HMO Landlady Breaks Her Silence!

So far I’ve kept quiet about all the new tax and HMO minimum requirement legislations our “Dear Leaders” are proposing to throw at landlords over the next few years – I suppose if I didn’t give it any attention, they’d see sense, it would all go away and I wouldn’t look like an idiot for commenting.

It clearly isn’t going away so I’m now going to voice my opinions in a vague attempt to stick up for myself and other landlords who have contacted me for advice over the last few months.

Social Tenants

What next for housing benefit tenants, sorry, local housing allowance, no that’s not it, universal credit recipients?

I genuinely don’t mind how a tenant is funded provided we can have a mutually beneficial working relationship. i.e I provide a warm, safe, functioning place to lay their head and, in return they pay the contracted rent and behave themselves accordingly within the law.  This is a challenge for some and takes a degree of tolerance on all sides.  Some tenants find the PRS too challenging and the following evictions have taken place so far this year:

Alcoholism – being discovered one too many times comatose on the stairs with no control over his bowels;

Weed Smoking – always leads to problems and it is NOT harmless;

Family increase – a couple suddenly discovered they had 2 small children whom they hadn’t declared upon interview or check in believing they would all be happy living in one room;

General Twathead – I was blessed with 2 of these who partied all night, were rude to the other tenants and lived like pigs;

Most went quietly after a Section 21 notice and agreement that they’d be better off elsewhere without a control freak of a landlady who nagged them.  However, 2 HB tenants took it to Court Possession Order.  Why?  Because the council (understandably) didn’t want responsibility of them until they very last moment.  I believe they would have left it until bailiffs turned up landing the tenant with not only the £355 court fee but also bailiff costs and, as these were unlikely to be paid, a CCJ against their name.  You could argue that pursuing these costs against someone with no money is morally reprehensible, but so is putting the plug in the sink and leaving the kitchen tap to run onto the kitchen worksurface, the open drawers and the flat below.  Can’t see anyone fighting my corner on that one.

The lack of support for landlords to house tenants in receipt of HB is growing and this is now another reason I would have to think two or three times before considering another one.  I have, however, discovered that PIP recipients appear to be able to claim more than LHA recipients – they don’t know the criteria for the higher payments and, for the life of me, I can’t find them either.

Proposed Tax Changes

How will the tax effects take effect on my business?  I’m getting a headache banging my head against the accountant’s office wall on this one.  Partnership? Limited Company? Moving to a tax haven?  Remortgage to the hilt or sell the children’s vital organs to pay off the mortgages?  Big refurbishment projects or squeeze all the rent out you can whilst avoiding repairing that leaky ceiling or malfunctioning boiler?

Until I receive concrete answers I’ve swapped Nurofen for Sainsbury’s own brand Ibuprofen.

Profit vs Income

How can I make enough of a profit it to make it worthwhile?  Being an HMO landlord is a thankless task – your tenants really don’t care about the amount of money invested.  This week:

Raw sewage flooded the garden after not one tenant reported blocked drains.

Just refurbished a kitchen and re-kitted it for £10,000 and installed a tumble dryer.  Not one tenant acknowledged this except to moan that they had to use a launderette for a week.

Cleaning – halfway through the tax year and I’m astounded at my cleaning costs.  This led to an overall view of profit for this financial year.  More on this below:

Ban of letting agent fees

My husband and I run a letting agency – it’s cost effective, efficient and we work damn hard at it seven days a week.  We don’t have targets, flashy cars, a high street presence or branded pens which keeps our operating costs low.  One of the major areas of the business is student lets.  Now, I understand that some agencies have built their business models on letting fees and indeed friends have told me of the eye watering amounts high street agents charge just to consider a tenant for a property.  We charge a £100 fee per person which covers ALL admin tasks – credit checking, ID checking, reference checking, ASTs, check in, check out, a welcome pack, a household instruction folder, a key fob with our contact details on AND informing the council tax and utility companies of a change of occupier.  The same price is for students but we have the added effort of not only referencing them but also their Guarantors – the admin for a student let can take months to track down probably because they have to physically print the paperwork sign it and discover how to use the postal service.

So, there’s a ban on letting fees.  But what does this actually mean?  I can’t find any parameters – does it cover the check in/out costs, deposit scheme costs, issuing ASTs?  If you’re going to make something a rule then for goodness sake, give us some flippin’ detail to work to!

