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Two Day HMO and LHA Presentation with Arsh Ellahi

Arsh Ellahi

Hi all, Arsh Ellahi here!
People often ask me about how I set up my HMO’s (Houses of Multi Occupancy) so my tenants pay all outgoings such as Council Tax, Water Rates, Electricity and Gas (where applicable). It may seem surprising to some that my only outgoing for a HMO property is merely the landlord’s supply, which pays for the communal lighting and fire alarms.

With this in mind I am holding a 2 day course which will assist you in maximizing your income from your HMO properties and LHA Tenancies. Not paying large utility bills will form part of the course alongside other essential hints and tips from a Landlord with a wealth of HMO experience.

Day 1 Saturday 20th April 2013 – This day will consist of a visit to 4 high cash generating HMOs in which tenants are responsible for their own utility. See a successful HMO in action!

Day 2 – Sunday 21st April 2013 LHA Masterclass– How to skyrocket your cashflow without converting to HMOs

Find out more details and book onto this course by clicking the link below:
www.arshellahi.com/web/ae-events

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No Buy To Let Mortgages For Landlords with Benefit Tenants

No Buy To Let Mortgages For Landlords with Benefit Tenants

It has emerged that one of the property investor’s best mortgage resources is going to have restrictions placed on their Buy To Let mortgage products.

The Mortgage Works, who were once the lender of choice for hundreds of UK property investors, have changed their mortgage acceptance and lending criteria to such an extent that they will no longer accept buy to let properties that will be inhabited by any tenants claiming any form of state benefit, local housing allowance (LHA) housing benefit or even the upcoming Universal Credit.

As the major buy to let mortgage lender used by portfolio landlords, this news is a real blow for anyone with DSS tenants or even working tenants claiming Housing Benefit.

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UK PRS Landlords still avoiding housing benefit tenants

1/3 of Private Rental Sector Landlords Avoiding Tenants Claiming Benefits

A new Government report has revealed a growing concern about UK landlords, as an increasing percentage are now refusing to accept applications from tenants claiming housing benefits.

The situation regarding LHA tenants is set to get much worse, following the recent statements made by UK Prime Minister David Cameron and his party’s vision for further welfare reform. Read full story

The Government commissioned report was compiled by the Centre for Regional Economic and Social Research at Sheffield Hallam University revealed that over one third of the 1867 landlords who agreed to take part, are already actively refraining from accepting LHA tenants or are considering avoiding benefit tenants in the future.

This change in UK landlord’s perspectives has developed since the government capped housing benefit payments in April 2011, meaning that many LHA claimants are no longer able to claim the entire rental amount from the local authority.

33% of the UK landlords surveyed admitted having severe reservations concerning the reliability of payments from LHA tenants, and as a result they were either planning to or considering no longer accepting benefit claimants as tenants.

29% of landlords had already gone through the process of tenant eviction with LHA tenants or had refused to renew the tenancies of benefit claimants when they came to an end.

36% also admitted that they were experiencing increased rental arrears from LHA tenants because of the changes to benefit payment levels made last year.

Landlords can safely and legally recover rent arrears/debts from all types of tenants, including absconded tenants by using Legal 4 Landlords professional services

Welfare Reform Minister, Lord Freud, didn’t see the results of the Government commissioned report as worrying, stating that: “The research gives us an early insight into what is really happening, and it shows that the many scare stories about the effects of housing benefit reform are simply not materialising.”

If that were true, why are an increasing number of UK landlords wrongly avoiding accepting LHA tenants?
Don’t miss out on the opportunity to get regualr direct payments from any Local authority – Get “The Landlords Essential LHA Handbook” by John Paul – The LHA Expert

Evolution of a letting agent

Letting Agents - Survival Of The Fittest

Over the last few years, the UK media have spread fear and panic among the renting public, reporting doom and gloom about the state of the property sales market and countless news stories about letting agents closing down, failing their landlord clients and taking hundreds of thousands of pounds of client funds with them.

Reports like these have led the British public to believe that anyone with a passing interest in property or business can set up a property management or lettings agency.
That may or may not hold true, depending on the experience of the individuals concerned, but in reality, what does it take for a property professional to be able to maximise the potential of a rental property business and provide a reliable quality service for their landlord clients and their tenants?

Many self managing property investors and landlords had viewed property management companies and lettings agents as a money grabbing, larger business concern designed to accommodate all sections of society who treated all parties with whom they did business, with equal disdain.

Is this 1970’s Rachmanian stereotype really true? ….. Of course it isn’t!

