Posts with tag: buy-to-let landlords

Landlords facing minimum room size licensing scheme

Published On: October 18, 2016 at 2:27 pm

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The British Government has today announced it is to introduce minimum room sizes for shared tenant homes. This is part of a wider national clamp down on rogue landlords forcing tenants into unsafe and overcrowded properties.

Housing Minister Gavin Barwell said that the measures will affect England only and will heighten councils’ ability to solve the issue. This in turn will bring an end to rogue landlords ‘ability to exploit tenants and charge them high rents for poor conditions.

Minimum sizes

Plans outlined today will see landlords letting properties to five or more people from two or more households would have to be licenced. In addition, they would have to provide a room of a minimum size of 6.52 square metres, thus closing a loophole allowing some rogues to rent rooms much too small for an adult.

Mr Barwell said: ‘These measures will give councils the powers they need to tackle poor quality rental homes in their area. By driving out rogue landlords that flout the rules out of business, we are raising standards and giving tenants the protection they need.’[1]

Other measures to help councils raise standards in multiple occupancy lets include ensuring mandatory rules apply to all shared properties with five or more people from two or more households. Additionally, this would apply to flats above and below shops and other business premises.

At present, licensing only comes into force for homes with three or more floors and does not apply to homes attached to businesses unless they are in a three-story property.

Landlords facing minimum room size licensing scheme

Landlords facing minimum room size licensing scheme

Storage

Under these proposals, landlords of shared properties will be permitted to provide sufficient storage and disposal of rubbish and pass a fit a proper person test. Criminal record checks will be carried out.

If a landlord fails to obtain a licence they will be liable to pay an unlimited fine. Mr Barwell believes these measures will complement other Government efforts to seek out unscrupulous landlords.

Already, £5m of Government funding to 48 councils has brought about a big increase in the number of homes checked in the last quarter. In early 2016, in excess of 33,000 homes were inspected. Around 2,800 rogues are facing prosecuting as a result of these checks.

[1] http://www.propertywire.com/news/europe/landlords-multiple-occupancy-lets-england-face-mandatory-licencing/

 

 

70% of eviction notices could be illegal

Published On: October 18, 2016 at 10:48 am

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A law firm has claimed that a large number of buy-to-let landlords who are attempting to evict their tenants are being held up by defective Section 21 and Section 8 notices.

North West solicitors Kirwans said it has seen a significant rise in the number of private landlords seeing delays in evictions. In some cases, these can take more than two months, leading to rental losses. The problem surrounds invalid notices, which are part of the Housing Act 1998. These notices are being identified, with hold ups coming as new ones are subsequently issued.

Stress

Danielle Hughes of Kirwans observed that over the last three month, 70% of landlords seeking to evict have been held up by problematic notices. This is turn has caused much stress amongst buy-to-let investors.

Hughes noted: ‘The legal changes that have taken place in this area over the past 12 months have been fast-paced complicated and many landlords are finding that the notices they have prepared themselves using online forms, or even those that have been prepared for them by well-meaning letting agents are out-of-date as a result.’[1]

‘When trying to evict someone, landlords have to follow a strict process which sees them serve notice on the tenant, then issue a claim for possession in the county court, then request a warrant for possession and make an eviction appointment. Many landlords don’t seek legal advice until they try and move on to stage two of the eviction process, when the claim for possession is issued.’[1]

70% of eviction notices could be illegal?

70% of eviction notices could be illegal?

Increases

The eviction process can be lengthy, with courts fees for all stages recently rising from £390 to £476. Hughes believes that most errors and risks occur during the first stage, when some landlords opt to go ahead without the advice of a solicitor.

Concluding, Hughes said: ‘Time and time again we are seeing defective notices. The impact of this on the landlord can be devastating, both in terms of emotions, costs and delays, particularly in situations where the tenant is no longer paying rent.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/up-to-70-of-eviction-notices-could-be-illegal-says-law-firm

22% of landlords to be pushed into higher rate tax bracket from 2017

Published On: October 18, 2016 at 9:37 am

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Around 440,000 basic-rate tax payers will be pushed into a higher tax bracket from April 2017, according to a new report from the National Landlords Association.

