Rent-to-Rent, the Latest Property Get-Rich-Quick Scheme

Daniel Burton is just 25, a dropout from the London School of Economics, but he's raking in £35,000 a month in rent – without ever having to buy a property. He has let out 200 rooms in 40 properties across London, turning a fat profit by renting a three-bed house from a landlord, converting the lounge and dining room into bedrooms, cramming more tenants in and leaving them with just a kitchen to share. Welcome to the rapidly growing world of "rent-to-rent", also known as "rent the rented" and "multi-let".

Burton calls it "arbitrage" – finding properties where a landlord has not realised how much more they could squeeze in rent from the house. In an online webinar he tells other potential investors how to "jack up the rent" and maximise the amount of money that can be obtained from local authorities through the Local Housing Allowance.

But Burton is just one player in a mushrooming industry. A new breed of self-styled property experts are flogging books, seminars and courses on rent-to-rent, boasting that pretty much anyone can "turbo charge" the rent or "make £10,000 a month" without so much as even buying a property.

This comes amid growing concern about spiralling rents in Britain's major cities, overcrowding and a lack of tenancy rights. Average rent in London has increased by 18% over the past three years, with the latest increases running at about 8% a year at a time when real wage growth is close to zero.

But for the promoters of rent-to-rent the lure is the "infinity profit" and "passive income" – terms that are cheerfully bandied around websites encouraging others to participate.

Francis Dolley runs "Multi-Let Cashflow System" (MLCS) courses where delegates can learn to "turbo charge your cashflow". He boasts he earned £5,000 per month in this way, and now he is teaching others how to do it too. Places on his courses cost £497 each. With 30 spaces available for his latest workshop in Bristol, he could make £14,910 in a day, on top of the "rent roll" from his sublet properties.

Nigerian born Taiwo Orishayomi is another promoter of rent-to-rent and claims she earns £10,000 a month in "passive income". She has even written a book about it called Rent2Rent: Massive Cash During a Massive Crash.

Both say their systems are above board and perfectly legal. They say landlords know what is going on and agree to a guaranteed rent while the rent-to-renter looks after the property, does small maintenance jobs and finds and manages tenants.

In theory there are several ways to legally sublet a property, usually involving commercial or corporate tenancies, management agreements, leases or guaranteed rent schemes. These can be attractive to landlords who want a hands-off investment.

But whether multi-let subletting is legal isn't really the point – any tenant who has struggled to find a decent property at a decent rent will question the ethics of the new middlemen. The success of rent-to-rent appears to depend on cramming the most people you can into a property and charging them the maximum possible.

On his webinar Burton suggests rent-to-renters look for a three-bedroom house with two reception rooms. "You can rent this as five rooms. The rent on a house with five rooms will be more than the rent on a three-bed house," he explains. Tenants and their needs hardly come in for a mention. The practicalities of living in a potentially overcrowded house with a bunch of strangers are rarely discussed either.

A key tactic used by rent-to-rent investors is to issue tenants with a licence rather than a conventional assured shorthold tenancy (AST). Under a licence agreement, which is more usual when a homeowner lets a room to a lodger, the landlord or agent can access the property whenever they want – something an AST doesn't allow.

Meanwhile, Dolley describes MLCS as a "profit strategy to be the middle-man between the landlord and the tenants", which sums up what tenants are to rent-to-renters: profit.

David Smith of Anthony Gold Solicitors warns that rent-to-rent is a legal "fiasco", and says that not only tenants but landlords can be seriously affected.

"If the landlord lets to a rent-to-renter they are creating a commercial tenancy which is subject to different laws than a residential tenancy," he explains. "At the end of the tenancy the sub-tenants have the right to demand a new tenancy under a law designed to protect commercial tenants such as shop owners. Landlords can lose control of their property this way."

Another issue is that renting out individual rooms could mean the property is classed by the council as a House in Multiple Occupation. HMOs need a licence and there are strict penalties for the landlord if they are caught renting out an HMO without one.

But it is not just tenants who are the victims of rent-to-rent; often it is landlords too. While many might know exactly what the deal is, others become victims of subletting scams that can see both their properties and reputation in ruins.

