After last week’s news that Paragon is returning to BTL new business, there’s some more good news for landlords in need of finance. TMV have announced a rate reduction of up to 0.3% on a number of products. They have a 2 year fixed rate up to 70% LTV at 4.79%, and a 3 year fixed up to 75% LTV at 5.49%.

TMV also have a new range of tracker mortgages, including a 80% LTV 5 year fixed rate option at 6.29%, and 1 and 2 year tracker products starting at 3.39% up to 70% LTV.

We had a chat with Upad CEO James Davis and asked him what he wished he’d known before he became a landlord. He’s a landlord himself and lets several properties in London.

James said:

“I became a landlord by accident. When I was a student I took the plunge and bought a place and took in lodgers to cover the mortgage. Now I have several properties and with scale comes added complexity. And there’s so much I wish I’d known when I started out but experience is a great teacher.

Preparation is vital. Take time to understand residential lettings and your local marketplace. You may have a gut feel or general idea, but back that up with rigorous investigation. Don’t try and busk it with what is likely a very serious investment in a complex industry with lots of laws and regulations to be aware of. Also, understand the financial aspects of being a landlord from the get-go. Take advice on that. It saves time and money in the long run.

Get your team in place. You might be landlord, but that doesn’t mean you also have to be a handyman, cleaner and gardener too. Get people like builders and plumbers onboard at the start and don’t wait until you need them. Trust me: boilers always go wrong at Christmas or over the weekend. Don’t wait until the worst happens before you seek out a professional. Doing it on the fly is more expensive and beggars can’t be choosers.

Be a tenant for the day. Go undercover and really get to know your area from a tenant’s point of view. Visit some agents, view some properties. It’s not only a good way of understanding what the competition is offering, but you’ll also better understand local demand and how to price your property.

Every day’s a schoolday. Read books and blogs and news about landlords and letting property. New laws come in, others are changed and it’s up to you to keep on top of that. One great source of news and views is this very blog. But I would say that, wouldn’t I?”

A fraudster has been jailed by Plymouth Crown Court after stealing his landlord’s identity and using it to take out credit cards and loans. Taylor confessed to five different charges of frauds including registering credit cards with Egg and Capital One, opening an account with Littlewoods, buying a laptop from Argos and also taking a loan from PayDay Express. In total, he ran up more than £3000 of debt in his landlord’s name.

The judge sentenced Taylor to 42 weeks in prison. The prosecution said Taylor had also offered tickets for concerts and rugby internationals for sale on Gumtree fraudulently. Taylor also has previous convictions for burglary, theft, fraud and handling stolen goods and recently served a suspended sentence for a slashing the tyres of 13 cars with a kitchen knife.

The Judge commented: “Five of these offences involved your landlord, who was trying to assist you. He came to regret it, no doubt.” And although the financial institutions and ticket buyers were technically Taylor’s victim, so was the landlord “in the wider sense”.

This is obviously a fairly extraordinary case and one that has been successfully discovered and prosecuted but it’s a useful reminder. As a landlord, you will have shared details and, potentially, quite private information with your tenants. What can you do to protect yourself?

The most important advice is to ensure that copies of your correspondence don’t get into your tenants’ hands. Bills and statements with the correct address and your name are often all that’s required for to apply and get credit. Of course, if you share a front door with your tenants that more tricky. So always keep an eye out for missing statements and the like.

Upad is backing a campaign to improve the current tenant eviction system: ‘Rebalancing the Law’. The campaign, spearheaded by Landlord Action and backed by the Residential Landlords Association, the Southern Landlord Association and Mike Weatherley MP, endeavours to drive for speedier court action for landlords with problem tenants by presenting Parliament with a petition showing just how serious landlords are about these issues.

The campaign’s aims are four-fold:

1. to highlight the difficulties experienced by responsible landlords when faced with unscrupulous tenants,
2. to seek changes to the law to speed up the eviction process when a clear case of either non-payment of rent or anti-social behaviour exists,
3. to seek changes to the law to improve a landlord’s rights of access to their own property in the case of, again, non-payment of rent or anti-social behaviour,
4. to seek commitment from the government that proposed closures of UK County Courts will not contribute towards any delays in landlords obtaining possession of their property.

