How The Market Is Changing

From where I’m sitting, this is purely subjective of course. Having run HMOs for 7 years and I’d only planned to do it for 5 years, reckon I’m now a couple of years past retirement. The plan had been to squeeze as much yield out of them as possible, sell at a profit and do something else. As a plan it had strategy, goals and optimism but, in reality, it was nothing better than a property wealth creation course pie-in-the-sky unsubstantiated greedy wish.

Instead, thanks to the recession and divorce, I have a niche business, constant room demand, an appreciation of real life on minimum or no wage and a set of tenants whom I couldn’t bequeath to another landlord with a clear conscience (on both sides).

What do you mean The Market is changing?

From 2007-2011 every tenant which arrived on the doorstep came armed with a good sob story, housing benefit papers to sign, could be found on any benefit database under several addresses and, if I was really unlucky, on a few police databases as well. Apart from Paul and Andrew in recent times, everyone else has pretty much kept their nose clean (to my knowledge). I suspect a couple are up to some dodgy deals and workings but we need a few in society just to keep the police on their toes and prove we still have freedom of movement (Yes, I do believe Big Brother will be a reality in my lifetime).

Perhaps I’m getting better at filtering advertisement responses? Immediate “no”s are:

  1. “You got’a room for me and me girlfriend? A single bed will do”
  2. “My landlord wants me out by Monday”
  3. “My mum’s told me to leave and stand on my own two feet”
  4. Text messages enquiring about the room at 11pm on a Saturday night when the sender can’t even be bothered to give their name
  5. Anyone who doesn’t have the commonsense to hide or gloss over their misdemeanours after basic questioning. E.g. “So what’s your job?” response “Community service” (bet THAT won’t be on his CV)

Instead, I have been receiving a succession of lovely, hard working, paying tenants through the door of both sexes, but I hasten to add that they are all from abroad and grateful for the work that our little town can provide. Sadly, they are also grateful that we have working showers, heating, zero drug policy and they feel safe – somehow I suspect a lot of their previous accommodation stuck two fingers up at the HHSRS (Housing Health and Safety Rating System for those of you who have never been within earshot of a council employee).

Even Tom has been taken aback. His house has not just been infiltrated by one female but three! I broke the news gently as he’d always relied on the overwhelming smell of testosterone as a natural deterrent to any heterosexual female. We had a long “when you’re pissed and punching the wall, the ladies may find it a trifle intimidating and are under instructions to call me if you’re out of order” talk. This went surprisingly well and he retorted with “Whilst we’re being honest, make sure they don’t put their lady products down the toilet. I’m a man of the world but there are just some things I can’t handle.”

So far, so good and to Tom’s credit, he’s even become a bit protective; one of the ladies came to the house via a previous tenant. Last month she kissed her Polish boyfriend goodbye as she left for work, returned home a few hours later to find him dead in bed and, if that wasn’t bad enough, was mugged a week later. She hasn’t gone screaming home to Poland but she and a few friends laid him to rest locally as they couldn’t afford for his family to come here or to return his body home. She and Tom spend long hours in conversation during which he’s vowed to find the mugger……

Fancy your own HMO?

I am currently marketing the following property. This is a good, solid house next door to the promised £85m shopping centre refurbishment which would be ideal for individual or student rooms.

Front View

http://www.andrewsonline.co.uk/sale/details/92086/Longstone-Road-EASTBOURNE-East-Sussex-BN21-3SN

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British Gas Engineer Escapes Unhurt

Before Christmas I received a friendly letter from British Gas asking me to contact them to arrange an electricity meter change at James Street as it had come to the “end of its life”.  It lingered at the bottom of my in-tray until I was ready to spend a quiet afternoon on the phone listening to elevator music.  However, the call went surprisingly quickly and we made an appointment for a few weeks later.

At the next rent collection/coffee/gossip stop at the house I asked if anyone was going to be around for the four hour window to wait in for the engineer.  Sarah  said she’d only let him in if it was a straight swap i.e. standard dumb meter for dumb meter as opposed to the installation of a smart meter.  The word “smart” hadn’t been mentioned during the call or in the letter so I assumed it would be the dumb one.  A few days before the meter change, an email was sent to me saying that BG were looking forward to making my life a million times better with the forthcoming Smart Meter installation.

