Cannabis farms are a popular theme in the news. Most weeks you will find at least one or two horror stories of landlords who have unwittingly let their properties to unscrupulous criminals and belatedly discovered that those properties were turned into cannabis farms. Unfortunately, the damaged caused can be horrific—floorboards ripped up, walls knocked down, water and electricity supplies illegally diverted. In some cases the repair bills can easily run into tens of thousands of pounds. So who is responsible for paying?

Will Insurers Pay Up?
Most landlords probably assume they are safe should the worst happen and they find out that a tenant has turned one of their properties into a cannabis farm. They think that if they have landlords insurance with ‘malicious damage by tenant’ cover, it’s fine and the insurer will pay out. But this is not necessarily the case and landlords should make sure they check the small print.

Limit on Amounts Claimed for Tenant Damage
Not all insurers cover damage caused by tenants and those that do often place a limit on the amount that can be claimed. Insurers take the view that landlords must carry out checks on tenants before they take up residence and make regular inspections of their properties after a tenancy has begun, which would weed out cannabis farms before they cause significant damage.

Landlord Checks

• Be wary of a tenant who wants to pay a large amount of rent in advance
• Check tenant references with a fine-toothed comb
• Inspect the property regularly and log your checks

HMRC is once again urging landlords to come clean and declare any undisclosed tax they may owe. The Revenue believes that there is at least £550 million owing from landlords and they are determined to claw some of it back.

Property Let Campaign
The Property Let Campaign is currently in full swing and landlords are being encouraged to come forward voluntarily or face steep penalties. HMRC is targeting landlords who have failed to declare rental income from previous years, plus those who may have incorrectly filed their tax returns. Landlords who come forward of their own free will face a penalty of up to 20%, but those who don’t and are subsequently caught out by HMRC will be severely penalised, and could even be prosecuted.

How do HMRC Catch Landlords?
Thanks to the wonders of modern technology, HMRC have all kinds of sources of information at their disposal. Tax officials are able to obtain data from letting agents and local authorities, plus they can track down landlords who advertise their properties on websites or even in newspapers. They are also receptive to anonymous tip-offs from the general public or a disgruntled tenant.

“You’d be amazed at how many people ‘dob’ each other in,” said a HMRC spokesperson.
It was a Mistake, Your Honour!

Everyone makes mistakes from time to time and HMRC will waive a penalty if they feel that a landlord was genuinely not trying to pull a fast one. However, it is likely to be difficult to persuade HMRC that you were truly unaware of your tax obligations.

Some UK housing charities are calling for the government to speed up the eviction process so that landlords can reclaim their properties sooner. As a result, landlords and representatives of a few housing charities have been asked to attend a government working group to discuss the issue and, hopefully, come up with some potential solutions.

The Pain of Evicting a Tenant
Evicting tenants can be a real pain in the neck. In fact it isn’t unheard of for the entire eviction process to take up to 12 months, which when you have no rental income is disastrous for your cash flow. When a landlord has a mortgage to pay, no rent can soon spell disaster, and in the long term can affect a landlord’s credit rating.

Experts in the lettings industry believe that landlords everywhere will welcome a streamlining of the eviction process. Most landlords want to get rid of problem tenants as fast as possible so that they can replace them with good tenants. This would also help good tenants find new accommodation by ensuring a swift removal of bad tenants who invariably clog up properties for a long time.

Encourage New Landlords
New landlords are more likely to enter the rental market if they are able to evict problem tenants swiftly since having a problem tenant when you only have one property is fatal.

The best way to prevent problem tenants in the first place is to conduct a background check, pay for a credit report, and ask for comprehensive references from previous landlords and employers. It isn’t a fool proof method, but it will help minimise the risk.

According to the Telegraph, landlords across the UK feel that local authorities are persecuting them by applying a long list of charges, which makes it harder for small landlords to operate a profitable buy to let business.

Landlords are ‘Cash Cows’
The Residential Landlords Association happens to agree with this point of view. Alan Ward, chairman of the RLA, describes the charges as a ‘creeping plague’. He thinks that increasing costs are making buy to let less viable to new landlords, which in the long term could be disastrous for Britain’s housing situation. The National Landlords Association (NLA) is not happy either. In fact the NLA is considering taking action against several local authorities because they are so concerned about the rising cost of being a private landlord in the UK.

