Posts with tag: buy-to-let landlords

Landlord jailed after cannabis cultivation

Published On: May 9, 2016 at 9:16 am

Author:

Categories: Landlord News

Tags: ,,,,

A buy-to-let landlord has been put behind bars after being found guilty of growing cannabis with a value of £75,000 in one of his properties.

Despite claims that he was unaware of the cultivation, James Sullivan, 61, was given a three-year jail term.

Scent down

Officers were alerted to the illegal cultivation after detecting a scent from the street outside the house in Plymouth. When entering the property, the officers found 64 mature plants, some of which reached 4ft in height.

Mr Sullivan, a former paratrooper, was found guilty of growing cannabis between December 2012 and February 2013 and was sentenced to four years behind bars. However, this conviction was quashed by the Court of Appeal.

Addressing the most recent conviction, judge Ian Lawrie said: ‘you are a man of good character and what on Earth possessed you to get involved in criminal activity at this stage in your life, I do not know. But you are going to have to pay a heavy price.’[1]

Landlord jailed after cannabis cultivation

Landlord jailed after cannabis cultivation

Going to pot

The case of Mr Sullivan highlights the need for landlords to be wary of their tenants growing cannabis in their rental property.

In the last year alone, police seized 456,911 plants across Britain, according to Direct Line for Business. In London, 59,002 plants were found, more than in any other part of the country.

Birmingham is also the second city in terms of cannabis cultivation, with police in the West Midlands confiscating 52,218 plants. In greater Manchester, officers found 33,547 plants.

Jane Guaschi, business manager at Direct Line for Business, noted, ‘the consequences of a cannabis farm on a landlord’s property can be financially catastrophic.’[1]

Offering advice for landlords, Guaschi said, ‘landlords should check to see if their insurance policy covers them for malicious damage as it’s not just the structural damage that could have insurance implications, it’s the financial headache of the clean-up that will hurt the landlord’s back pocket. What’s more, landlords could face the loss of rent and the stress of the legal wrangling during periods of repair or eviction.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/landlord-jailed-for-marijuana-related-crime

Landlords urged to join campaign against tax changes

Published On: May 6, 2016 at 11:00 am

Author:

Categories: Landlord News

Tags: ,,,,,

Buy-to-let landlords with mortgages on small-scale portfolios are being urged to join a campaign that promises to fight back against perceived unjust tax relief changes.

From next year, existing rules that allow landlords to offset their mortgage interest against tax will be slowly phased out. By April 202, these rules will be abolished altogether.

Changes

The changes to the amount of tax landlords can claim on their properties were announced by Chancellor George Osborne in last summer’s Budget. It is feared that these alterations could mean purchasing a buy-to-let property and subsequently renting it out will be unachievable for many.

According to Treasury estimates, the tax alterations will raise almost £1bn a year by 2021.

In light of the upcoming changes, campaigners are hoping to raise a £300,000 fee in order to launch a judicial review against the restrictions. Anyone pledging £100 or more to the campaign is being offered a complimentary ticket to a rally against the changes, being held in London on Thursday 9th June.

Landlords urged to join campaign against tax changes

Landlords urged to join campaign against tax changes

Backing

The campaign has already received some high-profile backing. Cherie Blair MBE QC has given her support to the opposition of the alterations, with her firm Omnia Strategy having sent a legal letter to HMRC in February. This letter said that the changes were in breach of a landlords’ human rights.

These challenges are also being backed by landlords Steve Bolton and Chris Cooper. Mr Bolton is the founder of Platinum Property Partners, specialising in buy-to-let, with a portfolio worth over £200m.

In a joint statement to landlords, the pair said, ‘with your continued financial backing and support, we plan to take the Government all the way to court and fight the strongest case that we can.’

‘Please spread the word far and wide amongst your community, especially fellow landlords, tenants, letting agents and others who will be adversely affected by this ludicrous legislation.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/landlords-urged-to-oppose-mortgage-tax-relief

 

 

High demand and low supply to drive rents up

Published On: May 4, 2016 at 8:57 am

Author:

Categories: Property News

Tags: ,,,,

A director of leading letting agents in Britain has warned that rents will continue to increase over the coming months.