I went back to Sarah who, quite frankly, went berserk.  To be fair, she was active at the anti-fracking protests and I have a feeling I saw a mild version of her pro-environmental passion.  I called BG again to ask why this was the first I’d heard of it when the call handler said it was for gas AND electricity AND at a completely different address!  Well, by now, I had the distinct feeling that something fishy was going on so said I hadn’t received any communication about the other house.  “Oh well” she said “whilst you’re on the phone, I’ll book smart meter installations there too”.

“Er, no you won’t” I replied.  “If I’m being offered something so brilliant that it’ll change my life and it’s free, I want to know more”.  During all this, Sarah risked her life accessing the wi-fi to print off information about smart meters and, whether it’s true or not, here is a summary of why many people don’t want them in their homes:

  • Smart meters monitor, measure and communicate private electricity, gas and water usage data to utility providers
  • They transmit intense bursts of microwave radiation (known as RF EMF) 24 hours a day – the same kind as emitted by mobile phone masts
  • More than 5000 studies show RF EMF radiation is harmful to humans, plants and animals
  • Utilities will become available to energy companies and any potential hackers at a moment’s notice even allowing the providers to disconnect their services without entry to the property
  • UK Government has said Smart meters will cost tax payers £11bn for estimated savings of just £25 per home/year – and that saving only possible if customers change their behaviour and have TWO Smart Meters

(Information provided by www.stopsmartmeters.org.uk)

By the time the engineer turned up, Sarah had cancelled her dentist appointment to be there, put up three “Do Not Install Smart Meter” signs on the front door, meter box and hallway and was ready and waiting to not only inspect the equipment he was installing but checking he hadn’t sneakily attached any smart devices.  To my knowledge, he was eventually allowed to leave peacefully…… and in one piece.

On The Other Hand

As you know, I like to give a balanced article so in contradiction to our belief that the meter company (acting under the British Gas banner) is trying its damnedest to dish out cancer and other nasties, the lovely call handlers this morning saved me from a long, drawn out heart attack.

I’m involved in a new project which involves moving the gas and electricity meters a few feet to an external wall.  So imagine our surprise when we opened the shiny new gas meter box only to find no bl**dy meter! In past experience, the engineers simply moved the meter and hooked the supply back up again.  Apparently, that simple, clever system stopped ages ago and you now have to contact your supplier to disconnect the meter, book another company to relocate it, another to dig up the road if need be and your supplier to come back to reconnect the supply.  Experienced pros will know to book all these on the same day and preferably in the right order.  For some reason, I didn’t receive or read that bit of advice so this morning had a plumber with no gas supply and a builder about to lose his electricity supply as the “digging gang” had turned up to look for electrical wires in the middle of a busy street.

Two hours and eight phone calls later, Yarin from British Gas took me under his wing, played “Greensleeves” to calm me down whilst he put me on hold and assured me in his silky tones that all was in hand and an engineer would turn up in the morning to disconnect the meter, actually engage in some kind of meaningful conversation with the “installation gang” from the other company then set a time to come back and ensure a wonderful fast, capacious and efficient phase 3 electrical supply.

This house is round the corner from Sarah’s so let’s hope the engineer doesn’t find a spare smart meter in his van just to get me back.

However, This IS Smart!

If you haven’t discovered it yet, I recommend the British Gas mobile app which allows you to enter meter readings on site.  I used to write all the meter reads down on the back of an envelope and try to decipher which house the numbers belonged to.

British Gas app

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No Longer a Novice HMO Landlady

I’ve been reviewing the blog recently and decided that, after seven years, I am no longer a Novice Landlady.  Having said that, I’m not an expert in HMO legislation either – I’ll leave the ever changing rules to solicitors such as David Smith of Anthony Gold solicitors and local authorities who are paid far more than I to translate all the finer points.  Thank you to everyone on Twitter who consider me to be more well versed in this area and I’m just grateful we have a great HMO council department who trust me to do the right thing within the boundaries of the aforesaid legislation.