Current rules permitting landlords to offset mortgage interest against tax is being phased out from next year. As such, the amount of mortgage interest landlords can offset against tax when buying property is to be restricted.

Changes

The phasing out of mortgage interest tax relief will be complete by April 2021. By then, it is estimated that higher-rate tax payers will only receive 50% of their current relief. This will subsequently cut returns as landlords will be required to pay much more in income tax.

Worryingly, the National Landlords Association claims that while 440,000 basic-rate tax payers (roughly 22% of landlords), will be pushed up a bracket, all landlords could be at risk.

By region, landlords in the capital are likely to be worst hit, with 31% of investors estimated to be impacted by the changes. Next came the East of England (30%) West Midlands (28%).

The full breakdown of where landlords will be impacted is shown below:

Region Will move up a tax bracket

(from basic to higher rate)
East England 30%
East Midlands 22%
London (central) 31%
London (outer) 24%
North East 24%
North West 19%
Scotland 13%
South East 25%
South West 23%
Wales 23%
West Midlands 28%
Yorkshire & Humber 24%

[1]

22% of landlords to be pushed into higher rate tax bracket from 2017

22% of landlords to be pushed into higher rate tax bracket from 2017

Liability

Further research from the NLA indicates that landlords’ tax liability will rise depending on their yearly mortgage interest payments. These are broken down by portfolio size below:

  • Single property-£3,600
  • 2-3 properties-£8,600
  • 4-5 properties-£16,300
  • 5-10 properties-£18,200
  • 11-19 properties-£24,900
  • 20 plus properties-£38,000

Richard Lambert, chief executive officer at the National Landlords Association said: ‘When the Government announced these changes last year, it claimed they would only hit a small proportion of higher-rate tax payers. We now know that is complete tosh.’[1]

‘The Government must look to amend these tax changes and minimise the impact on landlords and their tenants-something that could easily be achieved by applying the rules to only new loans written after April 2017. Unless this happens, landlords will face an impossible decision of whether to increase rents and cause misery for their tenants, or sell-up and force their tenants to find a new home,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/around-440-000-landlords-will-be-pushed-into-higher-tax-bracket-from-april-2017

 

Rental growth slows during September

Published On: October 14, 2016 at 9:00 am

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Rents in the UK increased by just 3% in the year to September, this slowest annual growth rate recorded so far in 2016.

Latest analysis from HomeLet also indicates that tenants signing a new agreement in September agreed an average rent of £910 per month.

Ups and downs

Whilst rents are up by 3% from last year, it represents a monthly drop of 0.8% in comparison to August. Rental price inflation has fallen from a high point of 4.5% in March 2016, with the rate of increase falling in each of the last three calendar months.

This slower rate of growth suggests small decreases in average rents across the UK, which could indicate that affordability thresholds are being reached.

Martin Totty, HomeLet’s Chief Executive Officer, said: ‘Landlords are being very careful to ensure rents remain affordable for tenants. Despite factors such as higher Stamp Duty on purchases for buy-to-let investors and the tax changes coming in from April 2017, it would appear so far landlords have absorbed any actual or expected decreases in their yields, rather than pass this on through higher rents.’[1]

Rental growth slows during September

Rental growth slows during September

Inflation

Private rental sector inflation is now less than house price inflation, with relative affordability of rented owner ownership improving.

The future of the rental market is still uncertain, with factors such as mortgage interest tax relief and Brexit looming.

Despite the rate of annual rental growth slowing, the September 2016 HomeLet Rental Index shows that rents are up year-on-year in 10 of the 12 regions.

Of the regions that have not seen yearly rental growth, Scotland recorded a 1.7% annual decrease, while rents in the North-East were unchanged.