The Future of Property

What is the future for anyone in property without the surname Trump or Candy?  Most of us have invested as an alternative or top up to our woefully inadequate private pensions we’ve been paying into for decades.  How do I advise new investors of all ages who regularly contact me via this blog and have found themselves on the road to believing HMOs are income generators?  We have 5 HMOs and, if wealth gurus were to be believed, the income should be keeping us smelling of roses.  The reality is that it is ploughed back into the properties through repairs, wilful damage, high wear and tear and utility bills as all of these elements are the Landlord’s responsibility.   It’s a business, not a lifestyle.

Another question: How will any of the decisions made by Government solve the housing crisis?  Yes, greater control should be applied to ROGUE landlords sticking two fingers up at the law and their unfortunate tenants, but putting in preventative measures to increase the supply and running of rental stock and providing no alternative choices is not encouraging a free market.  Their policies are creating unrest, misery and adding letting agents and landlords to the list of Most Hated Professions.

One final question: with the increase of food banks, homelessness and concern over personal debt – where the heck did the UK find £2bn to spend in the shops on Black Friday?!

Over the last few weeks I’ve read opinions, forecasts, proposals, consultations, Brexit-blaming content and online comments but, like a TV with 200 channels to watch and naff all on I want to see, I’m not finding any answers to my questions.  Perhaps I’ll have more luck reading my horoscope ………….

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Thank You HMCTS!!

Now, I’m not all that great with technology – my website needs updating, my social media presence is non existent and Facebook flabbergasts me.  However, I have just discovered a fantastic link to complete eviction forms which I believe must have been developed just for me.

Ten years’ ago I unknowingly evicted a tenant illegally which brought forth the wrath of the council, their solicitors, Citizens Advice and some bloke working for a homeless charity who threatened in no uncertain terms to “sort me out”.  It wasn’t a great experience especially as the tenant was found half dead and naked, I’d had to give him the kiss of life which turned out to be more of a peck of derision, AND visited him in hospital with grapes.

From then on, Continue reading

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No One Likes A Bed Bug

But they liked John – a lot.  John has been a faithful, landlord-fearing, regular paying tenant for 10 years.  He keeps himself to himself and, whilst I’ve been aware of his limitations we keep pretty much out of each other’s way.  He fills his time collecting supermarket trolleys, putting out the bins and filling the garden with scary looking 3ft high gnomes.  His other activities raise a few eyebrows but nothing which breaks the law.

We’ve been trying to control an outbreak of bed bugs for a few months in a room next to his, but every treatment seemed to stop working after a couple of months.  After a bit of surreptitious detective work, we found the bugs’ headquarters in John’s room – in his mattress, his chair, his sofa and even his childhood teddy bear.  They had stopped being discreet by only coming out at night and had gone into full on party mode as soon as they sensed a human food source nearby.

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I’m not going to go into the science behind bedbugs or how to treat them as I’ve recently covered this in an article for HMO Magazine. Click on the link and the next issue is out soon.

John was devastated and genuinely had no idea he was their host.  Continue reading

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You Have To Be Tough To Be A Landlord

Ok, so being a landlord is hardly a profession which requires a degree or other formal qualifications.  We’re not going to save lives with our medical expertise or improve the world with great engineering feats.  However, every day, in our small world, we deal with good tenants, clever tenants, unbelievably daft tenants and downright manipulative, difficult tenants.

Being a landlord and letting agent is a 24/7 profession – you can turn the phone off or not look at your email, but your customers are human and your product can fail or leak outside of the 9-5, Monday to Friday.   This blog was set up as a form of personal therapy to let off steam and encourage would be HMO landlords to think twice.  Faithful to its origin, here’s a rant of the week so far: Continue reading

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So You Want To Run An HMO?

This post has been borne out of the numerous emails I receive from people wanting to leave the day job and invest in property – focussing on HMOs due to their higher yield.  I answer every email honestly and, I hope, encouragingly but my enquirers disappear back into the virtual world and I never hear whether or not they’ve pursued their dreams.

If you’re considering writing to me for advice on ditching the 9-5 and earning enough money through HMOs to keep your family, go travelling and leave a decent nest egg for the kids, below is a typical response:

“Dear Very Nice Person Who Has Taken Time to Email Me

Thank you for your kind comments about the blog and I’m glad you enjoy reading it.  Before I sell you the golden key to untold wealth and flexible lifestyle through owning HMOs, let me ask you a few questions which you must answer yourself honestly:

  1. How much money do you currently have? If you don’t have any, I suggest you open a savings account, tighten your financial belt and save up.  Despite what anyone will tell you (having relieved you of several thousand £s for the advice), property investment requires money – cold, hard cash.  If you borrow every last penny from the bank, you are effectively working for them to pay their interest rates, there is little margin for unforeseen disasters such as a new boiler or roof and, if your sums are correct, there will be enough profit for yourself, but is it enough to live on?  If you decide to joint venture with another investor, bear in mind that profits must be split amongst the parties involved regardless of the level of work undertaken by one or more individuals.

