Landlords grow portfolios as buy to let mortgage choice grows

The number of buy to let mortgage products in the UK reached 521 in the last three months,

with competition leading to better deals for landlords.

According to the latest Mortgages for Business Complex Buy to Let Index new purchases made up a significantly larger proportion of lending in the final quarter of 2013 across all residential property types.

Standard buy to let lending saw the biggest move towards new purchases, with 47 per cent of these plain vanilla mortgages going towards new buy to let properties. This compares to 38 per cent representing new purchases in Q3, and 31 per cent at the beginning of 2013.

HMOs

More complex properties also formed a growing feature of landlords’ shopping lists. Houses in multiple occupation (HMOs) saw a similar trend to standard deals.

Almost one third (29 per cent) of mortgages against HMOs were for new purchases in the final quarter, compared to 23 per cent for new purchases in Q3 and 20 per cent in Q4 2012.

Larger, multi-unit freehold blocks (MUFBs) saw the same trend, with mortgages for new purchases making up 31 per cent of loans against such properties, compared to 30 per cent in Q3 and 25 per cent at the start of 2013.

Remortgage

There has been a significant fall in remortgage activity over the last six months despite remortgaging still making up the majority of buy to let activity. In the last quarter, 53 per cent of standard buy to let deals were a remortgage – down from 65 per cent in Q2. For HMOs, 71 per cent of BTL activity was a remortgage compared to 84 per cent six months ago. And for loans secured against MUFBs in Q4, 69 per cent were a refinance rather than a purchase – down from 88 per cent in Q2.

LTV

Loan-to-value ratios have remained broadly stable.  For vanilla buy to let properties there was no change in LTVs for the third month running, standing at 68 per cent once again in Q4. HMOs saw LTVs drop slightly to 70 per cent, from 71 per cent in Q3, and loan to value ratios on semi-commercial property fell from 66 per cent in the previous quarter to 53 per cent in Q4.

The only properties to see higher LTVs in Q4 were larger MUFB blocks, with loan to value ratios averaging 68 per cent compared to 62 per cent in the previous quarter. This is likely due to the increase in average property values among MUFBs causing landlords to require larger LTVs.

David Whittaker, managing director of Mortgages for Business, commented:  “At the end of 2013 landlords could choose between more than 500 mortgage products – the figure today now tops 550. But that choice isn’t just delivering cheaper deals – there are now even more imaginative and flexible financing options out there too – many of which offer some of the best yields.  With demand for tenancies as strong as ever, landlords are making use of a more buoyant situation to boost their portfolios.  As we move into 2014 capital accumulation is accelerating, and joining solid rental income to make buy to let consistently attractive to investors.”

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Criminal Gangs 'Hotwire Power Supply' to Help Cut Bills

Criminal gangs are helping homeowners and landlords avoid paying for power by "hotwiring" supplies for as little as £10, BBC Inside Out has learned.

The energy thieves operating in London can tamper with 15 meters in a day, an investigation found.

Fraud investigators from British Gas said the gangs were risking causing gas explosions and endangering lives.

Regulator Ofgem believes theft costs the industry £400m per year. British Gas says it adds £30 to annual bills.

Mark Andrews, the firm's head of revenue protection, has warned people die "every year" because of meter tampering.

Power theft investigator Piers Merritt said: "We find trends where people go around estates and tamper with meters.

"These people will charge between £10 and £500 a time.

"They're not putting themselves at risk, if something happened there it's all the adjoining properties and everyone in there that's going to be affected by a potential explosion."

Investigators found five instances of gas theft and two of electricity theft in a Sheffield street where a house was destroyed in a suspected gas explosion last year.

The scale of the damage meant the cause of the explosion could not be identified.

And in London, a man who received a suspended prison sentence for digging up a street in the capital, allowing residents to steal electricity, told Inside Out "thousands" of homes in the capital were avoiding paying for usage by "hotwiring" their supply.

Mr Andrews said: "More people are feeling this is the only way they can get their energy.

"This is a huge problem, we believe that perhaps £500m worth of gas and electricity is stolen across the industry each year.

