Tag Archives: HMO

Subletting Scams – why landlords are afraid to report them Cautionary Tales, Landlord News, Latest Articles, Letting, Lettings & Management, Property News, UK Property Forum for Buy to Let Landlords

Many landlords are fearful to seek help from their local authorities in terms of dealing with subletting scams.

Just imagine this, you’ve jst let your nice little three bed house to Mr & Mrs Lovely and their two perfect children, only to find out that 10 of their family have also moved in. How would you feel?

Subletting scams can also go a stage further. Mr & Mrs Lovely may never actually move into the property, they simply cram as many immigrants in as possible (sometimes illegal immigrants) and charge them all a rent and make a huge profit.

The landlord then has numerous concerns including:-

  • Mr and Mrs Lovely fail to live up to their name and stop paying rent, but they continue to collect it
  • wear and tear on the property
  • noise related issues affecting neighbours
  • will their landlords insurance still be valid
  • fire safety
  • HMO licensing
  • and so the list goes on.

You would think that a quick call to the local EHO (Environmental heath Officer) should sort the problem wouldn’t you? So far as I’m aware, EHO’s have every right to close the property down if they consider it to be a danger to human life, through overcrowding for example. In such circumstances, that’s exactly what many landlords actually want to happen. What they don’t want is to spend several months going through the Courts to obtain possession order, which under the circumstances they will inevitably obtain but at what cost to themselves and at what risk to human life in the meantime?

Whilst any legal action is ongoing the landlords property is probably getting ruined, they may not receive rent, the neighbours get very upset and the landlords ends up with a huge bill.

The fear of reporting such problems runs deep. Will the local authorities use the problem against the landlord? Will they take pictures of the property and use them in their anti-landlord propaganda to justify licensing schemes? Will the local authority press charges against the landlord for the state of the property, which may well have been perfect when they first rented it to Mr & Mrs Lovely?

In many cases, inventories prepared by landlords are not up to scratch so the fear of reporting problems is that tenants will claim the property was a death trap from day one and the landlord becomes a victim twice over!

I am hoping that any TRO’s (Tenancy Relations Officers), EHO’s (Environmental Health Officers) and others with the powers to actually do something about this will comment on the problem as well as landlords and letting agents. Subletting Scams - why landlords are afraid to report them

 


Nearly Legal SEO Discussion Landlord News, Latest Articles, Property News, UK Property Forum for Buy to Let Landlords

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Key Property (UK) Ltd fined £47k for damp unlicensed HMO Buy to Let News, Cautionary Tales, Landlord News, Latest Articles, Letting, Lettings & Management, Property Investment News, Property Maintenance, Property Market News, Property News

A letting agent who rented out a damp, dangerous and dilapidated property received a hefty fine following a successful council prosecution. Key Property fined £74k for damp and unlicenced HMO

Key Property (UK) Ltd of 47 Bell Road, Hounslow, who trade under the name Key Solutions and Key Lettings, were fined £42,500, on top of costs and compensation worth £5,040, at Feltham Magistrates Court after being found guilty of 15 housing offences.

The offences related to a property on Cromwell Street, Hounslow, which the council investigated following complaints from tenants in July last year.

Officers inspecting the property found seven tenants living at the property, in five separate bedrooms, which included the front and rear living rooms.

They discovered a significant number of defects relating to excess cold, damp and mould, electrical hazards, problems with sanitation and drainage, security, fire safety, structural hazards and hygiene.

A boiler that had been turned off by the manufacturer due to its unsafe installation had been switched back on.

It was also discovered that the property was a house in multiple occupation (HMO) and required a license to be let out to tenants. Having a license would mean the property was being managed well, and was suitable for occupation.

Cllr Steve Curran, cabinet member for housing, planning and regeneration at the council said:

“The fact the fine for failing to have an HMO license is one of the largest in the country shows the seriousness of the offences.

