National Landlords Association

Encouraging renting

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Five things to be aware of as a landlord

5 tipsThere is so much more to being a landlord than just purchasing a property and finding tenants that it is near impossible to name just five things to look out for. Being a landlord means that you are running a business and for it to be a success it must be treated as such.  This includes complying with the many, ever-changing laws and regulations which govern the sector.

To avoid getting into trouble here are 5 things a landlord should know:

  1. Tenancy agreement

It is vital that you provide your tenants with a comprehensive tenancy agreement which is robust and up to date.  A tenancy agreement sets out the terms of the tenancy and includes important details of each party’s responsibilities in a clear, concise and transparent way. The tenancy agreement may also be called upon should a dispute arise at the end of the tenancy. It is therefore vital that the agreement covers every aspect of the tenancy.

  1. Documentation

At the start of a new tenancy, the landlord should provide a tenant with certain documents. If you don’t, you could be in breach of the law, and may run into difficulties if you need to regain possession of your property.  From 1 October 2015, the Government will require a landlord to provide their tenants with the following documentation:

  • A valid Energy Performance Certificate.
  • An annual Gas Safety Certificate. Each gas appliance must be checked and certified each year.
  • A copy of the Department’s ‘How to rent’ Guide. This guide is accessible for free on the Department’s website:
  • Relevant tenancy deposit protection information.
  1. Deposit protection

If you take a deposit, it is the law to that it must be protected in a Government-approved scheme such as my|deposits.  A landlord in England and Wales (other rules apply to Scotland and NI) must protect the deposit within 30 days of receiving the deposit and provide the tenant with the prescribed information within those 30 days.

  1. Protect yourself and know the law

As a landlord, you need to protect yourself; that includes conducting a thorough tenant check and having appropriate landlord insurance.

You also have a responsibility to your tenants and you must ensure that you know what they are and follow them. This will ensure the safety of your tenant and keep your property in good nick.

As well as providing a safe environment for your tenant, you must also be aware of a wide range of other responsibilities. For example, is your property in an area where the local authority requires landlords to be licensed, and if so, do you have a licence for the property?  If you don’t, you will be breaking the law and could end up with a hefty fine.

  1. Information

Having readily available advice and support can mean all the difference.  Joining a landlord association such as the NLA will provide you with help, advice and support to ensure the smooth running of your letting business. The NLA has a comprehensive online library and an advice line. The NLA also offers training for new and existing landlords to ensure you develop your professional skills and are up to date with any new changes.

Most calls to our advice line have been because a landlord has an issue which arose because they were unaware of the rules and their responsibilities. Getting into trouble like this is stressful and sometimes ends up being very costly.

More than anything else, do your research before embarking on the landlord journey.

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European Court of Justice VAT ruling could cost UK landlords so act now

Gary Rowson, One EGary Rowson, OneE, urges landlords considering energy efficiency improvements to take action.

A recent EU ruling on the application of the UK’s reduced rate of VAT for energy saving equipment and materials is likely to increase costs for landlords with domestic properties and individuals who are either building or refurbishing their homes (who are not able to recover VAT incurred on their construction works).

Under current UK legislation, a reduced VAT rate of 5% is applied to the installation of energy-saving materials to make dwellings ‘greener’ – such as solar panels, insulation or micro-combi boilers.

However, the European Court of Justice has now decided that this interpretation is not in line with the relevant VAT Directive, which only allows the reduced VAT rate to be applied where there is a ‘social aspect’ to the works.

The judgement means that UK VAT legislation will have to be amended and the scope of the relief is likely to be significantly restricted.  While there’s no clear timeframe for when this will be implemented, landlords would be wise to seriously consider bringing forward any energy efficiency improvements in order to take advantage of the current situation.

If you have any questions about how this might affect your rental property business, please call OneE Group on 0207 8701234 or send an email to

And to find out more about how the NLA can help you to make energy efficiency improvements, visit NLA Property Services.

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Is the grass always greener on the other side?

Matt Oliver, NLA Public Affairs Officer, on more evidence to suggest rent controls simply aren't the answer.

