Welcome to the next in our series of interviews with industry commentators.
Today, we hear from a well known face of the industry - Paul Shamplina, founder of Landlord Action, author, and TV Presenter for Channel 5.
1. Tell us about your property and business journey.
I started working at the age of 16 in a solicitor’s firm in Brighton as an outdoor clerk in 1987. I remember my starting salary was £4600 a year.
I did my first court hearing before a judge at 16, then I moved back to North London to work in a very small solicitor’s in Camden and gained valuable experience in all forms of litigation, including Landlord and Tenant.
I always wanted to work for myself, so I became a Certified Bailiff, Private Investigator, Process Server, Tracing Agent and started doing fixed fee evictions.
This led to me meeting my former partner in Landlord Action, who wanted me to assist him in gaining possession of a property with over 20 illegal sub letters in a 3 bed property he owed. From this Landlord Action started in 1999.
2. Do you think for those starting out, that BTL is still viable in 2018?
Yes definitely, demand is still strong, yields of 5 % are still achievable.
People still cannot afford to buy, so they have to rent, but the game has changed, there is more regulation in Buy to Let than ever before, so beware, especially if are thinking of self managing.
Looking at multi lets, HMO’s will achieve you a better return, but are harder to manage. The demand for the shared economy is great.
Rents are still rising and individuals and couples can still not afford to rent single dwellings, i.e.. 1 or 2 bed flats, so they are looking at shared accommodation, which can be very profitable for landlords. But remember the laws on HMOs changed on the 1st October. Join a landlord association like the Residential Landlords Association or the National Landlords Association.
Now a shameless plug, I’ve just finished writing my second book ‘The Landlords Friend 2019’, with Kate Faulkner. It will be out in the next month or so, to assist landlords on their landlording journey.
3. What is your top piece of advice to anyone starting out as a landlord today?
Research, Research, Research!
Take your time, don’t be rash with your first purchase, understand that place you are buying in detail.
What are your investment objectives?
Renting a property is for the long term strategy, typically 15-20 years.
Surround yourself with a good network of experts around you.
Go to websites like Property Tribes & Landlord Zone, to understand what is happening in the market and gain advice from landlords that are more experienced in the market, ask questions.
Go to Landlord Shows and Networking meetings, to hear experts speak.
You will make mistakes, you just have to learn by them.
Remember this is a business and put a price on your time, which landlords often forget to do.
4. How important is research and due diligence when engaging with any part of the property sector such as assessing a property deal, referencing a tenant, checking out a mentor, researching a prospective commercial partner?
Everything is about research and diligence.
Buying a buy to let will be one of the most important decisions you have to make - so do the figures stack up? Make sure you are gaining advice from a qualified financial advisor.
Finding a mentor/professional landlord to gain advice from is also invaluable.
There are some property educational courses out there that are really good, but some that just want to make a quick buck out of you. So again checking them out, going on forums is always a good move.
You can’t rent out your property on a gut feeling alone , that normally ends in tears.
A fully comprehensive reference, even taking out a Rent Guarantee/ Landlord Insurance is a must. Protect your asset.
The tenancy agreement is a credit agreement, treat it that way.
5. How important do you think it is to work with a letting agent and how can landlords find their way to reputable ones?
I will always recommend using a letting agent.
Thankfully Client Money Protection is coming in next year and Letting Agents will have to be regulated and educated up to a certain standard set by the government.
This is only good news for the industry, as agents will have to become more professional and hopefully the rogues will be forced out, especially now the Admin fee ban is coming in.
For me, using a letting agent to fully manage a property if there is a only a difference of, say, 4% between “let only” and “fully managed” is a no brainer!
Do you want to take calls from your tenant that they have lost their keys at 4am or that the boiler has broken? If not, let the agent deal with it and get a good night’s sleep. It's all tax deductible.
But again do your research on the letting agent before instructing them, get recommendations of current landlords, do searches on AllAgents review site and always read the terms of business, as to what service is being provided to you.
6. What do you see as the biggest threat facing landlords?
The tax liabilities, more regulation and expenses and interest rate rises.
Let’s remember - landlords have had it good for the last 12 years (you can’t eat steak every day of the week) , with record low interest rates.
When rates do rise and your tax bills increase, are you prepared? Are you achieving the same rents, are they increasing?.
Mortgage borrowing is becoming more difficult, with stress testing, this will have an impact.
7. What do you see as the biggest opportunity for landlords?
I think a Brexit “no deal” will cause uncertainty, there may be a lot more willing sellers and bargains to be had!
If the housing market hardens, that will allow opportunities for landlords.
Also other landlords are exiting the PRS market, so an opportunity to purchase that stock. If big developments of Build to Rent pop up in your area, that you rent your properties in, then they will become stiff competition for you.
Their offerings of better onsite services, may have a upper hand.
8. How do you view the private rented sector today and do you think we will see further legislation and regulation going forwards?
The government a few weeks ago closed a consultation on Three Year Tenancies which I filed a response from Landlord Action.
Offering tenants greater security makes sense, but you can’t make it compulsory, or you will have more landlords exit, meaning more tenants get evicted.
The powers of Section 21 will be diluted. There should be incentives for landlords who grant three year tenancies.
Letting Agents will have to become regulated. The government need to make investment in the PRS still attractive. Landlords and Agents, need to now understand that the tenant is the consumer.
Without a tenant, there is no landlord and without a landlord, there is no letting agent.
I do think tenant groups like Shelter, Generation Rent, Tenants Union need to work closer with Landlord Groups and work together and I hope to see more of that going forwards.
Thank you very much to Paul for taking part in the interview and sharing such valuable insights.
You can follow Paul on Twitter @paulshamplina and at @landlordaction.
Visit the Landlord Action website
Catch up on our previous industry interviews: