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Em Morley

Landlords should be offered more support, claims peers

Published On: January 12, 2017 at 10:38 am

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The Government must do more in order to support buy-to-let landlords, starting by changing tax increases, according to industry peers.

Since the 3% stamp duty increases, alterations to mortgage interest tax relief and other changes, there has been a substantial drop in the number of buy-to-let transactions. A number of would-be investors have been deterred by the alterations.

Concerns

Jenny Mayes, of Simple Landlords Insurance has called on the Chancellor Philip Hammond to listen to the concerns of landlords.

She noted: ‘Landlords should be supported and recognised for their contributions in providing affordable housing, rather than burdened with unfair tax measures that will see them having to take considerable cuts to their income and being forced to pass some of this to their tenants.’[1]

A survey conducted by Simple Landlords this month discovered that landlords’ biggest wish for the New Year is for the Government to alter its stance on buy-to-let tax relief on mortgage interest payments.

Landlords should be offered more support, claims peers

Landlords should be offered more support, claims peers

Impact

Bevan Smith, director of BPM Estates, observed: ‘2017 is going to be an interesting year and I think we are yet to really see how potential changes are going to impact the rental market. Brexit and the US elections aside, it is likely to be changes to landlord taxes and mortgages that will really influence the market place.’[1]

‘Investing in residential property is becoming increasingly expensive and I wouldn’t be surprised if we see landlords sell parts of their portfolio. This could be good news for the buyer-occupier market, but will likely mean less supply for the rental market, which could in turn lead to higher rents,’ she added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/1/landlords-should-be-supported-rather-than-burdened-with-unfair-tax-measures

Should more be done to improve renting?

Published On: January 12, 2017 at 9:56 am

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An industry peer has stated that he feels more needs to be done to improve renting, as opposed to focusing solely on making properties more affordable for those looking to buy.

Peter Girling, chairman of Girlings Retirement Rentals, has said he wants to see longer private tenancies introduced, in order to give renters ‘greater security of tenure.’

Tenancies

Mr Girling said: ‘In our latest customer survey carried out in October 2016, we found that 85% of people wanted a tenancy of 12 months or more and 71% said that the security of assured tenancies we offer that enable residents to rent their property for as long as they choose, mattered most to them when making the decision to rent.’[1]

His comments come only days after Citizens Advice said that it will be heightening its campaign for longer tenancies, in an attempt to overhaul the sector.

According to figures, 39% of people living with their children in rented accommodation have a tenancy agreement of just six months or less, which creates uncertainty.

Should more be done to improve renting?

Should more be done to improve renting?

Longer agreements

In addition, 34% of private renters want their tenancy to be longer, with this number rising to nearly 40% for those with children. Families now account for nearly 40% of the private rented sector.

Concluding, Mr Girling noted: ‘Like Citizens Advice, we believe that should longer tenancies become more widely available for all sectors of the market – from young professionals, to families and older people – this may remove the uncertainty people face and give them more reassurance and greater security of tenure to plan for the future.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/1/longer-term-tenancies-needed-to-enable-tenants-to-plan-for-the-future

 

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Published On: January 12, 2017 at 9:28 am

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Asking rents will rise by 4% outside London this year, according to Rightmove.

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Last year, the property portal reports that asking rents increased by 3% outside London, but dropped by 4.4% within the capital.

The highest growth in rental prices of the year was recorded in the northern regions of Yorkshire and the Humber and the North West. However, all regions outside London saw a rise.

In inner London, rents fell by 5.2%, while there was a smaller decline of 2.5% in outer London.

The Head of Lettings at Rightmove, Sam Mitchell, considers the future of the rental market: “This year will be one of caution for buy-to-let investors, due to tighter lending criteria and increased Stamp Duty.

“We definitely won’t see the spike in Q1 purchases that we saw last year, as landlords rushed to buy before last April’s new Stamp Duty deadline.”

He also assesses how further changes will affect the sector: “If the tax changes being phased in from this April lead to even fewer buy-to-let purchases and some landlords deciding to sell, then a tightening of supply in some areas will lead to increasing rents.

“We forecast that asking rents could rise by 4% outside London by the end of 2017, though in London, prices are likely to stay flat.”

Mitchell advises landlords on the best locations to invest: “Investors looking for the strongest yields could consider investing in certain areas in the North West, where both demand and yields are high.

“Those with a number of properties in the capital may find that tenants are more price sensitive, so setting realistic rent levels will be the key to avoiding void periods.

“In order to mitigate this, we would recommend landlords asking for longer tenancies to help secure a steady rental income over the next few years while they adjust to what the tax changes will mean for them.”

While recent reports claim that rental yields are expected to drop below the five-year average this year, landlords should be aware that strong returns are still possible in some locations.

UK property prices moderate as supply increases

Published On: January 11, 2017 at 12:08 pm

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The most recent data released by Home.co.uk has revealed a steady decline in London’s property market. In turn, this is impacting on the national average.

