According to recent research conducted by a large landlord mortgage lender in the UK, the average buy to let landlord fits a particular profile. So if you fit this profile, you are the average landlord!

An Average Buy to Let Landlord

• Earns just under £60k per year, which is double the average salary

• Has a property portfolio of around nine homes, which are worth £1.2 million

• Relies on buy to let mortgages to fund his property investment businesses (66% of respondents had mortgages in place)

• Enjoys an average return of 6.2% – 6.7%

• Is positive about the future of the buy to let market

Phil Rickard, the head of BM Solutions, the mortgage company that commissioned the survey of buy to let landlords, said: “It’s easy to see why people are attracted to the buy-to-let market; it offers a tangible investment which can provide the long-term returns that some other assets won’t.

“For those people considering the opportunities that this market presents it is however important to understand the financial and legal commitments being a landlord brings and to ensure that you undertake the right level of research and due diligence to increase your chances of success.”

Buy to Let Landlord Surveys
Another recent survey revealed that landlords are more likely to invest in buy to let properties in their own neighbourhood, which indicates that landlords are keen to invest in their local communities. Landlords also look at other key features, including the current housing market, whether the area is served by public transport, and what tenant demand is like, all of which are crucial factors when you are running a property rental business.

Student properties have historically offered good rental yields for landlords, but according to HSBC, student ‘housing cities’ are now the biggest buy to let hotspots in the UK.

What are Student Housing Cities?
Student Housing Cities are purpose built blocks of accommodation strictly for student habitation. They are often new build and landlords are asked to make an investment of between £40k and £60k per room. A developer usually takes care of the day-to-day management student city properties, which can be a big bonus for many landlord investors.

Top Student City Hot Spots
Cambridge, Oxford, Manchester, Southampton and Nottingham all feature in the top ten of cities most likely to give you a good return on your investment, but despite all the favourable advertising claims made by property sellers, experts are warning landlords that investing in student housing city properties is not without its risks.

“Despite the high headline yields often touted, student accommodation funds are high risk,” say financial advisers, Chase de Vere. “They are usually based offshore, are unregulated, have high charges and can suffer from poor liquidity, meaning it might be difficult to get your money back when you want it. They are more suitable for institutions than retail investors.”

The risk of losing on your investment is pretty high and if the developer overestimates the rental yield on the properties or goes into liquidation, you may be left high and dry. This type of property investment is not for the risk averse, so do your homework before ploughing your life savings into such a scheme.

According to Philip Inman, Economics Correspondent in the Guardian, the answer is an unequivocal: “Yes”. He says landlords are taking advantage of generous tax allowances and cheaper mortgage rates, but failing to spend any of their profits on the housing stock. He describes the buy to let housing sector as the “route to riches for those denied a big win on the lottery” and calls it a disaster for UK Plc.

Short Term Tenancy Agreements
Now that the banks have made it easier for landlords to take out loans to buy investment property, many landlords are snapping up property at the cheaper end of the market at the expense of first time buyers. At the same time many lenders are forcing landlords to only offer six-month contracts to tenants. Mr Inman says this is causing friction between landlords and tenants. However, in reality most landlords are more than happy to let good tenants stay long-term because it is better for everyone.

Chartered Institute of Housing Advice to Government
Gavin Smart from Chartered Institute of Housing (CIH) believes the government needs to review landlord tax allowances:

“Private landlords currently benefit from around £7bn of tax allowances per year for deductible expenses such as repairs and maintenance, insurance and professional fees, but [ministers] don’t target or incentivise higher standards. If landlords who committed to a higher level of standards benefited from a more targeted allowance, while those who did not saw their allowances stay the same or even reduce, the government could encourage higher standards – without needing to find any extra money.”

Your thoughts?

Everyone has heard of TripAdvisor. It’s the website where people go to check user ratings on hotels, apartments and anything else trip-related. In many ways TripAdvisor can be really useful. In fact I would hesitate to book a trip abroad without checking reviews of hotels I am considering paying a fortune to stay in. Well one enterprising individual has decided to create a TripAdvisor website for tenants and landlords. So how does it work?

