to come after you.”

A website founded in 2008 is proving popular with landlords in London, despite the fact it was designed as a holiday let tool. Airbnb lets homeowners list a spare room or even their entire house as a cool place to stay in one of many cities across the world, the idea being that they use the website to earn some extra cash. However, all is not as it first appears…

The Guardian has analysed data from Airbnb and discovered that a large number of ‘homeowners’ listed on the website are in fact professional and semi-professional landlords. Of the 13,000 listings on Airbnb, just over half relate to an empty property rather than a single room. More than 1,500 of the people using the website have multiple property listings; some have more than five properties.

Worried Hoteliers
This is causing concern amongst hoteliers in the city. The British Hospitality Association (BHA) says: “We are very concerned that large numbers of private homes are being let on a semi or even permanent basis to tourists because it’s unlikely that any of these properties have ever had any fire risk or health and safety checks.”

Buy to Let Investors
The BHA believes that many of the properties are being run by buy to let property investors who are trying to pull the wool over the tax man’s eyes by not declaring that they are running a lettings business.

However, Matt Griffith, associate fellow at the IPPR thinktank isn’t too concerned: “If Airbnb is being used by a professional group of landlords to provide hotel accommodation using residential property then this could potentially have implications for the housing market. But it would have to grow a hell of a lot to have any significant displacement effect.”

Experts reckon that 40% of Londoners will be renting by 2020, mostly as a result of the impossibly high cost of property in the capital. But with average rents currently around £1300 per month and a lack of affordable properties, it is becoming increasingly difficult for lower paid workers to find somewhere to live.

A Raw Deal
Londoners may pay more than anyone else, but they often get a raw deal. Rogue landlords are happy to part them from their cash in return for providing overcrowded rental properties that are not fit for human habitation. The London Rental Standard, otherwise known as a ‘Boris Badge’, aims to improve things, but in the meantime many tenants are turning to live-in rentals instead.

Flexible Living in the City
Renting a flat or room in a shared house usually involves handing over a shared deposit and a significant sum of money in rent every month. Tenants may also be tied into a one-year tenancy agreement and required to give one month’s notice if they want to leave. Live-in tenancies are far more flexible and a lot cheaper. Tenants have their own room and use of shared facilities. It won’t suit everyone, but if you find the right live-in landlady or landlord, it is a more affordable solution.

Landlords can rent a room and enjoy up to £4,250 tax free under the government’s Rent a Room scheme. But remember, earnings over this amount must be declared under the Self Assessment scheme or you could end up falling foul of HMRC.