Mr Totty concluded by saying: ‘Landlords and tenants alike will need to monitor the market carefully as we get closer to the April 2017 reduction in tax relief on buy-to-let mortgage interest. The recent trends in rental values appear to be changing, which may yet prove beneficial for both tenants and landlords if it reflects some rebalancing between yields and affordability. Both are important for the proper functioning of the increasingly important private rented sector.’[1]

[1] http://www.propertyreporter.co.uk/landlords/uk-rental-growth-slows-further.html

 

Buy-to-Let Investors Return to the Property Market

Published On: October 12, 2016 at 10:29 am

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Number of UK buy-to-let businesses increases 2.1%

Buy-to-let investors have returned to the property market, following the post-Stamp Duty deadline lull in April, according to Rightmove.

The property portal’s Rental Trends Tracker for the third quarter (Q3) of the year found that buyer enquiries from potential landlords and buy-to-let investors were up by 30% on May, following a short-

Buy-to-Let Investors Return to the Property Market

Buy-to-Let Investors Return to the Property Market

term dip after the 3% Stamp Duty surcharge for second homes was introduced on 1st April.

New rental listings on Rightmove were 6% higher in Q3 than the same period of 2015, found the report.

In addition, the research revealed that the average rent is up by 0.5% on a quarterly basis, and 3.2% on the year, to stand at £779 per month. This is down from quarterly growth of 2.7% and a yearly rise of 4.1% in Q2.

Rents continue to drop in London, by 0.7% on Q2 and 1.5% annually, to an average of £1,885 a month.

The most in-demand area outside of London for rental properties was Ashton-Under-Lyne in Greater Manchester, where the average rent on a two-bedroom property was £524 per month. This was followed by Wellingborough in Northamptonshire, where the typical rent stands at £660.

Rightmove also analysed the returns that landlords making last-minute purchases before 1st April would have received, by looking at capital price growth and average rent prices since the Stamp Duty changes.

The best returns for buy-to-let investors were found in Southend, Essex, where house prices rose from £187,515 in Q1 to £210,353 in Q3, and the average rent was £4,816, giving a total return on investment of 14.7%.

In London, the highest returns were found in East Croydon (13.8%) and Greenford (13.4%).

The Head of Lettings at Rightmove, Sam Mitchell, comments: “Investor activity has bounced back following the Stamp Duty changes, though some agents report that many investors are looking to knock sellers down on their asking prices to make up for the additional Stamp Duty they now need to pay.”

She adds: “New rental supply has held up, despite concerns that the Stamp Duty changes would lead to less fresh stock.”

Have you purchased a buy-to-let property since the Stamp Duty change was introduced?

BLT Ltd companies applications rise to 63%

Published On: October 6, 2016 at 10:19 am

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New data released by Mortgages for Business indicates that 63% of applications from buy-to-let landlords purchasing properties are being made through limited companies.

This figure is a substantial rise from the 21% recorded just before alterations to mortgage interest tax relief were announced by previous Chancellor George Osborne in 2015.

Changing trends

There has been a substantial change in landlords’ behaviour, with many investors choosing to incorporate their business.

In contrast, the number of remortgage applications made via limited companies remained at a fairly constant level.

For market share, buy-to-let market products available to limited companies make up 16% of overall products. This is a rise from 13% recorded in the first half of the year.

Further data from the report shows the average rate of a buy-to-let mortgage slipped to 3.3% at the end of September, down from 3.7% in June. Rates for products available to limited companies fell to an average of 4.3%. This means that rates available to limited companies are only roughly one percentage point greater than the average market value.

BLT Ltd companies applications rise to 63%

BLT Ltd companies applications rise to 63%

Rates

A Mortgages for Business spokesman said: ‘Many lenders with product for both personal borrowers and limited companies, offer the same rates to both. At the moment, some of these lenders accept only SPV limited companies, including Foundation Home Loans and Paragon. Some of the more specialist lender and I’m primarily of Aldermore Bank, InterBay Commercial, Shawbrook and our own lending band Keystone Property Finance, also offer the same rates to trading limited companies.’[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-ltd-co-purchase-applications-rise-to-63.html