“I’m pleased magistrates have thrown the book at this criminal letting agent, as the conditions the tenants were living in – no fire alarms, dangerous gas and electrics, and some of the worst damp and mould our officers have ever seen – were, frankly, appalling.

“They took more than £24,000 in rent from these tenants and left them to live in squalor.

“They tried to avoid their legal responsibilities, but thanks to the hard work of our housing team, we were able to successfully prosecute them.”

Key Property were found guilty of 15 housing offences at Feltham Magistrates Court on Wednesday, 4 September.

The offences, fines and costs awarded were:

  • Managing an unlicensed HMO: £15,000 fine
  • Supplying false information: £5,000 fine
  • 3 offences relating to management of the property: £22,500 fine
  • Compensation to tenants: £600
  • Victim surcharge: £120
  • Council’s legal costs: £4,320

The director of Key Property (UK) Ltd is Mrs Adibah Uddin, and the company secretary is Mr Iftikhar Uddin


Can a landlord refuse to put locks on HMO bedroom doors? Latest Articles, UK Property Forum for Buy to Let Landlords

My son has moved away from home to take up a new job. We took him there  last week and realized that there no locks on the bedroom doors. He is living in a HMO with 5 other professionals. locks on HMO bedroom doors

We asked to have a lock put on the door to the manager. Her reply was that rooms used to be let to students and that’s why there are no locks. Students lose keys most of the time and she would often be called our at unsociable hours.

We stressed that these are no longer students but professionals. My son went to her office the next day. He was told that she does not want to carry a big bunch of keys around when next she comes to show prospective tenants.

The landlord insurance does not insure tenants contents. He “strongly advises ” tenants to take their own insurance.

My question is, have we got any rights to insist on having a lock put on the door?

How can you insure valuables when you leave the door unlocked?

Are we within our rights to put the locks ourselves?

Your help will be most appreciated.

Flo


Mortgage Express or Mortgage Distress? Advice, Buy to Let News, Cautionary Tales, Financial Advice, Landlords Stories, Latest Articles, Mortgage News, Property Investment News, Property Investment Strategies, UK Property Forum for Buy to Let Landlords

The Mortgage Express exit strategy has been a hot potato since at least 2011 when they first met a group of 70 landlords at an event organised under the Property Tribes banner. Mortgage Express or Mortgage Distress

They have been slated by landlords for imposing terms and conditions which were buried in small print and which are no longer adopted by the mainstream buy to let lenders.

The bottom line for MX though is that their loan book is now the property of the UK tax payers and the organisation is pretty much run by Civil Servants, accountants, debt collectors/councillors and insolvency practitioners.

The Government have imposed tough targets and deadlines on the new MX team to reduce the loan book and therefore, it was inevitable that strong arm tactics, which many would describe as bullying, would be used.

Naturally they have gone for the easy targets and started by selling the concept of making over-payments to people who were too naive to work out that repaying a loan which typically costs 2.25% rarely makes sense. It’s possible to get a better return on that with a cash ISA or a deposit account in a bank or building society!  MX appear to have had scant regard to advising their clients to pay off more expensive credit first and they were never going to suggest investing any surplus into anything but reducing a debt with them were they?

The strong arm tactics have extended to imposing their “Right to Consolidate” which their contracts say allows them to use 100% of any sale proceeds to repay debts owed to them. It has even been implied on many occasions that if a borrower redeems one mortgage with Mortgage Express they can call in the rest! I’ve not seen these terms challenged in Court yet but I have come across borrowers who had stood up to Mortgage Express and there are quite a few examples on internet forums of MX having backed off. Bullies don’t like people who fight back.

