Finding the right tenant for a rental property is not always easy. The current economic recession is biting hard and with unemployment at an all-time high and wages failing to keep in line with the cost of living, rent arrears are becoming an increasing problem for many UK landlords.

According to recent figures, more than 100,000 tenants were at least two months behind on their rent payments between April and June of this year. As a result, there has been a corresponding rise in the number of landlords taking court action in order to evict non-paying tenants in the last three months.

How can landlords try and avoid such problems?

The best way to avoid having to take your tenants to court for non-payment of rent is to choose the right tenant in the first place, and although there are always going to be some circumstances where a tenants is struggling to pay the rent because he unexpectedly lost his job, or similar, it makes sense to scrutinise references even more closely in these difficult times.

But if your tenants do appear to be struggling with rent payments, tackle the issue sooner rather than later. Talk to them and find out what the underlying reason is, and if they are otherwise good, reliable tenants, consider reducing the rent for a short period of time until they get back on their feet. Just remember to put anything you agree on in writing in case there is a dispute at a later date. However, if you can’t resolve the situation, make a move to have the tenant evicted before you lose too much money.

According to a recent survey carried out by the Department for Communities and Local Government, the percentage of homes in the private rented sector is now equal to that in the social sector, which together makes up a huge 17% of the total housing stock in the UK.

In the last ten decades, the number of private rental homes in the UK has risen by a massive 1.5 million whilst the number of local authority owned houses has fallen by 1.8 million. And as Alan Ward, chairman of the RLA, commented:

“The news that the private rented sector is now equal in size to the social rented sector demonstrates the ever-increasing importance of the sector in meeting the UK’s housing needs.”

The result of the survey is not all that surprising when you consider that the cost of owning our own home is becoming increasingly unaffordable for a large number of the population, especially younger people with no savings. However, it does illustrate just how important the role of private landlords are in the current economic climate—without people like us buying property to let, there would be an even greater shortage of housing stock in the UK.

However, despite the increase of landlords in the private rental sector, there is still a chronic shortage of homes available, which in part is driving rents up across most parts of the UK. As a result of this, industry experts are still calling on the government to review the way landlords are taxed in order to encourage further investment and increase housing stock.

Letting rental properties to student tenants can be very lucrative: you are pretty much guaranteed rental income for a year in advance and if you own buy to let properties in popular university cities, there will be no shortage of students waiting to move in. But although many students make excellent tenants, there are long holidays between academic terms and your properties could be left empty for several weeks at a time.

Potential problems during student void periods

1.    An empty property is a magnet for thieves and squatters, so if you know your student tenants are going home for the summer holiday, make sure locks on doors and windows are in good condition and keep a close eye on the property. Ask your students to hide any expensive equipment out of sight and avoid telling all and sundry that they are going to be away.

2.    Accidental damage caused by a running tap or a leaky pipe is very common in empty properties: if someone fails to turn a tap off before they head home for a couple of weeks, the subsequent flood could cost you a lot of money. The best way to prevent such problems is to turn the mains water supply off when the property is left vacant.

3.    Some students may decide to sublet their house or flat whilst they away, but although their new best mate might seem like a nice guy, he could just as easily bring his pets along for the ride, thus leaving you with a bill for damage to furnishings and carpets. It is also not unheard of for unofficial tenants to turn an empty house into a cannabis farm or brothel for the summer break, so make it quite clear to your student tenants that this is not an option!

Rental homes have to have some form of heating, just like any other home, but in a bid to save money, many landlords install types of heating that are cheap to buy, but very expensive to run, which leaves the poor unfortunate tenants facing crippling heating bills over winter.

In one recent case, a council decided to take a landlord to a Residential Property Tribunal (RPT) for fitting panel heaters on a standard electricity tariff in one of his rental properties. Because the house in question was old, it was very poorly insulated and the tenants were forced to pay a huge amount just to enjoy a warm and comfortable home.

The landlord initially won his case when the tribunal decided that as long as he provided some kind of central heating for his tenants, he was not obliged to consider what the running costs were. However, the council appealed the decision using cost benefit analysis of heating a home as part of their evidence. The original ruling by the RPT was overturned by the Upper Tribunal (UTLC), who subsequently decided that central heating running costs were not irrelevant when making an assessment of “excessive cold” under the guidance of the Housing Act 2004.

This ruling has far reaching consequences for landlords in the private rental sector. No longer will you be allowed to install a cheap form of heating without giving due thought to how much the running costs are likely to be. Instead you will have to take running costs into account and make a decision accordingly, or face the consequences.

Newham Borough Council is the first local authority in the UK to bring in a borough-wide private landlord licence scheme in an effort to reduce the numbers of unscrupulous landlords flouting the law and making tenants’ lives a misery.

“We want to ensure that private sector rented properties are well managed and meet a good standard. We also want to deal with the crime and anti-social behaviour that is sometimes associated with bad private sector rented housing,” says Mayor Sir Robin Wales of Newham Council, although many industry experts, including the NLA, are not convinced the scheme has any great merit.

The landlord licence scheme in Newham is scheduled to begin on 1st January 2013 and will require private landlords to pay a flat fee of £500 in return for a five-year licence. However, if landlords wish to sign up for the scheme early (before the start date), they will be entitled to receive a one-off discount of £150, thus reducing the fee to £350 for five years.

The private landlord licence scheme was first piloted in the Little Ilford Neighbourhood Improvement Zone of Newham Borough Council and several bad landlords were subsequently targeted for enforcement notices. As a result of the successful pilot scheme, Newham has now decided to roll out the landlord licence to the whole of the East London borough and more than 35,000 private landlords with a portfolio of private rented accommodation, including buy to let properties and houses of multiple occupancy (HMOs) will be affected by the changes.

