MORTGAGES: Worried landlord tells BBC how his payments have tripled

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Paul Bradley, a landlord with a single rental property in North London, has told the BBC how the ongoing mortgage crisis has seen his monthly interest-only loan payments triple over the past 12 months.

His case illustrates vividly the significant challenges that the approximately 500,000 landlords who own BTL properties via mortgages in the UK now face as their costs ramp up, and the Government’s removal of Section 24 mortgage relief come home to roost.

Bradley, who is 74 years old, told the World at One programme how he became an accidental landlord after moving from London to the West Midlands some years ago.

He told presenter Sarah Montague (main picture) that his usual mortgage payments have been £304 a month, which he paid via the £1,000 per month rent he charged his long-standing tenant.

Payments tripled

But the recent interest rises have seen his payments, which are for an interest-only mortgage rather than repayment, triple to £923 a month.

“If you take away the tax that I pay on that revenue then in effect I am now subsidising him to live in the property,” he said.

Bradley said he therefore has no choice but to sell the property and has served notice on the tenant, who has refused to move out and an attempt to seek possession of the property has now begun as his mortgage arrears build up.

“I work part time so there isn’t much spare money so until this is resolved there won’t be any holidays or going out for evening meals – that’s all gone.”

Listen to the programme.

View Full Article: MORTGAGES: Worried landlord tells BBC how his payments have tripled

EXCLUSIVE: More tenants failing reference checks as cost-of-living bites

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The number of tenants passing referencing checks has dropped off drastically as the cost-of-living crisis bites.

Rent guarantee firm Housing Hand reports that about 35% previously passed checks, but that the number is dropping and could now be as low as 25%. Another 40% will get accepted using a guarantor, but that means up to 35% will fail to achieve either.

“Referencing has become more stringent and it’s partly about ID checks, which shouldn’t be a problem for legitimate renters, but it’s also about their financial capability,” COO Graham Haywood (pictured) tells LandlordZONE.

David Coughlin, director of the Landlord Sales Agency, says he knows of one instance where a landlord has sold a property and the letting agent is trying to find his tenant a new home – however, this tenant has failed to pass current credit checks which are now more stringent than when he moved in years ago. Despite having paid his rent on time, the task is proving impossible.

Salary test

“We’ve heard of similar cases,” says Haywood. “Paying your rent on time doesn’t necessarily give you a financial qualification.

“Referencing firms would typically base their test on three and a half times a would-be tenant’s salary but as rents have gone up, that can be four or even four and a half times their salary.”

He adds that in the last six months, Housing Hand has seen a 50% rise in applications for guarantees and that it’s not just young people who need to use its services, but older – even elderly – renters as well, particularly if they’re not in full-time employment.

“People are being challenged in terms of their income not going up,” says Haywood.

“There are also pressures on landlords paying higher mortgage rates, and the next few months aren’t likely to get any easier.”

Read more: ultimate guide to referencing.

View Full Article: EXCLUSIVE: More tenants failing reference checks as cost-of-living bites

UPDATE: Councils to give landlords more time to find out about licencing launches

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Councils have been given three months longer to launch selective licencing schemes, new Government guidance has revealed.

An update to the Department of Levelling Up, Housing and Communities’ advice to local authorities considering or planning a selective licencing scheme has been updated to say that the “introduction of [a] scheme may be delayed up to an additional three months [on top of the existing three-month limit], if need be, to prepare for the scheme’s implementation”.

The updated rules apply to schemes which cover less than 20% of a council’s housing stock, and which therefore can be self-approved by councils.

“If a further delay is required for schemes approved by the Secretary of State [i.e. those over 20%] then this must be discussed with the department in the early stages of the application process and good cause must be provided,” the guidance adds.

Extra time

It clarifies that the extra time is partly to ensure that people – i.e. landlords or agents – who are likely to be affected by the designation have been consulted.

LandlordZONE understands the changes are to help councils deflect criticism that they don’t give landlords enough time to find out about licencing launches. This follows complaints by many that they were unaware that selective licencing schemes were about to start, particularly if they lived outside an authority’s borders.

One celebrated case of this was landlord group iHowz’s criticisms of Ealing’s implementation, with many landlords complaining about ‘being kept in the dark’ about the councils plans.

While agents have platforms like Kamma and London Property Licencing to help them keep abreast of local licencing requirements, private self-managing landlords are more exposed and, as our many stories about Property Tribunal decisions reveal, are often caught out.

DHLUC has been approached for comment.

Read the guidance.

View Full Article: UPDATE: Councils to give landlords more time to find out about licencing launches

VIDEO: ‘Best landlord in UK’ gives unusual advice to other investors about profits

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Treat tenants like customers and stop thinking about profit if you want to make a success of property investing – that’s the advice of lettings and landlord professional Tom Soane, who boasts that it’s made him the ‘best landlord in the UK’.

“Your property is a product, tenants are your customers, and property management is customer service,” he explains in his latest YouTube video.

“Any business tries to keep customers happy, so think ‘what can I do to make them comfortable and happy and with the best quality product?’ This makes them a better, long-term tenant and keeps your asset valuable as they look after it.”

Soane believes that if landlords stop focusing on profit, they will ultimately make more money because they can then charge the top end of the ‘fair market value’.

He also advises investors not to challenge every expense in order to create a more stress-free life for both themselves and tenants.

“What’s the point? If a boiler needs repairing, I could argue with the lettings team and get comparison quotes, but there’s a cost to time as well as the trust and confidence of the lettings team. You start getting contractors to do comparison quotes, you’ll lose working with them.”

Every decision

He also reckons that delegating jobs to agents is more sensible than getting involved in every decision. “If it’s something that needs to be done and it can be covered by the rent, just get it done,” suggests Soane.

Appreciating that earnings will fluctuate each month means he focuses on the long term. “Investing in property isn’t a guarantee and there are risks,” he adds. “You didn’t invest in property for the short term, you’re building financial security, not so you could just sell it at the end of the year.”

Watch the video in full.

Pic: YouTube

View Full Article: VIDEO: ‘Best landlord in UK’ gives unusual advice to other investors about profits

Welsh Minister supports tax review proposal for the PRS

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The Welsh Minister for Climate Change, Julie James MS, has expressed her support for the National Residential Landlords’ Association (NRLA) proposal to conduct a comprehensive review of taxation in the private rental sector (PRS).

The endorsement came during the launch event of NRLA’s State of the Welsh Private Rented Sector report

View Full Article: Welsh Minister supports tax review proposal for the PRS