So, do I carry on with the blog as a journal, bringing you my tenant stories interspersed hopefully with a few nuggets of useful tips and information or do I make it more of an educational “How to run an HMO”?  Readers are very kind with their comments and often ask questions such as where they should invest, what yields I achieve and the finer details of how to make their venture into HMOs a profitable one.  I’m only one of many thousands of landlords (many of whom are making far more profit than me) and enjoy bringing the realities of the coalface to any new investor who thinks it’s all about yield.  Having said that, for a hefty fee, I’ll happily come out and show you how to set one up and  interview tenants!!

If you’re looking to chew the fat and debate the pros and cons of property investment, I heartily recommend Property Tribes, The Property Hub and Property 118 where you can connect with property people nationwide.  They are all online to give you their opinion and benefit of their experience but it’s no substitute for getting down and dirty and throwing yourself into the practicalities of BTL.  These sites weren’t around when I started and desktop research had little to offer.  As with Channel 4’s Undercover Boss, there’s no better way to understand your business’ strengths and weaknesses than experiencing all aspects of the work for yourself.  Once you know what makes your property profitable, then you can hand it over to a letting agent if you like.

With the acquisition of a new computer, I’ve decided to better systemise my business by creating tenant records and scanning in all their documentation then storing it somewhere between earth and Heaven.  At present, I often begin conversations with tenants “Remind me, when we last spoke….” or scrolling through texts to find out exactly the terminology one tenant used to slag off another.  In the same way that Miranda Hart promised herself to become a “new me” by power walking wherever she goes, drink fresh juice and eat homemade muffins, I aim to stop carrying around my tenant’s emotional baggage and rifling through Tenant Information Forms for email addresses that the cat’s been sleeping on.

However, it won’t be complete detachment.  Saturday morning rent collections (so few want them now) allow me to

  • Be shouted at by a Morroccan Rastafarian who couldn’t wash his dreadlocks properly because the shower was underperforming and he thought I was limiting the water output to save money,
  • Witness Tom’s attempt to drink himself to death after borrowing money for “rent” from a family member
  • Be given 70% proof orange liquid by some the Portuguese sisters/lesbians at 10am and
  • Try to assist a pedantic long term tenant who says he’s living with damp, when all I can find is a small brown stain on the ceiling 20 feet away and he won’t give me permission to send in a decorator.  He wants fifty quid “for materials” to do the work himself.

If you’re new to investing and have already bought and read my book, I can now recommend Property Geeks new book Beyond The Bricks  which is available to preorder.  It’s hot on the heels of  his immensely successful first book “Property Investment For Beginners”.  With all the above knowledge available at your fingertips, now is the time for you to jump feet first into Buy To Let.  (Just don’t ask me to point you in the direction of the next hot investment location!)

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New Year, New Leaks, New Horizons

Happy New Year to all my Readers!  I hope this year brings you all that you strive for and thank you for coming back to read more about the realities of running HMOs.

Importance of Ongoing Maintenance

A dull subject but, despite the torrential rain and storms over the Christmas period, we only suffered one tiny leak across all the properties.  This is proof in itself of the need to consistently address any maintenance issues as soon as they occur and don’t patch the holes or be a skinflint otherwise your phone will be ringing off the hook with distraught tenants whilst you’re trying to toast yourself by the fire.

Talking of leaks, the biggest one I had was inside a house.  Lilian from Portugal called saying “Metal thing on wall, it dripping water.  You come”.   I was there within a couple of minutes (beauty of having the properties in one area) to find a not insubstantial lady trying to hold up her room radiator  whilst water gushed, yes, gushed NOT dripped from the pipes flooding the carpet.  I swore, phoned the builder who is working on the new project, took over holding the radiator as she was about let go and shouted descriptions for towels, buckets and shallow pots to capture the water.  She came back with most of the saucepans and a tooth mug.  Have you seen how much water can come out of a radiator and how long it takes?   All the knobs to turn off the supply were stuck, the pathetic tiny pipes feeding it were bending under the pressure, she and I were trying to prevent the radiator falling any further whilst the builder and his mate cracked a few jokes, ferried the escaping water to the bathroom and tried to work out how to stop it racing through the system and onto our feet

Finally it all stopped, the boiler and water supply to the property had to be turned off which meant no flushing toilets, no showers and no heating.  In the calm I asked Lilian how it happened “I don know.  Not my fault” until I pointed out all the washing which was stuffed behind the radiator.  She then had the cheek to complain that it was cold and she couldn’t go to the loo.  “The shopping centre behind the house has plenty of toilets, use those till it closes and we’ll have come up with a solution by then” and I left her to ponder the folly of her actions.  To be fair the fixings weren’t great, but they’d stood up to two previous tenants before her and I suspect she’d either leant on it or it had yielded under the weight of her enormous underwear.

