Dispatches ran a disturbing programme recently on Slum Landlords.  I’m sure anyone watching the programme would have been disgusted and shocked at the condition of homes some tenants have to reside in, sadly, although disgusted, I am not shocked.  This Government, and previous Governments’ policies (or lack of)  positively encourage such landlords and their behaviour.

For example, to date anybody can set up a Lettings Agency tomorrow, without any qualifications, or without any insurance protecting Client funds (such as landlord’s rent).  This has resulted in landlords losing thousands of pounds if their Agency goes bump, often without knowing they are exposed to any risk.  Why has it taken so long for any UK Government to insist that Letting Agents must be member of a qualified body such as ARLA (Association of Residential Letting Agents) or RICS (Royal Institution of Chartered Surveyors) or other recognised bodies?  In addition every Lettings Agent should insure all Client funds.  If a bank goes bust you wouldn’t expect to lose money (though it can happen in extreme cases), likewise if a Letting Agent goes bust you shouldn’t lose money either, period.  (PAD4U is ARLA licensed and Client Funds are insured).

Of course there are landlords who do not use Letting Agents, which is right and proper they have this choice, but they ought to be licensed by local Councils.  Landlords should meet a minimum understanding of tenancy law (and this should be tested), before they are able to let out a property without the aid of a qualified agency.

However this doesn’t explain the poor condition of property, this is due in part to the present Government failing to keep it’s promise to overturn a policy implemented by the last Labour Government in regards to Housing Benefit.  Previous to the last Labour Government, Housing Benefit rent was paid directly to the Landlord, this ensured the following: tax payers money which is meant to pay for rent actually pays for rent (this is incredibly important point – it is not the Government’s money, nor the tenants, it’s is the tax payer’s money, and due care and attention should be made that it meets its intended purpose in society), secondly, even if a tenant has other debts which may automatically be taken from their bank account, their rent money is safe , they would always have a roof over their head, because their rent was paid automatically.

The reason such a policy results in sub-standard housing is because “good” landlords that ensure their property meets (and exceeds) all standards set, will insist they receive a fair market rent for their property. Due to the above policy “good” landlords or agencies for that matter cannot afford to take the risk on Housing Benefit tenants.  So Housing Benefit tenants have no choice, but to fall into the hands of “Slum Landlords”, who will happily take the risk of not receiving rent, because they are happy to throw tenants out, and spend no money on the property whatsoever, so they will always make profit regardless.

So much is obvious.  However, what baffles me is why all Governments seem complicit in this inevitable outcome.  Perhaps, because they can lay the blame at “Slum Landlords” rather than themselves, or because it can potentially save money.  But it is shameful that such an affluent country has it citizens living in squalor, or that millions are still awaiting a home.  Intelligent Government policy should ensure “good” landlords and good agents can operate and that “Slum Landlords” cannot.  Shelter and other charities work hard to help those people unfortunate enough to be in this position, but it is the Government who are ultimately responsible for housing its citizens.

David Boyd, Managing Director, PAD4U Estate and Letting Agents Manchester writes:

Voids are the Black Holes of property investment, they will suck out your yields and chew them up!  So, although with a great managing agent by your side this post is likely to find you sipping a mai tai in a sun-lounger, when we call to say your tenant has given notice, it’s time to take decisions quickly!

PAD4U are very aware of the hidden dangers that voids present.  Whereas maintenance issues are usually very visible in terms of outlay, voids eat away at your return on investment quiety, but they can be a far bigger danger.  So when we hear a tenant is leaving, we will inform you, and we will also book a pre-vacating inspection at least 2 weeks before your tenant actually vacates the property.

At the pre-vacating we will assess whether the property can be marketed immediately and , if so, we will swing into action and start marketing your property with the aim of securing a tenant just as your previous tenant is vacating.  If the property requires minor updating, or even major updates (say if you have had a long term tenant), we will call you to let you know what will be required (although  not a full inventory), it’s a useful heads up to get work scheduled in as soon a your tenant vacates the property.  PAD4U are FMB MasterBuild and TrustMark approved and we can arrange for qualified and insured contractors to complete the works quickly and to a high standard.

It always amazes me that some landlords will try to save money on contractors to carry out works themselves, but take many months to complete the required works.  This is a false economy and your property is losing money every day it is not tenanted.  Not only this, but you are leaving your property insecure and more likley to be broken into. Other landlords await the resolution of TDS disputes, but this can take weeks, meanwhile you are already losing £££s.

The moral of the story is simple, PAD4U aim to ensure voids are kept to an absolute minimum, but we need your help.  If works are required, it pays to get the work done quickly rather than cheaply, as cheaply may end up costing you a lot more money.  I guess it’s proves the old mantra, that time is money.

David Boyd, Managing Director, PAD4U Estate and Letting Agents Manchester writes:

The chancellor didn’t have much up his sleeves this time around, certainly not any money, so the country’s expectations were not sky high.  However, the budget had been touted as a budget for growth, and there was certainly interest to see how radical the chancellor would be.  The Markets were also watching closely for any signs that the austerity measures, which are now just beginning to bite, being relaxed, such signs would no doubt be met with markets taking fright.  After all our deficit still puts us close to the PIGS (Portugal, Ireland, Greece Spain).

The Markets were quickly calmed by the fact the budget was virtually cost neutral.  But this didn’t leave the chancellor with too many levers for growth.  Given this, overall his budget was a success in my opinion, but there was little if anything to get the housing market back on track.

The reduction in corporation tax and investment in redevelopment zones for businesses are two simple but effective mechanisms to get businesses growing and investing again and this is welcome.  The fact the banks won’t benefit from this reduction was politically smart.  However, the windfall tax on North Sea oil is counter-productive in a time when oil is expensive and becoming more difficult to source given conflicts across the globe, the last thing the chancellor wants is to thwart growth in North Sea oil exploration.  Statoil, and Valiant Petroleum have already mothballed developments in the North Sea, I hope this is merely bravado on their part and that development and exploration of North Sea oil will continue, if not, this will be a clanger for the chancellor.  Especially given the penny saving on fuel is unlikely to be seen in the forecourts I suspect.

In regards to the Housing Market, I hoped for a shake up of the stamp duty tax system, which is outdated and could have been an excellent lever to get the Market moving again.  Instead we got a token gesture for the builders providing loans to assist buyers with deposits only with new build purchases.  This really is a band-aid, and I would have liked to see more pressure on the banks to get sensible rates and deposits for mortgages – not trying to patch over the problem.  How is it justified to have rates as high as six of seven percent when the BoE base rate is at 0.05% with deposits of 5-10%!  This needs to be looked into thoroughly and there needs to be a mechanism whereby when the banks/markets are over/under pricing risk the BoE/Govement have levers to liquidate the market, other than pumping money into  those very same institutions that are not working.

Ultimately the real levers for growth are not directly in the chancellors control,  it is low, stable interest rates that will bring confidence back to the market.  But how long can Mervyn King keep his nerve?  Inflation is predicted to hit 5.5% before coming down, the temptation  to increase interest rates will be hard for Mervyn King to resist, but resist he must until growth returns to the economy.