Although the majority of tenants are pleasant, reliable and pay their rents on time, a small minority are not, and it is these tenants from Hell landlords need to learn how to avoid where possible.

Tenants from Hell

No landlord wants to let a property to someone who never pays the rent, but unfortunately, non-payment of the rent is the least of your problems if you end up with the tenant from Hell. This person will probably cause huge damage as well as paying no rent. And in the worst cases, they might even sub-let your property to a load of illegal immigrants, steal your identity and take out loans on the property in your name, or set up a drugs factory inside.

How to avoid the tenant from Hell

 Check every piece of information given to you, including employer references, references from previous landlords, and credit history.

 Research their employer online and make sure they even exist, and then ring the employer and ask questions to verify information you have been given.

 Check out a potential tenant on social networking sites. You can see what kind of person they are from the kind of content they post online. And if they are employed, check them out on Linked-in.

How do bad tenants fool landlords?

Tenants with a dubious history will sometimes enlist a friend or relative to act as a former landlord or employer. To weed out this kind of deception, you may need to cross check facts and information. If anything seems remotely awry, listen to your gut instincts and investigate further.

Buy to let landlords are an invaluable source of housing for tenants claiming benefits, particularly in some areas where local authority housing is in extremely short supply. Unfortunately, one of the largest lenders on the high street, Nationwide, has now withdrawn all buy to let mortgage products for landlords specialising in the Local Housing Allowance market, or in other words, landlords who let to tenants claiming benefits.

How will this affect LHA landlords?

New landlords looking for a buy to let mortgage with a view to letting their properties to benefits claimants will no longer be able to apply for a mortgage with the Nationwide. There still lenders offering buy to let mortgages for the LHA market, but the choice pf products is now a lot smaller. The only landlords who are immune are those who own their properties outright.

How will this affect the rental market?

Rental homes are already in very short supply in some areas and in many cases, the private rental landlords provide a valuable boost to the overstretched Local Authority housing stocks. With a reduction in the number of available mortgage products for aspiring landlords, there is no real incentive for them to market their properties at tenants claiming benefits, which is likely to leave some vulnerable tenants homeless.

What happens if my tenant loses his job?

If your property is mortgaged and your working tenant subsequently ends up on benefits, you must check the terms of your mortgage or you could end up in breach of the conditions of your lender.

According to figures released as part of the English Housing Survey, as many as one in ten buy to let homes in the private sector could be impossible to let in five years because they don’t meet minimum energy efficiency ratings.

Poor results for the private rental sector

Nearly 12% of homes in the private rental sector are currently rated F and G in the energy efficiency scale. Unfortunately, because of new laws passed by the government, landlords will not able to let out these properties after April 2018. The government has yet to decide whether the ban will come into effect on a set date or if tenancies in affected properties can continue until the end of the tenancy.

Causes of low energy efficiency

In most cases, the poor energy efficiency rating is as a result of no cavity wall insulation where wall cavities exist, or insufficient loft insulation. The figures are also a reflection of the fact that many buy to let homes in the private sector are older properties with no double-glazing.

Green Deal

The government has introduced the Green Deal scheme to try and encourage landlords and owner-occupiers to improve the energy efficiency of their homes. Landlords can borrow money to make essential energy efficiency improvements and the loan is repaid by supplements added to the property’s electricity bill. Since energy improvements should reduce the electricity bill, the cost of the work is effectively cancelled out.

Tenants can ask for improvements

As of 2016, landlords will have to make reasonable improvements to the energy efficiency of a property if their tenants ask for work to be carried out.

In some boroughs of London, housing is in desperately short supply. There are quite simply not enough affordable homes available for tenants, which is why rents are skyrocketing and unscrupulous landlords are letting out ramshackle garden sheds to make extra money. So in an attempt to try and deal with the housing shortage in their borough, Ealing Council has come up with an innovative solution.