"In terms of what that means for the customers, it's potentially £30 a year on their bills and it's money they shouldn't have to pay."

Inside Out was shown examples of bicycle inner tubes being used to divert supply.

Lewisham Council has uncovered evidence that landlords are stealing the supply for multiple properties on the same street.

Ben Reeve-Lewis, from the council, said he regularly visited homes where meters suggested no electricity had been used for three months.

"Landlords of that kind will fill up their properties with people who can't complain," he said.

Ofgem believe a third of energy theft is linked to the illegal growing of cannabis and police and energy firm investigators have found booby traps close to illegitimate equipment.

Insp Lee Devall, from Essex Police, said: "Organised crime gangs don't want you to find this and are not happy when thousands of pounds worth of equipment is ruined."

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Cannibal Lodger Eats His Landlord

A lodger has admitted killing a man during a row over a game of chess - and is said to have eaten his victim's heart.

Saverio Bellante claimed to have eaten his landlord's organ after a violent argument.

But a post-mortem found that while one lung was missing, the heart was intact.

The examination found that a lung was removed from the body of researcher Tom O'Gorman, 39, during the attack and had not yet been located, the Irish Independent reported, citing an undisclosed source.

Mr O’Gorman’s body was found with multiple stab wounds at his home in Beech Park Avenue, Castleknock, in north Dublin, where the accused had been living as a tenant. He had also been beaten several times over the head with a dumbbell.

Bellante, 34, originally from Palermo on the Italian island of Sicily, has been charged with murder.

The paper said it had not been possible to establish whether Mr O'Gorman was already dead before his body was mutilated.

Irish police were alerted to the killing when the accused, who was described as "calm," phoned emergency services at 1.50am on Sunday.

Bellante appeared before Blanchardstown District Court on Monday. Detective Garda Patrick Traynor told the court that Bellante admitted the murder when he was cautioned.

Judge David McHugh ordered that he undergo a medical assessment.

It is understood Mr O'Gorman was a former journalist with The Voice Today, a Roman Catholic newspaper.

A graduate of University College Dublin, he had more recently been a researcher with the Dublin-based Catholic lobby group the Iona Institute for seven years, and is believed to have taken in a lodger in recent months to help supplement his income.

David Quinn, director of The Iona Institute, said Mr O'Gorman's friends and colleagues were left devastated by his death.

"On behalf of everyone at The Iona Institute, I would like to express our total shock and deep sorrow at the terrible and untimely death of Tom O'Gorman," he said.

"Tom was a friend as well as a work colleague to us all. He was a fond and dear friend and we will all miss him.

It is not thought alcohol or drugs were involved in the incident.

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Landlords 'May turn away people on benefits when universal credit comes in'

Buy-to-let landlords could turn potential tenants away or even evict them if they are on housing benefit, the government has been warned, amid confusion over whether the benefit will be paid to tenants rather than directly to landlords under the new universal credit system.

Kevin Green, one of the country's biggest private landlords, who rents out more than 700 houses, mainly in Wales, described the universal credit benefit system as a timebomb for private landlords.

He said he hoped to stick with benefit tenants but believed he was in a small minority. "Most other landlords are changing now. At least 90% of landlords are considering it. I know a lot of landlords all across the UK and most are saying they're not going to support housing benefit. It's a major problem for government."

Private landlords accommodate just over 1 million people who have part or all of their rent paid by the state. "My worry is for the customers. People are going to be homeless as a result of it. There's absolutely no doubt about it," Green said.

Fears that housing benefit will go directly to tenants under universal credit, bringing an increase in rent defaults, is prompting many landlords to consider following Fergus and Judith Wilson, who own almost 1,000 properties in Kent, who announced a week ago that they would no longer take tenants on benefits.

Fergus Wilson was unrepentant, sending an outspoken and at times bizarre statement to the Guardian urging benefit claimants to "get a job" and calling on David Cameron to make it clear that landlords can receive benefits directly. He says: "Calling Dave, Calling Dave, Fergus to Dave. Take a tip Dave! Stop this nonsense of paying housing benefit direct to the tenant!

