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Em

Em Morley

Confidence for coming year high in real estate sector

Published On: March 4, 2016 at 12:52 pm

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A new survey has revealed that there is a positive feeling in the real estate sector regarding the next 12 months.

An investigation by the British Property Federation (BPF) and Grosvenor Britain shows that 88% of people in the sector have confidence over the coming year. However, this figure drops to 54% when looking ahead to real estate performance over the next five years.

Increases

60% of property owners and investors noted that their company’s development output would increase in 2016. This said, the survey also revealed a number of potential barriers to property supply, which the Government and local authorities could remove.

In London for example, there are calls for the Mayor to both locate and sell developable land, to encourage investment in the build to rent sector. According to results of the investigation, 53% of respondents said that their firm plans to increase investment levels, with 23% saying they will keep them constant over the next year.

For the East Midlands, 60% of landlords said they would increase development and 23% believe it will stay constant. In the North West, these figures stand at 25% and 23% respectively, while in Scotland, these figures are just 16% apiece.

Crucial Regeneration

Melanie Leech, BPF Chief Executive, said, ‘the real estate industry is a vital contributor to the UK’s economy and crucial to bringing about regeneration and growth across the country. It is therefore welcome to see that sentiment over the next year is positive.’[1]

Confidence for coming year high in real estate sector

Confidence for coming year high in real estate sector

‘Wider economic circumstances and political uncertainty are outside of our control, but there are a number of things that Government can do to ensure that the outlook remains bright. The next London Mayor has a clear mandate from the industry to assemble and sell public sector land, if they really want to boost development early on in their tenure,’ she continued.[1]

Concluding, Leech noted that, ‘it is good to see that investment is flowing into all parts of the UK however and not just London and the South East. We hope to see this increase as devolution deals continue to be rolled out across the country.’[1]

Unlocking success

Peter Vernon, chief executive of Grosvenor Britain and Ireland believes that the findings of the report are a stark reminder of the real estate’s desire to impact on the UK’s economic future.

Vernon said, ‘the sector’s ability to boost supply will rest in part on Government lowering the policy barriers.’ He went on to observe that, ‘in London, getting more developable public land to the market and unlocking new rental homes to meet growing demand will be key to success.’[1]

[1] http://www.propertywire.com/news/europe/uk-real-estate-sector-2016030411636.html

 

Government’s Intervention in the Housing Crisis has Been “a Step in the Wrong Direction”

Published On: March 4, 2016 at 12:13 pm

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A new report from the Institute of Economic Affairs states that almost all of the Government’s interventions in the housing crisis have been “a step in the wrong direction”.

The paper, by Dr. Kristian Niemietz, particularly criticises the Help to Buy scheme, Inheritance Tax and tax changes for buy-to-let landlords.

Government's Intervention in the Housing Crisis has Been "a Step in the Wrong Direction"

Government’s Intervention in the Housing Crisis has Been “a Step in the Wrong Direction”

However, it believes that the Stamp Duty reforms of December 2014 have been a step in the right direction, but still criticises it for hindering those looking to downsize. It was recently reported that the majority of homebuyers have saved money under the new system.

The paper claims that the prohibition to build on the greenbelt is not just outdated, but conceptually wrong and should be abolished entirely.

The document especially criticises the forthcoming changes to landlord taxes, notably the reduction in buy-to-let mortgage interest tax relief. It says: “Letting a property is a business like any other and the cost of servicing the mortgage is a business cost like any other. Thus, the tax system should treat it as such.” 

On the subject of the shortage of housing, the report states that not only is the UK’s stock inadequate, but it is mostly in the wrong place.

It adds that there is no specific shortage of social housing, private rental properties or first time buyer homes, but an overall shortage of affordable housing across all tenures.

It does not believe that boosting homeownership should be a policy aim in itself, but that the Government should strive to improve general affordability.

Dr. Niemietz’s report states that the housing crisis was caused by high costs of buying and renting.

It has found that both house prices and rents are among the highest in the world, both in absolute terms and in relation to average earnings.

Since 1970, house prices have risen by four and a half times after inflation, says the study.

It claims that no other OECD country has experienced price increases on this scale, or anywhere near the enormity seen in the UK.

OECD countries consist of the world’s wealthier states, including the USA and Canada.

The report also found that UK house building has sat at the lowest rate of construction than any other OECD country for over three decades. Earlier this week, it was claimed that UK housebuilders are restricting supply in order to keep house prices high.

Find the full report by Dr. Niemietz here: http://www.iea.org.uk/sites/default/files/publications/files/IEA%20Housing%20Crisis%20Briefing%20Feb%202016.pdf

Prepare your property properly!

Published On: March 4, 2016 at 11:52 am

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Becoming a buy-to-let landlord requires a lot of preparation. As the saying goes, failing to prepare means preparing to fail!