Matt Oliver, NLA Public Affairs Officer, on more evidence to suggest rent controls simply aren’t the answer.

Today’s publication of the interim report from LSE, commissioned by the NLA  debunks the myth that rent control is a golden bullet, easy to implement and guaranteed to work in the UK.

The launch comes on the day that the four Labour candidates aspiring to be leader (and potentially our next Prime Minster) go head-to-head in a live TV debate.  The Private Rented Sector (PRS) and housing is going to be top of the agenda, especially as Labour’s London Mayoral candidates are all advocating some form of rent control in the Capital as they pitch for votes in their separate election primary.  This is all despite the fact the Mayor has no such powers to implement such a scheme.

Rent controls are non-transferable policies

When it comes to the PRS, LSE’s report shows the grass definitely isn’t always greener. For example, the model cited for the policies advocated by Labour during the election was Ireland but, as the report concludes, the controls introduced in the last few years have had very limited effect.  In fact the country is experiencing a housing crisis, with rapidly rising rents and a near-standstill in new housing production.

Ah, but what about Germany?

Yes of course, Germany. This is often cited as the best example of a country with a stable PRS, yet LSE’s report found that the system of indefinite security and in-tenancy rent stabilisation has in the past been cushioned by low house prices and demand, something we don’t have here, whilst initial rents can be well above current market levels in high-demand areas. Meanwhile in San Francisco and New York it looks like the main beneficiaries of interventionist policies are older middle class households, with the young hardly getting a look in.

What’s the moral of the story?

Well, in a nutshell: rent controls sound great on the surface but the evidence points to the contrary. The NLA is a strictly neutral political organisation.  However, as Labour members listen to these proposals for the PRS and contemplate choosing their third leader in eight years, much like some do with Tony Blair (the only Labour leader to win three successive General Elections), they will remember that you often don’t know what you’ve got till it’s gone.

*LSE’s final report, due to be published later this year, will examine London in more detail to see specifically how renters in the Capital would be affected by various proposals for change.

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How to get started with buy to let financing

BTL RB blog

NLA London Rep Richard Blanco unpacks buy to let financing…  

I’m always keen to encourage people to research their own buy to let (BTL) mortgages, but there’s no doubt it can be very daunting.  There are a few key concepts you need to understand and I’m going to outline them here for you.

What mortgage do I need?

Most investors choose to take out interest only loans, because the interest can be set against your rental income, making this a relatively tax efficient transaction.  The lender will look at your credit file, and most expect borrowers to have their own home mortgaged or owned outright and have a minimum income of around £25,000 – although this varies depending on the lender.  Some major lenders like Birmingham Midshires and The Mortgageworks don’t require earned income, but their credit score is consequently more onerous, especially at higher loan-to-value ratios (LTVs).

How will my credit score and income be calculated?

Credit scoring plays a key part and having a high credit limit on a card can increase your credit score. However, using the credit facility regularly can reduce it quite dramatically and your credit score will be spared from impairment if your balance is below 50% of your total credit limit. Lenders can be fussy about what they include when calculating your income, and most disregard the forecasted rental income that the property will command.  They also tend to favour employed income from a payroll, and things like bonuses and earnings from zero-hours contracts may be overlooked.

What about lending criteria?

Rental income must cover 125% of the mortgage but almost all lenders now calculate prospective payments at a higher notional rate of 5%, rather than the agreed mortgage interested rate. This makes it harder to obtain finance and is aimed at acclimatising borrowers to the likelihood of interest rate rises in the short to medium term.  Lending policy also tends to favour landlords with smaller portfolios and most lenders place a cap on how many properties you can own, regardless of who the loan is with – usually between 3 and 10 or if not, a cap on how much you can borrow overall.

And what interest rates should I expect?

In 2009, typical buy to let interest rates were around 5.25% with often an arrangement fee of around 2.5% of the loan applied, but thankfully rates and fees have fallen considerably, and at 75% LTV you are now looking at an interest rate 2.5% to 3.5% with fixed fees of less than £2,000. If you have a bigger deposit and can stretch to a 65% LTV, rates can be as low as 2%.  New entrants like Virgin Money, The Mortgage Trust, Precise and Aldermore – though not always the cheapest – have helped to increase competition.