"We have £800,000 arrears for those on HB [housing benefit]. Has the £800,000 caused financial difficulty … to be honest not an awful lot, but it has some!"

Marion Money, who rents out more than a dozen flats and houses in north Kent, said three-quarters of private landlords were considering turning away would-be renters on benefits. She said: "Landlords are running scared. They are saying 'if I've got a choice I'll choose somebody who's working'. The government isn't giving the right message about universal credit. They seem to be in a complete mix-up. The fact it has been delayed is compounding the problem."

Currently around a quarter of private tenants on housing benefits have the money paid directly to their landlords. In some cases this is because they are viewed as vulnerable, and it happens automatically if a tenant misses two rent payments.

Universal credit will mean money being paid monthly rather than weekly, with an emphasis on recipients learning to budget properly. The paradox is that after trials in which some social tenants received rent money themselves for the first time, bringing a rise in defaults, the protections for private landlords are now arguably stronger.

The latest Department for Work and Pensions plan would keep the system under which rent goes directly to a landlord after two missed payments, while adding a review after a first month's default. But some warn that the initial message about recipients managing their own money has stuck, while the DWP has yet to confirm whether tenants who currently have rent paid straight to landlords will keep this under universal credit.

Kate Webb of Shelter argues that an already difficult climate for tenants on benefits has been made worse by the DWP. "The rules will be broadly the same, and the arrears trigger will actually be stronger, but landlords are very worried. The DWP has bungled the communications. They need to be doing much more to reassure landlords about the rules," she said.

A DWP spokesperson said: "This is needless scaremongering. The majority of Housing Benefit claimants already receive payments directly and there is no change under Universal Credit. Our reforms ensure our strong housing safety net remains in place and there has been no fall in the number of claimants in the private rented sector. Ignoring over a million private rented sector claimants would be foolhardy for landlords' business plans."

What seems certain is that publicity about universal credit, and the Wilsons' decision, is making it even harder for tenants on benefits to find a home.

Benjamin Matthews, a letting agent in south-east London, said he was called this week by a client in Singapore: "He has quite a portfolio and the majority are rented out to people who are on benefits. He wanted to know: 'Has something happened? Has there been a big change?'"

A poll of National Landlords' Association members has found that while three years ago almost half were aiming properties at tenants on benefits this has already dropped to 22%.Chris Norris, the NLA's head of policy, said universal credit was a major issue: "The difficulty is the government has been very cagey in releasing information and timelines, and so many deadlines have been missed. They have been a little bit secretive and landlords have jumped to conclusions, or filled in the gaps themselves."

Housing charities and landlords' associations, while stressing that the extent of the chaos may yet not be quite so significant, have called on ministers to reassure landlords about the planned changes under universal credit, particularly those connected to housing benefit being paid to tenants rather than directly to property owners. Even landlords with a significant commitment to housing benefit are considering their options. Almost three-quarters of Green's homes are leased to such people, some with the help of charities working with young homeless people or victims of domestic violence.

Green says he is something of an "oddball" among landlords for such efforts, but says this might have to end. "It could be before the end of this year that we follow the Wilsons and say OK, we're not taking people on benefits any longer. It has to be an option for us. It's a commercial business. A lot of properties still have mortgages on them and they need to be paid."

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£1m Awarded to Council to Increase War on Rogue Landlords

The government has awarded Newham Council £1 million to help it continue its fight against rogue landlords.

The local authority successfully applied to the Department for Communities and Local Government for the funds, and, at £1,028m, the payout is the largest yet awarded to any council in the country.

The council has reported great success in combating both rogue landlords and ‘beds in sheds’, and has also brought in the country’s first compulsory borough-wide property licensing scheme, which has resulted in more than 30,000 applications in its first year.

Over the past two years, the council has taken enforcement action against 101 beds in sheds, 114 illegal house conversions into flats and 84 illegal conversions of houses of multiple occupation. Nine outbuildings and 12 flat conversions have been removed and 106 landlords have been successfully prosecuted for planning offences.

