The uptake of HomeLet’s new tenant reference, Optimum, which guarantees to remove the tenant if they fail to pay the rent, is up 150 per cent on projected sales figures. With inflation and unemployment rising the popularity of this product has been attributed to growing concern of rental arrears.

Commenting on the news HomeLet MD, John Boyle explained, “Naturally we’re pleased with the uptake of our new ‘Optimum’ reference, we developed this product specifically to counter the concerns of both our letting agent customers and their landlords. With rents remaining high conditions are particularly hard for tenants at the moment. The latest statistics make for grim reading; inflation is way up on the Bank of England’s targets and unemployment is continuing to creep upwards. These and other factors sadly mean that 2011 will be a tough year for many tenants’ which is obviously a major concern for landlords, who are also facing these difficult conditions.”

According to the latest Residential Lettings Survey from the Royal Institution of Chartered Surveyors strong tenant demand resulted in rents rising rapidly in the three months to the end of January. Figures released by the Council of Mortgage Lenders show that number of new mortgages lent to house buyers slumped by 29 per cent in January when compared to December. With lending likely to remain low throughout the year, demand for rented property is likely to push rents up further in 2011.

Matt Billingham, Owner, Billingham Cooke Estate Agents said, “Demand for high quality rented property is only going to increase in 2011. In many areas across the country tenants are already bracing themselves for an expected increase in rents. For many a rise in rents whilst inflation is so high will only increase the pressure on their budgets and many landlords are starting to realise that a service, which provides an element of cover should a tenant fail to pay the rent, is essential.”

Commenting on Optimum, Sara Bailey, Manager, Aquarius Homes said, “More landlords are asking for a service that also offers to protect their investment income. We’ve seen a number of traditionally safe tenants who’ve passed their references with flying colours fall on hard times, especially with the cuts in the public sector. This is a real concern for landlords, especially reluctant landlords or those with highly geared investments.”

John Boyle concluded, “Following the credit crunch, housing agency Threshold reported an increase in threatened or actual cases of illegal eviction. Evicting a tenant can be a difficult, costly and emotional process, and landlords shouldn’t take matters in to their own hands.

“When they’re covered by Optimum, through their local letting agent, our in-house Legal and Claims department take care of everything whilst ensuring that tenants are treated fairly and that every letter of the law is followed when obtaining vacant possession of a property. We also offer a range of products that provide missed rental payments as well as legal cover.”

Source: Property Drum Newsletter

Two lettings firms, one in London and the other in Torbay, have been expelled by The Property Ombudsman scheme.

Madisons of 7, Odeon Parade, 468, London Road, Isleworth, was expelled for failing to pass on rent it had collected and for mishandling tenants’ deposits.

However TPO is required under the terms of the Consumers, Estate Agents and Redress Act 2007, to maintain Madisons’ registration for sales activities.

The Disciplinary Standards Committee (DSC) of the TPO Council considered a number of complaints where Madisons collected rent and did not pass it on.

When the matter was referred to the Ombudsman he determined that the rent should be paid over to the landlords, and that compensation be paid for breaches of the TPO Code of Practice for Letting Agents in the firm’s general failing to provide a service consistent with fairness, integrity and best practice. In one case, although the rents have now been paid, the compensatory award made by the Ombudsman has not been met.

“This has been a sorry and frustrating business for both Madisons’ clients and TPO,” said Gerry Fitzjohn (right), vice chairman of the company operating TPO.

“It concerns us that while we can expel their lettings business from the scheme we have no option but to continue registration for their sales business until the Office of Fair Trading bans the agent.

“In the meantime, it is our duty to make the public aware of the situation regarding Madisons.”

The second firm to be expelled is Torbay Residential Lettings (TRL), of 49 Market Street, Torquay.

The firm had breached several aspects of the TPO Code of Practice for letting agents by not co-operating with the Ombudsman’s investigation, not paying the award made by the Ombudsman after he had found the firm had not registered the tenants’ deposit, failing to complete a proper check-out process, and failing to provide an appropriate form of tenancy agreement.

The Disciplinary Standards Committee (DSC) of the TPO Council, in deciding to expel TRL also noted that one of the directors of the firm had been jailed for three years in January, 2010, for child cruelty and perverting the course of justice.

The remaining director considered that the dispute being decided upon by the Ombudsman was not the firm’s responsibility because the complaint arose from the actions of the jailed director. The DSC took the view that this was not relevant and the firm was liable to meet its obligations as a TPO member.

