Are landlords money grabbing beasts?
BTL landlords are often portrayed as money grabbing, evil, exploitative beasts. We are accused of roaming the free market jungle, charging whatever rent we want, savaging the finances of our hapless tenants. Unsurprisingly, I would say that this is rubbish, a political and media misconception, or a convenient diversion from the truth – here’s why.
The letting market is very competitive
As a result of the 80’s buy-to-let lending initiative and the ground breaking Housing Act of 1988 is the private lettings market is a highly competitive place. Gone are the days of any half decent place getting snapped up immediately. There is significant competition between landlords to let their properties and this despite the London based media coverage of the subject keeps rents and rental increases, if they occur at all – small.
A breed of anonymous exploitative landlords
However, I will concede, there is one breed of landlord that are exploitative. These are not the BTL landlords who compete within the open, regulated private rented sector, but those operating in another sector, one lacking regulation and competition, these landlords are the suited, booted and wealthy individuals who exploit all of us, including us BTL landlords.
I’m talking about the world of clandestine freehold companies and their associated management companies.
Exploitative landlords and management companies
I speak from recent experience, as a buy-to-let landlord who has recently received a notice from one of the freeholders of an apartment block I have a rental flat in. The freeholders, who after 10 years of ownership have suddenly and for no apparent reason (other than they want more money) decided to charge a letting consent fee of £50 for the subletting of my leasehold apartment. They are unable to point out quite where in the lease there is provisions for charging this.
On another apartment I own in the centre of Nottingham I am currently being charged a £4,000 service charge for a 1 bed flat! Considering the dated state of the common areas, I really cannot see where this money is being spent. Admittedly, there is a car and pedestrian lifts which need servicing which are expensive, but other than that, for Nottingham this is an exorbitant amount of money. The freeholder and management company are closely related, so I suspect they will be making money on this.
My latest experience of an exploitative landlord and their property management company involves the actions of Hamilton King and the freeholder Southern Land Securities, both controlled by the same owner, one Mr Raymond Taube and family.
I will reveal more about them over the coming weeks, needless to say I have been held over a barrel whilst trying to sell my property.
A situation that resulted from me being honest on the information I proffered in relation to the sellers pack. Here is a lesson for other landlords.
The freeholder decided that my replacement UPVC windows were out of character with my maisonette property (despite the fact that they were designed to replicate the existing fenestration). This judgement was all made without visiting the property and despite the fact that FENSA certification was obtained to make the new UPVC windows compliant with building regulations.
As a result of this decision I was forced to agree to a deed of variation, costing me nearly a grand by the time their legal fees were thrown in together with a rehearing of the peppercorn ground rent that equated to a 1000% increase!
This is all perfectly legal, but is it remotely fair?
I obviously have legal redress but the costs to me of taking it through the Courts and going up against their in-house legal team would make it financially unrealistic. Also this kind of issue only comes to the fore on the attempted sale of a property, when timescale is critical to avoid losing a sale.
In my case, I lost 2 buyers, deterred by this action, then almost lost a 3rd potential buyer because of the risk of the potential delay.
Leaseholder landlords being overcharged on block insurance
Another way that landlords who own buy-to-let property are exploited are through being massively overcharged on their block insurance. The cost of the insurance is often hidden within the service charge. We have written previously about the extent that leaseholders are overcharged
and Alan Boswell Insurance have recently highlighted to us the FCA concerns on page 16 over the conflict of interest inherent in many Freeholders / management companies and the leaseholders that they act on behalf of.
The real landlord villains are…
It seems to me that the real landlord villains are not the buy-to-let investors who provide much needed rental property for the growing rental class to live in at no cost to the taxpayer. In fact we all know that following the recent tax rises, buy-to-let landlords are making an important and increasing contribution to the exchequer. ( Is it worth incorporating your rental business? )
No, the real crooks, are the band of secretive freehold landlords and their management companies who exploit the law to extract excessive charges and fees whilst knowing that legal challenge is beyond both the scope and resources of most leaseholders, including us buy-to-let landlords.
If you have had a similar experience or have a view please share them by posting a comment to help other landlords.