There are a number of ways in which landlords can prepare their property to make it available to rent. Making sure this is done properly will help in securing a quality tenant and the desired rental return.

Presentable

Allison Thompson, lettings director at Leaders, said, ‘presenting a home to rent in an appealing way, with quality fixtures and fittings, is a must for attracting good tenants and getting the best possible rent.’[1]

‘But it can be expensive and time-consuming so landlords need to find the right balance between short-term costs and long-term gains. Over the years Leaders has guided thousands of landlords in preparing their properties for letting in a way that will help them to secure and keep good tenants and maximise their returns while saving time and money in the long run,’ she continued.[1]

As such, here are some to tips to help landlords prepare their investment properly:

Don’t over décor-By sticking to neutral colours throughout the property, a home will appeal to all tenant groups. High-quality paints are the sensible option, as it will last for longer, meaning landlords will have to redecorate on a less regular basis. Doorstops are also a savvy choice, to protect walls from being damaged by doors handles.

Fit similar flooring- Fitting the same carpet or flooring in as much as the property as possible should ensure a discount for buying in bulk. What’s more, by keeping quantities aside, damaged areas can be easily replaced.

Prepare your property properly!

Prepare your property properly!

Keep the kitchen modern- A clean, modern kitchen will undoubtedly attract better tenants and a higher rent. Being the creative hub of the home, a well-thought out kitchen will go a long way in attracting the right people. Choose standard shapes and tiles for the worktops, which again can easily be replaced should they become damaged.

Boss the bathroom-There are a number of things that can be done to heighten the appeal of a bathroom. Installing a power shower or heated towel rails for example could be the little features that make all the difference. Again, installing a modern, stylish floor and features can also prove vital. Just don’t install a carpet!

Build the bedroom-Providing built in wardrobes in bedrooms is becoming more and more a required element for tenants. This will also save on having to buy and replace standalone wardrobes in case of damage. Allow tenants to add their own stamp to the room and the property as a whole.

[1] http://www.propertyreporter.co.uk/landlords/top-money-saving-tips-for-landlords-preparing-a-property-to-let.html

 

More over 55’s investing in buy-to-let

Published On: March 4, 2016 at 10:12 am

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Research from a leading pensions provider has indicated that 20% of over 55’s are thinking of purchasing their desired retirement home now, then letting it out until they reach retirement age.

Data from the report conducted by Prudential also found that more than half of would-be potential investors plan to use their pension savings to fund their property purchase.

‘Buy-to-let-retire’

The provider says that the trend of ‘buy-to-let-retire’ seems to be making a challenge against the more conventional route of selling up and downsizing during retirement.

Of those over the age of 55 that had already made a buy-to-let investment, almost one in three stated that had done so to secure funding for a home that would one day become theirs.

52% of people in this age group looking to, ‘buy-to-let-retire’ noted that they would think about using a lump sum from their savings to fund their investment. This follows the changes made to pension regulations that came into effect in April 2015.

Additionally, data from the research shows that some over 55’s have purchased property to pass down to a loved one. 17% of people in this age bracket said that they chose to invest in bricks and mortar for this reason.

More over 55's investing in buy-to-let

More over 55’s investing in buy-to-let

Rising popularity

Findings from the report also show that the popularity of buy-to-let among older people is growing. 29% of over 55’s surveyed said that intended to make a buy-to-let investment in the next two years. Of these, 70% said that this would be their first investment in the sector.

Stan Russell, retirement expert at Prudential, said, ‘the advent of older people opting to buy-to-let-retire is an interesting development and in a post-pension freedoms world its appeal is understandable. However, there are a number of risks involved for anyone looking to take money from their pension savings, irrespective of the reasons.’[1]

‘Before making decisions that could reduce retirement income in the future, not mention increase this year’s tax bill, it is important to make the most of the advice and guidance available. The Government’s Pension Wise service provides free and impartial guidance on accessing pension savings, while a professional financial adviser can help retirees navigate the pros and cons of using pension savings for property investment. The simplest approach for most people looking to give themselves choices and secure their ideal home when they retire is to save as much as possible into a pension as early as possible in their working life,’ he concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/3/buy-to-let-to-retire-is-the-new-downsizing

Landlords to be Protected Under New Changes to Right to Rent

Published On: March 4, 2016 at 9:35 am

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Landlords will be protected by Government changes to Right to Rent legislation, the Residential Landlords Association (RLA) has announced.

The RLA has campaigned for changes to the Right to Rent scheme, notably that landlords should not be immediately criminalised for failing to identify illegal immigrants.

Landlords to be Protected Under New Changes to Right to Rent

Landlords to be Protected Under New Changes to Right to Rent

The Government has now agreed to changes to the Immigration Bill – currently going through Parliament – which will provide protection for the good landlords that take reasonable steps in an appropriate timeframe to end tenancies for those living in the UK illegally.

