Subletting – A Perfect Storm

Experienced landlords among you may have discovered a tenant subletting all or part of the property (with or without your permission), but as this blog seems to be attracting more first time landlords and investors I want to draw reader’s attention to this increasingly common practice.

In the nine years I’ve been investing it’s not something I’ve had to deal with in any great depth till now.  There was the chap who handed his room keys over to “a bloke in the pub” a couple of years ago but he only managed a couple of nights before I changed the front door lock due to a breach of security.  He never did contact me to retrieve his holdall and grubby Y fronts.

But when you hear that six Somalians, with false names, were discovered in a two bed flat in a small, sedate seaside town like Eastbourne, you know that it’s common practice everywhere else.  In the last 3 weeks I’ve received no less than 4 requests from tenants to move in their boyfriend and, in some cases, for their entire families to join them from abroad.  All requests have been refused based on the maximum comfortable number of people and facilities ratio.  This didn’t stop Bruno, however, who has moved his sister into his room and no amount of Google Translate can make him see that it contravenes his tenancy agreement. Her very sweet smile clearly indicated that she doesn’t give a s**t either.

Landlords and particularly HMO landlords: I urge you to make regular checks on your properties.  Some tenants will see a room in a shared house as their home and castle, others will view it merely as a cheap convenience to invite their mates over and have them all bunk down on the floor, particularly if they see this as normal practice.  Waldemar was forced into asking me if his friend, just arrived from Poland, could stay after Tom found him one day in the kitchen.  Tom likes to know who is coming in and out of the front door particularly if he’s had a skin-full and doesn’t want to assault a legitimate tenant.

And that’s the point – Tom’s drinking habits are a pain to all and sundry: the police, the tenants and me when the fire alarm call point gets mistaken for the light switch.  But we put up with him because, without him, the house would be mayhem.  Having one bossy, house proud, person per HMO means they are your eyes and ears, particularly if they’re home all day.  It doesn’t take long for a house to earn a reputation for taking in all and sundry. You start to understand why those fabled landladies of the Seventies wouldn’t allow overnight visitors.

I treat each comment made by these “house wardens” seriously, and work with them to resolve concerns.  This gives them the confidence to protect their home and not be afraid to stick up for themselves and the other paying tenants knowing they have my full backing.  It’s in their interests to know who they’re going to meet on the way to the bathroom and they value being able to sleep soundly knowing the house is secure and quiet.

What do you do if you discover an unknown person in the house?  You can’t serve notice if the tenant has abandoned the property and I don’t believe you can claim they’re squatting if the subletting tenant has keys.  Therefore, I suppose the simplest resolution is to assume the tenant has abandoned the property, follow procedure and change the locks leaving a clear message detailing the landlord or agent contact details for re-entry.  If the tenant is still in residence, it’s a Section 21 notice or a quiet word in their ear to get their guest out immediately.

If one of my tenant’s requests a guest to stay over, I impose a £25 per week charge, a maximum of two weeks’ time frame with a specific end date and expect them to introduce their guest to the other housemates.  I will also let everyone in the house know there is an extra person temporarily.

I’ve just written an article on the subject of subletting for the RICS (there’s no link as it’s a subscription only site for RICS members) and delivered a speech on the rise of Rogue Landlords for a local Toastmasters Club.  My research on the subject led me to watch Panorama’s The Great Housing Benefit Scandal; what with Ben Reeve-Lewis’ appearance on BBC2’s Rooms, Rogues and Renters earlier in the year and Housing Enforcers presented by Matt Allwright subletting is providing a food mountain for the media and a shed load of cash for the scumbag landlords.

Click on the links above, watch the programmes and it will either inspire you with ideas to adapt your business plan and capitalise on the misery of desperate people or you may hang your head in despair knowing we share the same job title of Landlord.

£600 crappy caravan yielding 1400% anyone? (Watch the Panorama programme and you’ll understand)

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Review of Britain’s Benefit Tenants

Last night Channel 4’s Britain’s Benefit Tenants had my partner and I screaming into the sofa cushions at the naivety of the characters:  one of whom was the optimistic landlord who invested his hard earned pension pot of £40k into a Hartlepool terraced house he’d never seen before. Looking forlornly at his due diligence homework courtesy of Google, he realised he’d cocked up.  Fighting his corner was the lettings agent from NGU Homelettings, David,  chasing rent arrears from a lady who refused to answer his efforts to contact her so he could “prevent her eviction”.  One of his other cases were two drugged up brothers who were finally being evicted after a year and were oblivious to their dog peeing against a cupboard fondly labelled as a family heirloom.

