Please Note: This Article is 6 years old. This increases the likelihood that some or all of it's content is now outdated.

A new house price boom is on everyone’s lips. It is given more credence every day with reports like the recent RICS (Royal Institution of Chartered Surveyors) one suggesting that house prices will rise by an average of 6% every year for five years.

According to Vince cable home ownership has now become “unaffordable” to many people on middle incomes in some locations, and he has warned that the bubble developing in the housing market could be more serious than during the last property crash.

And the wave of price rises appears not to be restricted to London: A recent economist quote in the Daily Telegraph said: “Buyers seem to be looking to test the market right across the country, not just in the usual hotspots of the South East.”

The up-shot is that more often than not young people are forced to rent rather than buy. They rent for flexibility at first but of ten then struggle to raise sufficient money for a deposit as a first time buyer. The Help-to-Buy scheme is helping but is likely to but small scale considering the size of the problem.

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Of course all this adds fuel to the fire, stoking a bad reputation, which often falls on legitimate landlords, as people see landlords making a killing from “Generation Rent”. As more and more people are forced to rent, and on present trends it is set to continue for years to come, the market situation and some unsavoury practices will likely dent the legitimate landlord’s reputation even more.

As owner-occupation in Britain has gone into a steep decline over recent years, a new kind of landlord has emerged, the so called property guru. Many had gone to ground or gone bust since the credit crunch, but many have re-emerged with a vengeance, ranging from those that give relatively straightforward property investing advice, at a price, to those who are out and out fraudsters.

The very high demand for rental accommodation in many areas, particularly in London, is leading to all sorts of scams, from dodgy letting agents to opportunist advertisers of non-existent properties on Gum Tree.

A favourite scam is the taking of deposits outside of a property that the fraudster has no connection with. Posing as a legitimate landlord they will persuade the unsuspecting tenant to hand over large sums as holding deposits and up-front rent and then disappear.

Others scams have involved identity fraud when tenants hand over personal details and documents such as passports and drivers licences on the pretence that these are needed for tenant vetting purposes.

One of the so called “property  gurus”, a self-styled property expert Daniel Burton, who went around giving seminars at property events boasting of making £35,000 a month from a get-rich-quick scheme called rent-to-rent went missing recently. He left behind him a trail of misery leaving many unsuspecting landlords and tenants in London hundreds of pounds out of pocket.

This is yet another rent-to-rent scandal which leaves a bad taste in the mouth for both landlords and tenant victims and the industry as a whole. The idea behind rent to rent is fairly simple: so called “landlords” with no capital rent a large house off a legitimate landlord.

They offer a guaranteed rent for a long period, typically 5 years. They then proceed to pack tenants into the property like sardines in a can, using every room as a bed-sit and maximising the rental income for the rent-to-rent sub-letting landlord.

All very well in theory, but packing so many tenants into a small living space inevitably leads to problems. The sub-letting landlord, who has taken all the deposits and rent, then directs the disgruntled tenants’ complaints back to the original landlord owner.

The latest example of this type of scheme that went wrong, run by 25 year old London School of Economics dropout, Daniel Burton, makes a mockery of all the decent landlords trying to make an honest living. It also shows up many of these so called “property experts” who go around leading others into these dubious no-money-down get-rich-quick schemes, for what they really are – unscrupulous charlatans.

Tenants should be very wary about renting from any landlord who does not have access to the property before taking rent and deposits. Tenants can check out landlords with the local authority and favour those who are members of a legitimate landlords’ association or accreditation scheme. Original documents should never be handed over to landlords or agents – they only need sight of these and perhaps a photocopy record.

Likewise with agents, landlords and tenants should look for agents who are members of recognised professional associations or the Property Ombudsman or SAFEagent schemes.

Landlords should be very wary of entering into any rent-to-rent or guaranteed rent agreement unless they are dealing with an established company in this field.

When a local authority is concerned there is obviously far less risk as they cannot hide behind limited liability, but some authority schemes are run through sub-contract companies and contracts vary. It’s very important to check the contract to make sure what you are getting before you sign up.

Where the scheme is run by a company it is important to verify the status of these. Two companies which operate nationwide in this field and have stood the test of time are Northwood and Orchard and Shipman. Both these companies trade off long-term reputations in the industry.

Please Note: This Article is 6 years old. This increases the likelihood that some or all of it's content is now outdated.
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