A Landlord Must Have

I was amazed that the above leak hadn’t caused more damage in the room below until Roman, another Pole reliant on Google Translate, left on Christmas Eve.  I pulled back his curtains to find huge amounts of mould growing up the bay window.  He’d been drying clothes in his room, hadn’t opened any windows and there must have been water somewhere above his ceiling but he didn’t think to mention it!

Out came the Marigolds and a trusty bottle of Muffycid which is, quite simply, the most effective mould killer/cleaner I’ve found.  Spray it on, sit back and play Candy Crush on your phone for 15 minutes, et Voila!  The mould has disappeared and there’s a slight bleach smell – just make sure you’re wearing old clothes as it’ll ruin any fabric it touches.

Muffycid

 

 

 

 

Keeping Tenants

Many of my tenants have been working their socks off in the hotels during Christmas and New Year, paying their rent from tips (lots of £5 notes!) and have gone home for January and half of February whilst the hotels close.  Realising that most of them wanted to give up their rooms and look again when they came back, I offered them the deal of half rent whilst they were away to encourage them to have somewhere to leave their stuff and return.  It’s not in my interest to have empty rooms at this time of year or to go through the process of settling in new tenants.  All of them took the deal and are now spending time with family and hopefully Immigration will let them back into the country in a few weeks time.

Finally, New Horizons

Following Nadine’s cancer treatment last year and her mother’s death, she has taken a long desired voyage.  Her mum left her a little money so she’s gone for the trip of a lifetime for four weeks to discover the delights of India and its people.  She said “I’ve got more surgery to come, I have no idea how long I’ll live, so I’m just going to go and realise my dream before I undergo more surgery later this year”.  And, yes, she got the half rent deal too.

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Worst Investor or Best Landlord of 2013?

Six years ago my Ex and I were persuaded to buy BMV (Below Market Value) properties in the North of England.  On paper, they looked like good investments and, during a time when one only needed to be able to sign their name to be granted a mortgage, it was easy.  A letting company “only” charged us £2,500 to find each property and £5,000 to refurbish it, promising immediate equity of £20,000 to £30,000.  A few of these under our belts, and next year we could be millionaires, Rodney.

Following the split I agreed to sell what I could.  The first property took six months to sell and achieved £15,000 under the perceived original value although I was grateful to be rid of it.  I instructed the sale of the next one, with a tenant in situ, but after a year of being on the market and only one vague offer which barely made it to exchange I took the decision to find another agent and help the tenant to move on with a cash incentive to aid their moving costs and market the property with vacant possession.

The agent told me it was easily worth £90,000 and with a £70,000 mortgage and £2,500 agent’s fees, I comforted myself that I would finally get something out of the house after sinking thousands into it for repair, maintenance and buying costs.  After weeks of no interest, the agent persuaded me to try their auction house for “only” £5,000 selling fees as it was sure to generate some activity there.  Three months later and I was offered, £55k, £60k and £65k.  It was a sure bet that my Ex would be unwilling to share the loss so, for the last two months, I’ve sunk another £8,500 into its long needed refurbishment, changed agent and put it  back on the rental market at a rent of £550 per month.  After agent fees and mortgage, it’ll take 60 months or 5 years to repay the investment omitting any capital growth in the north of country.

With head held high, desperately trying not to weep at having to spend hard earned savings on the stupid house and consoling myself that at least I was reinvesting rather than having to look after an empty, risky property or give funds to the mortgage company the agent called this week to say they’d found a tenant.

“Great! Brilliant! Get them in!”  I said.  “Well, the only thing is” said the agent “That she’s lived there before and wondered if you’ll have her back?  She said she loved it so much, didn’t want to leave and said you were a great landlady who sent them chocolates every Christmas.”  So, after months of paying a mortgage, council tax, insurance and utilities for an empty property, dug deep for refurb costs, spent hours finding a decent agent and agonising over turfing a good tenant out of their home, it’s gone full circle and she moves back in at the beginning of January.