Mortgage Express Reviews

General sentiment of landlords is that Mortgage Express borrowers should avoid reviews like the plague. The conspiracy theorists, of which I am one, are that MX have a very simple agenda and it’s not based on helping borrowers despite how they pitch it. It would appear the entire purpose of the meeting is for MX to persuade you to pay off or reduce your debt and/or to look for you to trip yourself up by admitting to breaching mortgage conditions which you were not necessarily aware of. Examples include:-

  • living in a property financed as a BTL
  • Letting a property which was financed as a private residence
  • letting to tenants which are now claiming benefits
  • where a property is an HMO

Would you know whether your tenants were claiming benefits though? What if they started claiming benefits after the tenancy started? What if the property became an HMO due to your local authority imposing selective or additional licencing?

Is it fair that MX could find one little problem, call in that loan and then call all the others in based on their right to consolidate conditions?

My Preferred Mortgage Express Exit Strategy

It has been mooted on several forums that MX have a target to collect a percentage of their loan book. I’m not aware whether the percentage target has ever been published but I’ve heard figures as low as 25% banded about. I suspect it’s much higher than that, otherwise, why would they carry the heavy administrative costs of their current activities as opposed to simply selling their loan book for 25% of it’s value? Perhaps they could and it’s a simple case of government ineptitude and politics preventing this from occurring? More likely, in my opinion, is that the government want to be seen to try to recover as much as possible of the tax payers bail out money.

If we knew what the desired recovery percentage was we could make suggestions. Let’s suppose the figure is 60%. Most buy to let landlords would happily refinance if their loans were discounted by far less than that. I’d certainly consider moving for a 25% to 30% write off of debt. Not every borrower would want or be in a position to go for such a deal but if only half did so, the remaining book, which I suspect would include a lot of toxic dent and low value assets due to negative equity, could still be shifted. They may only get 40 pence in the pound for these assets as a block sale but those extra 10% to 15% figures they would get from borrowers taking up their offers directly could well make up the balance.

Why don’t Mortgage Express just exit now?

I suspect it’s only a matter of time before Mortgage Express start offering golden goodbye deals to borrowers, it’s just a case of satisfying the tax payer that they’ve tried everything else first. Mortgage Express were given 7 years to exit and it is because we are into the final states of that period we are seeing them apply increasing pressure. Those of us who can survive the next few years will, I suspect, come out of this with a great deal but in the meantime we should expect the unexpected as well as underhand tactics.

What would you do if you were Mortgage Express?

What do you think Mortgage Express borrowers should and should not do to protect their interests?

Don’t be bullied by Mortgage Express

Before you agree to do anything with Mortgage Express talk to your fellow landlords. Go along to Landlords Association meetings or post comments/questions below or on Property Tribes. If Mortgage Express do bully you, fight back. If you don’t want to meet them don’t meet them. If they get aggressive with you just bear in mind that there are thousands of other Mortgage Express borrowers who are likely to have had similar experiences. Focus on the ideas that are legal and make the most sense. There are reported to be in the region of 50,000 Mortgage Express buy to let borrowers.

Via this link we have an excellent story as it unfolds of a landlord who was being forced to sell his home by Mortgage Express. It’s a very long discussion thread which was contributed to by several landlords and property professionals. To cut a long story short the landlord got his MP on side and Mortgage Express backed off.

Mortgage Express problems - You are NOT alone

 


Planning and building control office discover unused basement room Latest Articles

I have a HMO which I bought way back, it is officially licensed etc and above board.

They recently discovered that there was a basement in the building which had been converted in to a room with en-suite facilities illegally. The work was done before we bought the building and has never been let out and won’t be because it is not up to scratch from a legislation point of view etc.

I had a meeting with building control, private sector housing and planning. They are now saying that as it has come to their attention that this is there, that they want me to put it beyond use. Which would basically mean, taking out the en-suite and cutting off the water supply to the area. Removing and cutting off the sockets and electrics to the area and get a new periodic inspection report.

To me is seems completely over the top as  have not asked for it to be licensed, and don’t rent the room out, so why do I have to go to all this expense of making it unusable.

My question is, can they make me do this or can I lawfully argue that the room is not being used, it won’t be used so let’s leave it as that.

