My 5 favourite landlord mistakes.

1) “The Council has stopped paying my rent”.

The council never were paying your rent . They were paying your tenant a contribution towards their housing costs based on their personal circumstances. Before you start whinging that “the housing benefit is for rent” it isn’t.

Let’s keep this simple

1) Any mortgage is between you and your mortgage company

2) your rental agreement is between you and your tenant.

3) any claim for housing benefit (L.H.A) is between your tenant and the local council. If they become more than 8 weeks in arrears or are classed as vulnerable you may have it paid directly to you. It however is never “your rent money”.

2) “It’s my property!”

Not whilst there’s a tenancy agreement in place . As long as that’s in place it’s your tenants property. Even if your tenants are not paying their rent.

3) “The property must be returned in the condition it was let”.

Minus fair wear and tear . If you think that waffer thin carpet you  put down with no underlay is going to be in the same condition after a family has been walking over it for 6 months then think again.

4) “If it’s in the tenancy agreement it must be legally enforceable”.

I have dealt with a landlord who has a term in his tenancy agreements that states

“If you miss a rent payment I have the right to enter the property and remove you and your possessions using physical force”.

Are we suggesting that that is legal as it is in a tenancy agreement given to a vulnerable person? It quite clearly isn’t .

5) “If you wish to remain in the property you must sign a new tenancy agreement”.

Usually this statement comes from letting agents who want to charge both the tenant and the landlord a fee for preparing a new agreement. If the tenant wishes they may simply allow the agreement to roll onto a monthly agreement. If the landlord does not like this then they can start the eviction process. However the tenant never “has to” sign a new agreement to stay in the property.

Increasing my debt and losing Local Housing Allowance in one move.

When I bought my flat in 2006 I was a little naive and believed that the 73 year lease the property had was plenty. It wasn’t. 6 years on and  the lease now has 67 years to run and very few mortgage companies would lend on it.

This means that the value of the property is considerably lower as I am limited to cash buyers and investors rather than someone looking for a home.

I am in the middle of lease extensions negotiations and it looks like the whole process will cost in the region of £10,000.00. I have taken out a loan to cover this. I know this is more debt but hopefully it will put me in a position whereby if I need to sell the flat it will not cripple me completely. I’ve been looking on rightmove and strongly believe that a good long lease with no ground rent will make the property stand out from it’s competition.

However the downside of increasing the lease is that I will no longer qualify for Housing Benefit as I’m confident I would have more than £16,000.00 equity in the property. The loan will costs me £180.000 per month in repayments and I receive £450.00 per month in Local Housing Allowance. The net loss to me each month is therefore £639.00 per month.

I know that all the benefits I receive will now go as soon as my claims are all rolled into Universal Credit so my reasoning is I  may as well start to live without them now and by doing this it will be a gradual process rather than losing it all in one go.

I’m confident that even with a wife and four children I can mange my finances in such a way that we will still cover all the bills and have around £450.00 per month spare. We live in a nice home and have a great life. I’m positive that by looking to the long-term we’ll get through this in a much better position than we started.

However I’m not going to lie. I am slightly terrified.