In an attempt to deal with the problem of under-occupation in the social housing sector, the government is introducing a new ‘bedroom tax’.  This is a cunning way of slashing the benefits budget because it penalises people living in houses with more bedrooms than they actually need: anyone who rents a property with spare bedrooms will be forced to move to a smaller property or face a 14% reduction on their housing benefit cheque for one extra bedroom, and a 25% reduction for two or more extra bedrooms.

So if a family chooses a property with more rooms than they need, perhaps because they are planning to have another child or they regularly entertain family or friends and need a spare room, they can expect to pay a hefty premium for the privilege. Children of different genders will be expected to share a bedroom up to the age of 10, or 16 if they are the same gender.

As a result of such changes, landlords who operate in the social housing sector could soon find their larger properties are much harder to rent while smaller one or two bedroom properties are very much in short supply. There is also likely to be an increased demand for properties in the private rented sector as families living in housing association properties are forced to look for a smaller home in order to retain their existing benefits. And with the cost of living rising almost daily, many families living on the breadline will be pushed even deeper into poverty in the worst affected areas.

As a landlord, you probably have an “ideal tenant” in mind whenever you place an advert for one of your properties. The list of ‘must-have’ attributes probably includes being solvent, reliable, and honest. So what do you do when you discover your tenants have stolen items from the property before moving on?

Sadly not all tenants are honest and upstanding members of the local community and no matter how respectable they might sometimes appear to be, quite a high number of tenants think it is perfectly acceptable to move out and take items such as the washing machine with them. In fact theft from rental properties is more common than you might imagine and most landlords can probably admit to experiencing tenant theft at least once in their careers.

A landlord insurance policy will go some way towards recompensing you for the theft of items from your properties, but the best way to approach the matter is to try and prevent theft from happening in the first place!

Obviously it is impractical to install some kind of anti-theft security tag on anything not nailed to the floor, so before you allow a new tenant to move into one of your properties, make sure you thoroughly check out their references. Financial status is a good indicator of whether a tenant is desperate enough to strip the sanitary ware from a house and if a tenant is massively in debt and owes money left right and centre, they should certainly be considered a high-risk prospect.

It is also essential to have a comprehensive inventory drawn up at the beginning of a new tenancy to help you flag up any anomalies when the tenant moves out.

It was feared that government changes to tuition fees would negatively impact the numbers of students choosing to go on to further education and university, but although many students are now being forced to cough up thousands of pounds in fees, figures indicate that applications for places in September 2012 are up compared to the same period last year, which is good news for student landlords!

Operating student rental accommodation can be an excellent business proposition for landlords in popular university towns and cities and there are many advantages in marketing your buy to let properties towards students. Students always need accommodation and in most cases on-site campus accommodation is restrictive and very much in short supply. Students are also used to paying their rents at least a term in advance, so you are unlikely to be out of pocket, plus a student tenant is a reliable tenant and will be around for at least one year—and potentially three years if you are lucky.

On the downside, students are not known for their clean living lifestyles and it is pointless in letting a smart four bed executive detached house to a bunch of students and expecting it to remain in good condition at the end of six months. It is also worth pointing out that students are far choosier about the accommodation they go for these days (most stipulate WiFi access, a good location, and other modern conveniences as an absolute minimum), so you may find it hard to let a property that is in poor condition and located miles from campus.

Reforms to the way Housing Benefits are calculated have made life unaffordable for many tenants living in the private rented sector and according to a report in the Guardian this morning that highlighted research commissioned by the government, increasing numbers of landlords are taking the decision to cease renting their properties to tenants on Housing Benefit. London has been particularly badly affected and very few tenants living on benefits can now afford private rental properties as a result.

Obviously reforms to the welfare system are long overdue and it is crazy that some families are able to claim thousands of pounds per week to live in affluent parts of the city. The government hopes that such reforms will provide a greater incentive for people to go out and find work instead of living in benefits, but many families unable to find a job are being forced to cut their expenditure on food and other essentials in order to fund the shortfall in housing benefit and remain in their homes.

Research highlighted in the article points to the fact that many London landlords are simply evicting tenants on housing benefits rather than trying to find a workable solution, and if such a trend is left unchecked, it will inevitably lead to a rise in homelessness in the capital and beyond.

However the government is adamant that Housing Benefit reforms are having very little impact on low-income families and that capping Housing Benefit is “the right and fair thing to do”, although the executive member for housing in the London Council feels slightly different: he described the report’s findings as “worrying”.

When London was confirmed as the host for the 2012 Olympic Games, hoteliers and landlords across the city rubbed their hands together with glee. The gilded promise of an influx of tens of thousands of visitors over the summer would surely signal untold riches and a fabulous profit on accommodation across the city, right?

Sadly an altogether different picture is beginning to emerge and according to many landlords in London, the much-anticipated demand for accommodation during the Games has failed to materialise and a lot have been left with empty rooms and little prospect of short-term tenants for the summer Games.

Across the city, rents are beginning to fall, but there are still a few landlords hoping to cash in on those seeking last minute accommodation for the summer—many are refusing reasonable rental offers in the hope that someone else will come along with deeper pockets. Unfortunately, they may find that their greed backfires on them when they end up with no rental income for the foreseeable.

Other potential problems also exist and have been highlighted by at least one landlord blogger on his website. As he commented, what happens if your existing tenant refuses to move out despite the fact you have accepted a large amount of money upfront for the property—the new tenants will show up and have nowhere to stay!

Most landlords would be better off keeping their existing tenants and enjoying the safety of a regular income for the summer. Short-term rentals can and do work very well, but not if you price yourself out of the market!