EXCLUSIVE: Which landlords and properties make the most money

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Research released exclusive to LandlordZONE reveals which properties make the most money and how the pandemic has hit buy-to-let investors’ finances.

Specialist broker Paragon says its research shows that HMOs produce the greatest yields (7%) followed by flats (6.1%) and bungalows (5.9%), showing that the greater the risk, the higher the return.

Its MD for mortgages, Richard Rowntree, says the results are from his company’s survey of over 800 landlords of all types, which asked them to share their experiences of the differences between single property and smaller scale landlords with those managing larger portfolios.

Also, the larger a landlord’s portfolio, the higher the yield – those with portfolios of 20 properties or more produce an average yield of 6.7% while a single property on average produces 4.2%.

Paragon also asked landlords how Covid has impacted their businesses. Just over a third said they had experienced problems in general following Covid including but not exclusively rent arrears.

Specifically, reduced income has been experienced the most by larger portfolio landlords (see below).

For example, while 36% of one-unit landlords reported significant (17%) or slight (19%) income reductions, 57% of those with 20+ properties reported an income reduction including 24% with ‘significant’ and 33% with ‘slight’.

Away from Covid, the report also reveals that terraced houses are the most popular buy-to-let property across all portfolio sizes, followed by flats, semis and HMOs.

“Although there are various reasons why people operate rental businesses, for many, the primary reason is as a source of income,” says a Paragon spokesperson tells LandlordZONE.

“This means that assessing profitability is one of the most important and obvious ways to gauge how successful a portfolio is.

“Our research shows that larger portfolios enable landlords to invest in a wider range of property types and target those that generate the best yields.”

Pic credit: Nenad Stojkovic | Flickr

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Which landlords and properties make the most money | LandlordZONE.

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EXCLUSIVE: Landlord and managing agent in ‘right to manage’ battle

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A campaigning landlord and a managing agent are embroiled in an ugly spat over the right to manage their apartment building in Manchester.

Frustrated landlord Philip Crawford, who has been interviewed on national TV about property management issues, claims tenants are at risk after Edge Property Management – also the freeholder – withheld the fire risk assessment on two adjacent properties in Athol Road (pictured), which Edge strongly denies.

He says seven of the 10 flat owners are landlord investors – all of whom have backed a bid to take on the right to manage – and that the firm deliberately split the building into two so that the attempt would be unsuccessful.

Edge MD Phil Green tells LandlordZONE that it is under no obligation to share the fire risk assessment. He says none of the recommendations were ‘category one’ and that it will carry out works identified when the statutory notice period has expired.

Right to manage

Green points out that The Property Ombudsman rejected Crawford’s claim for the right to manage while he also lost his case for management at the First Tier Tribunal.

He adds: “Mr Crawford has an agenda which consists of buying flats and causing disruption and attacking the landlord or managing agents with a view to gaining the management of the site as part of his own income.”

Crawford (pictured) commissioned his own fire risk assessment in April, and says this found that the building wasn’t safe. It discovered combustible back boards, wet basement walls, no RCD protection, and unsafe and out of date fire alarm fuses.

Crawford tells LandlordZONE: “One woman’s flat has been damp for 18 months yet she still pays a very high service charge. It’s now impossible to sell the flats as once a potential buyer finds out about these problems they pull out.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Landlord and managing agent in ‘right to manage’ battle | LandlordZONE.

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DEBATE: Should landlords chase rent arrears when Covid ends?

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Many landlords will soon find themselves in the unfortunate position of having to sue for rent when restrictions end – here’s how to go about it.

How can you recover rent owning when the tenant is refusing to pay? Yes, the government has provided measures to protect tenants during the pandemic, but as we come out of that, rent owning is still due.

If landlords want to forgive outstanding amounts or reduce the amount due as a matter of goodwill, that is up to their own discretion, but as far as the law is concerned, the total contracted amount owing is due in full.

Some landlords will decide to pursue their tenants for the money owned to them, many have mortgages to pay and it is not likely that their mortgage lenders will forgive them their payments.

For small-scale private landlords the rent is often a crucial element of their own income. There is no legal obligation on the private landlord to negotiate any form of rent reduction or early release from the tenancy agreement.

Questions to ask yourself before you sue

The first question is, can your tenant afford to pay? Suing someone who can’t pay or is unlikely to be in a position to pay in the future is futile, a complete waste of your own time and money.

Those on state aid, students, especially those from abroad are likely to be difficult, so think hard and long before pursuing these people.

If the tenant has left you, do you have a postal address where they are settled? You can’t pursue a claim otherwise; if they are on the move, you can’t pursue a moving target through the courts, and if they live abroad, it’s even more difficult, you might as well forget it.