However, it does take a certain kind of person to make a property lettings business successful?

Among other attributes, a good letting agent needs to be:

  • A Good communicator – Must be able to speak to investors and landlords as well as tenants
  • Customer orientated –both landlords AND tenants are your customers, so you need to find a happy balance
  • Analytical –Especially if you are dealing with the rents
  • Systematic – Capable of following systems and dealing with problems
  • Sales driven – you need to sell your services to prospective landlords and tenants to generate business.
  • Focused – Providing good quality of service requires determination and concentration
  • Professional – Every aspect of the business needs to be conducted to protect the clients best interests.

 

How To Get The Best Out Of The Business

Unless the property rental business is in the fortunate position of being able to employ staff, with the relevant skill sets needed, from day one, then the business owner will need to be master of all of the above skills, or at least be competent, otherwise business will be lost.

When starting any business, the main aims and objectives of the venture need to be clear, including identifying the niche it will operate in. If this is not done, how can the business push forward and in the right direction?

There are thousands of UK letting agents managing Billions of pounds (GBP) worth of property out there, so what separates them?
Why should landlords and property investors choose your letting agency instead of anyone else’s? Are you a HMO specialist, do you manage top end properties? Do you deal with LHA tenants?

New letting agents spring up and disappear again within 6-12 months because the business owners did not know enough about the local property market, the lettings industry in general, the niche market of the area they were operating in or even the demographic of their client base, in other words they did not have enough forethought to be able to survive and profit. In business, failure to plan is planning to fail!

If information and responsibility is not handled correctly, it can be a very steep and expensive learning curve for a new property lettings business, leading to a host of financial and legal issues that interfere with client’s expectations and obligations. Such matters could also force the closure of the business, costing your landlord clients dearly.

Knowledge and experience are the keys to success so business owners need to realise where their knowledge is lacking and plug the gaps with employees or other members of a support network, such as solicitors, insurance brokers, mortgage advisor, builders etc.

Landlords using an ill advised or ill equipped letting agency, (forced to close because they failed to move with the times), risk finding themselves with no tenancy agreements, (AST), no gas certificates (CP12), no rental income, no deposit and no fallback plan. In cases reported by the UK media, some failing letting agents had stopped paying rents to Landlord clients several months prior to closing, meaning that the landlords ended up falling foul of the law and many thousands of pounds out of pocket.

Don’t Let This Happen To You!

To be successful in property lettings, as with any business, you have to have knowledge and experience, not only the practical side of property management but also on the legal side, and keeping up with the latest government legislation, including all welfare reform changes and their impact on landlord clients, can be a minefield at times, but knowledge is power and only the strongest survive.

 

Letting agents can also get help is by joining the National Approved Letting Scheme (NALS) and/or the Association of Residential Letting Agents (ARLA).

UK Landlords avoid housing benefit tenants

Private Rental Sector Landlords Avoid Tenants Claiming Benefits

The results of a recent survey show that due to misconceptions over Government Welfare Reforms increasing numbers of private rental sector landlords are now refusing to even consider applicants claiming Local Housing Allowance (LHA), when searching for new tenants.

The Spareroom.com survey showed that out of 1000 UK landlords surveyed:

  • 87% had problems with non-payment of LHA by tenants at some time
  • 47% refused to even consider LHA tenants because of the potential payment problems.

This shows a real lack of understanding from UK landlords as many LHA claimants are often far more reliable than employed tenants, and all the media hype surrounding the Government’s welfare reform package has a lot to do with it.

Mike Clarke from Castledene Property Management, who are letting agents specialising in LHA tenants, explains: “UK landlords have often felt that tenants claiming benefits were far too much trouble and effort, as granting a tenancy (AST) meant endless forms and supporting documents had to be submitted before a claim could be processed. Landlords operate under the assumption that there will be delays in payments and if tenants were paid directly, there is also the risk that the landlord would not see any money for the rent. They only see the negatives and often ignore some of the positive aspects.”

  • LHA tenants generally remain in a rental property long term as they view the property as a home rather than just a place to live.
  • LHA tenants also care for the rental property as if it was their own.
  • The rental income from LHA tenants can still be significantly higher than from employed tenants.
  • Contrary to popular belief, Landlords can still get direct payments from local authorities.

Legal 4 Landlords recommend that UK landlords should always conduct thorough tenant referencing and always take out Rent Guarantee insurance for their tenants as a back-up in case there are problems with rent payments or delayed LHA claims in the future.

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