The business models of criminal landlords explained – Part 2
This short series is a guide to those landlords and professionals working in the PRS who might find it difficult to get their head around the vastly different way that the criminals view the market.
This is certainly the case in the four London boroughs that my outfit ‘Safer Renting’ operate in which is echoed by my experiences talking to officers in councils across Britain as a trainer.
Lesson #2: The money
Make no mistake, in rogue landlord world its all about the money, nothing else. Maximum income, in the shortest possible time with minimal outlay.
For the criminal landlord, cash is king
The concerns of a normal landlord, such as damage, safety, and property upkeep are not their concern. £1,000 cash in the back pocket at the end of the week counts for more than anything else. They’ll deal with the complications at another time.
Move money around fast and move the people around fast too, if that is the best way of sustaining the cash flow.
A 3-bed family home in a London borough commonly being let to 10 or 15 people at £300 – £400 per month for each available room, including dining room and lean-to. The occupants can afford it on low wages or benefits, provided they are not fussy about the overcrowding or safety, as set out in my previous piece and the monthly rental income more than doubles.
All the landlord and agent have to do is avoid any involvement from the local authorities. Rent is usually cash in hand, so no tax implications.
Evading Licensing rules and regulations
Evading property licensing isn’t so much a matter of the fee for licensing but simply staying off the radar and the costs of carrying out required works to be granted a licence, which will include things like fire escapes and fire doors, not to mention the overcrowding issues.
Council enforcement officers insisting on fewer people means reduced rental income.
The reasons for rent inclusive
Back when I started in this game in 1990, the only time you found a set-up where the rent was inclusive of bills was in large house shares, which made common sense. The situation back then was always compounded by landlords leaving a gas card and electricity key meter in the kitchen and leaving the occupants to fight it out over who was leaving the fire on in the summer.
An inefficient system but understandable in a weird way, given a landlord’s desire to stay out of the arguments.
However, now we routinely find arrangements where even those in self-contained accommodation are paying rent inclusive of bills. The reason being the easy availability of means to interfere with gas and electricity meters and obtain decommissioned meters online, not to mention replacement seals that enable the fraudster to cover up meter tampering.
In other words, the landlord or agent is charging money for bills that aren’t actually being paid. Do tenants tamper with meters? Yeah sure but if you are paying rent inclusive of bills why would you? That’s the litmus test.
By way of example
Last year I visited a property where a tenant complained that he was putting over £50 per week on his electricity key. I checked out the meter cupboard and found a line running from his meter to the landlord’s tyre changing garage business at the back of the property.
Even a housing law solicitor of my acquaintance was not immune. She was renting temporarily whilst waiting for a divorce settlement to arrange a previous home ownership deal. I explained this trend to her and she got her electricity supply company to run a check on her rent inclusive deal and found she had also fallen victim and was being scammed with a stolen meter.
Receipts and records
I never cease to be amazed at how many people put up with not being given receipts for money paid over.
People will pay a deposit but if they were to examine the tenancy agreement would notice that where it says:-
“Deposit paid” the number entered is ‘Nil’, effectively setting up a full defence to a deposit protection claim.
A common trick is when the tenant raises this issue the landlord or agent happily gives them a numbered receipt for the deposit but with no mention of what that money was for. Completely useless in a later claim.
Last year I was talking to a tenant who paid £1,500 per month in rent and was complaining that each month someone he had never met turned up at the flat, said they were the agent and he paid them the cash, without ever asking for proof of who they were.
Tenants complaining of minor disrepair are often encouraged by the landlord or agent to do the works and deduct it from the rent, only to find themselves subject to accusations of rent arrears and a denial by the same people of any such agreement and no email or letter to confirm what was previously agreed.
Housing benefit fraud
This is also common, where tenants move on, are hospitalised or imprisoned only for the rogue landlord or agent to keep receiving money.
Councils not being particularly great at monitoring such things, when a claimant moves to another authority.
Remember – councils don’t share information with each other.
If tenants do find themselves in rent arrears the landlord or agent foregoes eviction through the court.
They are either just illegally evicted or relocated to cheaper and even worse accommodation by the same exploiters – who let’s remind ourselves, might also pay them cash in hand to do the odd building works or might even employ them full time, again cash in hand, to work in a chicken shop or a field picking cabbages.
Remember this stuff isn’t just city based
Gangmasters routinely run overcrowded and dangerous properties in rural locations for agricultural workers but in London and other cities the same gangmasters work in construction and they have to live somewhere.
Raise any problems and you have more than homelessness to worry about.
In the next part, I will be explaining how aliases and fake companies are employed.