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Em Morley

Tax Hikes on Landlords Won’t Help First Time Buyers, Says the Public

Published On: October 25, 2016 at 8:27 am

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Tax hikes on landlords will not help first time buyers get onto the property ladder, according to members of the public.

Tax Hikes on Landlords Won't Help First Time Buyers, Says the Public

Tax Hikes on Landlords Won’t Help First Time Buyers, Says the Public

Less than 20% of the public believe that higher taxes for landlords will help aspiring homeowners buy their first property.

These figures come from a survey conducted by YouGov for the Council of Mortgage Lenders’ latest publication, Homeownership or Bust?

Of those that said that something should be done to make it easier for young people to buy their first homes, less than 20% said that the Government should introduce tax hikes on landlords.

The study completely undermines the argument made by the former chancellor, George Osborne, that tax hikes on landlords will make it easier for prospective first time buyers to purchase a home.

Landlords are currently facing several changes to their finances, including: Being taxed on their income rather than profit; a reduction in the amount of mortgage interest that can be offset against tax; and a 3% Stamp Duty surcharge on the purchase of additional properties.

The Government has compiled a guide for landlords on how the changes to mortgage interest tax relief will affect them: /government-guide-tax-relief-changes-residential-landlords/

Commenting on the findings by YouGov, the Policy Director of the Residential Landlords Association (RLA), David Smith, says: “These figures back up all that we have been saying.

“Recent tax hikes on landlords will serve only to drive up rents and reduce supply, making it more difficult for people to save for a home of their own.”

He urges: “With the wider public now in agreement, we call on the Chancellor to use his Autumn Statement to reverse these counter-productive measures.”

The new Chancellor, Philip Hammond, will deliver his first Autumn Statement on Wednesday 23rd November 2016.

Hammond has already received calls to scrap Osborne’s tax hikes on landlords from various industry bodies, such as the Society of Licensed Conveyancers.

Property Transactions Drop by 5% in September

Published On: October 24, 2016 at 10:44 am

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Property transactions dropped by around 5% in September, according to figures from HM Revenue & Customs (HMRC).

Property Transactions Drop by 5% in September

Property Transactions Drop by 5% in September

The data gives an indication to the number of buyers who may have started their purchases over the EU referendum period – June or early July – based on the fact that transactions typically take between 12-14 weeks.

HMRC’s latest UK Property Transactions report shows that there were 103,400 residential deals in September, down on 109,640 in the previous month.

This represents a 5.7% monthly decline and 5.3% annual decrease from September last year, when 109,160 property transactions were recorded.

The figures appear more drastic on a seasonally adjusted basis, when they’re down by 4.3% on the month and 11.3% annually to 93,130.

The Head of Lending at the Mortgage Advice Bureau, Brian Murphy, comments on the findings: “Neither of these figures are either surprising nor cause for concern.

“August completions reflect purchases which were started in May, which is typically a busy month as it’s the tail end of the spring market, rather than June, which generally sees the start of the summer holiday hiatus, and September 2015 was exceptionally busy due to pent-up demand following the general election.”

He explains: “This figure could be affected by the continuing lack of stock available, but it does somewhat demonstrate the ongoing demand for property, which therefore is likely to underpin the market for some time to come.

“Having said that, we will have to wait and see the data regarding the number of transactions completed this month and in November, thus reflecting those who started their transactions in August and September, to get a better barometer in terms of market confidence.”

Have you put property purchases on hold amid market uncertainty surrounding the EU referendum? This may be the reason that transactions are down on recent months.

But has confidence returned to the property market yet?

Buy-to-Let Remains an Attractive Investment Opportunity, Insists Together

Published On: October 24, 2016 at 10:13 am

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Buy-to-let property remains an attractive investment opportunity at a time of low savings rates and stock market volatility, insists specialist lender Together.

Buy-to-Let Remains an Attractive Investment Opportunity, Insists Together

Buy-to-Let Remains an Attractive Investment Opportunity, Insists Together

Despite a Government crackdown on buy-to-let landlords, including the 3% Stamp Duty surcharge on additional properties, the abolition of the automatic 10% Wear and Tear Allowance, and the forthcoming reduction in mortgage interest tax relief, Together reports that investors continue to be drawn to the buy-to-let market, as the returns regularly outperform those of other investments.