Costs Vary in Different Areas
The problem that landlords have with these so-called ‘stealth taxes’ is that the fees vary enormously between different local authorities. Selective licensing, for example, is becoming increasingly common, but no one local authority charges the same—the cost of applying for a selective license can vary several hundred pounds across different areas. The other criticism from landlords is that the disreputable landlords are not the ones paying the fees, so the argument that many local authorities use for introducing selective licensing (it helps to improve the standard of housing across the private rental sector) doesn’t really hold much weight because rogue landlords slip below the radar.

And to make matters worse, councils now have the authority to charge full council tax for periods when a rental property lies empty, so landlords can’t even enjoy a period of grace if a property needs essential repairs or maintenance.

What do you think? Let us know!

Since the property bubble burst in Spain, there are currently hundreds of thousands of homes lying empty across Madrid. Most are empty because the banks repossessed them when their former owners defaulted on their mortgage payments. Official figures suggest around 15k families were evicted in 2012 alone. But there is a whole sub-culture of people taking advantage of other peoples’ misery by cashing in on the empty dwellings.

Black Market Landlords
Empty homes are targeted by opportunistic landlords and sub-let to desperate tenants seeking a cheap roof over their head. Once a property is empty, someone comes along and breaks in. The property is then advertised ‘to let’ for a few hundred Euros per month and a tenant moves in. It is even possible to ‘buy’ a property if you have around 2k Euros spare, although most people can’t afford to do this.

Lack of Affordable Housing
Affordable housing in Madrid is in very short supply. With so many families facing eviction as a result of the financial crises, there is a massive waiting list for government-subsidised homes. Not surprisingly, immigrants and desperate families are turning to black market landlords to fill the gap.

Because it can take up to two years for the banks to obtain an eviction notice, tenants know they won’t need to move out for quite a while. Neighbourhood associations are holding the banks responsible for the housing crisis—instead of selling at a knockdown price, the banks are holding on to the properties until the market recovers. And in the meantime, local communities are suffering.

The majority of people in private rental accommodation, claiming benefits or otherwise, pay their rent on time and cause no problems whatsoever. But according to the Daily Mail, one Scottish family have managed to rent luxury family homes and abscond without paying the rent three times in a row now.

Three Landlords Out of Pocket
The married couple have seven kids and are currently living on benefits, but since 2011, they have managed to accrue a massive £21k in outstanding rent payments to three separate landlords. In each case, the landlord in question claims that the couple moved out without paying the rent owing, which naturally left the landlords significantly out of pocket.

The couple left the first property allegedly owing the landlord £6k. They moved into a second property and although a deposit was paid, no rent was forthcoming for nine months. The landlord eventually asked the council to make Housing Benefit payments directly to him, but it still left him out of pocket to the tune of £15k. It is also alleged that the couple have recently vacated a third property whilst owning a sum of money.

How to Prevent Tenant Rent Issues
The best way to prevent being taken to the cleaners by a tenant is to scrupulously check references before you let them sign a tenancy agreement. Repeat offenders are unlikely to have glowing references from previous landlords, and if they do, they are probably bogus. So check everything and if your instinct is telling you something is wrong, listen to it!

Despite initial doubts that the build to rent scheme would be viable
outside of London and the southeast, it is proving popular with big
institutional investors and confidence is growing rapidly. The main
reason for this is that two major reports, including one by EC Harris,
have indicated that the scheme is likely to work very successfully in
53% of local authority areas.

Government Plans for the Build to Rent Scheme
The Build to Rent scheme was incepted in 2012 and £1billion was poured
into it. This was further topped up in the last budget, in the hope that
the scheme will attract investors into the private rental sector. The
aim of the game is to encourage investors to finance new, purpose built
rental accommodation developments. The government thinks that this will
improve the quality of homes in the private rental sector as well as
provide some extra competition for private landlords (and thus help to
stabilise rents).