In an illegal rent-to-rent, middlemen pose as normal tenants and sign an AST. But instead of moving in themselves they let the rooms out individually. Sometimes they pass the agreed rent to the landlord, but in other set-ups the real landlord never gets to see his or her money. Meanwhile, the tenants are occupying properties they have no legal right to be in.

Eviction expert Paul Shamplina of Landlord Action says he is seeing more and more cases of landlords falling victim to this. "The telltale signs your property is being used for rent-to-rent can be the 'tenant' offering six months' rent up front, or complaints from the neighbours that loads of people are living there," Shamplina says. "I have dealt with landlords who are horrified when they discover who is living in the property – they have no idea."

Shamplina worked for some of the landlords tricked by asylum seeker Rose Chimuka. She was jailed for four years in March 2012 after ripping off landlords in a subletting scam that netted her £100,000.

Chimuka took leases on family homes across south London, illegally dividing them into bedsits and subletting them. Up to 15 people lived in each house. Chimuka didn't pass on the rent to the real landlords and each time she was found out she simply disappeared and started again elsewhere.

Rent-to-rent is a topic regularly discussed on landlord community website Property Tribes. Founder of the site, Vanessa Warwick, says sublet scams produce three sets of victims – the landlord, the sub-tenants, and the wider landlord community, which ends up getting the blame.

"To some people, subletting seems like easy money for little effort, but it is fraught with pitfalls that usually end up costing the landlord, not the subletter," she says, "I have seen a newbie fresh off a rent-to-rent course ask on a forum: 'I've let a property but haven't been able to sublet any of the rooms yet. Can anyone give me advice on how to avoid paying the landlord rent until I have let the rooms?'."

For "real" landlords the risks involved in rent-to-rent are massive: it could invalidate landlord insurance and be in breach of buy-to-let mortgage terms. The latter could result in a mortgage being called in by the lender.

But, inevitably, tenants are the biggest victims in rent-to-rent. Living in overcrowded properties with strangers, the dream of homeownership must seem more distant than ever.

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How Successful Landlords Design Properties for their Market

It is a common assumption that the location of a property is the most important factor considered by tenants when looking for somewhere to rent. However, landlords with successful portfolios are aware that it is possible to engineer your property towards a particular market.

The most obvious example of this is the different ways of decorating if you want to attract a family who might be looking for a long-term tenancy, or a group of students - who will often pay slightly more but are unlikely to stay in the property for longer than a couple of years.

So what are these groups of people looking for in a rental property? Talking to local letting agents will give you an idea of the market in the area and you should then set about tailoring your property to the most obvious group, using the tips below:

Families

If your property is in a desirable location, perhaps close to a local school and has a garden, you are probably likely to attract families who are looking to rent. This has become increasingly common since the global financial crisis, which made it more difficult to obtain affordable mortgage finance.

They are more likely than the other groups to own furniture and so will probably be looking for an unfurnished property. However, this does not mean that the house should be left undecorated - families will want a home that is well-presented and clean, with all wallpaper or painting taken care of beforehand.

Students

Despite rising tuition fees, thousands and thousands of students move out of home to go to university every year. Again, the location of your property will be important here, as it will obviously need to be close to a campus, but students also like to be near to other facilities, such as pubs, shops and takeaway restaurants.

If your property has three or more bedrooms it is likely to be favoured by students, as they are keen to split the rent.

They are unlikely to have any of their own furniture, so will be seeking a fully-furnished house. If you are going to kit out the property, it is advisable to choose sturdier items as they are likely to experience a great deal of wear and tear during student life.

In an effort to ensure you do not need to replace the items regularly, consider purchasing second hand items to keep costs down.

Young professionals

As it has become more and more difficult to get onto the property ladder, increasing numbers of young professionals are now renting for longer than ever.

When preparing a property for this market, you should consider their requirements closer to those of families than students. Young professionals may enjoy a garden for entertaining friends and family. Keep in mind that they probably haven’t acquired a lot of furniture, therefore furnishing your property with high quality and sophisticated pieces will help make their decision easier to choose your rental.

Whichever market you are aiming for, it is a good idea to choose plain decor that can be easily touched up and readministered between tenancies if required. However, magnolia is often a better choice of colour than white, as it goes some way to hiding dirt and making it less obvious.