Previously under the bill, landlords would face immediate criminal penalties upon discovery that they failed to ensure their tenants had the right to rent in the UK.

The Government has also agreed to consider changes to regulations that would enable landlords to provide information to tenants, such as tenancy deposit protection schemes, via email, rather than in paper form, as is currently required.

The RLA, on behalf of landlords, has campaigned for both changes and has welcomed the Government’s plans.

The Chairman of the RLA, Alan Ward, says: “The RLA warmly welcomes the Government’s pragmatic changes to its Right to Rent scheme that will provide protection for good landlords from the unintended consequences of the policy.

“It is also welcome that the Government is willing to look at how electronic information can be better used to provide tenants with the legal information they require.

“In the 21st century, it is ridiculous that landlords are expected to print so much paper when it can be provided at the simple click of the button.”1

Advice for landlords on conducting Right to Rent checks can be found here: https://www.justlandlords.co.uk/news/right-to-rent-coming-in-2016/

Information for landlords on the two new custodial deposit protection schemes can be viewed here: https://www.justlandlords.co.uk/news/two-new-custodial-tenancy-deposit-protection-schemes-launch-april/

1 http://news.rla.org.uk/news-rla-org-uklandlords-protected/

Average Tenant Has Spent £40,000 on Rent in the Last Five Years, Says Shelter

Published On: March 3, 2016 at 3:34 pm

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The average private tenant in England has spent more than £40,000 on rent over the last five years, according to a new report from homelessness charity Shelter.

The findings arrive as the Housing and Planning Bill continues making its way through the House of Lords today.

Shelter found that the average cost of renting a two-bedroom property is enough to put down a 20% deposit on a typical first time buyer home.

In London, the average rent on a two-bed home is much higher, at £89,000, according to the charity’s calculations.

The Chief Executive of Shelter, Campbell Robb, says: “Our drastic shortage of affordable homes is leaving millions of people stuck in their childhood bedrooms in a bid to save money, or in expensive and unstable private renting, with little hope of ever saving for a home to put down roots in.”1 

The Housing and Planning Bill seeks to introduce a series of changes that David Cameron believes will turn generation rent into generation buy.

It includes extending the Right to Buy scheme to housing association tenants, which Shelter says will aggravate the housing shortage.

Councils would be forced to fund the policy by selling off their most high-value assets. However, peers are warning that the policy could lead to a decline in the supply of affordable homes.

Average Tenant Has Spent £40,000 on Rent Over the Last Five Years, Says Shelter

Average Tenant Has Spent £40,000 on Rent in the Last Five Years, Says Shelter

Cross-bench peer Lord Kerslake, the former head of the Government’s Homes and Communities Agency, warns: “It’s very hard to make the numbers work and it’s very hard to find the land.”

Lord Kerslake has jointly tabled an amendment to the Housing and Planning Bill, which would force councils to replace the properties sold off with similar homes in their own area.

Peers are also expressing their concerns over the Government’s Starter Homes scheme.

These new build homes would be sold at a 20% discount to first time buyers under 40. The properties can be worth up to £450,000 in London and £250,000 elsewhere.

However, by urging housebuilders to prioritise Starter Homes, there are concerns that local authorities will throw out genuine affordable housing.

Kerslake comments that the policy would be a “cash bonanza” for homebuyers, many of whom could have bought their own home without the scheme.

“It’s a hell of an offer for people who have to be reasonably well-heeled to afford it,”1 he states.

A study by the Town and Country Planning Association has revealed that four out of five councils do not believe that Starter Homes are affordable.

Dame Kate Barker, who conducted a review of housing supply for Gordon Brown, told the House of Lords Economic Affairs Committee in December: “I do feel uncomfortable about a set of policies that are designed to be supportive of people who are just on the cusp of being able to buy and need nudging over the edge.”1

And the Shadow Housing Minister, John Healey, has said: “The forced sale of council homes will lead to a huge, irreversible loss of genuinely affordable homes to buy and rent.

“At a time when more affordable homes are desperately needed, the Government is forcing the sale of many of those that are left – not to tenants, but to buy-to-let landlords and overseas speculators.

“This will make finding an affordable home even harder for young people and families on ordinary incomes. But it’s also bad news for taxpayers, because it means more people renting privately and housing benefit rising to cover the cost.”1

However, a spokesperson for the Department for Communities and Local Government insists: “The Government is also supporting the boldest plan for housing by any government since the 1970s and is creating a bigger, better private rented sector that will increase choice for tenants.”1

Recent research found that the private rental sector is expected to grow to 30% of all households in the next 30 years.

1 http://www.theguardian.com/society/2016/mar/03/tenant-paid-40000-rent-five-years-shelter