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Em Morley

Scottish Renting Conditions Named Worst in UK

Published On: December 5, 2016 at 10:12 am

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Categories: Landlord News

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Scottish renting conditions have been named the worst in the UK following a study of private tenants.

The research, conducted by boiler firm Help-Link in partnership with eviction specialist Paul Shamplina, revealed that a quarter of tenants in Scotland described their current renting conditions as a “nightmare”.

Scottish Renting Conditions Named Worst in UK

Scottish Renting Conditions Named Worst in UK

Around 24% of Scottish tenants are unhappy with their renting conditions – higher than anywhere else in the UK.

Last year, Citizens Advice Scotland received over 6,000 complaints, with evidence of landlords failing to meet their legal obligations, refusing to conduct basic repairs, and even bullying or intimidating their tenants.

And the situation doesn’t seem to be improving.

Six landlords in Glovanhill, Glashow – the area represented by Scottish First Minister Nicola Sturgeon – have been banned after their licenses were withdrawn. They now face criminal prosecution with fines of up to £50,000 if they attempt to let their properties.

The area has been dogged by reports of slum homes and rogue landlords, including investors continuing to let their properties despite being banned.

In some cases, rogue landlords in the area are said to have advertised property for rent that they do not own and which is due to be demolished. Victims paid deposits and rent before losing their money.

In Scotland, all private landlords must be registered.

The six landlords in Glovanhill were found to be unfit to rent out property by Glasgow City Council’s licensing and regulatory committee.

Five of the landlords failed to provide a range of certification, including Energy Performance Certificates and Gas Safety Records, and confirmation that their tenants received information packs.

There were also concerns about the conditions of the properties, following inspections by council officers.

Hamid Akram, Tauheed Hussain, Mohammed Adnan Hussain, Shakeel Shahid and Simon Tsang own seven properties between them.

The sixth landlord, Johar Mirza, was banned from the register following his conviction for assault with intent to rape and for letting properties that failed to meet the tolerable housing standard.

If you are a landlord in Scotland, you must ensure that your tenants’ renting conditions adhere to the standard encouraged across the private rental sector – do not fall foul of licensing rules!

Demand for New Homes Slumps Following “Attack on Buy-to-Let Landlords”

Published On: December 5, 2016 at 9:37 am

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One of Britain’s largest housebuilders warns of a slump in demand for new homes following the Government’s “attack on buy-to-let landlords” and Brexit uncertainty.

Demand for New Homes Slumps Following "Attack on Buy-to-Let Landlords"

Demand for New Homes Slumps Following “Attack on Buy-to-Let Landlords”

Berkeley Group reports a decrease in reservations of 20% in the six months to the end of October. The firm’s Chief Executive, Rob Perrins, believes this is largely due to “heightened global macro-economic and political uncertainty”.

However, he claims the slump in demand is ultimately down to “higher Stamp Duty” and the “extraordinary attack on buy-to-let landlords”, who play a large part in sustaining the housing market, particularly in London, alongside increasing the supply of new homes.

So far this year, the attack on buy-to-let landlords has included stricter mortgage lending criteria, the 3% Stamp Duty surcharge for additional homes and the scrapping of the 10% Wear and Tear Allowance. What’s more, landlords will face a reduction in mortgage interest tax relief from April next year.

Shares in Berkeley Group fell by more than a fifth since the introduction of the higher Stamp Duty rate in April, along with the EU referendum in June, as housebuilding stocks were hit by uncertainty.

However, despite the slump in demand, Berkeley has recorded a 34% increase in pre-tax profits to £393m for the first half of the year. The firm says it is well positioned to withstand the uncertainty.

The company sold 2,076 homes in the first six months of 2016 – little changed on the same period last year – at an average selling price of £655,000 – up by 29%.

Last week, Bank of England data suggested that the UK housing market is recovering from a post-referendum slowdown, as mortgage approvals rose to the highest level since March.

A separate report from Nationwide shows that house prices are continuing to slow.

Do you believe that the Government’s attack on buy-to-let landlords is having a widespread effect on the housing market?

Number of landlords still unaware of Stamp Duty surcharge

Published On: December 2, 2016 at 2:47 pm

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A Liverpool-based law firm has suggested that a number of buy-to-let landlords are somehow still unaware that they are liable to pay the additional 3% stamp duty surcharge, introduced in April.