Do they have a reputation to maintain? If tenants want to rent again, they will need a clean credit record, otherwise they will very likely get turned down for tenancies. If they are professional people they will not want a county court judgement on their CV, so you need to remind them of these facts.

Suing someone and successfully getting a county court judgement (CCJ) may give you some satisfaction, and that may be enough for some, but it does take time and money to proceed – sometimes its just best to put the loss down to experience and claim it against you tax liability.

Follow the practice guidelines

If your tenant is still with you, you may decide to go for eviction on the rent arrears ground and attached the amount of rent arrears to the claim (Section 8 of the Housing Act 1988), or simply sue for the arrears, whether the tenant is resident or not.

However, before such drastic action you should consider mediation, which allows an independent third-party to assist those involved in a dispute to try to reach a mutually acceptable agreement to resolve their differences. There are also other sources of financial help that tenants can be alerted to.

The starting point is to read the pre-action protocols  for rent arrears and evictions. The key thing is trying to negotiate with your tenants and giving them ample notice in writing, of your intentions. Write to them and give them time to pay, set up a schedule of re-payments if you can and remind them of the above points.

If that fails, write a letter before action giving them at least 14 days’ notice of your intention to claim and setting out the details of your claim, or serve a section 8 notice.

Should I use Money Claim Online?

The internet portal operated by HM Courts & Tribunal Service known as Money Claim Online is a convenient way to start off and pursue a claim. The Small Claims Court (or County Court) offers a convenient and relatively informal way for the man in the street to pursue debtors.

You can claim up to £100,000, but more commonly claims up to £10,000 are pursued on what is known as the “small claims track”. Legal professional’s costs cannot be recovered, so most people do not use a solicitor for this, but the court fee can be recovered if the claim is successful, plus the judge will usually allow reasonable expenses.

How do I progress my claim?

Keep it simple and concise. State your claim on the forms simply as rent arrears, setting out what and when it is due and answer the other questions of the on-line forms

If the other side puts up a defence, answer that in a simple straightforward manner, stick to the facts, the judge will not be impressed if you try to answer or stray into a load of emotional justification.

At the court hearing, present you case clearly and concisely and with courtesy, whatever the defendant may say.

Read more about mediation.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – DEBATE: Should landlords chase rent arrears when Covid ends? | LandlordZONE.

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Rental market boom continues as lockdown eases, letting agents report

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The rental market is booming as demand for properties rises, according to ARLA Propertymark’s latest PRS report.

The average number of new prospective tenants registered per branch jumped to 84 in March, up from February’s figure of 82 – the third consecutive monthly increase. Regionally, the West Midlands saw the highest number of new tenants registered, with an average of 157, while Scotland’s agents saw the lowest, with an average of 31 new prospective tenants.

Tenants experiencing rent rises went up last month, as 60% of agents saw landlords increasing rent compared to 49% in February, while it was just 30% in March 2019. The number of tenants successfully negotiating rent reductions fell to 1.7% in March, down from 2%, which is the lowest number recorded since October last year.

Managing to fall

The number of properties managed per letting agent branch fell from 195 in February to 193. The West Midlands had the highest number of properties managed per letting agent branch with 260, while the capital’s agents experienced the lowest amount of rental stock with an average of 128 properties managed per branch.

The average number of landlords selling their buy-to-let properties remained consistent for the sixth month in a row, at four per branch in March. This figure was also the same in March 2018 and March 2019.

ARLA Propertymark’s chief policy advisor, Mark Hayward (pictured), says: “Of course, as demand rises and the number of properties decreases, rent prices will inflate, but we’d encourage letting agents to continue to support landlords and their tenants throughout the ongoing Covid-19 difficulties where possible and ultimately it is positive to see rent flowing and incomes returning for many people.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Rental market boom continues as lockdown eases, letting agents report | LandlordZONE.

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Extreme rogue landlord avoids jail despite breaching national banning order

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An extreme rogue landlord who ignored all attempts to make him adhere to HMO regulations has been fined £8,500 after breaching a national banning order.

Bournemouth businessman Mahmut Gilgil gained the dubious fame of being the second landlord in the UK to be given a banning back in June 2020 after numerous regulation breaches.

The 44-year-old was banned from letting or managing a property for five years but despite this he has been found to have violated multiple HMO regulations at a property in Poole above a kebab shop.

This included overcrowding, a lack of natural light or ventilation and ignoring required repair and upgrade works at the address.

Three improvement notices were issued to Gilgil by Bournemouth, Christchurch and Poole (BCP) council two years ago but last summer it was clear he had ignored them, so the council decided to bring a prosecution instead, which has now been completed despite his failure to attend court.

He has now been convicted of both failing to comply with an improvement notice, ignoring an overcrowding notice and failing to comply with a housing prohibition notice.