Surprises in the HMOs:

Back on home turf, Tom lost his job, Sarah has discovered a ghost and my son received the most thoughtful Christmas present ever.

Tom lasted three and a half months in the warehouse of a big company.  To be fair, it was two month’s longer than any of us thought he would before he either killed someone whilst driving a forklift under the influence or his vital organs gave up trying to digest the fruits of his overtime pay.  I really do think he enjoyed being a regular, employed person but perhaps he just didn’t have the stamina to stay out of the pub.

Sarah cornered me the other day to say that she’d managed to get hold of a radiation meter to check the levels of her room.  According to her, all the rooms in the house are clear except hers.  She saw my look of alarm and put me at ease by saying that this could be due to the wifi signal but is more likely to point to the existence of a ghost which she is trying to negotiate with.  She suspects it’s a child and she’s working with it to help it move on to the other side (this could be true as the house used to be home to wayward teenagers) and assured me she’s content to live with a “squatter”.

Finally, this weekend I dragged my seven year old son round to help with rent collecting.  Tom shoved a bag into my hand and whispered “give this to George at Christmas”.  “No” I said “You give it to him so he can thank you personally”.  As George unwrapped the gift his eyes lit up to find a Chelsea football shirt with his name and age (7) on the back, signed by all the players.  “Tom? Is this legit?” I asked.  It had to be as the odds of finding a shirt with my son’s name and age written on were a long shot.  He replied “I know a bloke in the pub who owed me a favour and works at Chelsea”.  George was so bowled over, it brought a tear to Tom’s eye so I gave them a tenner and sent them off to McDonalds for some mutual appreciation where they bumped into my eldest daughter who didn’t think twice to question why some middle aged bloke was buying my son a Happy Meal!George Shirt

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The End of the Curse of Room 2

For the last six weeks I’d be forgiven for thinking that Room 2 has been cursed.  The first person to occupy was Paul who was evicted  after a week following five separate police visits, a warrant for a recall to prison with a charge of rape thrown in for good measure.  I never told you exactly how he left but I am in possession of his keys and a signed Voluntary Leaving Letter – I’m not a bin bags on the street kind of landlady.

Mario was next.  The one whose mum was desperate to be rid of him and also a well known face to the police, so the offer of a room was withdrawn as he had failed his referencing – even though he probably had a decent credit score.

The next to turn up and ask for the room was Belinda from Portugal.  Smiley, bouncy and recommended by another tenant who worked with her – she didn’t seem put off by the ingrained smell of testosterone or the fact that the toilet seats are permanently up.  Brave girl, I thought and her friend seems nice, also I do like a good recommendation from another, trusted tenant.  She was living with friends after a holiday in Portugal to visit family so struggled to provide a landlord reference.  Just before she was due to move in, Antonio called in distress; he knew her from a house he’d been living in where she regularly “entertained” gentlemen throughout the night and had been forced to return home following a spate of charges against her for dealing.  To be fair, she took the news of the room offer being withdrawn incredibly well.

Then Karim – came across as hardworking and had entered the UK years ago as a Kurdish asylum seeker, but his wife had just left him taking all the money.  During the referencing process the only black mark against his name was the wife who was apparently unpredictable and a “nightmare” manic depressive.  Well, that was OK as his wife had disappeared.  At 10pm on the Friday night before he was due to move in on Saturday morning, he called to say he’d forgiven his wife and could she move in too?  No.  My suspicion is that they figured it was easier for him to find accommodation and then she could surreptitiously get under the bedcovers without anyone noticing.

I took the decision to lay the room fallow (I think that’s what they do to a field to allow it to recover from the trauma of being turned over time and again) and see if anyone suitable appeared in my lap.  My confidence in tenant selection had taken a knock and I needed the current round of room hunting tenants to subside.  This time of year also brings out many of the people who may have been evicted over the summer and they don’t fancy spending a winter under the pier or don’t qualify for the local Winter Night Shelter.