Jasper Dawson, of Kirwans said he is seeing an increased number of cases where investors are only finding out about the charge at the last minute. He said he is concerned that many will see less returns than expected, as a result of the charge.

Stamp duty surcharges

Those most affected are those changing their property’s use from residential to commercial, buy-to-let landlords and smaller scale developers.

The Treasury is expected to raise an extra £3.1bn in tax as a result of the Stamp Duty reforms.

Surprisingly, according to Dawson many investors are not aware they are subjected to the additional costs. As such, they are forced to seek urgent legal advice to assess if there is any way of them legally avoiding paying the tax.

Number of landlords still unaware of Stamp Duty surcharge

Number of landlords still unaware of Stamp Duty surcharge

Unaware

Mr Dawson said: ‘Since the 3% stamp duty was introduced in April, we have dealt with a number of clients who have discovered that the residential property they were planning to buy, perhaps to turn into offices or to regenerate and re-sell, is subject to this tax.’[1]

‘Often, these purchasers have been unaware right up until the last minute that this tax affects them, as many assume it only affects those buying second homes for personal use. The range of properties that this charge covers is vast; even off-plan purchases can fall into this bracket,’ he added.[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2016/11/novice-property-investors-failing-to-spot-3-stamp-duty-surcharge

 

Lettings Fee Ban will Provide Boost to Online Agents, Believes StudentTenant.com

Published On: December 2, 2016 at 11:19 am

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The lettings fee ban to tenants, announced in last week’s Autumn Statement, will provide a boost to online agents, believes StudentTenant.com.

Lettings Fee Ban will Provide Boost to Online Agents, Believes StudentTenant.com

Lettings Fee Ban will Provide Boost to Online Agents, Believes StudentTenant.com

The student rental platform has found that almost every single letting agent charges their tenants a fee. This ranges from a whopping £420 admin fee with a series of additional fees on top, to around £75 at the cheaper end of the scale.

StudentTenant.com, which is free for landlords, believes the lettings fee ban will cause the high street rental sector to diminish, with online agents excelling as a result. It plans to expand its operation to cater to this demand.

The firm’s Managing Director, Danielle Cullen, explains: “High street agents claim they have local knowledge and more people on the ground offering enhanced services in order to justify their extortionate fees. Here at StudentTenant.com, we really struggle to see that being the case. There is absolutely no justification for such exploitation and the rise of the online property sector, along with this latest Government announcement, will leave these agents exposed.”

Of course there is some work and cost involved in sourcing and securing tenants, but StudentTenant.com insists that high street agents will find creative ways to pass over the fees, as was seen in Scotland when it banned lettings fees, to pass all or a proportion of the tenant fees to the landlord, which will push up rents.

With the explosion of online estate agents in the sales sector, StudentTenant.com says it is clear that online letting agents are the future, and the lettings fee ban will only accelerate this.

The immediate impact of the ban has already been felt across the industry, with many high street agents starting a petition to remove the ban and introduce a cap.

Cullen continues: “As we see it, the traditional letting agents, with their high costs, won’t be able to compete with the online alternatives and their transparent proposition. It’s yet another industry that technology is disrupting. Smaller high street agents will be tightly bound by charging higher fees, due to their expensive and unnecessary overheads.

“With all of this in mind and the current opportunity that has been presented, StudentTenant.com will be launching ClickTenant.com at the start of next year to offer a fairer proposition for all landlords – not just those in the student sector – and we expect to compete with the high street letting agents in the residential market, if not overtake them.”

Are you more inclined to use online agents following the lettings fee ban?

Landlord confidence is seemingly bouncing back

Published On: December 2, 2016 at 10:50 am

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A new report has revealed that landlord confidence has returned, following a turbulent few months. Investors are now looking to secure mortgages through limited companies, with many also increasing rents in reaction to the tax assault on the sector.

The investigation from Kent Reliance reveals that landlords’ confidence is at its greatest level for a year. 54% of investors are confident about the prospects for their portfolios. The survey quizzed around 900 buy-to-let investors and reveals confidence is higher than in the second quarter of 2016, when just 39% said that they were optimistic.

