What is an amateur landlord?

by Mark Alexander

12:47 PM, 19th October 2013
About 6 years ago

What is an amateur landlord?

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What is an amateur landlord?

The phrase “amateur landlord” annoys me, I really wish people would stop using it.

First off, if you were a tenant would you want to be dealing with an amateur landlord?

I don’t recall ever seeing an advert on Rightmove or Zoopla which reads “Amateur landlord offers this stunning 3 bed ……” do you?

Would you put the words amateur landlord in you to let advert?

The phrase smacks of the landlord behaving amateurishly or not having a clue about what they are doing doesn’t it? What is an amateur landlord?

Dictionary definitions of the word amateur include:-

  • activity as a pastime rather than as a profession
  • one lacking the skill of a professional
  • not professional; unskillful

Are these the descriptions that people with just one or two rental properties wish to affiliate themselves with?

A landlord who owns just one property should still act professionally shouldn’t they?

I don’t really understand why the phrase “amateur landlord” ever came about. People who rent out property take an income from the rent, some spend any profits, some reinvest them and all are hoping for capital growth. Whilst this may not be their main profession, and often isn’t, surely they can’t claim to be amateurs? Why would they want to?

Perhaps they don’t want to be called professional landlords in the hope that Consumer Laws will protect them? Well there is no legal definition for what a professional landlord is anyway so I can’t see how that makes any difference. The legal case of OFT vs Foxtons ruled that landlords can be protected by consumer laws, however, the case didn’t set any a criteria for what constitutes a landlord no longer being a consumer.

Would these be consumers?

1) Let’s assume a person earned £500,000 a year as a banker and owned 30 investment properties making a net profit of a further £50,000 a year would that person still be a consumer?

2) Turn the numbers around and let’s assume the banker is making £500,000 of net profit a year from his property portfolio and £50k a year from a non-exec Directorship, what then? Logic might suggest he can’t possibly be a consumer any more because the vast majority of his income comes from being a landlord right? Well I’m not so sure about that either.

3) What about a housewife who owns one property making £50 a month profit after all expenses and has no other income?

The housewife with one property might be the better landlord too, hence more professional?

So is it number of properties which should set the precedent of whether a person remains a consumer or should it be based on what percentage of their earnings relate to rental properties. Based on the three examples above I can’t see logically how it could be either of these.

So, with no precise legal definition for what is a consumer landlord why do we have all these other tags?

Why aren’t landlords referred to as landlords?

If we must have further definitions I suggest the following:-

  1. Accredited Landlord – I like this one providing it refers to accreditation by education, not some “jobs for the boys” Council run scheme which inspects properties. I think it should be compulsory for all landlords to be accredited if they wish to manage their own properties.
  2. Rogue landlord – this is meaningless, either they are criminals or they are not.
  3. Portfolio landlord – a person who owns three or more properties (still a consumer though)
  4. Accidental landlord – that’s almost as bad as amateur isn’t it?
  5. Landlady – such a people run pubs or Guest houses. The legal definition of a female who rents out property is a landlord.
  6. Consumer – a landlord who is protected by unfair consumer contract terms – legal definition is required
  7. Sophisticated investor – a landlord who is not a consumer

Thoughts please?

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Comments

Dunsaw

13:10 PM, 19th October 2013
About 6 years ago

Hello Mark

"Amateur" landlords exist and the first I know of them is when they post a horror story on "moneysavingexpert" where an excellent group of professional landlords help them out. Their horror stories either stem from not realising that renting is a business or when a "professional" tenant has taken them to the cleaners.

Sometimes these landlords do not think that they are landlords as they say "I am renting to a friend or my brother and they are just paying enough to cover the mortgage, so I do need to be "legit"?

I would also send them to MissMoneyPenney on the "moneysavingexpert" forum as she takes no prisoners when it comes to "amateur" landlords.

The term "amateur" should continue to be used, so we we who have learned through (bitter) experience and continue to learn to be professional landlords help them out. After a while we can all be proud when they become landlords

Mark Alexander

14:04 PM, 19th October 2013
About 6 years ago

Reply to the comment left by "Dunsaw " at "19/10/2013 - 13:10":

I see where you are coming from and in that context I agree with you.

My article was inspired by West Brom borrowers who were arguing that they are amateur landlords in the hope of being treated as consumers by regulators in order to benefit from consumer protection. I'm not keen on that because it could divide the group and cause more problems but that's not really my pont here.

I also come across several mortgage brokers, lenders and newspapers referring to people who only own a few properties as amateur landlords. Maybe some of them don't have a clue about what they are doing but to group all landlords with the title "amateur" just because they only rent out a few properties is wrong in my opinion. It's a bad title in the way it is being used by much of the industry.
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Dunsaw

14:10 PM, 19th October 2013
About 6 years ago

Reply to the comment left by "Mark Alexander" at "19/10/2013 - 14:04":

In your context I would give the "amateur" claim short shrift!

If you have a buy to let mortgage you are deemed to be a professional landlord. If you claim to be anything else you should be done for fraud!

Vanessa Warwick

9:35 AM, 20th October 2013
About 6 years ago

Mark,

I must confess that the comment about being an "amateur" landlord and only "dabbling" at being a landlord really incensed me.

Are tenants allowed to be "amateur" tenants and only "dabbling" at being your tenant?

NO!

Landlords have to adhere to over 70 government statutes and regulations. These make no distinction as to whether a landlord regards themself as "professional" or "amateur".

