Landlord with Mortgages are Struggling

According to research carried out by the Council of Mortgage Lenders, mortgage arrears amongst buy to let landlords are on the rise. The number of people in arrears rose by 6% in the third quarter of last year, which is the first time this has happened since the CML started monitoring the situation two years ago.

Stamp Duty Tax
The government has introduced several key changes in the last year, one of the largest being an introduction of a 3% stamp duty levy on anyone owning a second property. This came into effect in April 2016, which caused a large spike in sales completions in the buy to let sector. Many landlords considering investing in buy to let property rushed into buying in order to beat the 3% charge. Experts believe that at least some of these people made an investment they really couldn’t afford, which is what has caused the rise in mortgage arrears.

Mortgage Interest Tax Relief
The concern is that more landlords will fall into mortgage arrears when new tax rules come into effect next April. From April 2017, mortgage interest tax relief is being phased out, so landlords will pay more tax on their income from rental property. It has been estimated that around 440k landlords will be pushed into the 40% income tax bracket, many of whom will have no choice but to pass their extra costs on to their tenants.

Are you one of these landlords? If so, let us know in the comments section.

Landlord Installs Coin Operated Toilet – Allegedly

The press is always full of tales of rogue landlords and feckless tenants causing havoc in rental homes. Do a search on any given day and you will find at least one story where a disgruntled landlord complains about clearing up the mess left behind by a tenant or a fed-up tenant complains about their landlord refusing to lift a finger. What you won’t see very often is a tenant complaining that his landlord has installed a coin-operated toilet.

Reddit Post
A thread first appeared on popular discussion site Reddit, where the poster asked for advice on whether his new coin-operated toilet was actually legal. The tenant claimed his Melbourne landlord has equipped the bathroom with a pay-to-use toilet, which required the tenant (and his guests) to pay one dollar to use the facilities. Not surprisingly, the tenant was unhappy with the arrangement.

“I understand in our laundry having to pay for the communal washing machine. But I pay the water bill that goes into my apartment,” the tenant wrote.

“[The landlord] said it was a government incentive to save water. But then why does he get to collect the money?”

Elaborate Hoax
Some people offered replies to the poster’s problem, but the majority thought it was an elaborate hoax. To dispel the naysayers, the OP posted a photo of the coin operated toilet, but most people were still unconvinced the toilet was real. The poster was advised to go to the press with his story, but once press got wind of it and contacted him, the trail went cold and the ‘tenant’ disappeared.

Government Consultation on Landlord Banning Orders

The government is getting tough in its approach to the problem of rogue landlords and letting agents. An official consultation has been launched, which will run until February 10, 2017. Views are being sought on which offences should be considered serious enough to cause a landlord or property agent to be banned from letting or managing rental properties. If a landlord or agent is banned, their name will appear in a national database of offenders.

Consultation on Possible Offences
Possible offences up for inclusion are threatening tenants, illegal evictions, and failing to carry out essential health and safety work, all of which are considered serious. The government’s housing minister hopes the introduction of a banning order will stamp out the problem of rogue landlords and make sure tenants are protected from exploitation.

However, David Cox, managing director of ARLA, is not convinced the proposed banning orders will work in the way the government intends them to do.

“It seems completely illogical that the database of rogue landlords and letting agents will only be accessible to local authorities and DCLG; surely this ultimately defeats the purpose of the legislation? If there is no public access to the database how will landlords or tenants understand if they are using a banned agent and how do agents see if those applying for employment are blacklisted or banned?”

A Holistic Approach
He rightly points out that lists would need to be combined to prevent a people jumping from one profession to another.

Kylie Jenner is a New Celebrity Landlord

Kylie Jenner is famous for many things, not least her lipstick range, glamorous Instagram feed and famous siblings. She may only be 20 years old, but Ms Jenner has a range of business interests. She also owns several properties, but instead of leaving them empty, she has decided to rent one of them out, which makes her a celebrity landlord.

Kylie’s brother, Rob Kardashian, and his girlfriend, Blac Chyna, recently became parents to a baby girl. According to the press, rather than live in Blac’s home, they have decided to rent one of Kylie’s homes in Hidden Hills. The seven bedroom mansion is closer to Rob’s family, so they will have more support while they raise their daughter.

