House fires are always dangerous, but recent research released from the Electrical Safety Council has highlighted just how many fires are caused by problems in and misuse of domestic electrical appliances. Misuse of electrical items is now the leading cause of all house fires in the UK. Unfortunately, many tenants and landlords are completely unaware of the problems that significantly increase the risk of a fire breaking out.

What NOT to do with electrical appliances

• Don’t block air vents behind fridges and freezers – clean vents regularly to avoid a build up of dust and debris

• Avoid overloading sockets – always make sure your properties have enough sockets per room and check that tenants are not plugging in multiple extension leads

• Remind tenants not to leave electrical appliances such as tumble driers running unattended for long periods of time

• Do not cover microwave vents

• Do not use cheap or second hand electrical appliances without BS safety ratings

How prevalent are electrical house fires?

Although the incidence of house fires has declined in the last three years, the number of electrical fires has increased by 33%, mostly as a result of the ever-increasing numbers of electrical appliances we keep in our homes.

How to reduce the risk of electrical fires

Ensure that there is a Residual Current Device (RCD) in the property’s fuse box (this cuts off power should a fault occur)—research has indicated that only around 50% of properties have this vital safety cut-off switch. You should also warn your tenants about the risks posed by misuse of electrical appliances.

Are you treating your buy to let investment portfolio as an extension of your pension plan for retirement? If so, then you are not alone and a recent survey of landlords in the UK found that many were viewing their properties as another source of income for their retirement. Indeed, many actually intend on living off the money generated from their buy to let properties.

Are buy to let properties a good retirement investment?

Given that around 80% of landlords questioned believe so, the answer is probably yes: a buy to let investment portfolio is definitely a good alternative to a poorly performing pension plan. Interest rates at the moment are diabolical. In fact you would be better stashing your cash under a mattress rather that waiting for it to collect a meagre few pence in interest from a savings account. So investing in property that can generate a steady income is probably an excellent plan if you have the money to spend.

But even if you are lucky enough to have a fairly decent pension plan, you can still use the income from buy to let to supplement your pension, which is what 20% of private landlords are currently doing. And if you find that you are short of cash at a later date, you can always sell one or more of your properties and release some equity.

Buy to let yields have never been so high, so now is an excellent time to consider investing in the rental market—although some areas of the country are out performing others and a bit of research is essential if you want to maximise your profits.

It doesn’t take an accountant to figure out that some long overdue changes are needed to the UK benefits system as too many people are taking advantage of the cash on offer and playing the system for all it’s worth.

Take for example Housing Benefit: when a family is able to claim more than £100k per year to live in a Mayfair mansion, there has to be something seriously amiss somewhere! This is just one of the issues the government is trying to address with the introduction of the ‘Universal Credit’.

How will the introduction of Universal Credit affect landlords?

Many landlords let their properties to tenants claiming benefits. The current Housing Benefit system allows for rent payments to be made directly to a landlord, which is useful if the tenant is not a reliable payer. Unfortunately, the government plans to scrap this policy unless a tenant has learning difficulties or is mentally ill, which could lead to a rise in rent arrears.

No landlord wants to deal with rent arrears—it takes time and money to sort out. Sadly, if tenants on Universal Credit end up with a poor payment record as a result of spending their benefits down the local pub instead of handing over the cash to their landlord, they are going to have a problem finding a landlord who is willing to offer them a new home.

The Minister for Welfare Reform (Lord Freud) tried to address some of the concerns held by landlords at the recent NLA National Conference in a question and answer session, but many landlords still remain sceptical about whether the new system will work as well as the government hopes.

Yes, you have read that correctly, but thankfully the property situation in the UK hasn’t quite reached such desperate levels, although there are plenty of unscrupulous landlords who are more than happy to let out a shed in their backyard, describing it as a “compact bedsit”.

China is one of the most populous places on earth and in the cities millions of people live shoulder to shoulder in high-rise buildings where space is at a premium. Even so, it is still hard to imagine how a 6-story building can be converted into an astonishing fifty-five capsule bedsits, but in order to maximise his income, one enterprising landlord in China has managed to do just that.