This said, not all regions of the UK have registered average property price declines during the last month. Increases of 0.3% were seen in the East Midlands and the North West. However, these have been counterbalanced by declines in Scotland (-1.1%) and the East of England (-0.6%).

Seasonal slowdown, yearly drop

Of course, given the time of year, a seasonal slowdown is to be expected. Despite this, the declining year-on-year trend gives a better indication of the overall picture.

During January 2016, the annualised rate of increase for property prices was 8.2%. This year, the same measure stands at 3.1%.

New instructions were up across all regions of England, Scotland and Wales during December. The largest rises were evident in Scotland, with instructions up by 23%. The East of England recorded rises of 18%, while more moderate growth was evident in the East Midlands (5%) and West Midlands (6%).

UK property prices moderate as supply increases

UK property prices moderate as supply increases

This trend is rare given the festive period and indicates that many people could be in a rush to exit, given changes to taxation, interest rates and the ongoing Brexit negotiations.

Eastern rises

In the East of England, prices have risen considerably during the last five years, but there are signs that this growth may be coming to an end. Property values here have increased by 10.2% over the last 12 months and by 44% in the last five years.

Increasing supply suggests that a slowdown could be evident as we progress further through 2017.

Letting Agents in Essex Fined Over £14,000 for Failing to Display Fees

Published On: January 11, 2017 at 11:27 am

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Several letting agents in one borough of Essex have been fined over £14,000 for failing to display fees.

Letting Agents in Essex Fined Over £14,000 for Failing to Display Fees

Letting Agents in Essex Fined Over £14,000 for Failing to Display Fees

Thurrock Council embarked on a crackdown to expose letting agents that do not comply with the law to display fees. It says the money raised by the fines will be used for further enforcement.

Following the launch of its crackdown last summer, the council visited 33 agencies and subsequently issued 13 with a notice of intent.

It has now issued fines totalling £14,100 to agents failing to comply with consumer rights laws that require agents to display fees, the redress scheme they belong to and whether they offer Client Money Protection.

One estate agent, Edward Clark Estates, appealed the penalty charge of £3,250 on the grounds that a member of staff was on holiday at the time the advice letter was sent and the amount of the penalty was unreasonable.

However, the court responsible for the case – the General Regulatory Chamber – dismissed these arguments and ruled in favour of Thurrock Council.

Councillor Rob Gledhill, Leader of the council and Portfolio Holder for Housing, says: “It is right that the council is taking action on those letting agents who flout the law and are not supplying the residents of Thurrock a high level of service.

“The legislation was passed in 2015, so there is no excuse for not meeting the requirements. Even after our officers visited these agents, some decided not to take the action needed.

“Well, now they face the consequences. The rental market in Thurrock is a very lucrative one, so I want to make sure letting agents are doing their part. The £14,100 raised in fines will be used to fund further enforcement activity by our Trading Standards team to help protect Thurrock residents.”

If you use a letting agent to manage your property portfolio, be sure that it complies with the rules to display fees before entrusting your assets with it.

Rental Yields to Fall Below Five-Year Average This Year

Published On: January 11, 2017 at 10:44 am

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Rental yields will fall below the five-year average of 13% this year, warns estate agent Carter Jonas.

Rental Yields to Fall Below Five-Year Average This Year

Rental Yields to Fall Below Five-Year Average This Year

However, the research arm of the agent insists that rental yields will be sustained in 2017 by a reduction in housing supply and moderate house price growth. It predicts total returns of 5.6% for the year.

Darren Yates, Head of Research at Carter Jonas, reports that the property market has been affected by Stamp Duty changes that have reduced the appetite of smaller investors in particular, with many anticipating higher tax bills as the phased removal of mortgage interest tax relief begins in April.

He says: “With weaker capital value appreciation forecast over the coming year, investors are likely to adopt a more income focused approach to residential property. By focusing on areas that benefit from a balance of strong rental yields and growing local economies, investors can ensure good returns.”

Yates predicts that while Brexit negotiations are likely to dominate the political and economic landscape for the foreseeable future, the UK property market is coming to the natural end of a long growth cycle that has also contributed to lower forecasts for rental yields.

He insists: “Total returns are forecast to moderate across the board, but property remains an attractive proposition for many investors compared with other asset classes over the medium to long-term.

“Property yields continue to offer a significant margin over bonds and equities, as well as delivering a stable income with the ability to add value through proactive asset management.”

Yates’ warning concerning rental yields arrives as HomeLet reports a slowdown in rental inflation. The firm expects rent prices to hit an affordability ceiling in the near future, with warnings of tenants struggling to pay higher prices.

Although rent prices are still increasing and are due to surge following a series of measures affecting landlords’ finances, notably the reduction in mortgage interest tax relief, it seems that yields will not remain so strong.