Thanks for your help.

Zahirbasement


A call to convert 66,000 student HMO’s back to family homes? Latest Articles, UK Property Forum for Buy to Let Landlords

I have been having a catch up on my on-line reading over this weekend and I have just come across an article which, in my opinion is very ill-informed. A call to convert 66,000 student HMO's back to family homes

Housing supply in many UK cities is being restricted by the conversion of family housing to student lets and local tenants are being prices out, according to new research. International real estate adviser Savills estimates that 66,000 properties or Houses of Multiple Occupation (HMO) now occupied by students could be freed up for conventional family housing through the delivery of more purpose built student accommodation”

The first thing that I would say is that only students want to live near students and the last place I would want to bring up my family is in an area that is highly populated by students.  I love my students tenants but they do not keep regular hours and often return late at night in a happy and noisy mood. There are other issues too but I won’t go into those, most of us who let to students will know what I mean.

For me, the most important point that has been missed is that the cost of converting a family home into a student HMO is colossal and this, coupled with the purchase prices in popular areas, means that landlords have invested a massive amount of money in their properties – will families really want to pay the prices that would cover this investment and also convert the property back to a family home?

In my book “Will You Survive the Mayhem”, I talk about the future of the student market where student numbers are reducing in many areas and there is an oversupply. I have given my predictions of the future of the market and I have warned landlords that we may need a plan “B”.  Plan “B” must, however, take into account that many landlords have big debts on their properties and could not afford to use them for family lets because of the reduced income. There are other markets for which these properties could be used which are realistic and would help to increase supply but Savills are dreaming if they really think that building more purpose built student accommodation is the answer to the shortage of family homes.  They have also overlooked the fact that students can’t wait to get out of “institutional” accommodation and share little houses, at least for their middle year, and there are many empty rooms in purpose build student accommodation in areas where the student population has receded since the increase in University fees.

The article goes on to say

The result is a double whammy for local non student tenants and aspiring home owners. Not only do students price other tenants out of many family housing areas in major UK towns and cities, credit conditions post downturn have favoured landlord investors rather than less equity rich potential owner occupier buyers. ‘Local council coffers would also gain. We calculate that reinstating these student HMOs to homes for non student residents would boost council tax returns by around £1.5 million per town or city, since student only houses are council tax exempt,’ said Savills research analyst, Neal Hudson.”

All local authorities get increased Government funding to cover the cost of Council Tax exemptions for students, the local authority would not be better off if these properties were converted back to family homes, they would in fact be worse off because they would lose the additional “automatic” income and would have to recover it from the families who live there.

The one statement I do agree with in this article is this

“Article 4 of the Town and Country Planning Act proposes restricting new HMO supply which could push students and associated landlord demand into smaller properties, pricing out other occupier and tenant groups.”

I also talked about this in my book because Article 4 Directions are ill-conceived and, in my opinion, will soon sigh and die.

Finally the article says

“For the institutional investor in student housing the UK market offers a mature, counter cyclical investment opportunity”.

Wrong again, I have given a lot of evidence in my book that shows how the student market will continue to recede in all but the Red Brick university areas, many of those are already building campi in the most popular sending countries, and many investors will catch a cold by investing in purpose built student blocks in the next few years.

I am struggling to understand why investors are not being encouraged to put their cash into funds to build more family homes, since we all agree that this is an area of increasing demand and it is very unlikely that the demand will do anything other than grow year on year?

Am I missing something, do Savills know something that I don’t know?