Why should a landlord be allowed to enjoy all the benefits of property investing, but avoid the associated responsibilities, and being professional?

When interest rates are low, does the "amateur" landlord pass that on to the tenant in the form of a reduced rent?

OF COURSE NOT!

The relationship between a landlord and a tenant is based on professional practices and obligations that need to be adhered to on both sides.

If you are not prepared to view your activity as a landlord as professional, then I say ... Don't be a landlord!

I wrote "Questions to ask yourself before becoming a landlord" to stop people thinking that a tenant is just a rent payment:

http://www.propertytribes.com/questions-to-ask-yourself-before-becoming-a-landlord-t-5988.html

Amateur landlords trying to wriggle out of responsibilities on the basis that they are just "dabbling" gives the PRS a bad name and fuels anti-landlord sentiment.

Interest rates ARE going to go up, and the BOE will not make a distinction between an amateur or professional landlord.

People need to accept the downsides just as much as they want the benefits, and the only way to do that is to treat it like a business and act in a professional manner at all times!

Rant over!! 🙂

Denise G

10:32 AM, 20th October 2013
About 6 years ago

I'm not even going to bother to reply to some of this bitter vitreole clearly aimed at me and the comments I made on the WBBS site having already justified (as if I need to) why I object to someone else classifying me as something to suit their own purpose

Mark Alexander

10:52 AM, 20th October 2013
About 6 years ago

Reply to the comment left by "Denise Doms" at "20/10/2013 - 10:32":

That wasn't the point Denise and it wasn't a personal attack I can assure you, certainly not on my part anyway.

You are just one of thousands of people who refer to landlords with just a few properties as amateurs and there are plenty other than you using this phraseology on the West Brom discussion thread I can assure you.

You may well be a "consumer" for the purposes of case law and the unfair consumer contracts regulations 1999 should at least give you some protection. You certainly would if you have an argument over hidden renewal fees in a contract with a letting agent. However, as you own three or more properties the West Brom don't believe you have this consumer protection. We could fight that but the cost of doing so would be far greater than the cost of suing West Brom for compensation based on contract law so what's the point? The other consideration is that if such a case were to be tried in Court the results would only affect a proportion of the borrowers affected by West Brom. For example, if the Courts ruled that anybody with more than 2 properties wasn't protected by Consumer legislation then you would be back to square one.

I suspect West Brom are expecting us to fall into that particular trap and the NLA have already done so. If the NLA continue on that basis they are bound to have a LOT of disgruntled members who may well miss the boat in terms being a named individual in the contracts dispute with West Brom whilst they wait for the results of the NLA's proposed complaints.

I have updated the Class Action Updates article to reflect the potential dangers of people not getting involved in the Class Action group and I have also contacted the NLA to share my concerns with them, please see my link below.
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Andrew Taylor

11:32 AM, 20th October 2013
About 6 years ago

Is 'landlord' offically a job title? Is owning mutliple properties under the umbrella of a company seen as 'doing business'. Does the generall person in the street see any difference to a person who owns one property, ten properties, or one hundred properties other than one is richer than the other?

The problem with the PRS is that its participants are seen as not adding value in terms of it being a proper job, providing to its customers as a real business, or even seen to have any professional skill other than wealth.

This is clearly wrong, and also clearly frustrating to all of us who make a living out of being a landlord, offer a service to our customers as good, if not better, than other service providers, and manage complex multiple portfolios.

We have no barriers of entry into our market, with have no universally accepted standard to be allowed to participate as a service provider, we have no professional body, we have no means of excluding participants we do not wish to represent our industry.

Mark Alexander

11:54 AM, 20th October 2013
About 6 years ago

Reply to the comment left by "Andrew Taylor" at "20/10/2013 - 11:32":

Quite right Andrew but the framework does exist and I understand that Boris Johnson intends to plug into this, i.e. education based landlord accreditation courses which are passportable to other areas of the UK. Wales are already piloting this. If a landlord isn't accredited it will assume they have no understanding of the rules and regulations referred to by Vanessa. I am warming to this idea on the basis that all landlords need to become accredited prior to letting a property, the alternative being to employ the services of an accredited agent. To retain the accreditation status landlords need to complete CPD. I understand the NLA are broadly in support of this too. Do we have the makings of a professional status, the Royal Institute of Accredited Landlords perhaps? Only time will tell but if it happens we may also be better placed to lobby for better tax treatment too, e.g. roll-over of capital gains and income being treated as earned as opposed to investment. Now that would be a nice carrot to add to the stick 🙂
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Jerry Jones

13:27 PM, 20th October 2013
About 6 years ago

I was a tenant myself a few years ago, having moved for work and let my own house. My landlord was letting her intended retirement home, a lovely converted coach house opposite the manor house, at an estimated rental yield of 2.5%. A bargain for me, but a nightmare to deal with. Repairs were not done and I even got charged for the boiler service (she paid the part of the bill relating to the GSC). Was not open to discussion of her responsibilities to I did minor maintenance as well because it was a nice place to live so I didn't much mind, but she fitted every professional landlord's definition of an amateur.

Jerry Jones

13:33 PM, 20th October 2013
About 6 years ago

Reply to the comment left by "Mark Alexander" at "20/10/2013 - 11:54":

> income being treated as earned as opposed to investment.

and thus liable to self-employed rates of NI contributions as well as the current income tax.

Bullet: meet foot.

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