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.

It was widely reported at the beginning of the week than ‘super
landlord’, Fergus Wilson, had decided to issue eviction notices to 200
of his welfare tenants. At the time he justified his decision by telling
reporters it was a business decision based on financial reasons, but in
the wake of a flood of criticism calling him ‘heartless’, he has hit
back at his critics by saying:

Fergus Wilson Hits Back
“If I am heartless all the other landlords are heartless, because we’re
all doing the same,” he said. “All the landlords will tell you that
there is so much default now with housing benefit tenants that you are
just simply better off with somebody working.”

Wilson did confess to Channel 4 News that he felt guilty about the
people he was evicting, even going as far as to suggest that “some could
be in dire circumstances”, but it hasn’t changed his mind about the
decision. He remains adamant that things can’t go on with more than 50%
of his welfare tenants in arrears, which is something that an awful lot
of landlords will probably be able to empathise with.

No DSS Tenants
Wilson isn’t the only landlord who doesn’t want housing benefit tenants
and many letting agents make a point of saying ‘NO DSS’ in their
advertising materials. Indeed, the NLA reported in December that only 1
in 5 of landlords questioned were willing to rent to tenants in receipt
of benefits, although in some parts of the UK, landlords don’t have much
choice because working tenants are few and far between.

Landlords: is your experience of welfare tenants good or bad? Let us
know in the comments section!

It may be a New Year, but this doesn’t mean that rogue landlords have turned over a new leaf and resolved to improve the conditions inside their properties. Because of this, Sheffield and Barnsley Council have been awarded £400k to help them track down rogue landlords operating in their areas.

Government Funding Boost
The £400k grant awarded to Sheffield and Barnsley Councils is just a small part of a £4 million cash bonanza earmarked to help councils all over the UK eradicate rogue landlords. Kris Hopkins, the minister for housing, has agreed the funding alongside tough new legislation designed to clean up the private rental sector.

“The majority of tenants are happy with their home, but the private rental market is still afflicted by too many ‘unscrupulous Scrooges’: miserly landlords who rent dangerous, dirty and overcrowded properties without a thought for the welfare of their tenants,” he was recently quoted as saying.

23 councils across the UK have been allocated funding as part of the scheme. All of these have been identified as having a problem with sub-standard housing whereby properties are dangerously overcrowded and unsafe.

Severe Penalties for Rogue Landlords
Rogue landlords face all kinds of penalties should they continue to operate slum housing. Thanks to the new funding boost, councils such as Sheffield and Barnsley will have the resources available to tackle the problem and take cowboy operators to court. Landlords who flout the rules could end up with hefty fines as a result of their dodgy practices. Further measures to introduce an approval scheme for letting agencies are also planned.

Rent arrears are affecting an increasing number of landlords and tenant
evictions are on the up. Unfortunately, a lot of first time landlords
don’t bother to check tenants’ references because they are trying to save
money, which is a big mistake in the current economic climate.

Why Tenant Checks are So Important

If you let a property through an agent, the agency will check references
on your behalf, but if you are managing your own properties, it is down
to you to check a tenant’s references. Running references does incur a
cost, but failing to do so could cost you a lot more in the long run
because tenants are not always what they seem.

• Con artists – Some tenants lie through their teeth in order to
get a foot in the door. They know their lies will unravel eventually, but
once they are in situ the onus is on you to get them out of the property,
and in the meantime they won’t bother paying the rent and live there for
free.

• Tenant fraud – Criminal activities can be prevented by running a
simple identity check and you can avoid the horror of discovering your
lovely four-bed executive detached property has been converted into a
cannabis farm.

• Affordability – Is your tenant really a highflying lawyer, or is
he a low-paid waiter instead? If he isn’t, checking his references will
help you avoid taking on a tenant who can’t afford the rent.

No matter how likeable and genuine a tenant appears to be, don’t skip the
reference checks—if you do, your oversight could come back and bite you
big time.

The cost of renting a home in the private sector is at an all-time high
in many areas of the UK. This is clearly good news if you are a landlord
with a large portfolio of properties, but what happens if you only have
one or two properties and your tenants can’t afford to pay the rent
because they have just lost their job?

Rising Rents
Times are tough at the moment and even though the economy is beginning to
show signs of recovery, the cost of living is showing no signs of going
down. It has never been so expensive to rent a home in the UK. But to
make matters worse, the cost of everything else is just as high.

According to a leading debt charity, many tenants are finding it
increasingly difficult to scrape together enough cash to pay the rent at
the end of the month. The Money Charity has revealed that the number of
landlords seeing possession orders from the courts has risen in recent
months and they say that the high cost of renting in the private sector
is in part responsible.

What can Landlords Do?
Communication is vital so always make a point of building a good
relationship with your tenants. Hopefully, this will encourage them to
let you know if they are experiencing cash flow problems so you can be
proactive before the debt escalates. Ignoring the problem won’t make it
go away. Talk to them and find out what the problem is. Try and be
helpful and supportive. Landlords who are sympathetic are more likely to
get paid if funds are limited. However, you still need to make it clear
that they will be evicted if they don’t pay up soon.

Increasing numbers of property investors from the UK and abroad are
choosing to invest their cash in student housing. Around £1.6 billion was
poured into student housing between January and September this year.

Unlike other property in the commercial sector, student housing offers
investors returns of around 10%, which is a lot better than any rates on
offer from a traditional savings account. It’s also a lot better than the
returns you can expect from residential lets.

Student Housing Sector Set to Grow
The government has pledged to continue backing education for the
foreseeable future and George Osborne has just announced that a further
30,000 university places will be made available from next September. He
has also stated that existing restrictions on the number of student
places on offer at UK universities will be lifted.

Rise in the Number of Foreign Students
Industry experts predict that the number of foreign students coming to
the UK to study is set to increase by 15-20% in the next five years. This
is of course great news for landlords operating in the student sector. As
demand for student accommodation increases, so too do rental values,
particularly in popular university cities such as Manchester, Oxford and
Leeds.

Steady rental income, high occupancy and low void periods, combined with
high returns on investment, make student housing a popular investment for
small and large landlords. But in order to maximise your profits, you
need to operate in the right areas, so do your research before you buy a
student property.

Channel 4 showed an interesting story concerning the life and times of
Daniel Burton, the man who brought the concept of ‘rent to rent’ into the
media spotlight. Sadly, despite many years of successful trading, Daniel
Burton and his company have disappeared into the ether—along with an
awful lot of cash owing to disgruntled tenants. So what happened?

Get Rich Quick

Rent to rent was viewed as a ‘get rich quick’ scheme. Daniel Burton
wasn’t the only landlord to jump on to the bandwagon, but he was perhaps
the best known. At one point, Daniel Burton was reported as making around
£35k per month. He even ran seminars to help instruct those eager
wannabes who wanted to emulate his meteoric rise to property letting
success. Unfortunately, tenants were less than impressed with his
business blueprint.

Rent to Rent

The idea behind rent to rent is simple. People like Daniel Burton rent a
large property from an existing buy to let landlord. They then sub-let
the property to tenants looking for individual rooms. To make the scheme
pay, tenants are packed into the properties like sardines in order to
maximise rental income for the sub-letting landlord. If there are
problems with the property, the sub-letting landlord doesn’t have to deal
with disgruntled tenants; instead he directs their complaints back to the
original landlord owner of the property.

Sadly, it all went a bit wrong for Daniel Burton and his company. Channel
4 eventually tracked him down to sunny Scunthorpe in the north of
England, which is a far cry from his previous stomping ground of London.
But if you want to know the ins and outs of Daniel’s story, check out
Channel 4.