Adrian Gill, director of Your Move and Reeds Rains, feels that there will be a cut in housing supply in the private rental sector, with many buy-to-let landlords leaving the market.

Alterations

According to Gill, the recent tax changes, including the additional stamp duty charges, is driving many residential landlords out of the sector. This is turn is set to drive up an early chronic shortage of properties in many areas.

Mr Gill notes that, ‘ultimately, this will only punish tenants, driving out buy to let landlords will reduce supply leading to lower choice and higher rents for those that can least afford them.’

He went on to observe that Spring represents the calm before the summer storm, with demand for homes in the sector driven by a flow of jobs and a flux of a general more mobile workforce.

‘This reflects the strengths of private renting, the opportunity for young, independent adults to strike out on their own, or for families to move across the country and earn the best possible livelihood. In the towns and cities with the biggest renting populations it is a constant struggle for supply from landlords to match demand from tenants. With a surge in jobs and local economic activity, rents rise. Keeping pace will not be easy and will depend on the freedom to invest as a landlord,’ Gill added.[1]

High demand and low supply to drive rents up

High demand and low supply to drive rents up

Restraint

Just last week, a survey from the Association of Residential Letting Agents (ARLA) found that 65% of landlords will not look to purchase any more buy-to-let properties in light of the tax alterations.

61% of ARLA agents said that rents will rise even further as a result of the tax changes.

David Cox, director of ARLA, said, ‘whilst landlords adjust to the increase in costs we can expect to see one of three outcomes prevailing in the buy-to-let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/rents-set-to-rise-as-demand-grows-and-supply-falls

Landlords to Blame for Decline in DIY Among Under-30s?

Published On: May 1, 2016 at 8:29 am

Author:

Categories: Landlord News

Tags: ,,,,

According to new research, buy-to-let landlords are to blame for the sharp decline in under-30-year-olds carrying out DIY work in their homes.

Generation rent cannot afford to buy and fix-up their own homes, reports credit card provider MBNA.

The firm says that spending by under-30s on DIY has fallen by a third since the mid-1990s. It blames the decrease on the rise of buy-to-let landlords.

These figures arrive as a report from Halifax shows that the average age at which people purchase their first home is still rising, with buyers having to take out longer mortgages in order to get on the property ladder.

MBNA’s Mark Elliott explains: “Generation rent is usually barred from making home improvements by clauses in their tenancy agreements. Although [overall] DIY spending has grown by 42% in real terms since 1996, an increase in the proportion of people renting in the UK could impact the sector’s growth in the future.”

Landlords to Blame for Decline in DIY Among Under-30s?

Landlords to Blame for Decline in DIY Among Under-30s?

Based on spending trends among millions of credit card customers, under-30s’ spending on DIY has dropped by 32% since 1996, to an average of £108 per year. At the same time, 45-60-year-olds have increased their spending, to an average of £240 a year.

“Any further increases in the average age of first time buyers could impede the DIY sector’s future growth by narrowing the window in which most people undertake DIY tasks during their lives,”1 says Elliott.

The report from Halifax found that the average first time buyer is now almost 31, compared with 27 in the early 90s. Some predictions say the average age of a first time buyer could be over 40 in the next ten years.

The young adults who are able to get onto the property ladder have to stretch themselves much further with ever-longer mortgages, says Halifax.

It reports that 26% of first time buyers are taking out 35-year mortgages, up from 16% in 2007.

As the average age of a first time buyer rises and the mortgage term is stretched, many will still be paying off their debt into retirement, warns the lender.

The report states: “One in three (34%) young people don’t expect to pay off their mortgage under after their 60th birthday – more than one in 20 (6%) still expect to be paying their mortgage over the age of 70, while almost one in ten (8%) expect to be paying their mortgage throughout their life.”

The research also highlights the huge deposits that young buyers now have to save. The average deposit size increased by 13% in 2015 to a huge £32,927.