Home improvement grants

Landlords in Ealing are being offered the chance to claim up to £30k if they turn an empty home into a rental property. The ‘empty homes’ grant is designed to cover the cost of home improvements and repairs for properties that have been empty for more than six months. A further grant of up to £25k is also on offer for homeowners who allow their properties to be managed by a social landlord for a minimum of five years.

Is there a catch?

Under the terms of the ‘empty homes’ grant scheme offered by the council, the property must be ready for tenants to move into within twelve months of the money being approved. There is also a limit of £30k, so if repair works costs more than that, the landlord will have to fund it out of his own pocket. Landlords must also commit to keeping the rent on the property at an affordable level for at least five years.

Free matchmaking scheme

Ealing Council are also offering to help owners of empty, derelict homes get in touch with property developers looking for a house to renovate with a view to letting out at a later date.

With a lot of pension plans not worth much these days, it is hardly surprising that many landlords view their buy to let property portfolios as a way of funding their retirement. In a recent survey, the results showed that around 84% of landlords questioned entered the property rental market with a view to boosting their income upon retirement. And who can blame them?

Rental income from property

A further 60% said they intended on living off the income from their investment portfolio instead of relying on a pension. Some even went as far as saying they had made no provision for their retirement and therefore their properties were their pension, in which case they would probably sell up once they retired completely.

Is the rental market still strong?

Demand for rental properties remains as high as ever. The number of tenants falling into arrears is falling, as are void periods, which is always good news for landlords. Although there was a slight dip in rental yields towards the end of last year, on average property investors can expect to see a 6.2% in rental yield under the current conditions, which is considerably higher than any savings account you might find on the high street.

Is property investment a good retirement plan?

As long as you manage your investment carefully, investing in rental property makes good sense for those who have spare money available and wish to boost their pension plan. However, returns on investment do vary greatly across different regions of the UK.

A recent report published by the Office of Fair Trading (OFT) has revealed that many of the complaints received by the OFT relate to charges and service fees. Landlords and tenants have made more than 4,000 complaints in respect of letting agents and a large percentage were unhappy that extra charges and fees had been added on after a contract had been signed. There were also numerous complaints about poor service and mismanaged deposits.

A call for regulation in the letting industry

In light of its findings, the OFT is calling on the government to introduce greater regulation in the lettings industry—this would hopefully ensure more consistency for customers who decide to use the services of a letting agent when letting out a property or looking for a home to rent.

Consumer groups comment

Top UK consumer groups, including Which?, have welcomed the call to action for the OFT.

“The government must act quickly to require all agents to sign up to a complaints scheme so that tenants know where to turn to for redress when things go wrong. This should be done by amending the Enterprise Bill currently before Parliament,” Which? executive director Richard Lloyd was reported as saying on the BBC news website.

In a further recommendation, Arla advised landlords to always use letting agents who are members of trade bodies.

“We have long-called for a central system of regulation, and would agree with a number of the OFT’s recommendations to help improve the market. In particular, agents should always be transparent about the fees they charge, and the services associated with those fees,” said managing director of Arla, Ian Potter.

The snow is falling outside and it’s freezing, which is why I am
pretty glad to be indoors somewhere nice and warm. So imagine how
unpleasant it would be to live in a half derelict shed at the bottom
of your landlord’s garden. Wouldn’t exactly feel like home, would it?

Exploitation of the vulnerable

Some of the poorest people in the UK are being exploited by
unscrupulous landlords in what the Daily Mail describes as a return to
the “notorious Victorian slum tenements of the 19th century”. Some
shed and garage conversions are not so bad, but many are no bigger
than glorified rabbit hutches; they are also dangerous.

More than forty-two rogue landlords have been handed enforcement
notices in the Newham Council borough since the end of 2011, and the
problem is getting worse thanks to overcrowding and rising rents. In
some cases, desperate families are being charged a fortune to take up
residence in a cramped hut with no facilities and certainly not enough
room.