After the programme, I dismounted from my high horse and remembered the following:

  1. My ex husband and myself also bought property (pre 2008 ) – unseen and unresearched – based on NGU Homelettings advice and investment potential for which they levied a hefty armchair and refurb fees.  My excuse?  I thought my ex husband knew something I didn’t.  His excuse?  The same as the landlord who bought the property in Hartlepool in a street where no one wanted to live – on paper it was a strong investment.
  1. As I was screaming into the pillow “You’ve waiting HOW long to evict the tenant?!?” the unswerving, magnanimous David excused the delay by saying something along the lines of  “It’s better to keep someone in the property and have a chance of them receiving Housing Benefit to pass onto the landlord”. To be fair, he worked hard at trying to get that something or anything out of the tenant and I admired his patience.  After all, he doesn’t have the luxury of quiet, clean, risk free tenants waiting in the wings to snap up one crappy, trashed house after another in a street where even the trades fear to tread.

On the subject of crap, did you see HOW much the tenants left behind?  Again, David shrugged his shoulders and decided it could have been worse – at least they didn’t nick the copper.

Three Lucky Benefit Tenants

A few weeks ago an opportunity came up for Nadine, Anthony and a friend to move into a proper house after accepting that they would be 150 years old before any kind of social housing would be available.  I’ve said before in a previous post that perhaps living in a room long term as you grow old could have a negative effect on one’s mental health. But with no job (or likely to ever have one) and relying solely on welfare, they knew most agents would balk at allowing them to rent any of their landlord’s precious abodes, despite the fact that they’d managed to save for a deposit and the first month’s rent.  Their prayers were answered when a client of ours bought a lovely 3 bed house, handed it to us to manage and declared that Nadine et al sounded fabulous (although we did have to encourage Anthony into a clean T shirt before he met her).  The landlord is now in possession of long term, reliable tenants and the tenants are ecstatic to have room to swing the proverbial cat.

But the crap they left behind!  I love these people and would stand up in a court of law to defend their honour.  However, after the fifth trip to the tip with their unwanted possessions I was ready to kill them.  I have come to realise, when you’re on benefits anything free/gratis makes your heart leap with joy even if you don’t need it.  I know Nadine would trawl the charity shops far and wide looking for something to bring home – clothes, pictures, lava lamps and a very weird set of elephants.  None of them have a car so there was never going to be a hope in hell that they could get rid of their hoard.  I spent a very wet and windy day sitting in the car listening to Tom confess his latest sexual exploits as he helped me take the detritus to the tip.  And it wasn’t the smelly mattress which made me gag.

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A Feel Good Story and Very Exciting News!

Picking up the on the trend of prime time reality TV documentaries, I would love to have a clichéd Immigrant Romanian Benefit Street tenant to report on but sadly they’re all working their proverbial nuts off as we speak.

Instead, I want to tell you about Lara who came to me via the Council’s Homeless Team a few weeks ago.  Her two adult sons were in supported accommodation and Lara’s non existent finances meant she had been begging sofas to sleep on from friends for the last five months.  She was tired, miserable and had been forced out of her lodging room after the landlord used to leave her presents to clear up around (not in) the toilet.

Just like a TV charity advertisement, she’s now happy, warm with a TV for entertainment and living like a queen – even buying herself some leopard print bedding from Primark to prove it.  The real point is this; the Council appear to have revised their Bond Scheme – they provide a 4 weeks’ upfront deposit paid via bank transfer into the landlord’s account and this sum is collected at £20 a month from the tenant’s benefits.  Housing benefit payments should then kick in four week’s later meaning the tenant is constantly four week’s in advance providing they keep up the payments. The bond is then returned to the council who check the tenant has kept up with repayments and the money is returned to the tenant if the landlord hasn’t made any deductions at the end of the tenancy.

Well done, Eastbourne Borough Council – good system, advertise it more!

One In, One Nearly Out

Tom is at risk of homelessness after we spent this evening watching CCTV footage of the police Continue reading

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All That Glitters Is Not Gold!

As yet another marketing email drops into my Inbox extolling the virtual virtues of HMO ownership,  I’ve decided I can no longer stop myself from passing comment on the increased hype of HMOs.

