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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.

Student Landlords warned of decreasing demand for Housing

Landlords have been warned today that the student rental market is now under threat due to the fact that numbers applying for university have dropped in the past year. In 2012 the number of young people applying to university was only 265,784, which is nearly nine per cent less than the year before. It is believed that many young people are choosing not to go to university since tuition fees have increased to almost nine thousand pounds per year.

The fact that there are less young people applying to university means that there will also be less demand for student housing, so landlords need to keep a keen eye on the news to find out whether the areas they rent out in will soon be affected. Landlord Assist managing director Graham Kinnear has said: “A continuing trend of reduced student numbers is worrying news for student landlords in university towns who, over the years, have been able to anticipate full occupancy levels for the academic year. If university applications continue to drop at the current rate this could ultimately lead to some landlords having empty properties on their hands or having to cope with falling rents in coming years.”

Student landlords are being advised to make sure their landlord insurance policies have rent guarantee insurance built in so that if they find their properties unoccupied they will still be able to pay their mortgages. They are also being advised to maybe start branching out into different forms of letting, especially as young people are now more likely to take on apprenticeships after finishing school in order to gain professional qualifications instead of degrees.

Steven Parry, commercial director at Landlord Assist said: “We feel that the numbers applying to higher education may continue to fall as long as tuition fees are in place and the jobs market remains flat. With the continuing trend for fewer university applications student landlords need to consider their business strategy and perhaps reinvent themselves in the professional letting market or move over to letting houses of multiple occupancy.”

Student rents affected by the drop in admissions

Despite annual growth in student rents slowing after a 7% drop in university admissions and a significant increase in tuition fees, it is still cheaper to rent from a private landlord than it is for a student to stay in halls of residence.

The cost of a student flat share room has gone up 3.9% in the last twelve months, while the halls of residence have increased by 5.5% meaning a student staying in a hall of residence will now pay an average of £1,200 more each year. Research carried out by the website EasyRoommate has shown that the average cost of renting a room in a student flat share across all of the major UK university towns has increased by 3%. In contrast the average rents in non-student flat shares have grown by 7.6% over the same period. The drop in student applications comes as no surprise after increased tuition fees of up to £9,000 per year come into effect for the upcoming academic year.

Jonathan Moore, EasyRoommate director, said “The rise in tuition fees and the prospect of a debt mountain on leaving university was the final nail in the coffin for many would-be students. The drop in applications has eased the pressure on student accommodation and this has caused rent rises to slow compared to the wider market. This is something that will be very welcome to cash conscious students and parents. Halls of residence have many advantages and can be a great social hub when first starting out at university. But as the cost of studying climbs ever higher, more and more students will be considering their options in order to save a few pounds.”

Huge demand for amenities such as Wi-Fi and en-suite bathrooms are reasons that halls of residence costs are growing at a faster rate than student flat share costs. While flat sharers don’t usually get bills and cleaning costs included in their rent, they can cuts costs by sharing with more students. The report will not deter any property investor with an interest in landlord insurance from avoiding the student market and with the cost of university rising higher each year students may be tempted to go private in a bid to save money.

Tenancy deposit scheme will benefit students

Students entering rented accommodation for the first time this year will be among the first to benefit from a new scheme which it is hoped will end the large number of disputes over deposits.

In the past, generations of students have found to their cost that when a deposit on rented accommodation is paid before moving in, there is no guarantee of getting it back when moving out. However, students renting properties this academic year are going to be among the guinea pigs for Scotland’s new tenancy deposit scheme. If there are any disputes over the return of deposits when the tenancy ends next summer, the dispute will be settled independently. The new scheme started in July and landlords have until November to comply.

Experts now believe that the days of arguments over deposits will be over which is good news for the estimated 11,000 tenants who have all or part of their deposits withheld each year. The scheme will also be welcomed by landlords who in the past have had to claim on their landlord insurance because of damage caused to the property by tenants and then faced months of wrangling with solicitors over withheld deposits.

Under the new scheme, both landlords and letting agents will be obliged to lodge a tenant’s deposit with an approved third-party scheme. They must then provide the tenant with confirmation plus proof of registration with their local authority at the time of paying the deposit. For the duration of the tenancy the money will be kept in an account set up specifically for the deposit.

The TDS (Tenancy Deposit Scheme) undoubtedly gives students better protection, although there are some concerns that the success of the scheme may be undermined by low awareness of it. Research has shown that the majority of private landlords are taking the scheme seriously and have already registered.

Julie Grieve, managing director at Braemore Property Management, said: “Students must check that their landlord is appropriately registered and that their deposit will go to an approved scheme under the new tenancy deposit scheme rules. Too often they are simply in a hurry to get the keys and don’t do the required homework.”

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 and students opposed to council’s new licensing laws

Property investors in Brighton, Sussex, are outraged by propositions from their local council that may see them having to pay £700 for a licence to rent property out to students.

The move comes after residents in several areas of the city have complained about nuisance levels relating to noise and litter in houses where students live. The local council is run by the Green Party and they are now considering how the many thousands of students in the city are integrated with the resident population in the best way. They have proposed that the licensing laws on Houses of Multiple Occupation (HMOs) are changed to bring more landlord properties under their jurisdiction.

At the moment a HMO licence is required if a building is at least three stories high and has five unrelated people or more sharing the accommodation. Landlords have to ensure they comply with extra regulations in such buildings and property insurance is a must. Brighton Council now wants to bring smaller houses where students live into the licensing net.

Councillor Bill Randall explained: “This would benefit the community where it’s about the litter and the noise from student houses. But I wouldn’t want to demonise students. Not all students cause problems by any means and not all the problems are caused by students either. However, we do want to be able to control it and perhaps deal with it more quickly than we can at the moment.”