Scheme Oversubscribed
A recent study by Knight Frank has indicated that the scheme is
oversubscribed. There are now more than a billion pounds worth of rental
housing development projects in the pipeline in London and other major
cities, including Manchester and Leeds. The average investment yield for
these areas was 6.6%, but for the last quarter of 2013, average initial
gross yields rose to 8.2%.

Knight Frank strongly believes that the UK rental market is still
growing and that investors are queuing up to pour their money into the
pot, which is good news for tenants, but not so great for private
landlords, as they could soon be facing stiff competition for
prospective tenants.

Landlords often have bad press. Many are accused of being rogues who are only in the business for the purposes of making money, but according to a recent survey carried out by the AA, this simply isn’t true. Instead of turning a deaf ear to pleas from their tenants to fix boilers and other common household problems, caring UK landlords are going the extra mile to put things right.

A Change of Plan
Somewhat surprisingly, seven out of ten landlords have changed plans at the last minute to help their tenants. One in five UK landlords have come home early from their holiday, 8% have chosen to leave a family event, and 16% have taken time off work to help sort out a tenant’s problem, which is pretty nice of them.

The majority of landlords don’t use a letting agent, so it is up to them to sort out problems their tenants may have. This can include all manner of things, from broken down boilers to storm damage. Unfortunately, this means that landlords are effectively on call 24/7.

Organise Holiday Cover
It is sensible for landlords to have arrangements in place for such times when they are not available to sort problems out. Make sure your tenants have a point of contact—a relative or friend will do. It is also a good idea to let them have the contact details for tradesmen you normally use, so if the boiler breaks down they can call out an engineer you are familiar with and whom you know won’t overcharge. You may also wish to let them have telephone numbers for your insurance company in the event of a home emergency.

Student buy to let property has traditionally been viewed as a gold mine
by many landlords. After all, students need somewhere to live when they
are studying away from home and the income is likely to be regular,
which is great for cash flow. But despite the obvious attractions of
buying HMOs and marketing them at the student sector, landlords from a
popular university city have put their properties up for sale.

Potential Family Homes
40 HMOs in the busiest student area of Manchester have all been placed
on to the market for a combined total of around £11.4 million. The
properties have been split into three separate lots and are expected to
attract a great deal of interest. Local residents on one of the affected
streets are hoping that prospective purchasers will convert the
properties into family homes, but have described the houses for sale as
“tatty” and “damp”, so any landlord looking to expand his or her
property portfolio may have to spend money on them.

One resident’s association spokesperson has been quoted as saying:

“We would love more of the houses in our area rented out to families.
The students themselves are lovely but the problem is in summer when
they all leave and it’s like a ghost town.”

Competitive Halls of Residence
In recent years, landlords have been able to cash in on demand for
student properties because purpose built student accommodation has been
in very short supply. On this occasion, however, local halls of
residence are providing landlords with some stiff competition and
students are choosing to stay in halls rather than off campus.

It will be interesting to see if this is a pattern that emerges in other
popular university cities, or whether Manchester is just a blip.

UK letting agents are predicting a buy to let boom over the next twelve months, which is good news for landlords. Market data indicates that the property market is finally beginning to pick up after it went into meltdown six years ago. House prices are rising and homes are starting to sell once again. This means than many accidental landlords (those who were forced to let out their properties when they failed to sell) will be looking to sell up. Mortgage lending restrictions are also easing as lenders are beginning to relax their terms. In fact, figures recently published indicate that buy to let mortgage lending is up around 25%.

Buy to Let Demand Rises
Of course this is not necessarily a good thing for tenants. If the number of available properties in the buy to let sector significantly decreases, rent prices will rise because of an increase in demand. This is great for landlords, but not so great for tenants trying to find a suitable home in popular areas. And the more demand for rental property there is, the more competition there will be, which will make it hard for tenants claiming welfare because landlords will be able to pick and choose who they take on.

Expand Your Buy to Let Portfolio
The next twelve months could be an ideal time to expand your property portfolio, but before you get too excited, remember to choose your tenants wisely as the wrong tenant could end up costing you money in the long run.