'My rental was a nightmare'

Reluctant landlords can be tough on tenants, but new rules offer hope. Cheryl Markosky reports

Wednesday 10 June 2009 00:00 BST
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Now should be a great time to rent. Prices are continuing to drop after a year in freefall and a new wave of "reluctant landlords" are desperate to let out their properties to meet their interest-laden monthly mortgage repayments.

In London alone, rents have fallen by around 5 per cent at the bottom end of the market, and by up to 30 per cent at the top end, according to Findaproperty.com, while the average asking rent across the country is 5.5 per cent lower than 12 months ago.

It is not all good news for prospective renters in search of a bargain though. The growing number of reluctant landlords – homowners who have decided to let their properties to recoup some of their hefty mortgage costs rather than sell in a downturn – are being criticised for their inexperience and in some cases, downright unscrupulous behaviour.

Last month, though, the Government gave hope to long-suffering renters by announcing a new licence to let, where landlords will need to register with a national body and pay about £50 before they can rent a property.

In Scotland, private landlords are already required to register to let properties and Jane Ingrams, head of lettings at Savills, believes this is a good thing, resulting in higher standards and more professional landlords.

"Landlords, particularly those who didn't see themselves becoming landlords in the first place, will have to comply with certain rules and carry out repairs. This will frighten off reluctant landlords or encourage them to do the job properly," says Ingrams.

Paul Shamplina from Landlord Action is coming across desperate private investors who were stung by property investment clubs and are trying to let their property rather than have it repossessed. "They are cutting corners, not paying service charges and trying to manage their places themselves, because they can't afford a decent agent to look after them." He isn't convinced that new legislation will solve the problem, however, as rogue landlords are likely to find a loophole.

One of the many renters supporting the registration of all landlords is trainee lawyer Anna Byrom, 27, from Surrey. In January, Byrom moved into a three-bedroom semi-detached Victorian house in Egham, Surrey., with two other professionals.

After signing a one-year contract and agreeing to pay rent of £1,230 a month, Byrom discovered major problems, including appliances that didn't work or were off the back of a skip, a failed Corgi gas safety check and items in the contract not adhered to, such as supplying furnishings and fittings. Worst of all was her discovery that the reluctant landlords, who had done up the house hastily to sell for a quick profit, had not informed their mortgage company they were renting and were in arrears on their mortgage.

"It was obvious on the day we moved in the landlords had gone into the whole rentals business blind and hadn't sorted anything out. When we found out the mortgage hadn't been paid since September and the house could be repossessed, giving us only five days' notice, we told the landlords we could sue for breach of contract or we could just mutually surrender the contract," explains Byrom.

Luckily, the landlords agreed to mutually surrender, releasing Byrom and her housemates from the tenancy agreement after four months. They have since moved to a new property in Staines but are more than £600 out of pocket after paying for new references, a new contract and their removal costs.

"Make sure you ask a ridiculous number of questions when viewing, including who will manage the property," advises Byrom. She also warns not to assume everything will work. "Insist on a proper inventory check where appliances and electrical items are tested."

With the number of lettings properties owned by reluctant landlords doubling over the last year, competition is strong – there are 200 to 300 per cent more rental properties in some parts of London alone. So, what can you do to make sure your property stands out, while conforming to all the rules?

The rentals market is flooded with unsold homes not fit to let, says Lucy Morton, head of lettings at London agent WA Ellis and president of the Association of Residential Lettings Agents (Arla). "Reluctant landlords need to provide modern bathrooms and power showers and newly decorated rooms with contemporary finishes," she says.

To be a successful reluctant landlord, you must completely change your mindset and look at the property as an investment rather than your home, says Tim Hyatt, head of lettings at Knight Frank. "Be ruthless. Remove all your personal effects and rip out dated avocado bathrooms. Today's tenants want fresh, clean living at a competitive rate."

Lynn Hilton, head of lettings at Cluttons, points out that "you need to get up to speed with the relevant legislation. There are certain things you must do by law, like have an energy performance certificate (EPC) check carried out that determines how eco-friendly your property is." You are also mandated by law to have all gas appliances and pipe work installations checked by a Corgi registered engineer every 12 months.

Seeking the advice of an experienced Arla-registered agent can reap benefits. As well as understanding all the legalities and how best to manage a property to a professional standard – keeping you of legal trouble – good agents can help you market your property and find a tenant.

Tips for tenants

* Be flexible – a landlord trying to sell might lower the rent if you allow viewings

* Meet the landlord to gain trust and lay out your requirements

* Check with Land Registry that the landlord actually owns the property

* Do not sign the tenancy agreement before the landlord has carried out work and tested appliances

* Use an Arla-registered agent

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