Rate Your Landlord
RentalRaters has been launched by Hannah Williams, who says:

“The main catalyst for me starting up the site was a very good friend of mine was stung very, very badly by a rogue landlord. He said to me – and the words really resonated – ‘I just wish that I could stand outside that property and tell other tenants as they’re walking through the door, don’t do it, he will rip you off, nothing works.’”

How does RentalRaters Work?
The website aims to make it easier for tenants to avoid rogue landlords by allowing them to post reviews on rental properties. Tenants considering moving into a new property will be able to perform a search on the RentalRaters website and see if the address yields any dodgy reviews. And if it does, they have the option to steer clear and rent somewhere else instead.

All reviewers are verified in order to reduce the number of bogus reviews.

A Landlord’s Right to Respond
Landlords have the option to respond to any reviews they are not happy with and if the information posted is malicious or simply untrue, they can request that the review is removed via the website’s ‘take down’ policy. Reviews about properties owned by a previous landlord can also be removed via the same means.

The SAFEagent Awareness Week is now in its third year and there are currently lots of regional and national initiatives in place to try and build awareness amongst landlords of the benefits of choosing the right letting agent.

Financial Protection is Important
The SAFEagent scheme is trying to encourage landlords to pick a letting agent that subscribes to a Client Money Protection (CMP) scheme. The importance of this cannot be underestimated. Many letting agents don’t offer any form of financial protection to their customers, so if their business fails or they do a moonlight flit one night, you stand to lose a considerable amount of money.

According to John Midgley of the SAFEagent steering group, “SAFEagent Awareness Week is the ideal opportunity to remind landlords and tenants of the importance of identifying agents who offer financial protection and the campaign has made giant strides in doing so since its launch in 2011.”

Look for the SAFEagent Logo
Despite the fact that letting agents now have to belong to an ombudsman scheme, which gives landlords some redress when things go wrong, their money is still at risk. The SAGEagent scheme hopes to increase landlord awareness about the benefits of working with a letting agent who offers financial protection via a CMP scheme. There are around 3,000 letting agents nationwide who are signed up to CMP schemes and who therefore carry the SAFEagent logo and mark on their marketing materials, so look out for this before you sign on the dotted line.

With demand for rental homes so high in some parts of the UK, it is somewhat inevitable that a small minority of landlords have decided to cash in. The end result is a ramshackle collection of commercial buildings that have been hastily converted into residential lets for tenants, most of them immigrants.

Unsafe Residential Conversions
This type of conversion is a worrying phenomenon in London and the Home Counties. ‘Beds in sheds’ have already been identified in large numbers, but the trend is spreading as rogue landlords see the potential for rental income from old warehouses, office buildings and disused factories. These conversions are unsafe and unregulated, with many having no proper sanitation or heating.

Mount Unpleasant
One such development in Mount Pleasant, Brent, only came to light after a small fire broke out and emergency services discovered up to 100 people living in horrendous conditions. Most of the tenants were evicted, but some 30 still remain, sharing one kitchen and bathroom. One tenant has lived in the conversion for over a year. He is paying £600 per month for the privilege.

Ghost Landlords
Thermal imaging cameras have identified hundreds of suspicious buildings. Last month Harrow Council identified four times as many suspicious outbuildings as they were expecting to find. The problem is that even when such developments are found, it is difficult to identify the landlords responsible because many properties are sub-let multiple times. Rent is also paid in cash, which compounds matters.

According to Kris Hopkins, Housing Minister, £6million has been made available to local authorities to try and deal with rogue landlords. Whether that makes any difference remains to be seen.

A recent Channel 4 investigation has revealed that despite government assurances to the contrary, deposits placed in deposit protection schemes are not 100% safe. Unfortunately, even when a deposit is placed in a government approved protection scheme, tenants are still not protected from rogue landlords.

Rogue Landlords Strike Again
The Channel 4 investigation centred on a self-styled property guru who made his money letting properties from landlords and then sub-letting them as single rooms. As a landlord, Mr Burton was obliged to place deposits he received into a government approved protection scheme.

Because such schemes are insurance based, the landlord is allowed to keep hold of the cash until the end of the tenancy when he is obliged to return the tenant’s deposit (minus any deductions if applicable).