If you do have some money – perhaps a divorce settlement, inheritance, result of many years of hard work and saving – ensure you are content to tie your money up this way. Your money WILL be tied up for years unless you’re prepared to remortgage (and expose yourself to fees) and you may have to wait a while for your investment to get up and running before you head for the hills on your long awaited extended holiday.

  1. Do you intend to manage the HMO yourself? If so, are the people you live with supportive?  Many people who have contacted me have a young family; so if you’re working 40 hours a week, you may have a wife and children who want to spend time with you at the weekends and evenings.  Will they be OK if you’re on call or have to nip off to change a lightbulb/stop a flood/ deal with a tricky tenant?  Your spare hours will be spent with additional paperwork, admin and bill paying.  However, if you want an excuse to spend time AWAY from family commitments, then investing in HMOs is definitely for you.
  1. Would you prefer to use a letting agent? Perhaps your job or lifestyle means that you’re not able to self manage and you’re happy to pass the responsibility over to an agent.  Thank goodness you’re realistic and know your limitations, BUT be prepared to pay for the service.  Agents rely on the bread and butter of tenant and landlord fees and the beauty of an HMO is the tenants are transient thereby creating ample opportunity to charge both tenant and landlord lots of lovely application, referencing, inventory, administration, check-in/out fees – and several times over depending on the number of rooms in the property.
  1. Are you handy? If you’re doing the management you’ll need to lift unwanted and broken furniture, find beds, redecorate, learn how to mend a vacuum cleaner (99% of the time it just needs emptying) and know why the washing machine has stopped working (no-one ever looks at the filter).  It also pays to know how to change a lock, put up a mirror, hold on to a trusty cleaner and, from February, know your immigration law.  In the last month, we’ve had no less than 10 room changes for which we’ve been left 6 unwanted wardrobes, 3 contraband fridges, 2 broken beds and soiled mattresses, a huge hamper full of odd shoes and a sofa bed which had to be sawn up and destroyed IN the room in order to get it out.  These items don’t always fit in the back of a Ford Galaxy and, unless you work out at the gym and are under 40, you may struggle to lift them on your own.
  1. Do you have a strategy or a plan which can translate from paper into the real world through your hard work and sweat and, more importantly, do you have enough hair to withstand the pulling out you’ll want to do once a month?

If you’d still like to go ahead, talk to me – I’m here to help and very happy to guide you through your journey into HMOs.  I can’t live the experience for you but I can provide hints to make your life easier.  I will leave you with this piece of advice: just do it.  Try HMOs, they’re fun, will take you outside of your comfort zone and, if you treat it like a business, they will eventually become a good source of income providing you act within the boundaries of the law and your own morals.

Kind regards

Serena

Aka HMO Landlady

If you’re still reading and would like to find more about the practical and business side of running HMOs, I’m putting together a half day workshop focussing on purchasing and getting your HMO up and running as well as the day to day administration.  And, if you’d like to make a day of it, we can spend the afternoon looking at different HMO set ups (all properties are within walking distance of each other).  Come and meet my husband and I, we’re friendly, encouraging, open and have run HMOs for 9 years.  Complete this form here with your preferred date and we’ll contact you.  The venue will be in Eastbourne, East Sussex (as I can’t transport a building) and the price will be £75 (no VAT) per person including all catering, plus £25 if you’d like to stay for the afternoon HMO property show round.

Any other queries?  Contact me at hmolandlady@hotmail.co.uk

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Implementing the Immigration Bill

The phone rings late one night last week.  It’s Erica, sobbing hysterically down the phone in broken English that her new husband, Harry, had been taken into custody and she didn’t know what to do.

Harry and Erica married last month; she’s Polish in her late thirties and he’s Indian in his mid twenties.  She swears to me it’s mad, impulsive, passionate love and he just smiles and nods in agreement.  They’re hard working, quiet, pleasant and an asset to the house and, quite frankly, anyone who can put up with binge drinking Tom and not moan to me about it, becomes a star tenant.

The story goes that Harry and two friends had been walking down the street that night. On spotting a police car, they pulled their hoodies over their heads and dashed into Ladbrokes.  The police watched as the men wandered around the shop looking lost and so they drove their police car down the road.  Sensing the all clear, the men left Ladbrokes, carried on walking, spotted the car again and slipped into a newsagent.  At this point, the police felt they just had to stop them for a friendly chat and find out why their acting skills as insomniac gamblers nipping out for a newspaper had failed them so badly.

