What a difference a decade can make!

Who could possibly have guessed that a single word could revolutionise an entire industry? A few fanatics might even claim that Europe too has felt the force of this change as British property wealth has fuelled price growth right across the continent.

And this magical word? Shorthold.

Some well-documented events took place in the 1980s, for example, the relaxation of finance regulation including lending on housing; a revolution in the availability of credit; new, ‘flexible’ workforce demands; massive council house sales; plus the 1988 Housing Acts, which contained the shorthold option meant for a few new tenancies. Together, these alterations changed the entire UK lending climate. Caution had ‘gone with the wind’. Borrowing was the new buzzword.

With the benefit of hindsight, the addition of the word ‘shorthold’ to an obscure Housing Act opened floodgates of money, which had, for almost 20 years, been firmly locked shut on my industry. The older ethic of creating wealth before buying something has become as obsolete as horse drawn carts. These days we borrow to consume on virtually everything – on an unprecedented scale. Cars. Holidays. And, most importantly of all – property.

Until only a decade ago, investing in property that you couldn’t get back, unless your low rent tenant let you have it back, was simply bad business. Lenders wouldn’t touch it with poles. So adding ‘shorthold’ to the 1988 legislation (which actually intended to create slightly more landlord-friendly rentals, market rents and reduced paperwork) was absolute dynamite.

The 1988 legislation intent on creating assured tenancies was swept sideways as lenders queued up to loan money to investors willing to give their tenants assured shorthold leases with virtually no security of tenure beyond a few temporary rights. Risk had been reduced. Investment could begin. And by golly, have we all partied.

The Buy to Let (BLT) phenomena has fuelled equity release and investment on an unparalleled scale. All of which was expertly exploited by the only people quick enough off the block. ARLA (Association of Residential Letting Agents) understood the real significance of these simple shortholds and ARLA pounced! And in fairness, for that at least, every modern landlord owes it a debt of gratitude.

In theory, the whole BTL concept is exceedingly simple. Borrow to buy. Tenants pay off the borrowings. Landlord gets the building for free. At least that’s the promised dream. Reality and dreams rarely make great pals. Here, they’re barely on speaking terms. The truth is, having cranked up property prices by buying anything with rental potential, we, as landlords have collectively disengaged ‘profit’ from effort. At today’s prices, the profit is strictly long term. And the biggest irony of all? Many new landlords with the highest lending exposures don’t even get a taste of their profit. In today’s climate, investors taking all the risk usually make fewer profits by a stretch than agents who take none.

Full management always was and still is a ‘top end product’ – not an essential. A bit like paying a chauffeur sooner than learning how to drive.

But in a skilful manipulation of both media and marketplace, the lettings industry has insisted that letting is ‘complicated’ and that landlords need a new breed of ‘experts’. So, ask yourself three simple questions.

• Why? When the 1988 Housing Act had created such easy to set up and terminate tenancies?
• Where? had all these experienced agents come from in the space of a year or so?
• Why? would landlords need them now, when the rules had just been designed to make life so easy?

What’s even more worrying is quality and financial control of agents. You can obtain a Degree in Knitting Design, but this government has shown no interest in creating a meaningful, independently validated qualification for the multi-billion pound lettings industry; let alone a financial overseer with teeth, like the ones your building society, pensions advisor or even your home insurers have to provide.

So, your letting agent may be okay, or may be an absolute donkey. He has no qualifications or diplomas to hang on his wall but those of his own trade organisation. Genuine professions take years of study – not a few hours ‘training’ at a hotel seminar. Training, which if you look at it closely enough, you’ll find concentrates in selling more and more commission generating products and services. It’s a hard truth to recognise, but that charming double-breasted smile may really be experienced, but it could have been selling wet fish last week.

Try remembering that landlords take 100 per cent of the risk. Agents survive by taking a hefty slab of your risk.

One final hard truth. Using ‘yields’ to cover interest on vast lending is an entirely new concept. It’s a uniquely UK solution to a uniquely UK situation. BTL landlords are financial guinea pigs: testing an untried idea and lacking the kind of advice that they really need. That’s the real risk that Buy to Let investors face. In reality, property remains a game of risk and don’t let anyone tell you otherwise. Property prices have tripled in the last ten years – but any investment can contract as fast as it boomed. As landlords, you’ll have little influence on the overall performance of the UK economy, which drives property prices and – as such – all you can do is minimise your own exposure to your own unique set of risks. Knowledge is the only way to reduce risk in such an expensive game of chance. Margins for error in the lettings game are narrowing all the time. Profitability is now tight. And borrowing to buy can be a tricky enough equation without handing over the difference between profit and loss every month in astronomical fees because you don’t feel you know enough to have any option but to use agents.

Agency fees can make the real difference between a healthy, profitable investment … or an albatross.

How the guide works

Learning things can be dull. It can also take too long. And, let’s be honest, most landlords don’t have that kind of time because they’re out earning money in demanding day jobs.

So, I asked myself, how could a new or potential landlord get to grips with the numerous simple steps involved with successful rentals – without hours of hard slog? How could I update the majority of landlords about massive new regulations which came into force in April 2006 and early 2007 on Houses in Multiple Occupation and compulsory Tenant Deposit Schemes, which will affect every new tenancy?

How could I provide ‘enough’ information to ensure that landlords can check what their agency is up to? And convince readers that letting property is not as time consuming or risky as you’ve been led to believe! A nuts and bolts guide that provided exactly that was needed.

So, this guide needed to be useful, detailed, concise, comprehensive and most importantly contain instructions, which could be easily replicated by amateur landlords. Something that was equally useful for the established landlord encountering a single problem - needing to learn about new legislation or having agency problems – right through to complete novices.

How could I provide access to all those ‘elusive’ little details that everyone else in the letting business is so anxious to keep to themselves?

To achieve this, I divided information into lessons. Each lesson is jam packed with detail and insider tips.

Most lessons will only take minutes to read (although a few earlier ones take a little more (well spent) time.

Each lesson tells you exactly what you need to do for the best results and why. Because none of this takes long – none of it is tricky – and none of it needs agents.

The lessons include:

• Not just ‘valuations’ but exactly how to do your own and why you need to learn how to do this long before you ever begin buying buildings.
• Not just ‘leases’ but what and why they are what they are, where to get hold of them, plus of course, how to fill them in and enforce them.

Each lesson has tips, tenant management skills, time management ideas, and problem solving advice, stacks of free, reliable information and guidance to support you, plus responsible, helpful websites and phone numbers.

And, because the Daily Telegraph’s reviewer of my Tenant’s Survival Guide liked them so much, I’ve included more toe curling anecdotes to make you grin or grimace! Unlike much of what’s written on this topic, all my anecdotes are true.

The Guide is a ‘pick and mix’ concept. If you’ve never invested before, you’ll need to read everything. If you’re just problem solving, skip to the relevant topic using the index.

Anyone can make paper profits in a bullish property market – being well enough informed to handle those grisly bear type markets is what separates success from failure in the letting’s game.

However, if you’re looking for a bit of straight talking about what is a massive investment or if you’re simply interested enough to learn and want to increase your own bottom line rather than some agent’s … then this is the guide for you.

And finally, for those of you who find this whole topic absolutely fascinating please read the Preface, where I blow off a little steam!

Author’s note: In order to produce an uncompromising ‘warts and all’ guide, this publication has accepted no advertising or endorsements of any kind.