By much the same token, laminate flooring is more resilient than carpet in main living areas, while tiles or vinyl will be better coverings for bathrooms. As well as lasting longer, these options will allow the tenants to add a touch of their own personality in the form of rugs.

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Court of Appeal rules on tenancy deposits - Superstrike Ltd v Rodrigues [2013]

The Court of Appeal has ruled on yet another anomaly arising from the troubled legislation concerning residential tenancy deposits in a case where Coffin Mew acted for the landlord.

In a judgment handed down on 14 June 2013 in the case Superstrike Ltd v Rodrigues [2013] EWCA Civ 669 (see: bit.ly/1bDaaJV), the Court of Appeal examined the vexed question of the effect of section 5 of the Housing Act 1988 upon the landlord’s obligations under sections 212 to 215 of the Housing Act 2004, where the latter came into force after the creation of fixed term assured shorthold tenancy.

The facts

In 2007 the landlord (and respondent to the appeal), Superstrike Limited, granted a one year assured shorthold tenancy agreement to the tenant, Mr Rodrigues (the appellant).  A deposit was paid by the tenant but at a time when the relevant provisions of the Housing Act 2004 had not yet come into force.  There was accordingly no regime which compelled the landlord to protect the deposit in any way.

However, when the fixed term tenancy expired on 7 January 2008 the tenant held over and remained in occupation. This meant that a statutory periodic tenancy was created by virtue of sections 5(2) and 5(3) of the Housing Act 1988, importing the same terms as the expired fixed term. Understandably, nothing was done about the deposit at that time, which the landlord continued to hold.

In June 2011 the landlord served a notice requiring possession under section 21 of the Housing Act 1988. Upon expiry of that notice, accelerated possession proceedings were commenced in the County Court. An initial order for possession was later set aside on the basis that certain transitional provisions in the 2004 Act had not been complied with by the landlord but on appeal to the Circuit Judge the order for possession was restored, the judge ruling that there was no statutory regime was in force affecting the deposit when it was paid.

The Court of Appeal’s approach

That decision has now been overturned by the Court of Appeal. In a decision on what Lloyd LJ termed “a problem which is of some importance”, the court ruled that, notwithstanding that the Housing Act 2004 did not apply to oblige the landlord to protect the deposit when it was paid in 2007, upon the tenant holding over under section 5 Housing Act 1988 in 2008, a new statutory tenancy was created by which time the deposit protection regime had come into force. 

The court found that there had been a notional fresh payment and receipt of the deposit at the time the statutory tenancy was created, notwithstanding that the landlord simply continued to hold the deposit that had been paid a year earlier. It followed that the deposit had to be protected under the Housing Act 2004 and because the landlord had not protected the deposit within the (then) required 14 days after the creation of the statutory periodic tenancy, the section 21 notice was invalid (by reason of section 215(1) Housing Act 2004). Therefore the landlord was not entitled to an order for possession and the tenant’s appeal was allowed accordingly.

It was further argued by the tenant that the requirement to comply with section 215(1) of the Housing Act 2004, which prevents a landlord relying on a notice requiring possession under section 21 of the Housing Act 1988 unless the deposit has been protected, stands independently of the requirement to comply with section 213 of the 2004 Act.  However, the Court of Appeal declined to rule on that issue “interesting as the point is” (per Lloyd LJ) as it was not necessary to do so for the purposes of the appeal.

The effect of the Court of Appeal’s ruling

Landlords who created a fixed term assured shorthold tenancy before 6 April 2007, whose tenant paid a deposit and who held over after the fixed term expired, have real cause for concern. Unless those landlords took the prudent step of subsequently protecting the deposit under one of the statutory schemes, any attempt to now serve a notice requiring possession under section 21 Housing Act 1988 will prove futile. Such a notice will be invalid.