Reporting dodgy dwellings

Once council officers have been alerted to the presence of an illegal
building, an enforcement notice is served on the owner instructing
them to take it down. If the owner fails to comply with the notice,
the council sends in contractors to forcibly remove the dwelling, at a
cost of around £1,000.

Wanted: good landlords

Local Authorities are happy to work with good landlords, but they are
also keen to stamp out rogue landlords in their boroughs, which means
serving enforcement notices on those who abuse the vulnerable for
profit.

Edinburgh Council has taken an unprecedented move by refusing an
application made by a landlord for entry on the Edinburgh landlord
register. This is apparently the first time such a move has been made,
but given the previous conduct of this particular landlord it is
hardly surprising that he is not considered to be a responsible
landlord in the city.

Previous offences

The BBC reports that the landlord has previously been convicted of
several offences relating to his buy to let letting business in
Edinburgh. In 2011, he was found guilty of operating a HMO without the
correct license and fined £1,000 as a result. Later that same year, he
was fined again for making threats against some of his tenants, which
is not exactly exemplary behaviour of a model landlord. He later
appealed against the refusal of an application for an HMO license,
which was of course rejected by the sheriff.

“Private rented property is an important part of the housing market in
Edinburgh and Landlord Registration laws have an important part to
play in ensuring tenants and neighbours can live their lives safe from
crime, disorder and danger,” said the Convenor of the Regulatory
Committee, a Councillor Barrie. “This decision sends a clear message
to good landlords, tenants and their neighbours that we will take
robust action against landlords who act unlawfully.”

So if you are rogue landlord operating in Edinburgh, the message is
simple: if you act unlawfully, you will soon find yourself banned from
letting out properties in the city.

The English Housing Survey results were published yesterday and a few interesting trends were highlighted. Apparently rents in the social sector have increased more in the last twelve months than those in the private sector, which is good news for tenants forced into private rented housing, although the average rent increase is still less than the current rate of inflation.

The figures also indicate that the private rental sector is now larger than it has been for twenty years, which is probably a reflection of the recession and the state of the housing market.

Differences in rents

Long term tenants often enjoy far lower rent rates than those who stay in properties for shorter tenancies and the report highlighted the fact that tenants who had been living in their properties for a decade or more paid around 28% less than tenants who had lived their for less than three years. This situation is clearly better for both tenants and landlords: long-term tenants enjoy a greater discount and landlords can have the security of a long term, reliable tenant.

Sub-standard rental homes

The report notes a fall in the numbers of sub-standard rental properties being marketed by UK landlords: the number of homes failing to meet the Decent Homes standard set by the government has fallen from 47% to 35%, which is good news for tenants. In response to this, the RLA has commented that this could be improved even further if landlords were give more tax breaks to encourage them to invest more in their rental properties.

A lot of people were probably hoping the property market would pick up in 2013, but so far that clearly isn’t happening and everywhere I look, there are dozens of properties for sale. A lack of mortgage funding is not helping matters, although lenders are slowly beginning to relax their lending restrictions, so there are still plenty of reasons to consider expanding your property portfolio if you are a landlord in the private sector.

Why invest further in the property market?

Current figures indicate that the average yield for a rental property is just under 6%, which when you look at the interest rates on savings accounts offered by high street lenders, is a great return on investment. So if you are looking for a way to make the most of your savings, or you need to plan for retirement, investing in buy to let property is still a good idea for many people.

Increase in accidental landlords

Many landlords enter the buy to let market by accident rather than design—in many cases because they are stuck with a property they can’t sell for love or money. But whatever the reason, research indicates that 1 in 8 of accidental landlords is more than happy with the money their property is generating and is seriously considering investing in further properties. And they are not the only ones—property website, Rightmove, says nearly three-quarters of professional landlords are planning to add to their property portfolio over the next twelve months, which is good news for the over-stretched rental market.