How long will the process take?

The whole application process can be very slow and pedantic – with an average completion of 8 weeks –and the big three BTL lenders have about two thirds of market share partly because of their speed and efficiency: TMW, BM and Godiva. 

Should I use a broker?

Around two thirds of landlords choose to use a broker but be aware they may steer you towards specialist lenders who are not necessarily the best value.  Often building societies who mostly deal direct with customers can have some of the best deals, so try carrying out your own research by looking at interest rates for example on the NLA Mortgages search engine, or Moneyfacts before deciding either way.

Is it ready to let?

Mainstream lenders will require the property to be habitable and ready to let in order to proceed, which means a working kitchen and bathroom and no damp or subsidence.  Many won’t lend to flats over four storeys high, flats over commercial outlets or to freehold buildings containing flats. For situations where the property requires works, you could try commercial lenders like Lloyds, Shawbrook, Bank of Cyprus, private or other high street banks, but expect to pay an arrangement fee of at least 1% and interest rates of around 4% on loans of up to 70% of the value of the property.  Interest-only loans are harder to come by in this sector and your repayment term will be shorter – say, 15 years instead of 25 – but there won’t be any caps on the number of properties you own. 

Is bridging finance for me?

Bridging financers are the funders of last resort, usually lend on a non status basis at 65% LTV, and involve much higher costs of generally around 1% per month with no arrangement fee. It’s a bit like buying on a credit card. The advantage is the property can be in any condition – within reason, but be warned: never obtain bridging finance without a clear exit strategy and be aware that you will be stuck on it for six months before you can apply for a remortgage.

Growing a portfolio

I hope this has all been useful. Remember, once you have a mortgage, and if the property increases in value, you can think about growing your portfolio by releasing equity and applying for a further advance.  People often release funds from their own homes in this way to buy an investment property. It’s called capital raising, and most lenders will allow it for the purposes of buying property, though they may insist you own the property for 6 or sometimes 12 months, and apply a lower LTV.

For more information about growing your portfolio, see our guide here – available to NLA Associate Members and above. Not a member? Sign up for free here

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Top 5 reasons for financial loss

Top 5 reasons for financial loss

Chairman Carolyn UphillCarolyn Uphill, NLA Chairman takes us through recent figures which have revealed the top five reasons for a landlord making a loss.

Have you considered the costs that go into maintaining and running a letting business?

A recent National Landlords Association (NLA) survey confirmed that it is no easy feat being a landlord, and operational costs need to be considered as it can mean the difference between success and failure. The landlords surveyed revealed the top five reasons for their financial loss:

5.     Agency fees

12 per cent of those surveyed said that agency fees contributed to them making a loss. Varying levels of agent’s services are offered so make sure you know exactly what you’re being charged before signing on the dotted line. It is also best to check if there are any hidden extras too so that you don’t get hit with a hefty unexpected bill.

Agents will soon be required to state prominently in office and online whether or not they’re a member of a Client Money Protection (CMP) scheme so make sure they are a member of a reputable trade organisation such as UKALA.

4. Voids

14 per cent said they experienced void periods which resulted in financial loss. Being realistic about tenant turnover can save you from getting into financial difficulties. We recommend budgeting for 10 month’s income for a calendar year to cover any unexpected void periods.

3.     Rent arrears

One in five landlords (18 per cent) said they experienced loss due to rent arrears. It is so important that you address the issue of rent arrears as soon as possible. Talk to your tenant and try to ascertain why they haven’t paid on time, you can then put in place a payment plan if possible or offer them the option of ending the tenancy, so that both you and they don’t get into any further difficulties.  For more information here is a guide to rent arrears.

2.     Rental income

Two in five landlords (39 per cent) claimed that their rental income doesn’t cover their outgoing costs, which include things like agency fees, renovations, repairs, tenant checks, inventories, check in and out reports, just to name a few.

