Written By Em

Em Morley

Mayor of London urges short-term agents to follow Airbnb’s lead

Published On: March 6, 2017 at 11:09 am

Tags: Airbnb,landlords,London lets,Mayor of London,short-term lets in London

The Mayor of London Sadiq Khan has called for online short-term letting agents to follow the lead of Airbnb and block hosts from renting out homes in the capital for over 90 days.

Airbnb, which has around 50,000 listings in the capital said in December 2016 that it is going to stop listings in London going over 90 days, without planning permission.

Welcome

This was a decision welcomed by Mr Khan, who had previously written to the Home Affairs Select Committee raising concerns over these lets in the capital. He voiced his worries that letting properties like these all year round could harm London’s much-needed housing stock.

As such, Khan welcomed Airbnb’s positive and forward-thinking introduction of the 90-day limit. Yesterday, he contacted other short-term agents in the capital asking them to follow suit.

These were:

Veeve
One Fine Stay
Wimdu
Booking.com
HomeAway
Airsorted

The Mayor remains open to Londoners being able to benefit from renting out their property for a short period, to accommodate many visitors from around the globe. In addition, he feels that the industry as a whole will benefit from ensuring customers comply with legislation and that self-regulating can offer an alternative to Government intervention.

Mayor of London urges short-term agents to follow Airbnb’s lead

Encouragement

In his letter, Mr Khan said: ‘While Airbnb accounts for a substantial share of the short-term lettings market in London, there are many other operators, such as yours, who occupy the same space. I am keen to see a cross-industry response to this issue, to help local authorities enforce the law.’[1]

‘I therefore strongly encourage your company to follow Airbnb’s lead, by ensuring that customers of yours who want to let properties in London on a short-term basis for more than the 90-day annual cumulative limit are restricted from doing so through your website, unless they can prove that they have the relevant planning permission.’[1]

Sir Steve Bullock, executive member for housing at London Councils, noted: ‘London Councils welcomed the steps taken by Airbnb to ensure its activities do not have a negative impact on the capitals’ already extremely challenging housing situation.’[1]

‘Ensuring short-term rentals advertised with all providers are being used in line with planning laws is a vital step in tackling a housing crisis which impacts on all Londoners – and we welcome this further intervention by the Mayor to ask other companies to follow Airbnb’s example,’ he continued.[1]

[1] http://www.propertyreporter.co.uk/landlords/khan-urges-short-term-letting-agents-to-bring-in-90-day-limit.html

Surge in Remortgages as Borrowers Opt for Longer-Term Fixed Rates

Published On: March 6, 2017 at 11:02 am

Author: Em Morley

Categories: Finance News

Tags: finance,Mortgage lending,mortgages,remortgaging

Mortgage brokers have witnessed a surge in remortgages, as borrowers opt for longer-term fixed rates, according to the latest Financial Advisors Confidence Tracking (FACT) Index from Paragon Mortgages.

The fourth quarter (Q4) 2016 report, based on interviews with 201 mortgage intermediaries, reveals that 39% of all mortgages handled by advisors between October and December were remortgages – up by 7% on Q1.

Surge in Remortgages as Borrowers Opt for Longer-Term Fixed Rates

This is also up by 4% on the same period in 2015, with the increase in remortgages reflecting industry statistics from the Council of Mortgage Lenders (CML), which show that there were 34,700 loans for remortgage in December, worth £5.8 billion, representing annual increases of 13% in volume and 14% in value.

Next time buyers are now the second most common type of borrower, having overtaken buy-to-let landlords, accounting for 23% of mortgages handled.

Buy-to-let lending dropped in Q2 following the increase in Stamp Duty, but had recovered by Q4, to 19.3% of all business.

Despite a 2% decline in Q4 2016, first time buyers accounted for 18% of all mortgages handled, remaining stable on Q4 2015.

In terms of interest rate type, there is a clear preference among borrowers for fixed rate mortgages, which accounted for 83% of all lending in Q4 2016, having increased year-on-year since 2010.

Tracker mortgages remain a distant second, at 14%, representing little change over the course of 2016.