Kylie’s Property Empire
The young Ms Jenner is rapidly turning into something of a property tycoon. She recently bought a second property next to her existing home in an exclusive gated community in Los Angeles, which means she now owns a joint compound. This is fairly unusual, but if she ever wants to extend one of the properties, it will make life a lot easier. Her most recent property acquisition has eight bedrooms, eleven bathrooms, and a massage room.

Celebrity Landlords
Kylie isn’t the only celebrity to recognise the value in letting out exclusive property in desirable areas. American actress, Brooke Shields, rents out her home in the Pacific Palisades and if you fancy living there, it will set you back $35k a month. Richard Gere also lets out his apartment in New York’s NoHo neighbourhood. This will cost you $20k a month.

Canadian Landlord Finds Livestock in his Rental Property

UK landlords are used to tenants moving cats and dogs into their properties, even when the tenancy agreement says “no pets”. It’s a common problem. Tenants like to share their homes with pets, which is fine until they start to cause damage. Stories of homes where dogs have defecated everywhere and cats have scratched carpets abound, but a Canadian landlord has had a much worse time.

Nightmare Tenants Move In
The landlord formed a good first impression of his new tenants when he leased a three-bedroom rental property in Ontario. Unfortunately, shortly after the tenants moved in, they started introducing livestock into the house. This might have been tolerable, except they failed to clean up the mess. There were reports of a goat, chickens, rabbits, dogs and cats living inside the house, which nobody bothered cleaning up after. They also didn’t bother paying any rent on the property.

Long Eviction Process
It took the landlord seven months to obtain an eviction order to get the couple and their son out of the property. By the time they did move out, the damage was horrendous. Timber floors were soaked in urine and there was mess everywhere. The landlord hired professional cleaners, filled two large skips with rubbish and animal carcasses, and ripped up the floors in an attempt to rectify the damage.

He now says he will only let his rental property out on short-term lets, as this will make it easier to evict problem tenants.

Reddit Users Discuss Tenants from Hell Stories

Reddit is a great site for general discussions on random topics. People share their thoughts and experiences on a whole range of things, which often makes for entertaining reading. How it works is simple: one user asks a question and then waits for other users to post their answer in the thread. In this example, a user asked for ‘tenants from hell’ stories. There were more than 500 responses, but some of the best were as follows:

Tenant DIY
One landlord complained that a tenant removed a kitchen island and took it outside to act as an outdoor serving area next to the pool.

Another tenant shoved marbles down a drain because his sink was clogged and he figured the marbles would push the blockage out. It worked in the sense that it pushed the blockage into the drainage system servicing an entire block of flats.

On a similar theme, a different tenant pushed plumber’s putty into the sink and bath drains, and then left the water running. The resultant flood was epic.

Fishy Story
Other horror stories included the guy who cut out holes in the drywall and left fish inside to rot; it took the landlord several weeks to figure out where the stench was coming from. Then there were the tenants who introduced bed bugs into their property.

Arachnophobia!
And finally, the worst ever story (from my perspective) was the tenant who called the landlord out to kill a spider. He refused, but agreed to go to unblock her sink. The spider turned out to be as large as a man’s hand…

Let us know your tenant horror stories in the comments!

Landlords Flaunting Right to Rent Scheme Face Prosecution

Failing to check up on a tenant’s immigration status has become a criminal offence. The new measures will be triggered under the Immigration Act 2016 and are an attempt by the government to crack down on rogue landlords providing accommodation for illegal immigrants.

“We are clear that illegal immigrants should not be able to access or remain in private rented accommodation, preventing lawful residents from finding a home,” says the Immigration Minister, James Brokenshire.

“We know the vast majority of landlords are diligent in their responsibilities when it comes to their tenants and we want to help them to be able to evict illegal immigrants more easily”.

Right to Rent Rolled Out Nationwide
The Right to Rent scheme was first rolled out in 2014 and has since been extended to the rest of England. By the end of next year, the government hopes to implement the Right to Rent scheme in Scotland, Wales and Northern Ireland.