It’s understandable that you want to set a rent which is competitive and fair. However if it doesn’t cover your costs then you should look to see that, a) it is in-line with the current rental market, and b) that you have reserves which cover things such as repairs and maintenance as well as the bigger jobs of renovations and refurbishments. It could be that the property is just at a stage where there is a great deal of outgoings, which is why you should always put money away for a rainy day and budget appropriately for any unexpected costs.

1.     Renovating and refurbishing

The foremost reason given for financial loss was money spent on renovating and refurbishing properties between tenancies (53 per cent). Renovations are essential in order to keep your property looking and feeling desirable and for achieving competitive rental returns, and putting renovations off can become costly if associated problems keep adding up. 

You’ve been warned

This is a wakeup call to anyone thinking of investing in buy to let; make sure you go in with your eyes open. There will be considerable outgoings at times which can lead to serious losses unless you’ve planned ahead. This is why having a financial plan in place is so important.

Take it from those who’ve already taken the leap into buy to let. These landlord testimonials highlight the issues you might come up against when in the business:

Landlord A:

“Set up costs are extremely high, especially refurbishments e.g. kitchen, bathroom heating and subsequent marketing. Also, management fees are rising and securing extension of leasehold is difficult.”

Landlord B:

“My last tenant caused a lot of damage and the guarantor absconded, setting me back severely.”

The NLA provides a wealth of information and help to landlords, both to those just starting out and those who have been in the business for a while. Our ongoing support can help keep things on track.

Find out exactly what the NLA can do for you and how we can support you to help make a success of your letting business.


The impact of rent control


Past attempts

For many years, rent control was considered an out-dated practice from a bygone age, with a history of failure and complications around the world.

In the UK specifically, the various Acts which introduced rent control in the private-rented sector had a dramatic effect on the proportion of households renting from a private landlord. As the chart below illustrates, the sector shrank dramatically after the introduction of controls in the Rent and Mortgage Interest Restrictions Act 1939, and continued to decline as the legislation was tightened through the 1950s, 60s and 70s.   It was not until the reforms of the 1980s that the private-rented sector turned the corner.

Even so, the initial pace of change was slow.  The modern rented sector only really developed after the enactment of the Housing Act 1996 when the Assured Shorthold Tenancy became the default tenancy and lenders felt secure enough to expand mainstream lending to individuals.


Political agenda

Yet, despite the wealth of evidence to suggest that statutory price capping does far more harm than good to the supply and quality of rentals, it is back on the agenda for some politicians.

The appeal of price controls to politicians is simple. It is a basic concept, easy to understand and able to appeal to a certain group of voters with whom it is often difficult to engage. Unfortunately, while the concept is simple, the practical and economic consequences are incredibly complicated and difficult to model.

The impact

Those proposing rent control tend not to consider its impact on the wider society. The use of rent ceilings has been shown, time and time again, to reduce the quality and quantity of property available to rent legitimately, while fuelling the growth of a black market. It wasn’t difficult to find somewhere to rent in the 1980s, but few renters were ever offered a full tenancy, with all the protections that entailed.  For good or ill, many properties were let on a “licence to occupy”.

Were a future government to introduce such a policy after the May General Election, the impact would undoubtedly be a reduction in the the number of properties available to rent and the exit from the market of a large number of responsible landlords who simply are not prepared to deal with inevitable reduced income or the higher costs that will follow as service providers, such as mortgage lenders and insurance providers, seek to off-set their risk.

Rents will be held down as politicians – looking to gain votes – will be unwilling to face the wrath of five million private renters. As the cost of renting to the consumer sinks below the natural market rate, artificially kept below the level needed to ensure that the landlord can maintain it properly, and inevitably squeezing profitability out of the equation, people will vote with their feet. Investment will move away towards other markets and assets better able to provide a reasonable return.

