Thursday, 3 May 2007

Property in the UK 3: A Landlord's Tale

I am in the peculiar position of being a landlord and a tenant at the same time. This partly reflects what I have been going on about property in the UK. In 2001 I was fortunate to get help from my family to buy a flat in East London. I was working in London at the time and with all that I have said about property prices rising, it seemed a sensible investment. The flat is close to the West Ham football ground, in the London borough of Newham. For a long time Newham council has been a one-party council, run by the Labour Party, and they had to have an ombudsman to represent the 'opposition' on decisions.

Anyway, months after moving into the flat a job came up outside London at 50% above what I was earning in London. So I left for the work. Everyone said, 'do not sell your flat, it's an investment; rent it out'. This is very common practice in the UK and that is what I did. I charged £100 per month less than the average rent for the area as I was not aiming to make a profit, just to keep it ticking over until I got work back in London. All well and good. I could pay my mortgage, the tenants, as I expected they would be, were neat and tidy and did not damage the flat. Sounds like a happy story.

Now, one thing I neglected to mention, was that the block in which the flat sits is owned by Newham Council itself. The flat was sold off to the tenant in 1990, an old woman who died in 2000. Now, I had qualms about buying property that should belong to the council, but given with the amount of money I could get and prices rising quickly, I had few options, I snapped it up. The borough of Newham is a poor area of London and many people are on benefits so its council tax revenue is low so they have to seek other means of raising money; this is something I should have been aware of. Neighbouring boroughs such as Tower Hamlets have done things like introduce parking licences. Anyway as with all blocks of flats you have to pay fees to the building owner, but they were fine, and tax deductible. I was in regular contact with four different parts of the council covering things like council tax, estates, keys, etc. and visited the flat with the letting agents every once in a while.

Four years pass and a debt collector arrives at where I am now living saying I owe £2500 (€3650; US$5000) for unpaid fees. Apparently despite 4 parts of the council having my details a fifth section which raised these charges did not and because of the Data Protection Act they were not allowed to share my details even between offices in the same corridor (most people in authority do not understand the terms of the Data Protection Act and just use it as a handy phrase to hide behind). Whilst the debt collectors found me in a few days that particular section of the council had been unable to do it in five years, despite their colleagues knowing where I lived and meeting with me every few months or so.

Anyway, that was resolved, I cancelled my holiday plans and used it to pay off the council. Then a sixth section of the council said I had not paid a registration fee for being a landlord, another £100 that no-one had told me about (if you ever think of becoming a landlord do not believe any of the television programmes, it is much harder than it appears, there are so many things no-one will tell you) not the agency, not my solicitor, not the council. This demand comes in a poorly worded email lacking grammar, looking like a poor example of a 'phishing' email. I finally determine it is genuine and pay up but they refuse to issue a receipt, so I cannot claim it back on tax or even prove to them in the future that I have paid the sum.

Now I am having doubts about whether it was the right idea to have bought the flat in the first place and certainly not one on council land. This March a bill arrives for £14,000 (€22,400; US$28,000). At first I think it must be a misprint, and that it is £1,400, no, it is the fourteen thousand pounds. Now, I find a seventh part of the council, well in fact now an 'arms length agency', Newham Homes is charging me for work done to the whole estate. I get legal advice immediately and unfortunately they have done it by the book. The work improving the area: anti-pigeon provisions, new doors, CCTV, was done in 2004, but because of the lack of communication between the multiple sections of the council the bill did not reach me until 3 years later and 14 months after I thought I had already resolved the address issue. So where do you get £14,000 from? Initially they gave me to the end of May, but they then cut that to end of April. Fortunately I was able to break it into 24 month payments, but then they added £300 to the first payment and brought it forward a month. I have extended my mortgage to raise the money but that is delayed because my local doctor is so inefficient that she cannot be bothered to complete the medical form for the lenders.

Now, I accept my problems are not major. I am better off than the bulk of people who still live in Newham and I still have a flat, which of course I am now going to sell as fast as I can. However, despite playing fair I have been treated like scum once again, someone who can be tapped for money whenever the council needs it. I accept that the estate needed work, but how rich do they think I am to be able to afford half my annual salary in payments? Anyone thinking of buying a flat or house that you may rent out immediately or sometime in the future, beware. I had additional charges because it was on council land, but they still sting you for a whole slew of fees, they set the rules and expect to be free of being brought to book themselves. All the rent I have received since 2004 has now gone and I am pushed into further debt. I have to sell the flat and I imagine my successor will charge higher rent than I ever did. I suppose this is the price you pay for being naive in the property jungle of the UK.

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