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BM Solutions changes lending criteria for Landlords

A day after the Budget announcement where George Osborne called on banks to increase lending to those involved in the housing sectors it was revealed that BM Solutions decided to loosen its lending criteria for buy-to-let landlords. This comes as good news as recently there have been a number of buy-to-let lenders who have stated that they will no longer offer lending to landlords who have tenants that receive housing benefits such as The Mortgage Works and Lloyds TSB.

Even though The Mortgage Works – which is the buy-to-let subsidiary of the building society Nationwide – later decided to overturn the decision, the fact that they wanted to restrict lending in the first place shows that lenders are becoming more wary of lending to those in the private rented sector. BM Solutions on the other hand has decided to extend their offerings and is now offering lending to student landlords with a maximum amount of five tenants on one shorthold tenancy agreement.

Currently, most lenders only lend to landlords with a maximum of four students per tenancy, however due to the housing crisis more students are now looking to live together in one property. A spokeswoman commented on the company’s decision and said: “We regularly review our lending policies and make changes when we feel it is necessary to do so. The private rental sector is playing an increasingly important role in supporting the demand for housing in the UK and as such we are taking the necessary steps to update our policies to support this.”

Meanwhile, the Buy to Let Business managing director Ying Tan, said: “By widening its criteria it will get more business and maintain margins still. If BM wants more business then you may find it will loosen criteria in other areas. This is turning the tap slightly without opening the floodgates.” Student landlords often find it difficult to secure lending due to the perception that students are risky tenants, which is landlords can also sometimes find it difficult to find cheap landlord insurance policies too. However, by letting a single property out to five tenants, landlords can also find that they will gain high yields, meaning that it can balance out in the end.

Council to work with residents to solve student problems

Residents in Bournemouth are being given four different options to tackle the problems caused by the “studentification” of some parts of the area. Currently around one in fourteen properties are used by students and Bournemouth Council are eager for residents to have their say on a range of possible solutions.

The four options are a result of residents’ complaining that the influx of students has changed the character of the area and led to an increase in unsightly properties, noise and antisocial behaviour in the early hours of the morning. Over the past two years, the council in Winton has seen a huge increase in complaints of noise nuisance associated with HMOs (homes in multiple occupation). The options being put to residents include introducing an additional licensing scheme for HMOs which would give the council powers to tackle rogue landlords.

However, it would introduce a new fee for landlords, who would probably pass this on to the student tenants. Another option is to introduce an accredited landlord scheme that is compulsory. At the moment the voluntary accreditation scheme has only managed to get 47 landlords to sign up. Landlords who sign up to accreditation schemes are usually expected to comply fully with all rules and regulations surrounding health and safety issues, property insurance and provide evidence they are fit and proper persons to let out property. Less than 50 coming forward to support a voluntary scheme is a big disappointment for local councillors.

The Winton Forum will hold a public meeting where residents can hear about the options and have their say. Forum Chair Anson Westbrook said: “This is the culmination of six years hard work by the forum. I cannot stress how important it is for everyone who has ever complained about antisocial behaviour or the changing face of Winton to attend this meeting, or at least complete the consultation form online. It’s also in the interests of students to improve the standard of HMOs in Winton and we want them to take part too. This is a great opportunity to improve things and it is so important that we take it.”

Landlords burdened by extra costs in Scotland’s Capital

Private landlords in Edinburgh look set to incur unforeseen extra costs as the local city council introduce new rules surrounding Houses in Multiple Occupancy (HMOs).

Edinburgh Council are now writing to all landlords of HMOs requesting them to carpet all hard floor surfaces, after they have been inundated with complaints from tenants regarding noise levels in flats. The council now want all living areas in HMOs fitted with carpets and kitchens and bathrooms to be kitted out with good quality cushioned flooring. The new rule will come into force on April 1st 2013 and many landlords are furious with the council decision.

Jake McGillivray, a landlord in the Waverley district of the city, was extremely disappointed with decision, saying “It is completely ridiculous, they are using a sledgehammer to crack a walnut. It won’t even be a case of a one off payment, landlords often have to re-carpet a place every time a tenant moves out and that is why wooden floors are so popular. At a time when tenant groups complain about rental charges going up, the council are forcing landlord’s hands. If I have to spend money on carpets, which will also add to landlord insurance and cleaning bills, then I obviously have to pass some of it on.”

A council spokeswoman was unrepentant about the decision saying most landlords will already have carpets in their properties and went on to say: “All residents living in a common stair have the right to live in their own home without being disturbed by their neighbours. Carpets greatly assist in reducing noise levels from people walking above, especially in Houses of Multiple Occupation, where footfall is increased.”

Council’s continue to take landlords to court over HMOs

Two people have been fined almost £60,000 due to housing offences which included failing to license their property as a HMO (house in multiple occupation) and other housing management offences.

The couple from Barnet pleaded guilty at the Magistrates Court to failing to submit a HMO for the two three-storey properties which were used to house some of the areas most vulnerable people. The owners had no fire safety certificates and the wiring system was so bad that its insulation was constantly overheating and could have started a fire. During the investigation by the local council, the pair obstructed them time after time by refusing to provide information. They also refused anyone access and the Environmental Health Officers were forced to obtain warrants to enter the properties. Camden Council even had to pay a handwriting expert to prove they had signed receipts for rent paid by the tenant.

Councillor Sue Vincent, Camden Councillor and Cabinet member for Environment, said “Camden takes the quality and safety of its private rented housing very seriously. This large fine reflects the importance of the case and the difficulties that Camden faced in getting evidence and taking it to court. The properties were in a dangerous condition, putting the residents at risk. This should act as a warning to other private landlords that Camden will ensure that they comply with the law.”

Landlords in the area were quick to point out that the couple were completely unrepresentative of other property investors in the area, who not only ensure they are completely up to date with legislatory requirements but also hold landlord insurance to cover their properties.

The Landlords, Mr and Mrs Stylianous, appealed to the Court against the £12,000 imposed on them for failing to license the houses. The court took little time to dismiss the appeal and even halved the period in which the fine had to be paid. They were also handed a Rent Recovery Order requiring the repayment of £9305.12 in Housing Benefit that was paid out to them while the property was unlicensed.