New Year for most people is a time of doom and gloom. Overspending at
Christmas often leads to hefty bills come January, all at a time when the
weather is cold and the heating is on more than usual. But thankfully for
landlords in the private sector, it isn’t all doom and gloom as figures
indicate that overall rent arrears have actually fallen for the first time
in a year.

Times are tough for tenants
The cost of living has been increasing steadily since the start of the
recession. Food, fuel, rent and pretty much everything is now much more
expensive than it was twelve months ago. Naturally this has led to a rise in
the number of tenants owing more than two months rent as more and more
people struggle to find the cash to pay their bills. Christmas and New Year
is traditionally the worst time for rent arrears since many tenants
prioritise their Christmas spending over paying the rent, probably in the
hope that their landlord will take pity on them because it’s Christmas.

More jobs available
Experts believe that the dramatic fall in unemployment figures at the back
end of last year is largely responsible for the fall in rent arrears. A more
buoyant jobs market means that fewer tenants are out of work and therefore
unable to pay the rent. However, despite the decrease in the number of
tenants falling into rent arrears, the number of landlords struggling to pay
their buy to let mortgages is increasing, which is not good news for the
private rental sector.

Rogue landlords operating in the Newham borough of London had better look out over the coming year because council officers are taking no prisoners in their fight against poor living conditions for tenants living in private rented housing.

Landlord licensing scheme
Newham Borough Council in London is the first local authority in England to introduce a landlord licensing scheme. Landlords in Scotland are already subject to strict regulations, but Newham is the first English authority to have introduced a registration scheme in its attempt to rout out private landlords letting sub-standard properties for extortionate sums of money.

Rise of the slum landlord
There are known to be a high number of HMO landlords letting out poor quality housing in the Newham area. The local authority is determined to deal with the problem and dawn raids against suspect properties have become all too frequent in the last two years. However, all landlords in the private sector can expect a dawn raid if they fail to apply for a license and council officers think they may have something to hide.

The Mayor of Newham told the BBC: “The bad behaviour occurs in the bad properties: the anti-social behaviour, the mess in the garden. We need to go after them.”

So if you are a private landlord in Newham and you have applied for a license, you probably have nothing to fear. But if you are a rogue landlord, watch out because a crack team of police officers and council officials may be banging on the door of your properties in the very near future!

Gas safety is a major issue for landlords and tenants and if any of your properties have gas boilers or heating systems fitted, you need to be aware of the changes concerning concealed flues, which come into effect at the end of December 2012.

How do the changes affect landlords?

The rules were changed in 2010. Gas engineers were given new guidance notes regarding the inspection procedures relating to concealed flues, for example, flues hidden behind wall cavities or above ceilings (a common practice in flats and apartments). If the gas engineer could not perform a visual inspection of the flue because there were no inspection hatches, as long as a carbon monoxide detector was present, this was to be considered sufficient protection for the tenant.

However, the two year phasing-in period is about to end and as of the end of this month, if a gas engineer comes to service or make repairs to a gas central heating system and a visual inspection of the flue is found to be impossible, he will be forced to determine that the system is ‘At Risk’ and the appliance will be decommissioned until appropriate changes have been made.

What must landlords do?

If any of your properties have gas boilers or gas central heating systems, you must make sure there is a suitable inspection hatch fitted so that the flue can be viewed by a gas engineer. If there is no inspection hatch and the boiler or heating system has been installed after 2000, you will need to have inspection hatches fitted.

Price comparison sites are great. I use them all the time to find cheap insurance and other financial products, as it saves me from having to spend hours online doing the research myself. For landlords, comparing prices on buy to let mortgages often means a trip to a mortgage broker, and since brokers earn commission on their sales, you are not necessarily going to receive unbiased advice.

Google launches a mortgage comparison site

Google, the world’s biggest search engine, has launched a mortgage price comparison website that includes hundreds of buy to let mortgages. On its own, this is good news for landlords, but what makes it even better for landlords is that any lender who wishes to be included in the search results must cap their fees at 1% of the loan advance, which is a lot lower than many of the deals on offer from lenders elsewhere.

How does the price comparison site work?

Like any other price comparison site, you have to answer some basic questions about the product you require before the site search engine returns a list of results, although Google promises that all information you provide will not be used for nefarious purposes apart from allowing the broker to contact you if applicable.

Hopefully one of the mortgage deals will sound good, but as always, never sign up for any kind of financial product without reading the small print and making 100% sure that the deal is the right one for your individual circumstances.

There appears to be no let up in the demand for rental properties across the UK and in a recent landlords survey, more than one third of landlords said they were planning to increase their rents in the New Year. Unsurprisingly, only 1% of landlords polled said they had plans to reduce their rents in the New Year.

Is demand for rental property likely to continue rising?

Well I don’t have a crystal ball, but the signs are good that rental demand looks set to increase over the next twelve months. Demand for rental property in some areas, (particularly London and the south east), is far outstripping available homes and experts predict that it is highly unlikely that this trend is going to suddenly change.

Why is demand so high?

First time buyers are still finding it almost impossible to get a foothold on the property ladder. Banks and building societies have not relaxed their lending criteria, so anyone wanting to purchase a property needs a substantial deposit in hand before applying for a mortgage. Unfortunately, with the cost of living so high, most people have nothing left at the end of an average month, so saving for a deposit is impossible.

However, there are many good deals for prospective investors hoping to purchase a buy to let property or add further properties to their existing portfolio, and since interest rates on savings accounts are so dire, investing in buy to let property is considered a good move for those who want to make their savings work harder.