Initial fixed or tracker periods of two years are still the most popular products, making up 53% of all cases in Q4 2016 – up by 5% on the same period in 2015. Longer-term products of more than two years accounted for 46% of all cases, with five-year fixes the second most popular product, with 33% of all business.

Unsurprisingly, capital repayment mortgages are the most common mortgage type, accounting for 80% of all products in Q4 2016. This represents a decrease on the previous quarter, but a rise on an annual basis, continuing a slow growth in share dating back to 2007.

Since interest-only lending was scaled back and stricter affordability rules imposed in 2009, the proportion of interest-only mortgages dropped to as low as 14%, and has since remained stable. Despite a slight rise in Q4 2016, interest-only mortgages still account for less than 20% of all cases.

The Managing Director of Paragon Mortgages, John Heron, comments: “Our survey data shows increased levels of activity over 2016, driven particularly by borrowers remortgaging to better rates. These are as likely to be longer-term fixes as they are short-term deals, which bodes well for customer resilience in an uncertain market.

“Buy-to-let had a very strong start to the year, with customers looking to beat the Stamp Duty deadline. There was an inevitable decline in lending in Q2, but volumes have slowly improved as landlords have developed their strategies to mitigate higher taxes on rental income.”

Government Challenged on Need for Landlord Tax Changes

Published On: March 6, 2017 at 10:34 am

Author: Em Morley

Categories: Landlord News

Tags: landlord taxes,mortgage interest tax relief,tax changes,tax relief

The Government is facing a challenge from the Residential Landlords Association (RLA) on the need for forthcoming landlord tax changes.

Government Challenged on Need for Landlord Tax Changes

The Government is being challenged to admit that the reasons for changing the way that landlords are taxed are flawed.

In a recent statement in Parliament, a Treasury Minister, Jane Ellison MP, argued that plans to restrict tax relief on landlords’ finance costs “will reduce the tax advantage landlords have over homeowners in the property market”.

This assertion was rejected last year by Paul Johnson, the Director of the Institute for Fiscal Studies, who said that the tax system “is not, and was not, even before the recent changes, more generous to people buying to let”.

Unlike homeowners, landlords pay Capital Gains Tax (CGT) when they sell a property, as well as paying Income Tax on their rental yield.

With a former member of the Bank of England’s Monetary Policy Committee expressing fears that landlords will need to raise rents by between 20-30% to accommodate the extra costs of the landlord tax changes, the RLA is warning that the policy risks “considerable hardship for tenants”.

The organisation is writing to the Office for Budget Responsibility to provide clarification on the tax burden on landlords compared with homeowners.

From 6^th April 2017, the amount of tax relief that landlords can claim on their finance costs will be reduced to the basic rate of Income Tax.

The Chairman of the RLA, Alan Ward, says: “We are now weeks away from a tax change that risks investment in new homes and will cause considerable hardship for tenants.

“It is troubling that ministers have not published any evidence to back up their assertions that landlords are taxed less heavily than homeowners. This is no way to make policy.”

He urges: “We call on the Government to use the Budget this week to halt its planned tax changes, which will do little to provide the new homes to rent they claim to want.”

Is Preston the next hot buy-to-let region?

Published On: March 6, 2017 at 10:16 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,Preston,property investment

The North of England is thriving, with support from the Northern Powerhouse concept drawing plenty of property investment.

In turn, this concept is helping to drive up property prices and rental values across the region. This has been led by Manchester, but other areas are likely to see further growth.

However, last year saw a turning point for the North West’s third city, Preston.

Regeneration

Big scale investment and regeneration programmes such as the £440m City Deal, are expected to create more than 20,000 new jobs in the next ten years. This is expected to boost the local economy by more than £1bn.

The University of Central Lancashire, based in Preston, recently announced plans to invest a further £200m into the city campus. This will see numbers rise to over 50,000, making this University the fourth largest in England.

What’s more, the city has seen the refurbishment of Winckley Square, with plans to convert several unoccupied buildings here into high-end residential apartments.

Preston offers easy access to the M6, M61, M65 and M55 motorways and is less than an hour from Manchester, Liverpool and the Lake District.

