Warn­ing that stu­dent land­lords face stricter rules

Birmingham Post - - PERSONAL FINANCE -

YourMoney.com re­view, in­sisted there were some great in­vest­ment op­por­tu­ni­ties for those who were pre­pared to take a chance.

“It’s not as risky a move as you might think,” he said. “It’s not quite the hard-par­ty­ing pic­ture many have of stu­dent life.”

Stu­dents took their stud­ies much more se­ri­ously, and many also worked to see them­selves through the se­mes­ter.

They were no longer the reck­less ten­ants many be­lieved them to be.

“Don’t miss out on a great in­vest­ment op­por­tu­nity and sky-high yields be­cause of ten­ant type,” Mr Cooper added.

In­deed, Sim­ple Land­lords In­sur­ance found that, of 20 ma­jor uni­ver­sity cen­tres, Durham and War­wick came out top for rental yields, with 11.5 per cent and 10.3 per cent per year re­spec­tively.

Birm­ing­ham, with Selly Oak a favoured lo­ca­tion, was 11th on 5.63 per cent.

But land­lords let­ting multi-unit prop­er­ties and those think­ing about it should be aware – the rules are chang­ing from Oc­to­ber 1.

The Hous­ing Act 2004 de­fined houses of large multi oc­cu­pa­tion (HMO) as be­ing three storeys high, hav­ing at least five ten­ants liv­ing there, form­ing more than one house­hold, and shar­ing toi­let, bath­room or kitchen fa­cil­i­ties. Manda­tory li­cences are re­quired. The aim is to pro­tect ten­ants in HMOs from poor con­di­tions, with coun­cils check­ing the qual­ity of the ac­com­mo­da­tion, that land­lords are suit­able per­sons, there are not too many peo­ple liv­ing there, and HMOs con­sid­ered high-risk are mon­i­tored.

How­ever, un­der an or­der due to come into force next month, the three-storey el­e­ment is be­ing re­moved, so ex­tend­ing the reg­u­la­tions.

New manda­tory con­di­tions to be in­cluded in li­cences are also set to be in­tro­duced, pre­scrib­ing na­tional min­i­mum sizes for rooms used as sleep­ing ac­com­mo­da­tion and re­quir­ing land­lords to ad­here to coun­cil refuse schemes.

Hous­ing provider Par­a­digm has sug­gested that a fur­ther 177,000 prop­er­ties across Eng­land will now have to ap­ply for a li­cence. Oth­ers be­lieve this may prove a very con­ser­va­tive es­ti­mate es­pe­cially as flats above com­mer­cial prop­er­ties will be cap­tured un­der the changes.

Fleet Mort­gages cites HMO ad­van­tages for land­lords as a po­ten­tial for higher re­turns – the com­bined rent of in­di­vid­ual rooms usu­ally gen­er­ates a higher rental yield than the same prop­erty would as a sin­gle-fam­ily home; less rental void – if one ten­ant moves out, other rooms are still ten­anted; less ex­po­sure to ar­rears – if one ten­ant fails to pay rent, the other ten­ants will still be do­ing so; while ten­ant de­mand for flex­i­ble, af­ford­able hous­ing is in­creas­ing.

It lists the dis­ad­van­tages as more plan­ning re­quire­ments com­pared to stan­dard buy-to-let, such as fire safety mea­sures, pro­vi­sion of safety cer­tifi­cates for gas and elec­tri­cal ap­pli­ances, as well as re­spon­si­bil­ity for clean­li­ness and re­pairs in the com­mu­nal ar­eas of the house; lo­cal au­thor­i­ties can take ac­tion against land­lords they be­lieve are non-com­pli­ant ; and in­creased ad­min­is­tra­tion through hav­ing to com­ply with ex­tra reg­u­la­tions and man­ag­ing mul­ti­ple ten­ancy con­tracts.

So weigh up the pros and cons – one to pon­der. Trevor Law is man­ag­ing direc­tor of East­cote Wealth Man­age­ment, char­tered fi­nan­cial plan­ners, based in Soli­hull. Email: tlaw@east­cotewealth.co.uk The views ex­pressed in this ar­ti­cle should not be con­strued as fi­nan­cial ad­vice

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