Paul Shamplina, Landlord Action’s founder, comments: “We accept that in many cases, tenants will have a valid defence against being evicted where, for example, the landlord has not maintained the property properly, etc. Quite rightly, evidence must be heard and these cases should take longer.

“But, in most eviction cases, tenants do not turn up to Court and there is not enough support for single property landlords who may have been forced to let out their properties due to financial hardship or unforeseen personal circumstances so, not being able to reclaim their homes is disastrous.

“It leaves the owners feeling like no one is on their side, especially as local councils are advising tenants to stay put until they are legally obliged to leave. The system needs a complete overhaul to give more support to landlords, in particular single property landlords.”

Visit Landlord Action’s website to find out more and sign the petition.

Landlord confidence in the buy-to-let market is still shaky, despite record tenant demand. The latest findings from the Upad Landlord Confidence Index show that just 57% of private residential landlords say they are more confident than last month in the lettings market.

327 landlords responded to the question “are you more or less confident in the rental market than last month?” Of those who said they were more confident, most cited tenant demand as their reason. Comments included:

• “Lots more people looking for property than last year and rents have increased.”
• “Demand for rented properties still good.”
• “Yet again no voids due to large number of tenants out there.”
• “Rental demand up, interest rate staying low. Looking good for now.”

Landlords from the south-east and south-west were particularly likely to say that demand in their areas was up.

For those who were less confident, government cuts, particularly to benefits, loomed large. One landlord commented at length:

• “I try to give good housing to people who are unemployed and on benefits, so I’m concerned that I will have to evict people when the new benefit rules come out as they won’t be able to pay the rent. I don’t charge unreasonable rent. It mainly just covers the mortgage.”

Others who said they were less confident were concerned about the general economic conditions, and some even bucked the trend towards increased demand:

• “I’m less confident. Is there going to be another dip? Banks may be only riding the wave on the back of quantitative easing.”
• “I’ve had to drop prices of new lets for first time in 10 years.”

James Davis, Upad’s CEO, comments: “Despite strong tenant demand in the private rental sector currently, we’re still seeing very low longer-term confidence in the industry. It’s going to take more than a month or two’s bullish headlines before landlords start to feel that things have got better – if in fact they have.”

“Though it’s helpful to have buy-to-let mortgage providers like Paragon back in the marketplace, landlords still face very real practical problems. A third of all landlords in the past 12 months have faced rent arrears, and keeping voids to a minimum must be a key concern in the current climate. With cuts hitting all sectors of the economy hard, plus concerns about housing benefit changes and their knock-on effects for the private sector, no one can afford to be complacent about their rental business.”

This much we know: the reduction of Housing Benefit and the changes to Local Housing Allowance are going to have a dramatic effect on the residential lettings market, and indeed the entire property market, when they start coming into effect next April.

We urge every landlord, even if they don’t take on social tenants to get to grips with the changes, understand what they might mean to them locally and plan accordingly. The scale of the changes mean that every landlord and community in the country will be impacted in some way and you can’t plan ahead too early. London landlords, and those in the south east are likely to be particularly affected.

The numbers are staggering. In London, they are talking about something like 15k households in central London moving to the outer boroughs in search of affordable rents. Capital blog The Londonist makes the case that this will be very bad news for the economy and culture of London as it comes to resemble the donut city Paris. There the centre is populated entirely by richer people and lower income families live on the outskirts.

The striking thing is that when we talk about Central London, we’re not just talking about salubrious areas and neighbourhoods. Mayfair, Westminster, Bloomsbury, the City and the like are included but we’re also talking about areas such as Battersea, Kilburn, Bermondsey and Hammersmith that will become essentially unaffordable for even average earning renters.

Conservative London Mayor Boris Johns recognised this in a report made this week. This noted that they expected to see the “loss of the private rented sector as a major safety net for London boroughs in reducing and preventing homelessness, overcrowding and move-on options for vulnerable households.” (bold emphasis is in the report). It also predicts that landlords will “leave the Housing Benefit market” because of its “perceived instability.”

Every landlord is a businessperson. How is this going to affect you?