The position is compounded by the changes to the Housing Act 2004 introduced by the Localism Act 2011. The transitional provisions obliged defaulting landlords to comply with the deposit protection provisions by 5 May 2012 (regulation 16 Localism Act 2011 (Commencement No 4 and Transitional, Transitory and Saving Provisions) Order 2012). Deposits paid after the 6 April 2012 must be protected within 30 days of receipt. This removed the previous leniency of the courts as demonstrated by the case of Vision Enterprises Ltd v Tiensia [2010] EWCA Civ 1224, which held that where the landlord had failed to comply with section 213(4) within the (then) stipulated 14 days, but had nonetheless complied before the hearing of the tenant’s claim, the sanction provided for by section 214(4) could not be imposed.

It follows that the only way landlords who are caught in this time trap can serve a valid section 21 notice under the Housing Act 1988, is to return the deposit to the tenant (section 215 (2A) (a) Housing Act 2004), unless a tenant’s application under section 214(1) Housing Act 2004 has been disposed of by the court, a position recognised in the Court of Appeal’s judgment although Lloyd LJ makes clear that it forms no part of the decision.  

It is not yet clear how many tenancies will be caught by the Court of Appeal’s decision but there will undoubtedly be quite a few. In practical terms, the impact may not be quite so great. Landlords who have trusted their tenants to remain in occupation for years after a fixed term assured tenancy has expired may feel little real hardship in returning the deposit to the tenant before serving a section 21 notice, although those landlords may feel aggrieved at having to do so. 

This is not the first time that the tenancy deposit legislation has caught out landlords. As Lloyd LJ put it: “Unfortunately, several points under this legislation turned out not to be as may have been expected or intended.” It is therefore essential that landlords take proper legal advice before potentially wasting a good deal of time and money in seeking a possession order which may be doomed to failure.

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Rent Arrears Drop as Tenants Pay Down Debts

Figures from LSL, the largest network of lettings agents, showed that the total amount of rent that is unpaid or late has improved by £6 million in a month. The company said it was part of a "clear long term trend", rather than a monthly blip, as tenants are "focusing on deleveraging and shedding their bad debts".

The figures also showed a slight cooling in rent increases. The average rent in England and Wales has risen by 0.1pc since April, to £737 per month. This is slower than the average monthly increase of 0.3pc over the previous twelve months. However, the latest increase still leaves rents up 3.5pc up on an annual basis – and brings rents in May to the third highest level on record.

Rents have been rising due to many first-time buyers struggling to get onto the property ladder. However, figures from the Council of Mortgage Lenders (CML) show that first-time buyers are beginning to get mortgage approvals again, suggesting that rents could fall in future.

"Despite a strong increase in new tenants, rents rose more slowly than other household costs," Mr Newnes said. "But that demand would have been even stronger had it not been for a recent spurt in the number of first-time buyers. Looking further ahead, sustaining the increase in new buyers will depend on how many tenants are able to build big enough deposits to get a mortgage. With wage growth so weak compared to inflation and house price growth, it looks like deposits will become less affordable – which will keep demand for rented accommodation high."

Mortgages for landlords are becoming cheaper than ever, with Nationwide subsidiary The Mortgage Works launching a 2.49pc buy-to-let mortgage for those with a 40pc deposit. "This is the lowest 2 year fixed rate for Buy to Let borrowers and is another indication of just how competitive the market is. That competition has been leading to lower rates and that trend shows no sign of slowing," said David Hollingworth from London & Country. He predicted that rates for buy-to-let mortgages would continue to fall. "In order to keep their position lenders will either have to carry on cutting the price of their products or perhaps alter criteria."

Analysis by Sequence, a national chain of estate agents that trades under brands like Barnard Marcus and Fox & Sons, found last month that applications for buy to let mortgages have almost doubled in the past two years and have jumped by 11pc since March alone.

Danny Gabay, a director of Fathom Consulting, has described FLS as "funding for letting" and claimed it is contributing to growth in "the buy-to-let sector at the expense of first time buyers".

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Landlords Remain Keen to Buy Despite Softening Tenant Demand

Landlord investment in residential property has increased significantly over the past three months despite slight easing of tenant demand, according to research from the Association of Residential Letting Agents (ARLA).

The proportion of ARLA members who think landlords are currently increasing their net investment in the private rental sector (PRS) by buying properties has risen sharply - from 30% to 39% - over the last three months, indicating that rental property is still perceived as a safe investment amidst ongoing financial instability.

