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 providing 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 ………….

12 Comments

Filed under Future of HMOs, Management of an HMO

12 responses to “HMO Landlady Breaks Her Silence!

  1. Owen

    In terms of agency fees there is going to be a consultation before implementation. Whilst I fully expect this to be a box ticking exercise and for no attention to be paid to it – if you don’t contribute you can’t complain after.

    In terms of what to expect, best thing to do is look at Scotland. Links etc below, basically seems to be everything.
    However this applies to tenants – not prospective tenants, so the area that is open to interpretation is referencing. I certainly don’t want to expend time or money on a tenant that then fails referencing – so I’m going to send my prospective T to a referencing agency and tell them to sort out their reference at their expense. (all of it – credit history, right to rent, prev LL, employer).
    Key things will be (a) T has choice to do to another reference checking agency if they wish (b) they can do it themselves if they wish (but then you have more potential fraud issues) – with my acceptance criteria being “is the reference acceptable for RGI.
    From an agents POV then it’s harder, but I think you could legitimately offer reference checking services to prospective T but you have to be super clear about fact they can go to other reference checking agencies and what the pass / fail criteria are.

    In more general cost terms I already charge more rent for a 6 month tenancy than a 12 month one and will continue to do so – other things I’ve heard people mentioning is charging more rent for the first 6 months of a tenancy to cover the one off costs (regardless of the ultimate length of tenancy)
    In the past LL have felt that managing agents (i.e. on-going management, not just let-only arrangements) – have had no motivation to keep tenant churn down, and in fact due to the LA fees have actively encouraged churn, at least this will be a thing of the past.

    ————

    ““premium” means any fine, sum or pecuniary consideration, other than the rent, and includes any service or administration fee or charge;”.

    http://www.legislation.gov.uk/asp/2011/14/section/32
    http://www.legislation.gov.uk/ssi/2012/329/contents/made
    http://scotland.shelter.org.uk/professional_resources/policy_library/policy_library_folder/an_extract_from_an_opinion_of_counsel_on_letting_agents_fees_in_scotland
    http://scotland.shelter.org.uk/__data/assets/pdf_file/0003/749361/Letting_agents_fees_in_Scotland_-_opinion_of_counsel_-_December_2013.pdf

  2. carol walker

    I have just found this site and it’s literally saved my sanity because I thought I was the only one with problems I’ve experienced. Not that I would wish my experiences on anyone .. it’s just that I too have had some pretty horrendous tenants and it’s getting worse. My permanent tenants are smashing compared to the scum that have basically conned/lied/manipulated their way in (and trashed on their way out) so if you are lucky enough to get good tenants, look after them.

    If you are thinking of going into an HMO, trust me on this, THINK VERY VERY HARD and have a stomach of steel, need to be as tough as boots, believe half of what you see and NOTHING of what you hear, and deep pockets because the cleaning and refurb costs after a rooms vacated … you will never get a room back the way it was handed over!

  3. Hello hmolandlady! I can confirm what you’ve noticed, that tenants who claim PIP get more housing benefit.

    Claiming PIP (or DLA for the few who still do) demonstrates that he or she is entitled to a disability premium for housing benefit. Which level of PIP a person receives determines whether he or she also gets an enhanced disability premium. For a person of pension age, it’s different: there is a severe disability premium that applies if they are getting certain amounts of DLA, PIP, or Attendance Allowance (which is like DLA for pensioners).

    A premium increases the claimant’s applicable amount, i.e. the maximum housing benefit he or she can get. The amount the claimant actually gets comes from subtracting an amount based on his or her income from the applicable amount. Someone with no income will get the full applicable amount.

    Other premiums that exist are disabled child premium, carer’s premium, and premiums for people claiming ESA. Some premiums can be paid together and some can not. It’s impressively complicated. If you would like to know the amount of any of these premiums I’m happy to look them up, but to keep from boring you to death I’ll stick to the main point: you are correct in noticing that people who claim PIP get more housing benefit.

    • Thank you for commenting, Jill and you’ve explained this benefit area well. May I ask how you know about it? Even my tenants appear to be in the dark over how their PIP is calculated.

      • I work at Citizens Advice.

        And sorry for the multiple posts. I don’t seem to understand wordpress as well as I understand benefits, sigh. 🙂

  4. “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.”

    Hello hmolandlady! I can confirm what you’ve noticed, that tenants who claim PIP get more housing benefit. I can also tell you what that is called in case that’s useful in talking with the council or some such.

    Claiming PIP (or DLA for the few who still do) demonstrates that your tenant is entitled to a disability premium for housing benefit. Which level of PIP a person receives determines whether he or she also gets an enhanced disability premium. For a person of pension age, it’s different: there is a severe disability premium that applies if he or she gets certain amounts of DLA, PIP, or Attendance Allowance (which is like DLA for pensioners).

    A premium increases the claimant’s applicable amount, i.e. the maximum housing benefit he or she can get. The amount the claimant actually gets comes from subtracting a figure calculated from his or her weekly income from the applicable amount. Someone with no income or very little income will get the full applicable amount.

    Other premiums that exist include disabled child premium, carer’s premium, and premiums for people claiming ESA. Some premiums can be paid together and some can not. It’s impressively complicated. If you would like to know the amount of any of these premiums I’m happy to look them up, but to keep from boring you to death I’ll stick to the main point: yes, people who claim PIP get more housing benefit.

  5. I’ve been offering rooms to benefit tenants for several years and always receive 1 bed LHA for every one of my tenants even though they share kitchens and bathrooms.

    In Cardiff the area I operate that is an 86% increase in the weekly housing benefit rate from £55.78 to £103.56 per week, there are numerous ways to ensure your housing benefit tenants qualify for 1 bed LHA rate.
    Find out how you can dramatically increase your room rates by visiting

    Most landlords are frightened of housing tenants on benefits especially with the introduction of Universal Credit, but Room Rate Booster ebook provides all the information and legislation you need to maximise your HMO room rates.

  6. My HTML expertise isn’t great 3rd time lucky in posting the Room Rate Booster link to share with your readers

    • Hi Cardiff Landlord, this looks great! The link does work and I’ve put my email address in to receive the ebook, but haven’t received anything as yet. Can you check if my request has been received your end?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s