A new trial landlord license scheme is being introduced in the Easton area of Bristol in an attempt to improve the quality of rented housing. Landlords with properties in Easton will have to apply for a licence costing £100, produce safety certificates, and ensure all of their properties have smoke alarms fitted. The area has been chosen to pilot the scheme as it has a large number of rented properties, but many landlords and agents are unhappy about the extra cost burden and say that rents will inevitably increase as a result.

What happens once a landlord has applied for a license?

Licensed properties will be inspected regularly and if the landlord has failed to adhere to their legal obligations, they will be fined by the local authority. The license will last for five years and at the end of the term, the landlord will need to reapply for a new license.

Selective licensing in other areas

Landlord licensing schemes are becoming increasingly widespread as many local authorities try and crack down on rogue landlords. However, not all landlords are happy about the schemes and in Hyndburn, Lancashire, a group of landlords have come together to challenge the council over an HMO licensing scheme that they claim is unfair and not enforceable in a court of law.

In what has been described as a first by the Daily Mail, one private landlord has the unfortunate notoriety of being handed a property rental ASBO (along with a massive fine and court costs).

Plymouth Council has prosecuted the landlord, who has been in the property rental business for more than thirty years, for repeated breaches of housing regulations and failing to clean up.

Two of the properties had been divided into six bedsits and were let to vulnerable tenants claiming housing benefit, many of whom had serious problems such as alcoholism. Representatives from the council say they did try and work with the landlord, but despite their efforts, he refused to comply with the improvement notices he received and do any of the necessary work.

What kind of condition are the properties in?

The pictures of these properties have to be seen to be believed. In fact they make my old student houses look positively hygienic by comparison. Rotten flooring, bare wiring, rubbish strewn rooms, filthy carpets, disgusting bathrooms and kitchens, mouse droppings everywhere—basically not the kind of homes that are fit for human habitation.

Why was an ASBO handed out?

Plymouth Council felt that a £28,000 fine was not enough to make this slum landlord see the error of his ways, so it took steps, in the form of an ASBO application, to try and prevent him from being able to let rooms in his properties to any more vulnerable people claiming benefits. Let’s hope it works!

There has been much discussion of late into how the introduction of a Universal Credit will affect tenants currently in receipt of Housing Benefit, and more importantly, how it will affect Landlords who let properties to Housing Benefit tenants. Many experts fear that the planned changes to the current system of benefits payments will prove disastrous. Unfortunately a pilot report published by the Department for Work and Pensions appears to back this up.

The DWP conducted a research study in several areas around the UK. It concluded that a number of serious challenges would arise for tenants and landlords as a result of changes made to the existing Housing Benefits payment system.

• Benefits are currently paid weekly or fortnightly, so changing this to a monthly payment system is likely to leave many tenants struggling to manage their finances.
• Most of the tenants interviewed felt certain that they would run out of cash by the end of the month, which makes the threat of rent arrears a very real problem for landlords operating in this sector (most tenants on benefits have no savings to pay for unexpected bills and over 1/3 of those questioned were worried about the changes to the benefits system).
• A large number of tenants on Housing Benefits live in a cash economy and some do not have a bank account—Universal Credits will be paid electronically, which could be a problem.

Are you a concerned landlord in the social housing sector? If so, you are not alone—the RLA found that 92% of landlords were reconsidering letting their properties to benefits tenants.

As economic conditions worsen and the country slips ever further into a triple dip recession, the number of tenants claiming benefits is likely to increase. Many landlords are reluctant to let properties to tenants claiming benefits because they view them as more likely to default on their rent payments (and with the government announcing a cap on benefits payments that will mean tenants are forced to make up the shortfall from their own pockets, this is not an unlikely prediction).

Why don’t mortgage lenders want landlords letting to benefits tenants?

As I have just pointed out, tenants in receipt of benefits are considered a high risk, which is why a large number of lenders include a restriction in their loan offer documents to prevent landlords letting a property to a benefits tenant.

The restriction on benefits tenants has been in place for a number of years, but as more and more tenants are forced into claiming Housing Benefit—or the new ‘Universal Credit’ as it will soon become—the block on this type of tenant is going to affect an awful lot of landlords whose properties are financed by a loan.

Will the restriction be lifted at any point in the future?

Unlikely, although lenders may have to be a bit more lenient if the percentage of tenants claiming benefits dramatically increases in the next few years. Mortgage lenders use a number of criteria to work out risk profiles and these are constantly evolving, but if lenders don’t change their policies, many landlords may struggle to fill their mortgaged properties.

The deadline for submittals of 2011-2012 tax returns is fast approaching and if you are a sole trader who hasn’t even thought about doing their tax return yet, you are probably panicking about now. However, all is not lost—HMRC are aware that many first timers have no idea how to fill in a tax return, so to make things a bit easier, they are running a series of helpful Webinars during December and January. The dates for these are:

December Webinars

 Monday 3rd, 2pm
 Tuesday 11th, 8am
 Friday 14th, 1pm
 Friday 28th, 3pm

January Webinars

 Thursday 10th, 7pm
 Saturday 19th, 11am
 Tuesday 22nd, 2pm
 Wednesday 30th, 8am

The HMRC Webinars should be very helpful, so if you have never before filled in a tax return, sign up for one of the Webinars by visiting the HMRC website at www.hmrc.gov.uk. I know from personal experience just how complicated and confusing tax returns can be, so if you have never done a tax return before, it is sensible to see how the forms work rather than leaving it until 23:45 on January 31st (the deadline is 00:00) and being fined for submitting a late tax return.

How do I do an online tax return?

Filling out a tax return online is the quickest and easiest way, but before you have access to the online forms, you must register with HMRC. Unfortunately, this takes time, so if you haven’t already done so, give HMRC a call today and start the ball rolling.