Follow me on Twitter @landlordtweets

My book, where I warn about the storm clouds that are gathering for landlords is here >>> http://www.amazon.co.uk/dp/1484855337


Retaliatory Eviction – Unlicensed HMO Latest Articles, UK Property Forum for Buy to Let Landlords

In a similar situation to the excellent discussion on Retaliatory Eviction, I can report that I have encountered similar practices in an unlicensed HMO. The situation is in some ways worsened by the fact that the four tenants involved were teenagers (2nd year university students) at the time that the 1 year AST was entered into, and as such, inexperienced in property rental. To say that they were exploited by the letting agent would be an understatement (in my opinion). Retaliatory Eviction - Unlicensed HMO

The property in question (in an E3 postcode area) is a double maisonette, two houses built one atop the other, the upper one having a separate entrance from a concrete walk way. It was originally built on two floors with the lower floor comprising a separate kitchen at the front with an L-shaped living/dining room at the rear. It has been “converted” so that the original kitchen is now a fourth bedroom and the original dining area of the lounge/diner is a very small kitchen. Dining is now at one end of the lounge area. Plumbing from the repositioned kitchen is still connected to the original service points by running the water and waste pipes through the new 4th bedroom around three walls in boxes. As you can imagine, the waste outlet is very slow due the the poor rate of fall in the pipe. The gas boiler has also been repositioned as a wall mounted unit in the lounge area again with water and gas supply pipes running around the walls through the living area and hallway back to the original connection points in the “new” 4th bedroom.

Since we have here 4 unrelated people living in a 2-floor house with shared bathroom and kitchen, we clearly have an unlicensed HMO. As the tenants have come to realise their homes status as an HMO, they have asked the letting agent to confirm the situation with the landlord and asked what could be done to ensure that the property could be rectified to meet the HMO standards. At first the letting agent denied that the property was an HMO, however, the tenants persisted. After a month or so, the letting agent then said that the property was not a licensed HMO. After another month or so of pressure, the letting agent said he had contacted the Housing Department of the Local Authority, who had confirmed to him that the property was not an HMO. On being asked for the name and department of the person he had spoken to, no name and a non existent department was forthcoming.

Subsequently, the tenant contacted the Local Authority who confirmed by e-mail that the property was an HMO. When this was reported to the letting agent, their response was, the local authority had contacted the landlord and if the matter was pursued by the tenants, the landlord would evict using a section 21 notice. Subsequently, the letting agent has said that he will get the landlord to fix any minor problems with the property being an HMO, but “if you ask for anything expensive he will evict, what is it that you want?”

The tenants have again contacted the Local Authority to ask for an inspection of the property to try to gain an official list of rectifications required, but have been met with a “we can’t inspect every property because our workloads are too high”.

It seems that a two tier HMO is not working too well as the threat to evict will stop any reporting of the situation by the tenant, especially where the Local Authority does not intervene . Since the HMO designation is statutory, I would have thought that it would be mandatory to at least investigate claims of this nature, otherwise why have the unlicensed HMO status when there appears to be no effective means of gaining enforcement of the statute without the risk of eviction?

Since all the guidance I have read says that the the requirements for HMO’s applies equally whether or not it is licensed or unlicensed, is there not a case to simply have all HMO’s licensed? As the statistics show, tenants are 14 times more likely to die in an HMO than in a regular tenant in a non-HMO, or is it just a fact of life that we cannot afford to protect all HMO tenants equally because of the current financial crisis, and that’s not mentioning what I believe to be the poor practice of the letting agent who is, at best, taking advantage of the naivety the tenant by knowingly letting an unfit HMO.

Eric Crossley


Buy to Let mortgage products and criteria – market update Buy to Let News, Latest Articles

After updating and writing the article on our Buy to Let mortgage sourcing system and calculator I thought I would give readers an update of what is still available and popular in the market.

You can find all these products on our system and get a quote (CLICK HERE), but many people ask me what has changed since they last took out a Buy to Let mortgage normally pre-credit crunch.

Loan to Value (LTV):

The industry standard maximum LTV is now 75% as opposed to 85% up to 2008.