The stereotype of a businessperson landlord would say they favour low taxes, smaller government spending and minimal interference from the state and we have some sympathy with that caricature. And with today’s Comprehensive Spending Review (CSR), we have seen the biggest reduction in government expenditure since the Second World War and it pays to be at least a little circumspect about such dramatic changes. Landlords don’t exist in a vacuum and anything that affects your tenants will also by extension have an impact on you.

Benefit cuts mean families with less money.
The bulk of the spending cuts will be coming from the welfare budget and we’re talking total cuts of £18bn a year by 2014 with an overall decrease of £81bn. This includes previously announced cuts in Housing Benefit and Local Housing Allowance as well as significant cuts to other benefits and tax credits. That’s going to mean a good deal less money sloshing around amongst people on lower incomes. Unless you are only renting high-end properties, and that’s generally quite unusual, then it’s likely that the people you are letting to will have less ready cash. That could spell trouble on rent levels and also with arrears.

Unemployment hurts everyone
The Chancellor’s “best guess” regarding job losses is that these changes will add nearly half a million unemployed to the dole queue, predominantly amongst public sector workers. These job losses are already filtering through with many quango employees already receiving redundancy notices. Job losses, and even fear of unemployment, make people more fearful of making changes. It’s easy to argue that’s good for landlords as many people will stick to renting or move back to it until the dust settles. But in any case uncertainty in the employment market is bad news.

Cuts will slow down Councils and Courts even more
We’ve looked at the economy in general. But start thinking about how these cuts might affect how you run your affairs as a landlord. Do you ever have any dealings with your local authority? If you let HMOs, you certainly will and there are plenty of situations that see a landlord interacting with their local Town Hall. Councils are notoriously slow in dealing with paperwork and decisions already. The CSR cuts the grants to local authorities and requires greater efficiency and job cuts. I can’t see how that’s going to improve the service landlords get from their local council.

One other government department that has promised to find savings is the Ministry of Justice that administers the courts system. Whether we’re talking squatters, rent arrears or anti-social tenants, getting legal action takes a long time already. Landlord Action recently noted that getting the relevant Court Orders can take as long as six months. We agree with them when they say that’s too long. Action needs to be taken in weeks not months. But it seems that these Ministry of Justice cuts will extend rather reduce the time that landlords have to wait for proper legal protection for their properties. That’s going to cost landlords a lot of money.

Do you let a student house?
Thinking more laterally, we can see that even less obvious changes in today’s announcement will likely have an impact. The Higher Education budget will be slashed by 40% and the recommendations of the Browne Report implemented for university funding and tuition fees. The doom-mongers are saying that these moves will see a drop in student numbers. Any such decrease will doubtless have an impact on landlords renting to students in university towns and cities.

There may be trouble ahead.
Whilst we can see the logic in some of the Comprehensive Spending Review cuts, we certainly take no pleasure in them. Such is the magnitude of George Osbourne’s plan, that they must be considered carefully. We don’t have the full picture yet and the devil is always in the detail. So whether you think they are right or wrong, every landlord must agree that they’ll have a significant impact on the residential lettings market all over the country. And we believe that for many landlords the impact will not be good news.

Liberal Democrat MP Simon Hughes has said that he doesn’t believe that the government will be able to pass the housing benefit reform the Coalition government has proposed over the past few months parliament. Whilst emphasizing the he believed the reforms and cuts the government were making were generally ‘fair’, he described the cuts to the Housing Benefit budget as “harsh and draconian”.

In particular, he criticised plans to cut the Housing Benefit for people who have been on Jobseekers’ Allowance for over a year. Hughes said: “My message to the government is I don’t think you will get Parliamentary approval for your current plans. I think government understands there have to be negotiations. The current proposals are not the best set of proposals, whatever the financial constraints. There are better ways of doing it and we need to achieve them. I am making sure the message from me and many colleagues is being communicated loud and clear to government.”

Labour quickly moved to emphasize the difference between the Conservative and Liberal Democrat partners in the coalition. Labour front bencher Douglas Alexander said he was keen to work with Mr Hughes to amend the proposals.

There can be little doubt that this is going to big issue for Hughes and it doesn’t look like he’ll compromise. Don’t forget that he’s a London MP and the capital is going to completely changed by the reductions to Housing Benefit. As MP for Bermondsey, many of his constituents will be exactly the sort people who may have to up sticks for the suburbs.