Incorporation and rent rises

Property investors have been forced into taking action as a result of the additional tax costs that they will face in 2017. Alterations to mortgage interest tax relief and the ban on letting agent fees are likely to push more landlords towards incorporation. Research from Kent Reliance indicates that there have been more than 100,000 limited company loans taken out so far in 2016. This is already double the amount in 2015.

Rents have also been pushed up by the upcoming tax changes. The average rent for Great Britain now stands at £881 per month-a record high. This comes despite the supply of rental property hitting an 18 month high. Rents were found to have risen by 2.4% over the course of the last 12 months.

It is estimated that in total, landlord are collecting £4.6bn in rent every month.

2017 is expected to bring an acceleration in rental prices. One third of landlords are expected to increase their rents by an average of 5.4% in the next 6 months. Two-thirds said this is due to the threat of higher taxes.

In addition, the sector is likely to see extra pressure from the Prudential Regulation Authority, with new underwriting standards due for implantation next year.

Landlord confidence is seemingly bouncing back

Landlord confidence is seemingly bouncing back

Taking its toll

Andy Golding, Chief Exceutive of OneSavings Bank, noted: ‘Property investors have had to roll with punches in 2016. The stamp duty levy clearly took its toll on the market, and combined with the forthcoming tax changes, landlords have felt at the mercy of a political agenda. But confidence is returning as landlords take action to limit the damage to their finances. The use of limited companies is soaring, and rents are increasing, even after one of the biggest surges in rental supply in recent history.’[1]

‘There is still more to come for the buy to let sector next year. The PRA’s new underwriting standards are due to be implemented, the tax changes begin to take effect, and there is yet more potential intervention in the form of the FPC’s new powers. If the cumulative effect of constant change undermines the expansion of rental properties, this will simply exacerbate the housing crisis, he continued.[1]

Concluding, Mr Golding observed: ‘Only through a substantive and long-term building programme across all tenures will we see an end to escalating house prices and rents. The Chancellor has moved to provide more support for house building, but it is not yet enough to see the step-change in supply that we need.’[1]

[1] http://www.propertyreporter.co.uk/landlords/landlord-confidence-at-a-high-following-government-intervention.html

 

The North-South Property Price Divide Defined

Published On: December 2, 2016 at 10:03 am

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Last week, Chancellor Philip Hammond set out further plans to boost the Northern Powerhouse in an attempt to close the north-south divide. But, in terms of property price, where does this divide start and finish?

Online estate agent eMoov.co.uk has used the latest data from the Land Registry to provide a definitive answer.

The agent recorded the current average property price across each county, finding that there is a clear £200,000 boundary that separates the north and south of the nation – other than North Yorkshire, two areas in Scotland and two in Wales.

The split begins at Bristol in the West Country, running up the border with Wales, through Herefordshire and Shropshire, before cutting back down through Worcestershire below the West Midlands, by Leicestershire and Rutland, to Norfolk and the east coast.

The North-South Property Price Divide Defined

The North-South Property Price Divide Defined

The border where the north meets the south acts as a clear mark where the UK’s over-inflated property market begins to lose steam, placating to a more affordable level.

The divide is apparent when it comes to the average property price between the north and south, as well as the rate of house price growth.

South of the border, the average property costs £295,395, having risen by 9% in the past year. This drops to £146,344 and an increase of 4% in the north. Removing Scotland and Wales from the equation sees a slight increase to £155,410 and growth of 5%.

The Founder and CEO of eMoov, Russell Quirk, explains the study: “Of course, this research is only valid where property prices are concerned, and doesn’t consider the further economic criteria that divide the north and south of the UK. However, with the divide often discussed across the industry itself, it’s important that there be a clearer definition of what and where it actually is.

“It is widely considered that the north is playing catch-up with the south where the divide is concerned and, of course, there is good reason property may command a higher price in particular areas of the UK.”

He adds: “However, for many struggling to get that first foot on the ladder, this research highlights the additional hurdles facing those south of the line and, in this instance, why heading north is a much more attractive proposition. Yes, property prices are climbing at a slower rate, but that is of little concern to those that don’t own a property.”

Despite Quirk’s warning regarding first time buyers, recent research shows that first time buyer sales in October were at the highest level on record.