Civil Penalties and Criminal Prosecutions for Rogue Landlords
Landlords and letting agents who flaunt the scheme will be liable for a civil penalty of up to £3,000. Landlords who repeatedly ignore the requirements of the scheme face being prosecuted and sent to prison for up to five years. They could also have their accounts frozen under the Proceeds of Crime Act.

On the plus side, landlords who discover they are housing illegal immigrants will have greater powers to evict their tenants quickly once they report them to the Home Office.

Landlords Fear Government’s Tax Regime Will Force Rents Up

Landlords are about to lose mortgage interest tax relief. This means they will no longer be able to deduct mortgage interest from their income. The National Landlords Association (NLA) says this will push 440,000 landlords into a higher rate tax bracket.

Mortgage Interest Relief to be Phased Out Next Year
At the moment, landlords can offset their mortgage interest against any tax. However, from April next year, this is being phased out. By April 2020, the tax saving will be phased out completely and landlords will no longer be able to offset any mortgage interest against tax. For landlords who have mortgages, this is disastrous. 40% income tax payers will have to pay significantly more income tax on their earnings from rental properties, which could make buy to let investment no longer worth the time or the effort.

Unfairly Penalising Landlords
Some experts believe that the government is wrongly punishing landlords for problems affecting first time buyers, when in reality it is the lenders who are at fault for charging first time buyers more when they need a high percentage mortgage. The government seems determined to penalise landlords.

Many landlords barely break even as it is, so they will have no choice but to increase rents on their properties to recover some of their costs. Those that can’t recover the extra costs will be forced into selling their properties.

These are difficult times for landlords. Are you going to be affected by the government’s tax changes? If so, let us know in the comments.

Toronto Tenants Want Landlord Licensing Scheme

UK Landlords are familiar with licensing schemes, as many local authorities have introduced them over the last few years. The practice is not so common in other countries, but an organisation representing tenants in Toronto, Canada, is putting pressure on the city to increase the scale of its existing licensing scheme to bring rogue landlords into line.

The Association of Community Organisations for Reform Now (ACORN) surveyed 174 residents living in the rental sector and found that 94% of them were living with problems in their homes. More than 66% of them said they had had problems from the day they moved in, but it was extremely difficult to persuade their landlords to complete even basic repairs.

Rogue Landlords in Toronto
Problems in Toronto rental units included cockroach infestations, holes in walls and ceilings, and peeling paintwork. Many tenants also felt threatened when they asked their landlord to carry out repairs.

More Comprehensive Landlord Licensing Scheme
ACORN wants a more comprehensive landlord licensing scheme where larger landlords would pay a fee. The extra revenue to the city would then pay for extra city inspectors, who would have the power to carry out annual inspections of larger apartment buildings. They would also be given the authority to levy large fines to landlords who violated property standards.

Toronto’s City Council will consider the proposal in the next few days. If the licensing scheme goes ahead, it will affect more than 2,900 larger apartment blocks and 500+ public housing apartments.

Fraudster Landlord Scams on the Rise

Fraudsters are becoming increasingly active in the online rental market, so tenants – and genuine landlords – need to make sure they are not taken in by scams.

Many tenants look online when they need a new place to rent. It’s the obvious choice for today’s internet savvy generation. A woman in Exeter thought she had found the perfect flat when she placed an ad on Gumtree. Sadly, it turned out to be anything but the perfect flat.

Fraudsters Target Free Advertising Platforms
Fed up with living in supported accommodation, the tenant advertised for a flat suitable for tenants on benefits. A woman got in touch offering a one-bed flat, but when the tenant asked to go and view the place, the landlord said she couldn’t take the time off work after being messed around by previous time-wasters. Her story seemed genuine and the tenant was sent a deposit guarantee letter and a signed tenancy agreement. This was enough to persuade her to transfer a £500 deposit to the landlord’s account, which disappeared without trace, just like the bogus landlord.

Stolen Property Listings
This story is not uncommon and fraudsters typically use listings stolen from genuine property ads, with a few key details changed to suit the ad. Sites like Gumtree do provide plenty of resources to alert people looking for rental property, but scammers continue to run amok.

The RLA believes not enough is being done to protect tenants.

“It’s the duty of websites where properties are advertised to show some due diligence in establishing that a property is valid.”