The building in Wuhan City in the Hubei Province now contains fifty-five tiny shoebox style homes. Each one is on average 4.5m2, but despite the cramped space, the capsules still manage to combine a sleeping area, bathroom and kitchen. Many are also shared, so it probably pays to get along well with your flatmate.

Considering the tiny amount of living space per capsule, you might expect rental homes like this to be less than popular, but according to the article in the Daily Mail, the average rent in the city is much too expensive for many young people on low wages, so ‘capsule homes’ are very much in demand. This might seem unbelievable, but looking at the pictures that accompany the article, I can see that despite the cramped living space the capsules are actually pretty cosy; some of the tenants have even made room for their pets!

Twenty to thirty year olds may be struggling to gain a foothold on the property ladder, but the same cannot be said for landlords—according to a report in the Daily Mail this morning, more than 1.4 million UK mortgages are now buy to let (around one in eight), which is the largest number ever recorded. Ten years ago, only 2.4% of mortgages in the UK were taken out by landlords, but today the situation is completely different and 12.7% of the mortgage market is made up of buy to let loans.

The Conservative Housing Minister, Mark Prisk, recently described the UK housing market as “dysfunctional”, which given that millions of young people cannot afford to rent a home let alone buy one, is probably not that inaccurate. Of course part of the problem is that affordable first-time buyer housing is being snapped up by landlords, which is pushing prices up. Consequently many people these days are not in a position to buy their own home until they are well into their 30s.

Why is ‘buy to let’ becoming so popular?

Savings rates are currently a pathetic 0.5%, so sticking your spare cash into a savings account is not going to give you much in the way of interest. Investing cash in property, on the other hand, offers a far more attractive return on your investment. Demand for rental property is high (because of the lack of affordable housing) and with the average rent around £714 per month, it is possible to make a good living from being a landlord.

With public spending at an all time high, the government is trying out a
series of hard-hitting reforms in an effort to claw back some money. The
cessation of Child Benefit payments to more affluent parents has been a
popular topic of discussion in the last few days, but reforms are also in
the works for Housing Benefit, which is causing many landlords some
concern.

One recent trial scheme encouraged landlords to offer concessions on
their rents in return for having Housing Benefit paid directly to them
rather than the tenant. Caps to Housing Benefit have affected a lot of
tenants in the private sector, as many are no longer able to afford
larger accommodation, so any concession made on the monthly rent is
likely to be most welcome.

Lord Freud, the Welfare Reform Minister, has declared the trial scheme a
huge success and claimed that in London around one third of landlords had
willingly reduced the rents on their properties in return for direct
payments.

“There has been no mass exodus of people moving out of city centres or
widespread homelessness because of our housing reforms,” he was quoted as
saying at the NLA annual conference.

However, in a recent survey of more than one thousand landlords, more
than 60% said they were unwilling to reduce rents in return for direct
payments and many expressed concern over the government’s failure to be
clear about when exactly landlords could demand a direct payment—the
government has refused to guarantee the current policy of releasing
payments direct to landlords once a tenant has fallen 8 weeks into
arrears. As such, more than 90% of those surveyed said they would think
twice about letting to tenants on benefits.

The massive hike in university fees has had an unwelcome affect on the numbers of students seeking accommodation in London and in an attempt to fill empty rooms, some property developers are using innovative marketing strategies to attract student tenants, including free iPads and driving lessons.

Why is demand for student accommodation falling quite so dramatically?

Tuition fees are now a staggering £9k and rather than risk starting their working lives with thousands of pounds worth of debt, many would-be students are choosing to find a job instead. And who can blame them—I would probably do the same if I were in their shoes.

