Confusion over share houses by Finance News Bulletin

Published: 30/01/07

Canny parents who spotted the chance to profit from their child's stay at institution of higher education have been one of the great property success stories of recent eraRising house prices, guaranteed rents and an enviable degree of manage over tenants have meant that many of those who chose to purchase a student home in many of Britain's university cities and towns have seen their asset deliverHowever new rules brought in last summer to regulate large shared properties, have caused bewilderment and led many possible parent landlords to think twiceMany properties bought for scholar children to live in do not come under the Houses of Multiple Occupation rules, moving houses of three or more storeys with five or more unrelated tenants

But bewilderment surrounding the changes is causing problemsA learn by specialist lender Heritable store has revealed that half of landlords do not understand the rules and local authorities are enormously inconsistent applying them – with charges for licences ranging from £60 per year to £1,100 per yearAnd the postcode lottery for licences is such that landlords in two neighbouring London boroughs, Richmond and Wandsworth, would pay £105 and £1,100 per year respectivelyblot Sismey-Durant, chief executive of genetic Bank, said: 'This is a text example of a postcode lottery being faced today by tens of thousands of buy-to-let investors

'We're also alarmed by how small this new scheme has been communicated to landlords, since they now face significant fines for non-compliance, but semi of them are unaware what they need to do'Our research among both restricted authorities and active landlords confirms the HMO licence scheme is already a confusing, chaotic mess'Despite the HMO evils, for many parents with a youngster at university the opportunities can still be good Under the legislation, introduced in July, all HMO properties must have a special council-administered licence, which requires particular improvements such as fire doors

Heritable's survey of 57 local authorities and 143 property investors revealed that yearly licence fees are on average £358 per year, but differ from £60 in Herefordshire to £1,100 per year in NewcastleA easy method around the vagaries of the licence scheme is to spend in a smaller property – one that's either lower than three-storeys, or for less than five tenantsMajor university cities and towns such as London, Manchester, Leeds, Bristol, Oxford and Cambridge have all seen strong property enlargement over the past five years and have a good stock of three and four bedroom housesNeal Aga, of Edgeware, North London, who manages a figure of large properties in Cambridge and London, including some let to students, supposed following the recent confusion he would advocate potential parent landlords buy smaller properties

He said: 'Professionals who are in the market for the long-term have just done the repairs, but private individuals trade for children are being more cautious in its place of buying such large places they are now trade two bedroom flats I would say go for a smaller property'in spite of the issues surrounding their implementation, the novel HMO rules should improve properties for student tenants – serving digs become safer and sturdier, if not tidier, than their conventional image

Lee Grandin, of buy-to-let mortgage brokers Landlord Mortgages, says most close relative landlords have houses smaller than those covered by the HMO rules and those that put on't will improve their propertiesHe said: 'It has become more restrictive for student lets, but at the finish of the day, it's not that hard for new landlords, such as parent buyers, because they will normally already intend to do the property up'choose a loan term 12 months (1 day 24 months (2 existence 36 months (3 existence 48 months (4 existence 60 months (5 existence 72 months (6 existence 84 months (7 existence 96 months (8 existence 108 months (9 existence 120 months (10 years)Please select a kind of insurance Life insurance Home and contents Car Breakdown services physical condition - medical physical condition

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