Written By Em

Em

Em Morley

Tenants could face rent rises of 30%, warns peer

Published On: February 17, 2017 at 9:50 am

Author:

Categories: Landlord News

Tags: ,,,,

Tenants could face potential rent increases of between 20 and 30 per cent as a result of tax changes hitting landlords, according to a former independent member of the Bank of England’s Monetary Policy Committee.

David Miles, now Professor of Financial Economics at Imperial College London, has called for the current 3% stamp duty surcharge and changes to mortgage interest tax relief to be scrapped.

Significant Rent Rises

Mr Miles estimates that, ‘rents would need to rise between 20 and 30 per cent’ in order to offset the Government’s measures.

Responding to the argument put forwards by former Chancellor George Osborne that tax changes are helping first-time buyers, Miles observed: ‘Aspiring first-time buyers are hardly helped by squeezing the supply of rental property and driving rents up.’[1]

Continuing, he said: ‘It’s strange to believe that having households channel more of their savings into US Government bonds or into equity issued by German companies is to be preferred to their investing in providing rented accommodation in the UK.’[1]

Tenants could face rent rises of 30%, warns peer

Tenants could face rent rises of 30%, warns peer

This analysis from Miles is included in the latest comments from the Residential Landlords Association, which claims that a majority of landlords could be negatively impacted as a result of the tax changes.

The RLA has called for the Government to use the extra revenue generated from the stamp duty levy to stop the implantation of mortgage interest tax relief changes. At the very least, the Association wants to see it applied only to new borrowing for new housing.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/tenants-face-rent-rises-of-30-warns-ex-bank-of-england-chief

 

House Price Gap Between London and England Doubled in 20 Years

Published On: February 17, 2017 at 9:22 am

Author:

Categories: Property News

Tags: ,,,

The house price gap between London and the rest of England and Wales has more than doubled in the past 20 years, analysis by Lloyds Bank claims.

House Price Gap Between London and England Doubled in 20 Years

House Price Gap Between London and England Doubled in 20 Years

Using data from the Land Registry, the lender found that the house price gap between London and the rest of England and Wales was 47% in 1996, but is now a huge 107%.

Back in 1996, the average house price in the capital was £105,266, compared to £71,433 in England and Wales.

At the end of 2016, the average price had soared to £578,381 in London, compared with £278,750 in the rest of the country.

The London Borough of Hackney has recorded the steepest growth in house prices in the capital over the last two decades, according to the data, up by a whopping 702%, to an average of £606,269.

This compares to an average increase of almost 450% for London, and 290% in England and Wales over the same period.

The Mortgage Director of Lloyds Bank, Andrew Mason, comments: “The past 20 years have seen substantial growth in house prices in London, especially in the most affluent areas of the City.

“The boom years between 1996 and 2008 saw the gap widening between house prices at the top end of the market and those in London’s inner and outer boroughs, creating two distinct markets – prime and mainstream.”

He continues: “However, whilst those boroughs at the top end have pulled away considerably from the rest of London and the country in terms of house prices, improved transport links to the City from the outer boroughs and the 2012 Olympic Games have meant that the boroughs directly benefitting from these have seen house price growth outpace the prime areas in recent years.”

Has the house price gap between London and the rest of the country had an effect on your property portfolio – whether it’s where you choose to invest, or how lucrative your investments have been?

How do London landlords compare to those in other regions?

Published On: February 16, 2017 at 3:23 pm

Author:

Categories: Landlord News

Tags: ,,,

An interesting piece of data released by the Council of Mortgage Lenders has revealed how London landlords shape up to those in the rest of the UK.

According to the report, those in London are likely to have greater disposable income, work full-time and become landlords and a younger age.

London Landlords

In London, around 50% of landlords have at least £1,000 monthly disposable income. Outside of the capital, just one-third of landlords report this kind of cash.

London landlords are 27% more likely to be in full-time employment and 37% less likely to be retired than landlords in the rest of the country.