You will find the cheapest rate products and and fees around the 60 – 65% LTV region with sub 3% short term rates or products with no arrangement fees and fees assisted such as Valuation and Legal cost.        Eg. 2.49% 2 year fixed with 2.5% fee

80% products will tend to have higher rates around the 5% point, with increased arrangement fees and stress testing to cover the perceived increase in risk compared to lower LTV products. A popular market provider of 80% LTV products is The Mortgage Works with rates starting from 4.14% 2 year fixed with a 2.5% arrangement fee to 5.29% with a £995 fee.

85% is still available with Kent Reliance but at a cost to rates fees and criteria – 4.99% 2 year fixed product fee 2.5% and reversion rate after initial term 6.58% SVR (ouch). Minimum property value £75,000 and £25,000 applicant earned income with proof.

Stress Testing:

How much you can borrow based on the rental income aka Stress Testing has actually changed very little over the years since 2008.  With reduced Loan to Values, lower property prices and increased rental income the amount you can borrow based on rent is not normally an issue unless the property is particularly poor yielding or the Loan to Value is high with a high stress testing.

The average stress testing figure is based around 5% notional rate and covering the interest by 125%. This in plain English equates to being able to borrow 192 times the monthly rental income. However at lower LTVs and interest rates this could be as much as 300 times or as little as 154 times for 80% products.

Criteria:

You can still borrow on Buy to Let mortgages for non standard properties such as HMO’s, new build flats, Multi-Unit, flats above none smelly or noisy commercial, however you have to be prepared depending on lender and the property for a lower LTV, higher interest rate and higher stress testing to cover the lenders perceived risk again.

Borrowing on Buy to Let mortgages in the name of a Limted company is still possible with Lenders such as Keystone, but it is preferred to be a Single purpose Vehicle rather than a Trading Ltd company and the options are vastly reduced. Therefore the tax advantages of purchasing using a Limited company can often be negated by difficulty and cost in finding finance.

Example Products:

Some other products not mentioned that I noted when updating the system as potentially stand out were:

3.99% 2 year Tracker Libor Tracker No Fee and Free Valuation 75% LTV

4.98% 5 year fixed £1,999 fee 80% LTV

3.49% Flexx variable mortgage for the term Fees £999 with no early repayment charge and free remortgage service and Valuation 65% LTV

4.74% Standard variable for the term No fees No early redemption penalty free valuation 65% LTV

2.99% 2 year fixed 2.5% fee 75% LTV

To Search for all the products on our own in house Buy to Let mortgage sourcing system and calculator please CLICK HERE

For any assistance you may need with a Buy to Let mortgage please email info@property118.com

Tel: 01603 489118Buy to Let Mortgage system

 


Alternatives to Landlord Licencing Schemes Latest Articles, UK Property Forum for Buy to Let Landlords

The alternatives to Landlord Licensing Schemes require joined up thinking, changes to data sharing protocols within local authorities and revised high level directives and strategies which must begin at Government level. 

Perhaps the first question to ask is what is Landlord Licensing all about? Is it really about raising standards or is it more to do with raising funds?Alternatives to Landlord Licencing Schemes

Funding

If society as a whole desires that people should not be subjected to sub standard housing conditions then society as a whole must pay to enforce this (howsoever that might be done) whether the money is raised at a local level or centrally.

It is both unacceptable and wholly undemocratic that landlords should be singled out by Government, Councils and Local Authorities to pay stealth taxes badged as licensing fees on the pretence that the money will be used to fund enforcement related initiatives.

Costs associated with licensing schemes imposed on landlords are funded through increased rents. Neither landlords nor tenants want this, particularly as there is clear evidence (demonstrated in this article) that landlord licensing schemes have proven not to be an effective solution to problems in the Private Rented Sector.

Recycling of Court awarded penalties

The high costs associated with prosecuting criminal landlords is borne by Local Authorities, however, fines and penalties go to the treasury. If these funds were to be redirected to the prosecuting authorities this would assist funding of additional prosecutions and create incentives to bring more criminal landlords to task. Continue reading Alternatives to Landlord Licencing Schemes


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