The firm’s Commercial CEO, Marc Goldberg, explains: “Buy-to-let has proved to be a resilient sector this year, despite the tax changes introduced by the Government.

“Buy-to-let lending continues to perform well for us here at Together, and we’ve been able to grow whilst maintaining a high quality customer base. Given this growth, we want to ensure that we offer a variety of products to meet the continued demand.”

Together has recently introduced a new five-year, fixed rate buy-to-let mortgage to meet the demand from this growing market, with the maximum loan size increased to £500,000, while offering landlords the opportunity to fix their costs.

Goldberg comments: “Our new fixed rate product, as well as bigger loan sizes, will help us deliver more funding to property investors through our network of broker partners.

“We offer both interest-only and repayment options, with loan-to-values of up to 75%, and we’ll accept projected rental incomes, so landlords don’t need to have a tenancy already in place to secure the funding needed.”

He adds: “We also lend to limited companies and have seen an increase in applications from limited companies for buy-to-let funding as a result of the various tax hikes.”

Under the forthcoming changes to mortgage interest tax relief, limited company landlords will not be affected; only individual investors will face a reduction in the amount of mortgage interest that they can offset against tax. The Government has a guide on how the cut will work: /government-guide-tax-relief-changes-residential-landlords/

Together recently announced record trading results, with annual new lending for the year to 30th June 2016 surpassing £1 billion for the first time in the firm’s 42-year history. Its current loan book exceeds £1.8 billion.

Rental Housing Supply Rises to 18-Month High

Published On: October 24, 2016 at 9:13 am

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Rental housing supply rose to an 18-month high in September, according to the latest study by the Association of Residential Letting Agents (ARLA).

Rental housing supply

In September, letting agents managed an average of 193 properties per branch, up from 183 in August and the highest level recorded since April 2015, when there were also 193 rental properties registered per branch.

Rental Housing Supply Rises to 18-Month High

Rental Housing Supply Rises to 18-Month High

Rental housing supply had dropped to lows of 171 so far this year. Therefore, the jump in September paints a positive picture for tenants, amid industry-wide expectations of post-Brexit uncertainty.

Demand for rental property

Demand for rental property also grew in September, with 40 prospective tenants registered per letting agent branch, compared with 37 in the previous month.

In line with expectations, demand for rental property has been steadily increasing since the start of the year and is now at the highest level since February 2015, when there were also 40 hopeful tenants registered per branch.

Rent price growth

The amount of letting agents recording rent price growth is at the lowest level so far this year, with just 24% of agents reporting increases for tenants.

This is down by 3% on August, when 27% of agents saw rent rises, and 8% down on this year’s high of 32% in March.

The Managing Director of ARLA, David Cox, comments on the figures: “This month’s findings paint a really positive picture for renters. Although demand is rising, we’ve seen this happen gradually over the course of the year, and would expect it to slow again in line with seasonal trends over the next few months.

“On the other hand, the supply of rental stock has risen astronomically, which suggests it’s not quite right that landlords are pulling out of the market as a result of Brexit. This is supported in our findings, which reveal the number of landlords selling their buy-to-let properties hasn’t changed since April, when three landlords were selling up per branch.”

He continues: “It’s good to see less landlords hiking rents this month, but 24% is still too high. The cost of renting is already high in many parts of the country, and until the Government converts its pledges and promises into bricks and mortar, we won’t see renters reach a position where they’re able to save to get on the housing ladder. It will be interesting to see how this is tackled in the upcoming Autumn Statement.”

Tenants may be disappointed to learn that the Government’s Help to Buy scheme will be scrapped in December this year.

However, the new Housing Minister, Gavin Barwell, has spoken out in support of the private rental sector, pledging to make renting more affordable and stable for the nation’s tenants.