The council has identified a further 2,000 cases with planning irregularities which are due to be followed up with enforcement action this year.

Newham will use the new funds to increase both its planning and housing enforcement work, and hopes to improve its property database to ensure activity is targeted on criminal landlords.

Since property licensing was introduced in the borough, 1,997 enforcement visits have been completed on unlicensed properties, 5,078 warning letters have been sent out and 82 cautions have been issued for first time offences.

Additionally, the council is seeking to prosecute 134 landlords under the Housing Act for various offences. The highest fine so far has been £12,000 and at least three notorious portfolio landlords have been refused licences for over 100 properties.

Sir Robin Wales, Mayor of Newham, said: “Newham is leading the country when it comes to tackling bad landlords who flout the law. This money will allow us to build on our enforcement work and continue to target the criminal landlords operating within Newham. 

We will never accept the exploitation of some of our most vulnerable residents by unscrupulous landlords who force them to live in dangerous and unacceptable conditions, and we will continue to work to improve the standard of accommodation for all residents across the borough."

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Another Local Authority to Introduce Compulsory Landlord Licencing

The London Borough of Enfield, like other London authorities, has seen a considerable rise in the number of houses rented out by private landlords as part of the private rented sector in the last decade.

In Enfield the private rented sector now has approximately 27,500 properties rented as private sector homes, which is approximately 20% of all the homes in the borough. This represents more than double the size of this sector when compared with 10 years ago.

There are concerns regarding a pattern of anti-social behaviour, which is linked to the private rented sector. Enfield Council is extremely concerned about this association, as there seems to be no indication that the current arrangements with landlords and tenants to improve the standards of property and tenancy management are adequately addressing the reduction of levels of unacceptable behaviour. 

If the Council does not take decisive action, the indications are that the situation will continue to get worse with parts of the borough deteriorating in a negative spiral of poorer conditions - both for private tenants and their neighbours. 

As a result of these concerns, the Council commissioned specialist data analysts NKM, to analyse the levels and location of anti-social behaviour, and any correlation with the presence of private rented sector tenancies. This research has provided evidence that there is a link between the two. 

Having undertaken more work to better understand these early findings, involving additional analysis of Council data and having sought the views of key stakeholders in an engagement exercise, the Council has considered the options available to it. The Council has decided to consult more widely with tenants, landlords, support agencies and resident groups and other concerned parties on the introduction of Additional and Selective Licensing schemes. 

The Council views that the introduction of this regulation of the private rented sector will support good landlords, and where necessary enforce against negligent or bad landlord practice. The Council considers  the introduction of these policies as a last resort due to current arrangements proving to be ineffective.

The main improvement that the Council is seeking is a reduction in anti-social behaviour and an improvement in neighbourhoods, by significantly improving the management of the private rented sector. This would be achieved through Licensing, by clarifying both tenant and landlord responsibilities and the minimum standard of property management and maintenance. This will lead to better property conditions, improved tenancy management, and improved neighbourhoods. 

Enfield Council has a clear ambition that its growing private rented sector should not be associated with anti-social behaviour, but be a positive force in the borough - providing homes and contributing to cohesive neighbourhoods and sense of place. 

What’s happening now?

There is already action, on a limited scale, involving both private rented sector landlords and houses in multiple occupation (HMOs) on specific issues. HMOs are typically properties where three or more unrelated tenants share kitchen or bathroom facilities, including some houses that have been split into flats or bedsits. The Council has been running a voluntary accredited landlords scheme covering the whole borough for many years, with the Council facilitating regular meetings with landlords and agents. There are currently around 70 landlords participating. 

Using the current law, the Council also regulates HMOs on a borough wide basis under a Mandatory Licensing scheme. But because most of the properties used as HMOs, in the borough, have only two floors, only approximately 40 properties are licensed. 