High student occupancy rates in conjunction with stable rental income has seen the student housing investment market increase from £350 million in 2009 to more than £2 billion at the start of this year. As a result, many property development companies have been targeting landlords with the promise of high returns on their investment

The sudden fall in student numbers is having a devastating affect on what has previously been a very lucrative market for landlords, particularly at the higher end of the market in London. The student let market has also been affected by tighter government restrictions on non-EU students and many would-be students from abroad have been unable to secure a visa to come to the UK to study. This negativity is also reflected in lenders—many are moving away from student property development sector over visa and fee concerns.

However, despite these challenging times, many experts feel that the situation will improve over the next couple of years and student numbers will gradually return to normal levels.

HM Customs & Revenue officers have launched a new regime designed to ensure landlords of all sizes are keeping the necessary records related to their buy to let property business.

A pilot scheme for record compliance was run between April 2011 and February of this year and more than three thousand buy to let businesses were inspected by HMRC. Unfortunately, 36% of those landlords targeted were found to have issues with their record keeping and a further 10% were identified as having ‘serious’ problems that necessitated follow up visits.

Following the success of the pilot scheme, it is now being rolled out nationwide. Landlords in London and East Anglia will be the first to face the wrath of HMRC, but over the course of the next few months, landlords across the UK can look forward to a friendly chat with HMRC.

What can landlords expect?

In the first instance, landlords can expect a preliminary phone call to establish what kind of business records (if any) they are keeping. If HMRC suspect inadequate records are being kept, an appointment 90 days later will be scheduled for a tax inspector to come and inspect records. Hopefully this should give errant landlords time to sort out their admin, but if further problems are found (ie. 90 days is just not long enough to create 5+ years of adequate records), you can expect fines and further visits.

It might sound a bit harsh, but this approach is designed to help landlords before everything snowballs into massive errors on tax returns. So although you might view record keeping as a drain on your time, remember: keeping accurate records is essential!

A Lancashire landlord has been prosecuted by Barrow Borough Council after failing to carry out essential improvements to one of his properties. He was fined a total of £6,000 and order to pay court costs of nearly £1,000.

A representative for the council was quoted in the local press as saying the council hoped the successful prosecution would deter other landlords from ignoring their legal obligations towards tenants: “We are hoping it sends a bit of a message that we are serious about enforcing these standards,” they said.

The case was first brought to the council’s attention when a disgruntled tenant complained about the state of his rental property. When the council housing officers duly arrived to make an inspection, they found that the accommodation fell way below statutory guidelines, and as a result of their findings, several letters were then sent to the landlord requesting that improvements be made. When the landlord failed to respond, this was followed up with an issue of formal improvement notices. The landlord continued to do absolutely nothing and so eventually legal action was initiated against him.

Barrow Borough Council, like many other local authorities across the UK, is starting to crack down on landlords who fail to make the necessary improvements required to bring their properties up to the required standards. The council acknowledges that most landlords are willing to carry out improvements when such matters are brought to their attention, but for those who prefer not to spend the money, a trip to the local county court can always be arranged.

There is no doubting that social networking sites are a massive part of
modern life and lots of us spend time every day on Facebook, Twitter and
Linked-In, but one less obvious use for social networking sites is to use
them to interact with tenants, including chasing them when they owe you
money!

Tenants who have fallen into rent arrears or owe money for damage done to
a property can sometimes be difficult to locate if you have no forwarding
address for them. However, thanks to a recent judgement, serving legal
claims via popular social networking sites could be a new and easy way to
start a money claim.

The judge presiding over a commercial dispute ruled that Facebook could
be used as a virtual address when it proved to be difficult to locate a
former employee who had been accused of overcharging commission to his
clients. Papers had been served on the defendant’s only known previous
address, but since nobody could be certain that he still lived there, the
court was asked if the notice could be served via an active Facebook
account. Permission was granted as there was good evidence produced to
show that the defendant was a regular user of Facebook.

This important ruling could now set a precedent for money claims against
elusive tenants, allowing them to be served via popular social networking
sites (this already happens in Australia and New Zealand). And since a
judge allowed Twitter to be used to serve an injunction in a previous
case, landlords could soon be using social networking sites to claw back
money from absconding tenants.