Shortage of housing

The impact of this will be felt more widely than simply by those who rent or let. The issue we face in many parts of the country is a shortage of all types of property for people to live in. Rent control will not increase the number of properties; indeed, it will have the opposite effect, driving investment away from these areas and further reinforcing the divide between high and low demand areas, as developers will no longer be able to cover the risk of new projects by selling off-plan to landlords keen to invest in residential property. Unless there is an increase in first-time buyers willing, and – perhaps more crucially – able to buy to compensate, housing development will fall away, further restricting supply and making it even more difficult for those seeking housing, both to rent and to buy.

The policy of rent control has failed whenever it has been introduced; the re-introduction of rent control in the UK will fail and will cause more damage to the housing sector, and to those that need to be housed.

Be heard

If you’re concerned about the impact this could have on you, enter your question via the survey. The NLA is holding a hustings event, on Monday 2 March, where there will be an opportunity to question policy leaders from all parties. The most popular questions, collected from our survey, will be presented at the event.

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Our new Housing Minister is keen to stress the positive role of the PRS

Pity the minister re-shuffled in July.  While you or I spent our summer holiday reading for pleasure, they resign themselves to packing a stack of briefing papers next to the must-read political biography and the highly recommended literary novel that they told the Sunday heavyweights were on their summer booklists.

CEO Richard Lambert on the NLA's meeting with the Housing Minister

CEO Richard Lambert on the NLA’s meeting with the Housing Minister

The new Minister for Housing and Planning Brandon Lewis doesn’t appear to have been tempted to slip a couple of thrillers surreptitiously into his suitcase.  When NLA Chairman, Carolyn Uphill and I met him yesterday, he was well on top of the subject – interested, engaged and keen to stress to us the positive role he saw the private rented sector playing in the provision of housing.

This was very much an introductory meeting.  We wanted to ensure Mr Lewis could put faces and names to the NLA when it came up in future, and that he had a sense of who we represent and what we are trying to achieve. Equally, we wanted to get a feel for how Mr Lewis was approaching the issues and to put some thoughts into his mind for the future.

Retaliatory eviction

We hoped that we would get some pointers on the Government’s attitude towards Sarah Teather’s private member’s bill on retaliatory eviction.  However, the Minister was carefully non-committal, saying that the Government was “not yet ready” to declare its position on the Bill.  Questioning whether there was the evidence that retaliatory eviction was as widespread as is often perceived, Carolyn Uphill stressed the importance the NLA and landlords in general attached to the no-fault possession procedure, and expressed our concerns over any call to reduce the flexibility section 21 gave to the market without good reason and sound evidence.

Model tenancies

We’ve been waiting through the summer for the launch of several initiatives which emerged from the Government’s response to last year’s Select Committee report, and he confirmed that we should see these shortly.  One of these will be a model tenancy agreement.  The Government’s aim was not to trump all existing tenancy agreements, but rather to change tenants’ understanding of how tenancies work, and raise awareness that longer tenancies are possible, and that they can ask for them.  This gave us the opportunity to outline the NLA’s recent campaigns which have highlighted the business benefits of long-term relationships between landlord and tenant.


More generally, we wanted to stress our concerns over the way local authorities are using the power to introduce discretionary licensing schemes.   Over the past year or so, we’ve seen more and more councils propose selective or additional licensing schemes, and some worrying trends have emerged:

  • The growing number of proposals for blanket borough-wide licensing
  • Poorly drafted consultations, based on flimsy evidence, which do not demonstrate how the case for licensing meets the specific criteria of problems caused by low demand or anti-social behaviour
  • The imposition of additional property or management requirements as conditions of licences
  • The absence of an independent check on whether local authorities have made their case and properly justified their licensing proposals, which means that there is no scrutiny of or check on how the powers are used – or in many cases, abused.

Brandon Lewis was very sympathetic to these points and said that he was “very aware of blanket licensing as an issue, especially in London”.  We pointed out that in reality licensing is a burden on the law-abiding, as they are the ones who accept the obligation, and pressed the case for accreditation as a method to filter out the responsible landlords from those who do not comply with the law or standards, who should be subject to more rigorous enforcement.

Further reading

All in all, it was a very useful conversation.  And I’m afraid we are going to add to his reading pile: we promised a couple of recent issues of UK Landlord for his red box.


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