Posts with tag: buy-to-let landlords

Number of landlords still unaware of Stamp Duty surcharge

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

Tags: buy-to-let landlords,investors,Stamp Duty

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

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

Landlord confidence is seemingly bouncing back

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

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,landlord confidence,landlords,rents,tax

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

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

Scottish letting agent offers his view on agent fees ban

Published On: November 29, 2016 at 12:27 pm

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,buy-to-let landlords,landlords,letting agent fees,letting agents

It is still less than a week since the Chancellor announced that letting agent fees are to be banned, but the debate on the overall impact on the sector continues to rumble on.

Now, the managing director of one of the leading letting agencies in Edinburgh and Glasgow has aired his opinion on how Scotland has adapted to the changes. Letting agent fees have been banned north of the border since 2012.

Ban on fees

The ban of agent fees in England is still subject to further clarification, with a consultation process expected early in 2017.

David Alexander, of Alexander Lettings, noted: ‘As is the case in England just now, established Scottish agents were initially strongly opposed to the change. Most took the view that fees were fair and reasonable and that the problem lay with a relatively small minority within the industry who charged tenants more than was necessary.’[1]

He noted that many reputable agencies simply got on with it and complied with the new law.

‘Individual agencies, of course, adapted in different ways. In our own case, with circa 5,000 properties under management in Edinburgh and Glasgow and with a substantial number of tenants coming from the corporate sector, we were able to pursue various alternative revenue options. Indeed, the need for change opened a number of new doors and led to an overall increase in the efficiency of the company,’ he continued.[1]

Scottish letting agent offers his view on agent fees ban

Buoyant

Concluding, Mr Alexander said: ‘Four years on, the markets in Scotland’s two biggest cities are buoyant but with supply and demand reasonably balanced, to the general benefit of both landlords and tenants. And established bona fide letting agents, who learned to live with the legislation, are continuing to thrive.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/advice-from-a-letting-agent-where-fees-are-already-banned

Landlords in Wales facing fines for illegal lets

Published On: November 28, 2016 at 2:20 pm

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,investors,landlords,Rent Smart Wales,Wales

Concern is growing that thousands of buy-to-let landlords in Wales could face fines or even a jail sentence for failing to register for a new licensing scheme.

Last week (23^rd November), the Welsh Government’s Rent Smart Wales scheme became law. However, it is estimated that over 13,000 private landlords in the country are yet to register with the scheme, meaning they could be letting out properties illegally.

Rent Smart Wales

The new registration and licensing scheme in Wales is a major change for the private rental sector. It requires all landlords and letting agents to register their properties and undertake training to gain a licence, should they intend on self-managing their investment.

Landlords and letting agents in the principality were given until last week to comply with the legislation, before it became an offence to either let or manage a property without the sufficient licence.

By the deadline, 89,130 online accounts had been created, with 64,248 licence registrations submitted. Another 13,208 applications but not finished.

Landlords in Wales facing fines for illegal lets

Delays

Carl Sergeant, communities secretary and minister responsible for overseeing Rent Smart Wales, acknowledged the registration system had seen delays. However, Sergeant said those who have started the compliance process would not face action-but said, ‘this must not be seen as an excuse to ignore the law.’[1]

In addition, he noted: ‘My message to private landlords is clear. You must take action to comply with the requirements of the law.’[1]

Registering as a landlord costs £33.50 if carried out online. On paper, this is £80.50, regardless of the number of properties an investor has in their portfolio.

Further information on Rent Smart Wales can be found on the Government website.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/thousands-of-landlords-could-face-fines-for-illegally-renting-out-properties

Are landlords set to shun letting agents?

Published On: November 28, 2016 at 10:24 am

Author: Em Morley

Categories: Landlord News

Tags: Autumn Statement,buy-to-let landlords,letting agent fees,letting agents

Buy-to-let landlords are once again under scrutiny, following last week’s decision in the Autumn Statement that letting agent fees will be banned.

Many peers feel that rents will rise as a result of the changes, with landlords looking to raise extra funds to cover their extended outgoings.

Rip-off agents

An industry peer has suggested many landlords should consider ditching letting agents as a result, particularly those that charge ‘rip-off’ fees.

Simon Lambert, editor of This is Money, observed: ‘Landlords are always ripe for a kicking in some circles, so it should come as no surprise that they were swiftly painted as potential villains in the ban on tenant fees.’[1]

‘The theory on the news that Chancellor Philip Hammond would ban tenant fees in his Autumn Statement was that buy-to-let owners would respond by passing on higher costs through rent rises,’ he continued.[1]

Anger

Continuing, Lambert said that buy-to-let landlords have a right to be, ‘as angry as tenants over letting agency fees.’[1]

‘Many landlords pay handsomely for letting and management already and the fees they pay are meant to cover many of the things that some unscrupulous letting agents also charge tenants for. A check with their agent on the level of double-charging going on would leave a landlord as grumpy as their tenant,’ Lambert observed.[1]

Are landlords set to shun letting agents?

Lack of service

Mr Lambert also highlighted the fact that many landlords are sticking with letting agents who do not deliver a sufficient service.

He said: ‘Ask any long-term landlord and they will tell you that the difficulty is in finding a good letting agent, who takes all the worry of sorting any problems for you off your hands. They will have a network including plumbers, electricians, and handymen or women, who can get things fixed ASAP, do essential maintenance swiftly and at a fair cost and keep your tenants happy.’[1]

‘Happy tenants are the key to buy-to-let success, as unless you are in a hot property area such as London where places rent instantly, its vital to avoid rental voids. Even one month of your property sitting unlet but your mortgage and other bills needing paying, proves expensive. Yet many landlords stick with letting agents who don’t do a great job for them, overcharge them for maintenance, double-charge them and tenants for the same work, and upset tenants with demands for unfair fees.’[1]

Concluding, Lambert told landlords: ‘If your agent can’t explain exactly what the charge is for and justify the cost and why you aren’t already paying for this, leave.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/are-more-landlords-about-to-ditch-letting-agents-and-go-it-alone

Average rents fall in October-but yields remain strong

Published On: November 24, 2016 at 12:57 pm

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,buy-to-let landlords,rental yields,rents

The latest figures from letting agents Your Move have suggested that private rents dropped slightly in October. However, buy-to-let landlords are continuing to see significant yields.

Data from the report indicates that rents in England and Wales slipped from a record high of £907 pcm in September to an average of £900 in October.

Sustained yields

Despite the slight falls, buy-to-let landlords are continuing to see significant yields.

Wales saw the largest annual growth, with rents going up by an average of 8% year-on-year to hit £591pcm.

Other regions with strong rental growth include the East Midlands and the East of England. Rents in both of these areas rose by an average of 6% year-on-year to hit £628pcm and £856pcm respectively.

London is still the region with the largest rents, typically £1,290pcm. This is a marginal rise of 1% annually.

Average rents fall in October-but yields remain strong

Fall

The only region to see rents fall was the North East of England, where rents fell by 1% year-on-year to hit an average of £541pcm. Rents in the South West remained unchanged, staying at £668pcm.

Director of Your Move, Adrian Gill, said: ‘After a turbulent year for the economy it is no surprise the rental market has paused for breath this month. Despite economic uncertainty and the European Union referendum result, the lettings market has powered through the year so far.’[1]

‘The underlying market remains strong and we expect growth to resume in future months. Landlords continue to see impressive yields and the UK property market continues to be a safe and secure place to invest,’ Mr Gill concluded.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/average-rents-drop-but-landlords-continue-to-see-impressive-yields