In addition to more landlords buying properties, the proportion of landlords selling their properties is also down incrementally on the previous quarter, from 15% to 14%, again indicating sector confidence.

Despite this positive investment background tenant demand has actually weakened slightly in the second quarter. ARLA's research shows that 54% of respondents said that there are more tenants than properties, a decrease from the 57% seen in the first quarter.

Susan Fitz-Gibbon, Director of specialist letting agents Fitz-Gibbon and President of ARLA, said:

"Our research shows that rental properties are still seen as a good investment option, despite the challenging economic climate. The slight slowing in tenant demand is worth noting, but the overall trend is still a continued appetite for rental homes.

"We would urge anyone planning to let out additional properties, or landlords looking at changing their portfolio, to do plenty of research and consult with experts. It is vital to ensure your investment is properly protected - using an ARLA agent will mean you have access to Client Money Protection and a redress scheme, as well as advice on selecting the right property at the right price."

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Universal Credit to be Withheld from Tenants in Arrears

It has been announced that the controversial Universal Credit, which is to be launched this autumn, plans will no include a mechanism for landlords to request direct payment of rent if arrears are accrued.

This mechanism will mean that landlords who are owed rent by tenants receiving housing benefit will be able to request direct payment from the Department of Work and Pensions (DWP).

Such a request will only be an option if a certain level of arrears has been accrued by the tenant, though the exact level has yet to be decided.

Upon receiving the landlord's request, the DWP will automatically begin docking Universal Credit so that arrears can be recovered.

Under current law only 5% of the benefits received by the tenant can be deducted for arrears. The Government has also announced it will be reconsidering this and whether the proportion should be increased.

Though Universal Credit has been criticised, it will be very similar to the current Local Housing Allowance in that the tenant will be receive the money, not the private landlord.

What has changed is that social landlords will no longer receive the rent directly, rather it will be paid via the tenants.

Many housing associations who are piloting the new system have already complained of increased rent arrears. These current trials, due to end after a year, will continue for 18 months.

These trials will determine exactly what level of arrears will have to be accrued before private and social landlords can make the request to the DWP for direct payment.

The current trigger for this request in the Local Housing Allowance and the pathfinder trial in Manchester is two months.

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Rogue Landlords 'Should Face Crackdown'

Sweeping new reforms should be introduced in an effort to banish London’s rogue landlords, a London Assembly member said.

The fresh proposals recommended by the London Assembly included moves such as stabilising rents, enforcing landlord registration and issuing longer tenancies.

The proposals would force landlords to register before setting up shop in the capital and include higher penalties for landlords caught breaching property rules.

The reforms would also see homeless households placed in the private sector given tenancies of at least 24 months with allowances made for families with children.

Meanwhile the Mayor would also launch a bid to stabilise rents in an effort to tackle rising property costs.

Landlords will also be given access to low coast loans in effort to improve the quality of the city’s housing stock.

London Assembly member Len Duvall said: “We need urgent reforms for London’s private rented housing, many people are forced to live in poor quality housing and pay rapidly rising rents for the privilege.

"As housing demand continues to far outstrip supply, the Mayor needs to take action now to make the capital’s private rental sector fairer. Law-abiding landlords should have no issue with the Assembly’s recommendations. We need a package of measures to rent stabilisation, longer tenancies and landlord registration.

“Tenants have had year upon year of inflation-busting rent rises, this cannot continue. Everybody deserves good-quality accommodation and to feel secure in their home, especially the ever growing number of renters with children. Reforms to renting in London are important to ensure we don’t see a return to the Dickensian squalor of the past.”

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Landlords Warned over Wiring Faults

The Electrical Safety Council (ESC) found that a fifth of tenants, equating to 1.7 million private renters across the UK, have reported concerns about the electrical safety of their property to a landlord that were either acted upon slowly or not dealt with at all.

The charity urged landlords to make sure they comply with legal obligations to ensure that electrical installations and wiring are kept in a safe condition throughout the tenancy. Failure to do so means that landlords could end up having their insurance invalidated or be fined tens of thousands of pounds.

Tenants also have a responsibility to maintain the electrical items they bring into the house and should report hazards to their landlords immediately, the ESC said.