All three were wanted on immigration charges and one had eluded the authorities for over 13 years.  Harry was released early as his papers were with his solicitor following the marriage and, as the story could be corroborated by his panic stricken wife, they saw no sense in providing a B&B service at the Custody Centre……the other two were kept overnight.

The following day, the very same copper who had arrested them happened to be booked to clean the carpets in all the houses (his second job and he’s very good at it).  Poor Harry came out of his room, found his arresting policeman on the stairs and ran back into his room, terrified.  I was at the house at the time and calmed him down long enough to make him understand that policemen work hard too – and can have other jobs.

£3,000 Fine

“If this had happened after February 2016, would you be demanding a £3,000 fine from me for giving a tenancy to an illegal immigrant?” I asked Simon, the policeman/carpet cleaner.  “Eh?  Why?”  he replied.

“Because from February 2016 landlords will have to check the immigration status of tenants to see if they have a right to rent.”  I said

“Don’t know about that. All I know is we have to document and photograph them and tell them to make their own way to the Immigration Centre in Croydon, before showing them the door. The Centre can process them IF they turn up.”

So, here’s my question:  if the police aren’t going to fine me under this new Immigration Bill/ Right To Rent, do they report us landlords to the Home Office and we await a fine (presuming the landlord is authority-fearing like me and has given legitimate contact details) or do they pop a Post It note in the illegal’s top pocket with the landlord’s name to be found when they reach the Immigration Centre?

Lining Them Up

In the meantime, I’ve found out what dominatrix Linda gets up to in her spare time when she’s not torturing consenting men.  She’s been corresponding with prisoners in the US and whilst she’s been out of town, her post has been piling up.  When she gets home she can look forward to letters from gentlemen residing at places such as:

Oregon Department of Corrections

Fort Federation Correction Institute

Airway Heights Correction Centre

Gatesville, Texas Correct Centre

Let’s hope they don’t all turn up on the doorstep after February 2016 otherwise I’m going to be facing a crippling penalty fine!

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Insuring Your HMO (And Other Precious Items!)

The end of the year heralds house insurance renewal. Every year I promise to apply myself, compare quotes and wallow for the next year in the knowledge that I’ve secured the most competitive deal.

The reality is, when the broker calls I groan with resignation and tell him just to get on with it. As he flicked through his computer information on my claim history, he came out with “Oooo, aren’t you a good client? You haven’t made any claims in the last 4 years so it’ll be easy to get you a good quote”.

“Excellent!” said I “And if I HAD claimed in the last 4 years I presume my quote would have risen to affect the amount paid out?”

Silence.

“Well, yes, that can be a problem” he replied.

Me: “And that’s why I don’t claim. Find me a quote, don’t bore me with the details and just let me know the telephone number for when a house burns down”.

However, how many houses do actually burn down? With HMOs, we are rightly governed by so many fire risk assessments and regulations that, according to my recent chat with a man in uniform, “you can stand in the hallway for 30 minutes without a fire affecting you”. Great, so I’ve informed all tenants that, should a candle set light to the curtains or a cigarette get lost under the duvet cover, come out of the room calmly, stand in the hallway and enjoy the safety the firedoors, smokestrips and fire retardant plasterboard I give you.

Later, whilst chatting to a friend, she asked that, if I’ve never made a claim, why bother with insurance? I explained that with HMOs there is ALWAYS the possibility of a fire.  Especially when the tenants take it upon themselves to put sellotape over the fire alarms or, to my eternal amazement, ignore the backup low battery signal which emits every 30 seconds.

So, it doesn’t matter how well maintained the house is, how many fire precautions are in place or how many baths you replace with showers to prevent flooding, are you willing to risk your cash on the odds of an unforeseen event happening which costs more than the insurance premiums?

So this year I’m leaving a well known insurance broker due to lack of customer service and unacceptably high levels of marketing emails and switching to The Home Insurer.  They understand the nature of HMOs and, from my research, seem to pretty much insure anything else.  I’m also giving their number to my tenants for quotes as it turns out quite a few of them do actually insure their room contents!  (They’re also human beings, very experienced insurers and don’t give in if the computer says “No”).  Click the link or give them a call on 0800 612 5764 and let me know how you get on.

On another note of insurance, the police turned up to take a statement following the case of Simon, his friend, a night out and a broken window. After checking that I hadn’t given permission for the friend to chuck a flowerpot through the window in October, he gave me the crime number for “insurance purposes”. I laughed and said – “Unlikely, Officer!” We’ve settled for a community order whereby, should the police find the young man involved he’s under instruction to pay me the cost of the repair. When I told Simon he replied, “Sod that, I’ve already told his girlfriend I’m going to kick his head in when I next see him”.

There’s nothing like a bit of civil justice, eh?

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