In addition, they are 25% less likely to start as an accidental landlord and 50% more likely to become a landlord after moving in with a partner who already owns a home.

The typical age of a first-time landlord in London is 42, in comparison to 47 outside of the capital.

How do London landlords compare to those in other regions?

How do London landlords compare to those in other regions?

Properties Owned

In terms of property types, landlords in the capital are more likely to let out flats, with 79% owning this type of dwelling. 47% have houses to let, in comparison to 84% in the rest of the country.

60% of capital landlords own a single investment property, while 20% own two-similar to the demographic in the rest of the UK. In addition, landlords in London are just as likely to offer tenancies of more than 12 months than in other areas.

The use of a letting agent is more common in London, but landlords in the capital are less likely to opt to obtain full management through their agent.

Using a limited company is still relatively uncommon, both in and out of London. Just 6.2% of landlords in London have incorporated, as opposed to 2.8% outside of the capital.

 

Backlash over Santander mortgage clause continues

Published On: February 16, 2017 at 2:13 pm

Author:

Categories: Finance News

Tags: ,,,

The backlash towards Santander rumbles on, following last month’s revelations of a clause in its buy-to-let mortgage contracts requiring landlords to raise rents by, ‘as much as can be reasonably achieved.’

Now, The Acorn Group, which lobbies for a more ethical letting policy, plans to hold demonstrations outside Santander branches across England this Saturday.

Rents

The Santander contract says when: ‘rents are up for renewal the landlord must get written advice from a qualified valuer (as to) whether the market rent at the date of the review is likely to be higher than the rent currently payable.’[1]

Acorn members are hoping to get signatures for a nationwide petition, which calls for Santander to drop the clause.

An Acorn spokesman said: ‘Santander Bank is screwing tenants with a clause in their buy-to-let mortgages requiring landlords to charge maximum possible rent. We’ll be picketing them, collecting signatures for our petition and handing out leaflets to inform the public of their dodgy practices. It’s a day of action demanding that they scrap the clause.’[1]

‘Private tenants in the UK already pay the highest rent in Europe. Average rents have increased faster than wages, and Santander made £2 billion profit last year have been forcing up rents since 2011 with this clause. With tenants facing a triple burden of insecurity, poor standards and already extortionate costs, Santander’s lust for profit above all else is making it harder for tenants to afford a home,’ they continued.[1]

Backlash over Santander mortgage clause continues

Backlash over Santander mortgage clause continues

Calls

Moving on, the spokesperson said: ‘We are calling on Santander to scrap the clause in its contracts and enable landlords and tenants free to negotiate costs

If Santander do not act quickly to remove the clause, it will not only continue to put pressure on hard-pressed renters, it will continue to threaten long-standing relationships between responsible landlords and their tenants.’[1]

Responding, a Santander spokesperson said that their policy is under review.

They noted: ‘We recommend that landlords should set their rents at a prudent level that is fair for the tenant and based on market rates, ensuring that they are able to continue to service their mortgage. The clause in question has formed part of our mortgage terms and conditions since we re-entered the buy-to-let market in 2011. It forms part of our terms and conditions because it is important to us that our customers can continue to afford their loan repayments.[1]

“It is in no-one’s interest for a landlord to default on a loan (including the tenant). We recognise that it is for the landlord to set a rent that both they and the tenant agree upon. As with all our products, the mortgage terms and condition remain under constant review and we will review this particular clause now that we are aware that it can be misunderstood.’[1]

 

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/tenants-backlash-against-santander-over-mortgage-clause-continues

The Impact of Right to Rent Checks on International Students

The latest research from student lettings platform StudentTenant.com exposes the impact of the controversial Right to Rent checks on international students, as the Government tries to crack down on illegal migrants.

Introduced in February last year, the Right to Rent scheme was launched by the Government as part of a wider initiative to assist with combating illegal immigration.