The email came from an estate agent I sacked last year for being useless and, eight years ago, actually told me they wouldn’t touch HMOs with a barge pole.  Why then, did they send me and possibly a thousand other property investors on their target list, promises of glittering HMO yields?

The reason, I believe, must be this:  with the rise of online and high street letting agents all scrabbling to secure properties to let, margins are thinner as they compete to offer the cheapest headline service.  However, the fees to cover their operational costs (cars, staff, rates,) HAVE to come from somewhere so they divide and spread their costs.  Here are some examples of fees levied to the tenant and landlord before a let has begun: Continue reading

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Leaking Roofs and A Drunken Call Out

Heed my warning all you new or wannabe property portfolio owners!  You may remember in this post I mentioned that, as the majority of Eastbourne (Sunniest Town in Britain apparently) was built around the latter half of the 19th century, some of the building materials are beginning to fail such as mortar and felt.  Now, on the Sunshine Coast our weather is mild compared to the rest of the country but this year the roofs have really taken a hammering in the wind and rain.  Four, yes FOUR, of my properties can no longer be patched and now require new roofs.

Perhaps more experienced, long in the tooth landlords investigate the roof condition of a potential BTL before considering anything else but from my research of Property Millionaire Courses run by gurus the focus is on the bottom line numbers/profit at no point have I seen anyone flag up what will happen or how it will affect the bottom line when a major repair needs doing which hasn’t been budgeted for.

Which roof do I pick first when looking at £10-15k apiece?  Well, obviously the one that shows the most!  So on top of delving under the stairs to look at RCD, open kitchen cupboards to locate boiler, my advice is make sure you have a good look at how well the tiles are likely to keep the rain off.

I don’t mind the investment as I’m young enough to feel the benefit for the next few decades and I don’t use the profit to live on, but if you don’t have the cash in reserve and cashflow is tight, a major expense such as this will really, really hurt if you haven’t budgeted for it.  After all, there are only so many times you can fob a tenant off with the words Continue reading

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Christmas of Domestic Disturbances

Happy New Year and welcome to a first globally bumpy week of 2015!  The events around the world over Christmas and the last few days have certainly put any trivial issues I have into perspective.

Christmas Disturbance

At 11.30pm on Christmas Eve, whilst digesting the contents of Swedish Christmas Eve dinner and discussing the origins of Elk meatballs, the phone rang to say one of the tenants was locked out.  It was minus 10 degrees where I was so I felt sorry for them, phoned a friend who was holding the keys, organised re-entry only to discover in the meantime the tenant had rung the doorbell and, lo and behold, someone bothered to let her in.  Sometimes, it doesn’t pay to be too reactive.

A few days later, I was enjoying a bit of TV catch-up Downton Abbey by the fire when a tenant called at 10pm which I ignored and they could leave a message if it was urgent.  His persistent ringing punctuated my daydream of owning a team of domestic workers (Downton had THREE nannies, for goodness sake!) and I threw a coat over my pyjamas to head down to the house.  One very cold night, two police cars, four bored policeman, a tenant clutching an arm, another sobbing in her room and a howling, ranting Portuguese called Amaro banging around in the back of one of the police cars.

Amaro’s girlfriend, Kalina, was 30 minutes late home from work and he was waiting for her.  Continue reading

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Smokin’ Sounds The Alarms

Today’s post focuses on our foreign and immigration-approved (I think) tenants – we may share a commonality as EU citizens but the last few weeks have shown that we’re definitely still worlds, continents and nations apart.

It started off with a faulty fire alarm.  The two storey maisonette was classed as an HMO by the council as it was part of a three storey building even though we don’t own the flat below which has its own entrance.  Under the HMO regulations we were required to install a Grade D alarm system providing every room with their own hard wired smoke alarm and linking it to the flat below.

There’s been quite a bit of room changeover recently and this HMO has one very grumpy English man, a Czech lady, two Portuguese men and a Spaniard.

The smoke alarms started to go off at seemingly random times but mainly throughout the night so we asked everyone to check their own alarm to see which was flashing red to show which one was faulty.  Everyone denied seeing any red lights – I’ll clarify – anyone who read and understood my texts denied either hearing the alarm or bothered to report it sounding.  It was only the frequent calls from the Englishman and the lady in the flat below which gave us an idea of what was going on.

After seeking advice from the manufacturer and various alarm system engineers we went into the rooms to remove one alarm at a time to find the fault.  What we found: Continue reading

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