Magistrates issued an £8,500 fine, with a requirement to also pay £500 costs and a £190 victim surcharge.

“It is unfortunate that the notices given were breached and the correct standards were not met, but ensuring housing is both safe and legal is paramount and the council will take formal action against landlords where these standards are not being maintained,” Kelly Ansell, BCP’s service director of communities (pictured) told local media.

Read more about Gilgil’s banning order.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Extreme rogue landlord avoids jail despite breaching national banning order | LandlordZONE.

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Housing Possession Mediation scheme could save on expensive lengthy evictions

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 The pilot of the government’s Housing Possession Mediation Scheme can help letting agencies and landlords recover arrears without lengthy waits for court evictions, according to PayProp. Launched recently by the Ministry of Housing, Communities and Local Government, the free arrears mediation service aims to help parties resolve disputes more quickly without the need for court action.

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New code of practice for assessing cladding

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Residents and building owners are set to benefit from a new code of practice for professionals assessing buildings’ external walls and cladding systems. As part of reform of the building sector, the government has commissioned the British Standards Institution (BSI) to draft a new code of practice for assessors when examining external walls and cladding.

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What does 118 mean?

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I have been asked many times over the last 10 years why we decided to call our website Property118

There have been many wrong guesses, and I have to admit several of them have been absolutely fascinating, so I decided to do a bit more research.

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Student disappointment over ‘useless’ rent repayment orders goes viral

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Students who won a rent repayment order against their rogue landlord are angry that they’re now having to pursue the money in the small claims court.

One of the tenants, Megan Cole, says they left the tribunal feeling overwhelmed and powerless, and has used the experience to write her dissertation, ‘The Power Dynamic in Renting: Rogue Landlords, Vulnerable Tenants and Policy Proposals for Change’, which has since caused a Twitter storm when she posted it online, with more than 117,000 likes in a few days.

After spending a year living in their shoddy and unlicensed HMO in Selly Oak, Birmingham, the eight students were awarded £35,000 by a tribunal.

But their landlord denied all responsibility for the house not being licensed as well as the poor conditions, which included leaky showers, broken boiler and ants’ nests.

After checking with Birmingham City Council, which told them of the landlord’s rogue status, the eight-bedroom property was deemed un-licensable due to its condition and was only suitable for five tenants.

Landlords can pay a rent repayment order in instalments but if they’re reluctant to pay at all, tenants can apply to the county court for permission to reclaim the money as a civil debt.

More money

“We feel stuck in our situation, unsure of how to obtain the money we are entitled to and wary of forking out more money,” says Meghan.

“This anger and frustration fuelled my dissertation. Those suffering in poor quality housing and squalor shouldn’t require power and money to fix their situations. Ultimately, the nature of UK legislation means this is the case.”

Giles Peaker, housing lawyer at Anthony Gold, tells LandlordZONE that their situation is not uncommon. He says: “Plenty of people don’t pay and the court can’t order your bank to pay either.

“If it’s a rogue landlord company they’ll just fold that and it will reappear with a slightly different name, while it’s also more difficult with a rent-to-rent set up.”

Read more about recent rogue landlord cases.

Pic credit: Megan Cole, Twitter

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Student disappointment over ‘useless’ rent repayment orders goes viral | LandlordZONE.

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LATEST TRENDS: Covid boosts demand for medium-term renting

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Business people relocating with their families has increased demand in the emerging medium-term let market.

Relocation rentals giant HomeLike reports rising bookings for its properties as families look for temporary accommodation for relocation and work, or to be closer to relatives.

The global online platform, which rents fully furnished apartments for those needing temporary accommodation for 30 days or more, adds that the increase in digital nomads – capable of working and living anywhere, and the need for UK companies to have an EU office following Brexit, is likely to spark a further increase in bookings.

As more people work from home, the option to travel for work and take the whole family is something HomeLike hopes to capitalise on, says Cherry Wang (pictured), country manager UK & Ireland.

She adds: “Mid-term rentals offer business executives the opportunity to create temporary second homes in their location of work, meaning their families can either live with them or visit more frequently where it feels like their home rather than a temporary living space.

“This need has been highlighted due to the pandemic where people wanted their families with them as we went into local lockdowns.”

In 2020, nearly 70% of its bookings were either for a work relocation or work project, which would normally last three to four months, while 25% of bookings were for temporary accommodation needs, such as to self-isolate, while doing house renovations or in-between house moves. The average length of stay increased by 10% last year.

HomeLike reports that 52% of all bookings for stays of over 30 days are now booked instantly, which shows that temporary home searchers are more comfortable making bigger ticket transactions online and points to a significant shift towards digitisation in the sector. 

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST TRENDS: Covid boosts demand for medium-term renting | LandlordZONE.

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