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Newsletter - November 2016

02/11/2016
Jonathan

One Bedroomed Rental Properties Increasing Rent

Good news for landlords renting out one bedroomed flats as rents for these types of properties are continuing to rise, in spite of overall rental growth decreasing.

A leading P2P lender's latest Rental Index reports that one bedroomed properties average rents throughout September rose by 0.12 %, whereas August's increase was 0.09%, which is equivalent to a year on year growth of 1.57%.

The index also shows that two and three bedroomed properties enjoyed an increase in average rental growth in September however at a lower rate than one bed roomed properties.

The lender states that one bedroomed properties in London stayed the same in September but overall rents fell by 0.04%. The North East was the only other region that had an overall decrease in rents in the same month.

September's national annual rent was 1.65% increase, which was a fall from August's 1.83%. The firm estimates that September's national average rent was £1,187, with the capital standing at £1,891 and elsewhere was £747.

Chief Executive of the lender, John Goodall said: "There’s no denying most people aspire to own their own home, but it’s critical that efforts to bolster the country's housing stock don’t overlook the importance of the buy to let market for a supportive and sustainable housing market,

“RICS’ forecast that 1.8 million more households will be looking to rent by 2025 is a stark reminder of the scale of future demand for the rental market," he says.

"The fact remains that those building up toward a house purchase rely on a well served buy to let market to ensure that excessive rental growth doesn’t dampen their purchasing power."

 
 

Parents Are Now Renting To Their Children

Increasing numbers of parents are now renting out their second properties as 'homes' for their children, within relatively easy reach of the parental home for their Sunday roasts.

A leading mortgage provider had commissioned some research of private landlords' renting 'trends', have discovered that approximately 1.4 million landlords are seriously considering to 'house' their children as fee paying tenants in their second properties. Across the UK it is estimated that 730,000 parents are already doing this because of the so called 'generation rent' who are finding it increasingly harder to get into the property market. The main reason why 26% landlord parents are doing this is to give their children some 'breathing space' to save up for a deposit on a future home.

27% of landlord parents are stating that one reason why they are taking this course of action, is to make sure that their children are living in a safe property, whereas 21% wanted to make sure that their offspring finally left the 'family nest'.

Only 5% of parent landlords actually charge their children the market rent, whilst 30% let them pay how much they are able to afford and 12% even cough up for their bills.

John Willcock of the lender said : "As both the cost of renting and buying a property increases, home ownership remains a distant dream for a significant number of today’s younger generations. Our research shows that an increasing number of parents are considering buy to let both as a means of helping their children, and of securing their own financial future.

"By becoming a ‘parent landlord’ they are able to provide this support – without necessarily having to compromise on their own space at home. This not only provides their children with the opportunity to save for the future, but can act as an investment and help with their own long-term financial planning."

 
 

30% Of Tenants Feel It Is OK To Steal Landlord's Property From Rented Home

According to research from an insurance company, nearly one in three tenants (30%) are under the impression that is 'fair game' to steal their landlords items/property when leaving their rented home.

The insurance company claims that in the last five years, tenants that admitted to remove landlord's possessions when vacating the property, found it perfectly acceptable in doing so.

The most popular items that tenants have stolen include freezers, fridges, light fittings, televisions and kitchen sinks. A few of the most bizarre item that were reported to be stolen were coconuts, a rolling pin and even a bee hive.

There were many excuses given for' removing' landlords possessions, such as forgetting items were not theirs and believing that the landlord could not possibly miss them. However a fifth of the tenants that took part in the survey held their hands up to just wanting the items.

It is estimated that landlords are on average losing £500 when falling victim to these crimes and this was admitted by the guilty parties, so it is more than likely that the figure is considerably higher.

Nick Breton, head of the business insurance arm of the company, said: “The range of items that tenants feel that they can take with them when vacating a property is quite amazing. It isn’t even just small items that go missing; our research found that renters are helping themselves to beds, sofas and cupboards once their tenancy agreement comes to an end. These are expensive to replace and could have a knock-on effect for future tenants of that property. Plus a tenant could find that they lose their deposit.”

The research also uncovered that 21% of those admitting their guilt to stealing said that they did not have to complete an inventory when beginning their tenancy. More than one in five tenants (23%) who also admitted to theft from their landlords said that the items they stole were itemised in the inventory, however it did not put them off from committing the deed.

Breton concludes: “The research highlights the importance of having a thorough inventory. Building a relationship with tenants could minimise issues further down the line. If the property is furnished then make sure you have the right insurance in place so you’re covered should things go missing – like the kitchen sink!”

 
 

Landlord's Illegal Conversion Costs Him A £700,000 Fine

A landlord has the dubious honour of receiving a record breaking massive fine, because he decided to illegally convert his property into nine flats without being granted planning.

On Wednesday 28th September at Wood Green Court, the rogue landlord was given a £700,000 fine because of contravening the 2006 council's orders telling him that he would not be granted permission to convert the property.

As the landlord decided to ignore the warning the council had no other recourse than to serve an enforcement notice in March 2007, they then took legal action.

Finally when the property was confiscated as the landlord was finally found guilty of planning offences, its Corporate Anti-Fraud Team (CAFT)undertook a thorough investigation of the landlord's income from the nine flats. The team was able to calculate an approximate sum that the landlord had illegally made from the property.

The court ordered the landlord to pay back £555,954.49 which was the calculated sum of profits derived from the illegal conversion. He was also slapped with a £65,000 fine for committing the planning offences together with a bill for £80,000 legal fees.

The landlord was warned that failure to comply with the court's ruling by not paying the fines within a three month timescale, would lead to a penal sentence of five years and four months.

Councillor Richard Cornelius, the Leader of Barnet Council, said: "I am delighted that after a lengthy legal battle, the justice system has supported us in making sure that anyone who flouts our planning laws is suitably punished.

He continued: "Planning permission rules exist to ensure everyone in our borough has a safe and healthy place to live, and we cannot allow anyone to breach these rules by providing substandard accommodation. We will always do our best to ensure that this illegal activity is stopped as soon as possible."

 
 

Landlord Locked Out Of House By Council

A Waltham Forest landlord has been handed an Interim Management Order on his property by the council. The authority is now in charge of the daily management of the house, as it states the landlord's “complete refusal to operate responsibly.”

Recently council officers turned up at the property unannounced in the early morning and whilst changing the locks informed the tenants that it would now be acting as their landlord.

Waltham Council had already sent legal notices to the owner notifying him that it would receive the monthly rental income from the tenants.

The property which 'suffered' the IMO, is a three storey building in multiple occupation, the landlord's HMO licence was cancelled in July 2015 as the property was overcrowded and in an extremely poor condition.

The council said that the landlord had not bothered to reapply for the licence or carry out the necessary improvements to the property, so it had no other recourse than to start the prosecution process earlier this year.

The authority reported that the house breached a number of planning regulations for rental properties. The top floor had been converted into a flat and a large bed-in-shed in the back garden was housing four tenants, and these were just some of the breaches committed by the landlord.

Sixteen people, which included several young children, were living in five units in the house. The landlord was receiving more than £4,000 monthly rental income, even when two rooms were vacant.

A statement from the council explained that: “Despite raking this in the owner has not paid council tax on the property since 2012, and is currently over £4,000 in arrears.”

The council has drawn up a list of the mandatory improvements and repairs that must be carried out and has received a price from a contractor for doing the work. The rental income that the council receives will pay for the work and its management costs whilst acting as the landlord.

The council is still trying to confirm the landlord's address and hopes that in time he will get in contact to pay any outstanding debts and deal with the outstanding breaches.

 

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