There is also a range of private sector enforcement work and action to combat ASB already in hand. This includes

• Investigation, notice service and prosecution for noise nuisance
• Bi-monthly proactive patrols, investigation, notice service and prosecution for dumped rubbish, untidy gardens, pest infestations, graffiti and prolonged display of estate agent boards
• Communications with landlords and letting agents regarding disposal of rubbish at the end of tenancies and prolonged display of estate agent boards
• Support for  victims of ASB and enforcement action against offenders using measures such as injunctions, Dispersal Orders, Antisocial Behaviour Orders (ASBOs) and Acceptable Behaviour Contracts (ABCs)
• Management of complex cases through Multi Agency Panel (MAP) meetings and ASBAG (Anti-Social Behaviour Action Group) both include work with tenants and landlords in the private sector.

From 23rd October this year, the Planning Department has introduced an Article 4 Direction on Houses in Multiple Occupation. This means that residential houses now require planning permission if they are used as HMOs. This regulatory action by the Council ties in with concerns over anti-social behaviour and the private rented sector.

The Council views that these actions are delivering a reduction in ASB, but that levels are not coming down as fast as we would like and remaining stubbornly high in some areas. Problems with the private rented sector are growing faster than the sector itself.  

Additional and Selective Licensing

The Housing Act 2004 provides Councils with the powers to introduce licensing of privately rented housing properties in areas. This is with the aim of improving conditions for local occupiers and the surrounding community. 

The Act also enables the Council to tackle many of the issues experienced within the PRS, through the licensing of all private landlords in a designated area, in order to ensure that a minimum standard of management is met. The Act introduced Mandatory licensing of all HMOs but this was, as referenced previously, limited in scope. The change only affected HMOs in buildings which have three or more storeys and are occupied by five or more persons, forming two or more households. The Act also enables the Council to implement an Additional Licensing scheme for HMOs not covered by the above Mandatory scheme and a Selective Licensing scheme of all other properties within the private rented sector within designated areas. 

The Council is proposing the designation of Additional and Selective Licensing schemes across the Borough as a whole, as the Council believes that this will have the level of impact required to deal with the anti-social behaviour problems that exist in the Borough, and will prevent problem tenants and landlords from merely moving to another area within the Borough.

The Council believes both license types are necessary due to the different sizes and characteristics of housing across the borough, and solely focusing on one power or one area would be insufficient.

To read the original article click here: "Another Local Authority to Introduce Compulsory Landlord Licencing"

Buy-to-let Landlord Defends 'No Housing Benefits' Decision

The UK's biggest landlord has defended his decision to evict tenants who are claiming housing benefits, saying that if he is heartless "all landlords are".

Fergus Wilson, who with his wife Judith owns nearly 1,000 properties around the Ashford area of Kent, made headlines at the weekend when the Guardian revealed he had sent eviction notices to 200 tenants who paid some of their rent with welfare payments.

On Monday night he told Channel 4 news that the decision was purely based on financial reasons, and that rent arrears were running at more than 50% in the homes he let to those receiving benefits.

"If I am heartless all the other landlords are heartless, because we're all doing the same," he said. "All the landlords will tell you that there is so much default now with housing benefit tenants that you are just simply better off with somebody working."

Wilson admitted he did feel guilty about the people he was evicting, suggesting that some could be in dire circumstances. "It is very, very sad," he said. "Particlarly, I feel sorry for battered wives who have come to us because we are very much consigning them to go back to their husbands to be beaten up again, but the situation is it cannot go on."

Asked about rising rents, Wilson said it was "common sense" that they rose at a time of rising house prices. "If house prices go up 5%, 8% or whatever, then the rents go up in proportion – that's common sense. All our properties have to stand on their own two feet, it's not a house of cards.

Although there have long been landlords who would not let homes to people on benefits, with "No DSS" not an uncommon feature of letting agents' adverts, there are signs that choice is becoming more limited for those who claim help with their rent.

Research by the National Landlords' Assocation (NLA) in December suggested its members were become more reluctant to offer homes to welfare recipients, with just one in five still willing to do so.

The NLA said there were parts of the country where investors would not be able to avoid taking tenants who received some kind of support with housing payments, but in areas where they had a choice many were opting not to let to them.