All landlords and letting agents are now required to check that tenants are legally in the country before renting out a property, or face criminal sanctions.

The Impact of Right to Rent Checks on International Students

The Impact of Right to Rent Checks on International Students

Tenants, including international students, must prove that they are legally allowed to reside in England by providing their identification documents to landlords. Tenants that do not provide the documentation could face deportation.

As it has now been a full year since the Right to Rent scheme was introduced, StudentTenant has assessed whether it has been successful in combating illegal migration, or if it has become an avenue for landlords to discriminate against international students/tenants.

Government data regarding the Right to Rent checks found that, of the 7,806 calls made by landlords to the Home Office between July 2015 and June 2016, just 31 illegal migrants were deported – calling into question how effective the scheme really is.

Furthermore, the official Right to Rent report from the Home Office reads: “Landlords, agents and householders should not be acting in a discriminatory way provided they make all checks on prospective adult occupiers.”

Nevertheless, a damaging new report from the Joint Council for the Welfare of Immigrants suggests that the scheme is causing discrimination against Britons, particularly ethnic minorities.

In addition, StudentTenant found that an alarming 23% of landlords were less likely to consider international students, while 76% of student landlords would not consider a tenant if they could not provide documentation that proves they are legally allowed to rent the property instantly.

It is likely that, due to requirements from the Government to check the legitimacy of documentation, recording expiry dates of immigration status and the pressure of fines, landlords are less willing to take on the extra burden of international students, the agency believes.

12 months on from in the introduction of the checks, 47% of student landlords still feel that the scheme will not have a significant impact on filtering out illegal immigrants in England – the core reason it was set up. What’s even more worrying, StudentTenant points out, is that 17% of landlords are still unaware of the rules.

The Managing Director of StudentTenant, Danielle Cullen, says: “When the new Right to Rent regulations were introduced, there was uproar amongst the landlord community, because of the supposedly unfair burden placed on them in relation to enforcing immigration laws. I have to say that the apparent ineffective implementation of the regulations so far seems to have warranted that uproar, particularly given the adverse effects on the international community legally residing within the UK.

“The worst part must be the lack of resources to actually police the changes, represented by the very minimal number of fines and deportations. Instead of actually assisting with a problem which should essentially be managed by the Government, it has simply created divides and increased discrimination and access to housing for non-British tenants, which is just not acceptable.”

Have your attitudes towards letting to international students changed following the introduction of the checks?

£40k salary required to rent alone in London

Published On: February 16, 2017 at 10:00 am

Author:

Categories: Property News

Tags: ,,,

A new online estate agency in London has stated that a single person renting in the capital must earn a gross salary of at least £39,876.84 to cover accommodation and living costs.

Nested has established an index which looks at rental costs in 33 London boroughs, 15 UK cities and 72 cities worldwide. In London, to cover rental costs, a single person must earn £3,323.07 per month.

Rental Costs

For a family living in London, they must earn an average of £6,305.31 per month in order to cover rent and living costs. This equates to a gross salary of £75,663.72.

In order to work out the amount required to cover rents, Nested looked at the price per square metre based upon current market listings with the minimum space, as seen in guidelines from the Greater London Authority.

Calculations from the agency reveal that the least affordable borough to rent in the capital is Kensington and Chelsea. Rents per square metre here total £72.40 per month. As such, to afford to rent alone and cover additional living costs in Kensington and Chelsea, an individual must earn £9,736.55 per month, or £116,838.60 per year.

£40k salary required to rent in London

£40k salary required to rent in London

For a family of four to rent in this borough, a monthly income of £18,474.48 is required. This equates to an annual income of £221,693.76.

On the other hand, the most affordable London borough in which to rent is Bexley, where rents per square metre total £13.30 per month. To afford to rent alone and cover costs here, an individual must earn an income of £1,788.62 per month, or £21,463.44 per year. A family of four requires a monthly income of £3,393.79 or £40,725.48 per year.