The findings come at a time when interest in the buy-to-let sector from landlords has been increasing due to strong demand for private rental accommodation from tenants which has pushed up rents. Many people have also become "accidental" landlords because they have found it hard to sell their home in the difficult economy.

Phil Buckle, director general of the ESC, said: "In the long-term, we'd like to see tighter guidelines for landlords on electrical safety, but with the number of non-professional landlords increasing every day, we also need to address this now.

"We need all landlords to understand that they are not only putting people's lives at risk, but they could also face serious financial loss through fines or invalidated insurance if they don't act on their existing obligations."

Kay Boycott, director of campaigns, policy and communications at Shelter, said the charity hears from families "across the country" who are living with the knowledge that an electrical fault in their home is putting their safety at risk.

More than 4,000 people took part in the ESC's research across the UK. The ESC has produced a free smartphone app called "home electrical safety checks" to help people make sure that each room in their property is safe.

A guide for landlords and tenants on their electrical safety responsibilities can be viewed at esc.org.uk/landlords.

Click here to read the original article: "Landlords Warned over Wiring Faults"

Find the Key that makes Buy-to-Let Pay

With savings rates at an all-time low and stock markets increasingly volatile, many ordinary people now view becoming an amateur landlord as the safest way of generating inflation-beating returns.

However, many would-be investors still have one nagging question to ask: have I left it too late?

Cheap mortgages and sluggish property prices, especially outside London, have made buy-to-let affordable for many, says Mark Ellis at broker SPF Private Clients.

“Interest rates have been at historic lows for more than four years and that shows no sign of changing,” he says. “Lenders are also easing their criteria, which makes it easier to get a mortgage.”

In addition, Ellis points out that landlords benefit from strong tenant demand, as many first-time buyers can’t muster large enough deposits to buy a property of their own and are forced to continue renting instead.

With the UK population rising and housing in short supply, tenant demand should remain high, according to Ben Thompson at the Legal & General Mortgage Club.

“If you buy the right property, you can generate healthy investment income now, with capital growth in the years to come,” he says.

But don’t invest in the hope of making a fast buck, says Ashley Brown from broker Money-Sprite. “The days of double-digit house price rises are gone. Buy-to-let is primarily about generating income and you should view it as a medium to long-term investment.”

In the short term, your property may even fall in value, he warns.

“But if you are getting strong rental returns every month, then over 10 or 15 years, your investment will pay dividends,” he says.

Interest rates may be low now but the only way is up, so the key is to play safe.

“If you are generating only enough rent to cover your mortgage now, you could be in trouble when rates rise,” says Brown.

You also have to put a lot of time and effort into finding a right property, he adds.

“Buy somewhere close to where you live, especially if you plan to manage the place yourself, because you don’t want to have to drive hundreds of miles when something goes wrong,” he says.

“A large local employer, such as a university or hospital, should ensure strong tenant demand.”

Becoming a landlord is much harder than setting up a savings account or investing in stocks and shares.

“You have to upgrade and maintain your property, and brace yourself for bad tenants, which is part and parcel of being a landlord,” says Brown.

“You can mitigate the risks by hiring a reputable letting agent to vet prospective tenants, but this will come at a cost.”

Buy-to-let is a safe haven compared with the stormy waters of the stock market, says David Whittaker, from specialist buy-to-let broker, Mortgages for Business. “It should remain strong for years to come, and the chances of a property market crash are remote, so you certainly haven’t left it too late to invest.”

The downside is that selling up isn’t always easy.

“You could get stuck with a property you don’t want, leaving you exposed if house prices fall,” warns Whittaker.

Buy-to-let investors may also face tougher competition as first-time buyers creep back into the market, with numbers rising by 15 per cent in April to 22,000, according to figures from LSL Property Services.

This is making it harder to snare bargain properties, says Mark Dyason, director of broker Edinburgh Mortgage Advice.

Another concern is that rents are beginning to slow down. The average UK rent rose just 0.8 per cent in the last 12 months, according to the Countrywide Monthly Lettings Index.

Rents in inner-London actually fell by a dramatic 6.3 per cent, and by 4.1 per cent across the South-east.