"It's a business decision and you look at the risk of not being paid. It quite often comes down to the local authority and what it is like at making payments on time," the NLA's head of policy, Chris Norris, said.

"There is certainly a lot of concern about what happens when universal credit comes in and people receive one salary-type payment a month. For most people it won't make a difference, but there will be a small but significant number of people who struggle."

Click here to read the original article: "Buy-to-let Landlord Defends 'No Housing Benefits' Decision"

Cash for Councils to Stop Rogue Landlords

Councils across the country will receive a £4 million Christmas cash boost to tackle rogue landlords in their area, Housing Minister Kris Hopkins announced today (30 December 2013).

Councils across the country will receive a £4 million Christmas cash boost to tackle rogue landlords in their area, Housing Minister Kris Hopkins announced today (30 December 2013).

Twenty three councils will share the funding so they can take on the ‘unscrupulous Scrooges’: landlords that force their tenants to live in squalid and dangerous properties, making their lives a misery.

The cash will enable councils to build on their work to root out ‘beds in sheds’. Since 2011 more than 500 of these illegally-rented outhouses have been discovered and action taken against the owners, while 9 councils have already received £2.6 million to tackle the problem.

Mr Hopkins said today’s funding is part of a package of measures that will ensure millions of hard-working tenants get a better deal when they rent a home. He also revealed that:

• New legislation, which came into force earlier this month, will enable courts to take account of landlords’ assets, as well as their income, when levying fines for housing offences
• Redress schemes for lettings and property management will now be able to come forward for approval, after the application criteria was published today. All agents will be required to join one of the approved schemes, so their tenants have somewhere to turn if they don’t get the service they deserve
• The Royal Institute of Chartered Surveyors have agreed to help develop a voluntary code of practice on property management, and will host a workshop in January to get the work started. The code will set standards for the management of rental properties, so tenants know what level of service they should expect from their landlord.

Housing Minister Kris Hopkins said:

The majority of tenants are happy with their home, but the private rental market is still afflicted by too many ‘unscrupulous Scrooges’: miserly landlords who rent dangerous, dirty and overcrowded properties without a thought for the welfare of their tenants.

That’s why we’re providing 23 councils with extra funding, so they can root out the cowboys and rogue operators in their area, and consign these scenes of Dickensian destitution to where they belong: the history books.

We also want to raise the quality and choice of rental accommodation across the whole sector. Today’s measures will continue our progress, ensuring tenants know what level of service they can expect and, if things do go wrong, giving them the confidence to get help and take action.

Rogue landlords ripple effect

The poor quality, overcrowded and dangerous accommodation rented by rogue landlords can result in a ripple effect of wider problems in the local community, such as:

• noise problems
• sanitation issues for whole streets
• greater fire risk
• council tax and benefit fraud
• anti-social behaviour such as street drinking

More help to rent

Today’s measures to tackle rogue landlords are part of an ambitious package of proposals to ensure England’s nine million private tenants:

• avoid hidden fees from unscrupulous letting agents
• can request long-term rental deals that cut costs and provide stability for their family
• feel confident to demand better standards and management of their property by landlords

Today’s publication will enable the government to start approving redress schemes, so they can get started. The remaining 3,000 lettings and property management agents, around 40% of the entire industry, who do not belong to scheme will now be required to join one by October 2014.

Tenants will then be able to ensure complaints about hidden fees and poor service are investigated independently and, where a complaint is upheld, receive compensation.

Further information

Twenty-three councils across the country will receive funding to help tackle rogue landlords in their area:

Barnsley £230,000
Blackpool £293,000
Bolton £56,000
Boston £109,000
Bournemouth £134,000
Croydon £82,000
Derby £238,000
Fenland £179,000
Hastings £204,000
Herefordshire £54,000
Hounslow £260,000
Lambeth £82,000
Leeds £125,000
Lewisham £125,000
Medway £64,000
Newham £1,028,000
Nottingham £124,000
Oxford £150,000
Pennine Lancashire £109,000
Plymouth £68,000
Rochdale £111,000
Rossendale £79,000
Sheffield £145,000
(Total: £4,049,000)

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