A Familiar Face…

Then Greg called.  This potted history is going to make all our lives appear ridiculously simple: He has two children by two different women of which we’ll call one X,  plus a high maintenance, glamorous, pregnant girlfriend who we will call Y.  In the summer, Greg bonked X then Y.  X  found out, got cross so reported him for breaking his bail conditions not to contact her and he was thrown into prison for eight weeks.  Y was waiting for him when he came out and talked of setting up home together.  The next I knew I was receiving a reference check for Greg and X to take a house together.  I asked Greg if shacking up with the woman who put him in prison was a good idea whilst her arch rival was pregnant with his child, but he said it would be ‘fine’.  And there I thought that he would somehow find domestic bliss……..

Turns out that, once he’d bought new sheets, furniture, car and a Sky dish the relationship foundered within a few weeks as he “was working hard and not getting any”.  He answered my quizzical look by spelling out the word “S.E.X.”.  He’d been offered a roof over his head from friends “but they’re all coked up and I don’t want that life” and had decided he’d been at his happiest renting a room in my HMO where “the landlady was spot on”.  I think that was a compliment.

When I asked Tom what he thought about having Greg back into the fold he said “I’ve got two heads, darlin’ and only one of them’s for thinking and that one thinks it’s great!”.

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How To Spot a Red Flag During Interview

So here we go again.  First respondee to the room ad, following the Paul scenario, was another English guy who sounded normal on the phone and, despite the fact his name was distinctly Italian, he was born and bred in the area and had a crop of red hair.   I thought he must be the worst identity thief in history, until he produced his photo I.D. confirming his name.

Call me paranoid or just smarting from the last experience, I launched into interrogation mode.  From his answers I gathered that:

1)      He has a fiancée who, in turn, has her own children.  Red Flag #1: why isn’t going to live with her then and isn’t that a lot of responsibility when you’re only 24?

2)      Mum will pay deposit and a month up front.  Red Flag #2: Why does mum want you out of her house so badly that she’s willing to pay when I’m only asking for deposit and a week up front?  She also sounded a bit desperate on the phone.

3)      Dates on the Tenant Information Form.  Red Flag #3: Lots of crossings out and too much time trying to work out dates and where he lived.

4)      Work.  There was a Supervisor’s name, no company and his job title was Ground Worker.  Red Flag #4: I interpret this to be the equivalent of a modern day chain gang rebranded as Community Service.

5)      He was 25 minutes late to the viewing and hadn’t bothered to call or text to let me know.  Red Flag #5: Demonstrates no consideration or awareness

Landlords, learn from this!

Take this as a lesson to all HMO Landlords: when the red flags start flying on points (1) and (2), if you can’t get satisfactory answers, leave the interview.  Often I’m so determined to find something “right” about someone or any nugget of information that will add credibility to the Tenant Information Form that I’ll ignore the frantic waving of red material as I have an unhealthy belief that the majority of people are honest and not pre-programmed to pull an entire wool sack over my eyes.

It was only once it had been confirmed that the deceitful little sausage had just come out of prison and was another well known character round town, that I gave up and withdrew the offer of the room on the basis that he had marked “No” to the question about a criminal record. Depending on his conviction and sentence, renting him a self contained unit wouldn’t be a problem, but putting him in a shared house with established tenants just wouldn’t be fair on them.  In our parting phone call he finally admitted to being known to the police for a variety of offences but said he’d grown up and wanted to show everyone he could behave.

By 9am this morning he’d left a voicemail and sent a text begging me to reconsider the offer of the room:

“I have been in trouble with the police in the past when I was a teenager, but I’m not violent. This room was an answer to my prayers and again I implore you to reconsider.  I’m an amiable guy and the other housemates would get on with me.  I wouldn’t often be there as my work can sometimes take me quite far afield – Bognor Regis, for example.”

Chequered Flag

Chequered Flag

Final red flag (or perhaps I should call it the chequered flag): begging for a room once your short and previous history has been uncovered is simply undignified.  Also, Bognor Regis is quite commutable from our town, but when you’ve been banged up in HMP Lewes for a while I suppose it could feel quite far afield.

Note: This is NOT a blog post intended to be biased against offenders, but with data protection preventing landlords from knowing about previous convictions, they are putting the other HMO tenants and the landlords and managers at risk.  Offenders straight out of prison should seek temporary accommodation via Supported Housing or the YMCA to build up tenant references, credibility and allow enough time for the police to forget their name.

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