The policy is not favoured by landlords in the city nor their student tenants. While landlords complain that the licences will just land them with an extra cost, students are fearful the extra cost will be passed onto them and make it even more difficult to eke out their limited cash resources. A decision will be made at the next full council meeting.

Students are still being taken in by property scams

Students who are looking for a place to stay while they study are being warned about a scam in which they are fleeced before they even see the property.

The NUS (National Union of Students) have confirmed that the number of students being taken in by adverts posted on the internet where fake landlords demand a deposit is increasing. The problem has been made worse by the high number of students who are seeking private accommodation and this is pushing many of them on to unregulated websites.

The NUS spokesman said: “The fraudulent landlords who post the adverts require prospective tenants to transfer money as holding deposits without visiting the property – or to prove they have money in order to rent by transferring money to a friend and sending proof.

Fraudulent adverts most often appear on free advertising websites as there is no cost to advertise the fake property. The easiest way to avoid being victim to these scammers is to use your common sense – if the price or location looks too good, then it probably is.”

That advice does not always work with students who are not familiar with the area, particularly overseas students. It is these overseas students that do not realise that £75 per week for a property in Russell Square, London is unbelievable. They will pay a holding deposit which they will never see again. The advice from the NUS is: do not pay a holding deposit, rent or any money without first visiting a property. All universities will have a list of recognised landlords who will have to comply with all legislation and property insurance demands, and they will remove any landlords who behave unscrupulously. Both the NUS and the universities are quick to point out that the vast majority of landlords are legitimate and trustworthy but should be asked to prove their legitimacy.

Headingley reclaimed by families and former residents

Estate agents in the Leeds suburb of Headingley feel the rising transport costs and the increased number of student accommodation available closer to Leeds City centre is prompting students to leave the area which has for some time been called “Student land”.

Houses up for sale in Headingley are being snapped up by families acquiring insurance for let properties who want to take advantage of the shops, schools and restaurants that are on their doorstep. The student exodus has been revealed by estate agents in Headingley who took part in research on the property market in Leeds. The research focused on how property is selling; where the cheapest and most expensive properties are; and what buyers want when it comes to a property.

Michael Moore, executive partner at estate agents in Headingley, said “Five years ago over 70% of property sold by our firm in Headingley was bought by landlords who would protect their investment with landlord insurance whereas now, that figure stands at less than 10%. A lot of students are moving back towards Hyde Park because they are closer to lectures and closer to the city centre. Transport costs are high, which will have had an impact, and there is also more purpose-built accommodation.”

This means that Headingley is fast becoming much more desirable for families and there are also a lot of buyers who used to live there but moved out because of the problems of too many students. The residents say they are not anti-student and it is not a case getting rid of people, the problem is, they have not had a balanced community for many years. They want a nice mixed population and that’s exactly what they are starting to see now that the students are moving nearer to the city centre.

Landlords advised to check new tenants

As a new university intake prepare to leave home for the first time, landlords in the cities that are getting ready to welcome them have been warned to reference check their prospective new tenants before offering them a contract.

With demand for university places at record highs this year, due to many students wanting to avoid the increase in tuition fees coming in next year, many property investors have been purchasing property insurance on new homes to take advantage of the extra business. There seems little likelihood of any good landlord experiencing difficulty in securing tenants for the university year, however, Landlord Assist, a company who specialise in tenant eviction, insist that landlords must be wary about the new influx of customers.

Graham Kinnear, the Managing director of Landlord Assist, explained just how important checks were for landlords saying “Referencing is a very important part of any tenancy agreement and should be standard practice for any landlord whether the tenant is a student or not.

“Although a full financial check may not be possible due to the students limited credit history, carrying out employer checks and referencing their parents will help landlords to paint a vivid picture of their character and should give a good indication of whether they can afford their rent or not. Generally speaking students should have a guarantor to support their application given that, as students, many will only have had a part time job or indeed no employment record at all.”

There is no doubt that many landlords regard student letting as a profitable venture, and indeed because of their willingness to share rooms, student tenants can bring in more revenue than alternative sources. Reference checking can be expensive but may save a landlord money in the long term.

Students enticed by “grand” scheme

The day after many students in England discover exactly what the future holds for them in terms of university education, a housing group in the South West are enticing students to take up tenancies in one of their modern accommodation blocks that have property insurance for landlords, by offering them a £1,000 cash back bonus.

As the A Level results were announced in England and Wales yesterday, students will be determining just where they can study for their degree. Those that select the top notch South West university in Exeter may have the chance to take up Spectrum Housing Groups rather special offer. The scheme will apply to any student who signs up for a year’s lease on one of Spectrums Point Exe apartments. The apartments are close to Exeter’s seat of learning and offer shared or even en suite accommodation, all the tenancies are covered by buy to let property insurance and Spectrum are confident the offer will see all the flats quickly snapped up.

Private accommodation in Exeter is in huge demand and Spectrum believes their custom built student accommodation will benefit inhabitants of the city as well as the incomers spending a few years at the university.

Jitindar Takhar, a Director of the Spectrum Group, explained thus “The recent announcement that a third of universities have received approval to charge the full £9,000 for every course, students more than ever, are thinking about whether or not they can afford to go to university. We’re a major provider of student housing in Exeter and we feel that it’s important to support students if we can and to thank them for supporting us by staying at our scheme. We’re piloting the initiative at Point Exe which offers en-suite and shared accommodation close to the University of Exeter. The cash-back scheme will be available to students signing up for a year to stay there – if well received we’ll look to roll it out to other schemes in the area.”