But what happens when a landlord is expelled from the deposit protection scheme?
The landlord above was expelled from the My Deposits scheme for flouting the rules. All affected tenants were informed that their deposits would only be protected for a further three months. Meanwhile the landlord was left with lots of money in his bank. So if the landlord decides not to pay this money back there is nothing the tenant can do. Their only recourse would be to take the landlord to court. Clearly there is a flaw in the tenancy deposit system that needs addressing and campaigners say the current situation is unacceptable.

As Alex Hilton from Generation Rent comments: “it’s a tenancy deposit protection scheme – they have told people that their deposits are protected: they’ve got to protect the deposit.”

A Darlington MP has joined local fire fighters to raise awareness of the dangers of living in homes without working smoke alarms fitted. Jenny Chapman, MP for Darlington, wants landlords to be forced to fit smoke alarms in their rented properties, so that tenants are protected at all times from the potentially lethal effects of a house fire.

Shocking Smoke Alarm Figures
Recent research has shown that people living in homes without a working smoke alarm are four times more likely to die if a fire breaks out. Sadly not everyone sees the importance of having a smoke alarm installed and analysis of the house fires attended by Darlington and County Durham firemen in the last twelve months showed that 43% of homes didn’t have a functioning smoke alarm.

Save Lives
We all know that smoke alarms can save lives. If a fire breaks out while you and your family are asleep in bed, without the shrill sound of a smoke alarm to wake you up you probably would never wake up at all. Ever.

Fire Service Comment
Dominic Brown from the County Durham and Darlington Fire Service concedes that deaths as a result of fires have fallen in recent years, but he adds:

“…The majority of victims continue to be those who are most vulnerable, often living in private rented accommodation. Making it a legal requirement for all landlords to fit smoke alarms will improve the safety of hundreds of families and stop dozens of people from losing their lives to fire each year.”

Mr Brown believes that the government needs to introduce legislation to force landlords to install smoke alarms and help save lives, which is something Ms. Chapman supports.

Recent changes to the way Housing Benefit is paid to younger claimants means that many young and often vulnerable people are being forced to look for accommodation in shared housing.

Changes to Housing Benefit
The way things currently stand is that a single person aged 35 and under can only claim Housing Benefit for a room in a shared house (the upper limit used to be 25). Unfortunately, because of new planning rules, many landlords are turning away from HMOs, which is causing a squeeze on shared housing in a lot of areas. Also, research undertaken by housing charity, Crisis, has found that in some cases young professionals on a higher income are taking up what rooms are still available.

This is backed up by further research carried out by the RLA. The results of a survey of RLA members revealed that 50 per cent believed that there are not enough shared homes to provide accommodation now that changes have been made to the benefits system. The result of these changes is that many vulnerable young people are being forced into unsuitable accommodation, notably ‘beds in sheds’ operated by unscrupulous landlords.

What is the Solution?
The RLA is calling for a review of Article 4 directions.

“The RLA is calling on ministers to review urgently the impact that Article 4 Directions used by many local authorities are having on the supply of shared homes. Without this, there is a very real danger that many potentially vulnerable tenants could find themselves being driven into the kind of beds in sheds accommodation that is simply unacceptable for anyone to find themselves living in.”

Landlords with HMOs have been forced to pay thousands in licence fees for quite some time, but thanks to a recent ruling in the High Court, many are now in the position whereby they can apply for a refund on fees paid, all thanks to a landmark case.

Definition of an HMO
Bristol City Council v Digs (Bristol) concerns a Bristol maisonette that the council decided was eligible for an HMO licence since the accommodation took up two floors of a four floor property. However, the landlord disagreed, saying that the since the property only consisted of two floors it fell outside the statutory definition of an HMO. The living accommodation was accessed via a separate staircase that led straight up to the second floor of the building.

Since Digs and the Council couldn’t agree, the case ended up in Bristol Magistrates court. The District Judge looked at the facts of the case and ruled in favour of Digs. The council decided to appeal to the High Court. Unfortunately for the council, Justice Burnett agreed with District Judge Zara. It ruled that the decision should be upheld and that the council would not be allowed to appeal.

What Does This Mean for Landlords?
This is an important decision for landlords since it means that any property taking up two floors or less, irrespective of how many floors the entire building has, does not fulfil the definition of a statutory HMO. Therefore landlords with similar properties who have paid licence fees should now look at whether they could be entitled to a refund.