Housing Minister Reinforces Support for Tackling Rogue Landlords in London

Published On: October 24, 2016 at 8:34 am

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Housing Minister Reinforces Support for Tackling Rogue Landlords in London

Housing Minister Reinforces Support for Tackling Rogue Landlords in London

The Housing Minister, Gavin Barwell, has yet again been required to reinforce the Government’s support for tackling rogue landlords in London.

Just last week, an MP questioned Barwell’s efforts to drive rogue landlords out of the private rental sector. The Housing Minister responded with details of the forthcoming Housing and Planning Act 2016, which includes measures to tackle rogue landlords.

Now, Barwell has been asked what steps the Department for Communities and Local Government is taking to support the boroughs where the number of rogue landlords in London is increasing.

Barwell replied to the enquiry: “The Government has made £12m available to a range of local authorities to help them crack down on rogue landlords. £6.6m of that funding was provided to London boroughs. Through the Housing and Planning Act 2016, the Government is introducing a package of measures to help local authorities go further in tackling rogue landlords. They include a database of rogue landlords and property agents, banning orders for prolific and serious offenders, civil penalties of up to £30,000, and extended Rent Repayment Orders. These provisions are expected to come into force in 2017.

“On 18th October, the Government also announced plans to extend mandatory licensing of Houses in Multiple Occupation (HMOs), to strengthen councils to tackle problem homes head-on and bring an end to ruthless landlords who exploit tenants and charge them extortionate rents to live in poor conditions. These measures will ensure mandatory licensing rules apply to HMOs with five or more people, and to flats above and below shops. Minimum room sizes will also apply to HMOs, to help to clamp down on rogue landlords cramming tenants into unsafe and overcrowded homes.”

He added: “This Government is committed to ensuring this country works for everyone, and a key part of that is ensuring everyone has a safe and secure home.”

Since his first major speech, the Housing Minister has spoken out in support of the private rental sector.

Calls for fair solution on tenant fees cap

Published On: October 21, 2016 at 11:34 am

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The National Approved Letting Scheme has announced its Fair Fees Forum. This has been created in ordered to bring industry, trading standards and consumer groups together to talk about the creation of a new charter for the private rented sector.

In addition, the Fair Fees Forum will look at whether capping upfront tenant fees is both practical and enforceable. At the same time, the Forum will look at creating a uniform format to clearly outline fees charged to tenants.

Fees

Issues surrounding letting agent fees in England continue to rumble on. More numbers of tenant organisations are campaigning for a blanket ban on fees. As such, the National Approved Letting Scheme has acted to create the Forum.

The Forum will work closely together to consider fees and make sure that agents are still paid for work undertaken when setting up a tenancy. However, the Fair Fees Forum will look at ways to curb the fee excesses that have made their way into the market.

A cap on fees has long been called for by the Scheme, with support growing in the industry. The National Approved Letting Scheme asked 1,000 of its letting agent firms based in England if they agree a cap on fees is appropriate, as opposed to a total ban.

Calls for fair solution on tenant fees cap

Calls for fair solution on tenant fees cap

Results

Results from the survey were interesting, with 84% of agents agreeing to a cap rather than blanket ban.

What’s more, analysis found that on average, the fees letting agents charge to tenants are £172-less than the national average of £233, as reported in the English Survey of Housing.

Isobel Thomson, Chief Executive of NALS said: ‘Ultimately this is about creating an equitable solution for all. The truth is, a good private rented sector cannot be free, and nor should it be. Agents should be paid for the work they do, but equally tenants should know they are paying a reasonable fee that has been explained to them clearly: nothing hidden, nothing excessive.’[1]

‘The private rented sector faces the widely held misconception that all letting agent fees are sky high, and should therefore be banned. In fact, the bulk of letting agents are charging tenants a fair fee for their service. Where they aren’t, we believe excessive fees should be curbed. NALS’ Fair Fees Forum brings all sides together to explore the feasibility and practicalities of a cap as well as considering the way in which agents’ present fees to tenants to ensure clarity and understanding. This is not a talking shop – it’s time to act on excessive tenant fees,’ she added.[1]

[1] http://www.propertyreporter.co.uk/landlords/nals-calls-for-a-fair-solution-on-upfront-tenant-fees.html