Further figures from Countrywide show the average buy-to-let property generates income of £842 a month but the amount you actually receive depends on the size of your property and location.

A one-bedroom flat in England, Scotland and Wales typically generates £679 a month, whereas a property with four or more bedrooms earns £1,392.

Before investing, you must work out the likely yield on your chosen property. This is calculated as the income you earn divided by the cost of the property. Cheaper properties often produce higher yields.

At present, Wales offers the highest average yield at 6.7 per cent, followed by the Midlands and the North at 6.5 per cent.

Yields in pricey inner-London are lowest of all at just 4.6 per cent.

Nationally, the average yield is 6.2 per cent, three times the rate you will get on a Best Buy savings account in the current low-interest environment.

If you’re tempted to get into buy-to-let, do your sums carefully and don’t overstretch yourself, advises Ellis.

“Avoid borrowing to the max,” he says.

“But keep some money for emergencies, and to pay your mortgage during so-called ‘void’ periods, when your property lies empty because you can’t find a tenant.”

Even when you have acquired a property, expect complications. Nine out of 10 landlords believe that complex tax, licensing and regulatory changes will make their lives tougher in the coming months, according to lender Paragon Mortgages.

In addition, the Government has even suggested that landlords must check the immigration status of tenants, although this proposal is likely to get watered down.

If your property is a house in multiple occupation (HMO), with three tenants or more sharing joint facilities, you must also meet new standards and obligations.

Click here to read the original article: "Find the Key that makes Buy-to-Let Pay"

Newham Council's Private Landlord Licensing Scheme Hits 30,000 Applications

Newham Council has received license applications from 30,000 private landlords as part of its pioneering scheme to improve housing conditions in the borough.

Since January 1 this year, the council has carried out 750 enforcement visits, issued 1,200 warning letters, and handed out 50 cautions. Thirty prosecutions, at various stages of the legal process, have been pursued since the scheme started.

Private landlords who have failed to apply are committing an offence - and could face fines of up to £20,000 per property.

Newham is the first council in the country to implement a scheme to license all private rented properties.

The council has consulted extensively with residents, stakeholders, private sector tenants, landlords and lettings agencies. 74% of residents and 76% of private tenants supported the borough-wide licensing scheme.

The radical move came after the borough announced the creation of a task force to combat 'sheds with beds', illegal ramshackle buildings built at the bottom of gardens which often house tenants living in appalling squalor, exploited by rogue landlords.

The scheme is backed by national housing charity Shelter and other councils are considering following Newham's lead.

The pioneering initiative has already been successfully piloted on a small scale in the borough's Little Ilford Neighbourhood Improvement Zone (NIZ). The pilot scheme achieved 100% compliance following enforcement action against a number of non-compliant landlords.

Newham Mayor Sir Robin Wales said: "It is clear from our consultation that our residents, including tenants in private sector homes, massively back our plans.

"This scheme shows that Newham is leading the country when it comes to tackling bad landlords who flout the law.

"We want to ensure that private sector rented properties are well managed and meet a good standard. We also want to deal with the crime and anti-social behaviour that is sometimes associated with bad private sector rented housing.

"There are good landlords in Newham and we want to work with them. Unfortunately there are also some unscrupulous ones - which these proposals would target."

Sir Robin added: "We will never accept private sector tenants being directly exploited by landlords who force them to live in dangerous and unacceptable conditions.

"Good landlords have nothing to fear from this scheme. For the bad ones, this a clear message they must clean up their act - or pay the price.

"One bad house can drag down a whole street. We are doing this for the community."

Kay Boycott, director of communications, policy and campaigns at Shelter, said: "We are delighted to hear that Newham Council is introducing this scheme, which will help protect vulnerable tenants from rogue landlords who are making their tenants' lives hell.

"With a chronic shortage of social housing and more and more people being priced out of the housing market, renting is fast becoming the only option for thousands more Londoners. Our advice service for tenants in Newham sees people every day who are suffering at the hands of rogue landlords who are ignoring their responsibilities and wreaking havoc on tenants' lives.

"We urge other local councils to follow Newham's lead in sending a clear signal that enforcing the law against rogue landlords is a priority."

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