Just over 40% of the UK’s working population live within a one hour commute, making Preston an ideal location for firms. In addition, the city was named as the number one place to live for quality of life in the North of England in 2016.

Is Preston the next hot buy-to-let region?

Savvy Investors

Smart investors are now looking to the city centre, where large Victorian and Georgian properties can be purchased for the same price as a two-bedroom apartment in Manchester.

Typical rental yields are Preston are:

1-2 bed new build city centre apartment-7.8%

2 bed terraced house or flat-6.2%

3 bed semi detached house-5.5%

3-4 bed detached house-5%

Pace of Property Market Growth Slowed in February

Published On: March 6, 2017 at 9:24 am

Author: Em Morley

Categories: Property News

Tags: property activity,property market,property sales

The pace of property market growth across the UK slowed in February, according to the latest Property Activity Index from Agency Express.

Nationally, the number of new property listings rose by 10.2%, while the amount of properties sold was up by 26.2%.

Pace of Property Market Growth Slowed in February

Agency Express points out that figures for February are always affected by January’s post-Christmas spike. However, data from last year shows that the supply of new listings was higher, at 23.3%, while the number of properties sold increased by 37.6%.

Assessing the performance of the property market across the UK’s 12 regions, the Property Activity Index shows that 11 areas recorded growth in new listings and all 12 regions saw increases in the number of properties sold.

February’s top performer was the North West. New listings rose by 38.8%, while the amount of properties sold was up by 35%.

Other regional hotspots include:

Properties sold

Wales: +45.9%
West Midlands: +37.7%
Scotland: +35%

New listings

Scotland: +25.9%
Wales: +14.8%
London: +10.8%

The pace of property market growth was lowest in the North East. The number of new listings increased by just 0.8% and the amount of properties sold was up by only 0.4%. Looking at the index’s rolling three-monthly data, properties coming onto the market are robust, up by 9.8%, while the amount of properties sold has declined, by 0.7%.

The only decrease in February’s index was recorded in East Anglia. The number of new listings for sale dropped by 5%, marking the region’s largest drop for February since the index’s records began in 2012.

The Managing Director of Agency Express, Stephen Watson, comments: “We traditionally see an adjustment in figures during February, and the latest data from the Property Activity Index has shown a slower moving market compared to 12 months previous.

“However, during the first four months of 2016, figures were stimulated by the Stamp Duty changes, so we may not see a clearer yearly comparison until the summer.”

Are thousands of London lets defying licensing rules?

Published On: March 3, 2017 at 10:47 am

Author: Em Morley

Categories: Landlord News

Tags: landlords,licensing scheme,London landlords,private rental market

An advice website has claimed that more than half of privately rented properties in a selective licensing region imposed by a council in London do not have the appropriate licence.

This alarming claims comes over four months after the scheme came into force.

Licensing issues

Research by London Property Licensing has uncovered the issue in Tower Hamlets.

On the first of October last year the council brought in the scheme for three wards in the west of the borough. This regime corresponds to all private homes in the boundaries whether they are houses or flats let to an individual, family or are in multiple occupation.

The application fee for a licence is £520 to £660 per property. In common with similar schemes across Britain, until an application is submitted, the landlord and/or letting agent are committing an offence if they let out a property in the selective region. This covers around 6,000 private rental units.

Responding to a Freedom of Information request, Tower Hamlets council told the website that as of last month, just 2,100 applications have been received by the council. 1,000 have already been approved.

Are thousands of London lets defying licensing rules?

Headache

London Property Licensing said: ‘Based in the council’s own estimates, there could be around 3,900 private rented homes in the west of the borough where no selective licence application has yet been submitted-accounting for almost two thirds of all private rented homes in the area’[1]

The website also says that there are now 23 different property licensing schemes operating in the capital.

Richard Tacagni, Managing Director of London Property Licensing, said: ‘The myriad of schemes operating across London is becoming a major headache for landlords and letting agents as they struggle to understand what rules apply where.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/3/website-claims-thousands-of-london-lets-defy-licensing-rules