“Such behaviour is unacceptable,” said Gerry Fitzjohn. “Our scheme’s primary purpose is to resolve disputes between agents and consumers but we also aim to raise professionalism and insist on certain levels of service. Where these are not met, we make it clear that an agent is no longer fit for membership and recommend the public take notice of this.”

TDS state that the following percentage awards (in terms of deposits held) were made during 2010

Percentage of awards made to tenant – 56%

Percentage of awards made to landlord – 42%

Percentage of awards made to agents – 2%

The lack of landlord generated accurate paperwork seems to still be a problem.

TDS state that in 2009/10 the top three causes of disputes were as follows:

Cleaning – found in 46% of complaints

Damage – found in 29% of complaints

Redecoration – found in 24% of complaints

I read a great article written for Upad this week….if you missed it then here it is. It is always good to remember the basics.

The Buy-to-Let boom is unlikely to return any time soon. A serious lack of good deals from BTL mortgage lenders is compounded by a distinct absence of confidence right now. But it does look like those green shoots of optimism are starting to appear again and 2011 may well be the year when a little cheer returns for budding Buy to Let landlords.

Tenant demand has never been stronger and banks say they want to lend again. Combine that with rising rents in many areas and a housing market that continues to splutter, and you’d be right to think that now is a good time to reconsider a Buy to Let investment.

And invest is the key word. Buying to let is just another way of getting your capital to work as hard as it possibly can for you in order to generate returns. How you do that is up to you. Perhaps you want the boost of a monthly rental income from a property. Or you could fancy a longer term punt and hope to rake in the cash when you sell the property some way down the line. But whatever your intentions, make sure you don’t make any of the common errors that often put a Buy to Let landlord’s investment at risk.

Don’t spend too much for too little return.
Calculate what you can afford and take into account all the expenses of being a landlord. Don’t overstretch yourself. Be realistic about your finances and take professional advice on taking out an appropriate mortgage. Consider future interest rates. Over the next few years, interest rate rises are inevitable. Don’t be caught out: will your investment be as attractive if any mortgage payments you make rise dramatically?

Being a landlord also attracts all manner of expenses and they can sometimes come out of the blue. Ensure that you can afford them and also that they don’t dent the profitability of your investment. In a rented flat, the boiler could go kaput at considerable expense or a service charge bill could come out of the blue. Expect the unexpected.

Remember that your rental income might occasionally be reduced. Tenants might miss the rent and get into arrears or you could experience voids between tenants when the property isn’t generating any revenue. Ensure that you should mitigate against these and that you can afford to keep going through the leaner times.

Don’t forget to “futureproof” your investment.
Many landlords come a cropper because they spot a cracking property at a great price and just go for it. Don’t forget Elvis: only fools rush in. With a little local research, you might discover why the property is such a bargain. Is the location up to scratch? Is crime a problem? Is a new motorway just about to plough through the local nature reserve? Maybe a supermarket is planned for the end of the road? It doesn’t take much nous to do some research and understand what’s happening in the area. A bargain property is always a bargain for a reason. Just make sure that some third-party development isn’t going to blight your enterprise.

Buy for your tenants, not yourself.
Channel your inner Vulcan, disengage your emotions and buy a property that will generate a fine return. That’s the challenge Don’t fall into that all-too-common trap and buy a place you like but which is entirely unsuitable for the tenants you have in mind. And be careful to approach the decoration and fittings of your property in the same way. Go for generic colours and furnishings and think of your future tenants at all times.

Don’t forget the taxman. (He won’t forget you!)
In general terms (and you are best advised to consult a professional accountant on such matters), if you are making more than £2500 profit on your property each year you’ll need to file a self-assessment tax return. So make a merit of it. You can claim tax relief on certain expenses you incur as a landlord. A canny accountant will help you pay not a penny more (and not a penny less) than you have to and is well worth the expense for all the expertise they can offer.

Do you understand the role of a landlord?
Sometimes landlords jeopardise their investment by failing to appreciate and understand the legal frameworks that surround every landlord. Firstly, whilst it may be your house, it isn’t your home. You can’t just pop by on a whim and you are also responsible for maintaining the property in a fit state for the tenants. Bone up on the law, read a few books and keep up with the news. Joining one of the landlord associations out there is always a good idea.