Until now, the size of the deposit has been the single biggest barrier to buying a home. But now, it is the size of the deposit and the absolute level of house prices combined that are keeping youngsters off the property ladder.

“The generation rent report has repeatedly shown that raising a deposit has been the consistent barrier for the majority of would-be homeowners,” says Halifax. “However, the 2016 report tracks the emergence of high property prices being perceived as an increasingly large barrier to purchasing a first home (rising to 60% in 2016 compared with 52% in 2011). The average price of a first property is now £196,801, rising from £134,889 in 2010.”1 

But the situation does not look set to improve. Figures from the Office for National Statistics show that the number of private rental homes has more than doubled in recent years, from 2.13m in 2001 to 4.74m in 2015. And prices in the private rental sector aren’t low either – the average two-bedroom property in London is forecast to cost £2,000 per month by September.

1 http://www.theguardian.com/lifeandstyle/2016/apr/29/buy-to-let-landlords-decline-diy-under-30s-generation-rent-age-first-time-buyer

Nationwide Updates Lending Criteria for Buy-to-Let Landlords

Published On: April 29, 2016 at 11:01 am

Author:

Categories: Finance News

Tags: ,,,,,

Nationwide building society is updating its criteria for lending to buy-to-let landlords, ahead of changes to taxes for property investors.

Landlords who take out new loans from the society’s specialist arm The Mortgage Works (TMW) will only be able to borrow up to 75% loan-to-value (LTV), instead of the current 80%. They must also prove that their rental income is at least 145% of their monthly mortgage payments, up from the present requirement of 125%.

These changes were announced as landlords face a reduction in the amount of mortgage interest they can claim against tax, which will come into effect from April 2017. If you are concerned about how current and future tax changes will affect you, we have advice from finance expert Paul Mahoney, of Nova Financial: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

Nationwide Updates Lending Criteria for Buy-to-Let Landlords

Nationwide Updates Lending Criteria for Buy-to-Let Landlords

Under the change, landlords that currently receive tax relief of 40% on their mortgage interest payments will see the amount cut to 20% over five years. Lenders have also been advised to consider the borrower’s costs associated with letting the property, including tax costs, when assessing affordability for loans.

Nationwide’s updated rules on rental income, coming into effect on 11th May, will mean that a landlord that makes £10,000 per year in rent will only be able to borrow £138,000, rather than £160,000.

Alternatively, if they wish to borrow up to £160,000 at 65% LTV, they must find a property that makes an extra £130 per month in rent.

The Managing Director of TMW, Paul Wootton, says the move is designed to help landlords strengthen their cashflow position “and help them withstand the impact of increased costs from the new tax regime”.

He adds: “As a responsible lender, this change is a pro-active move that recognises the need to help safeguard rental cover for landlords over the coming years, and in advance of the forthcoming changes to mortgage interest tax relief.”1 

The Director of Coreco mortgage brokers, Andrew Montlake, believes the change shows that lenders are starting to worry about how recent tax changes will affect landlords’ income in the future.

He says: “I suspect they will not be the last to change their rental calculations with this in mind, and landlords should review their portfolio and financing requirements sooner rather than later, as well as making sure they are aware of the very real effects these tax changes will have on their future income.

“The worry is that this will hit not just landlords, but tenants too in the form of higher rental payments, at a time when many are already stretched.”1

Other lenders have also been making changes to their lending criteria.

It is now almost a month since buy-to-let landlords and second homebuyers began being charged an extra 3% in Stamp Duty. The Association of Residential Letting Agents has expressed concerns that this is causing the level of rental property supply to decline.

1 http://www.theguardian.com/money/2016/apr/29/nationwide-tightens-lending-criteria-for-buy-to-let-landlords

Worries in the Private Rental Sector as Supply Drops Sharply

Published On: April 28, 2016 at 9:40 am

Author:

Categories: Property News

Tags: ,,,,

The supply of rental housing stock on letting agents’ books has dropped sharply, causing worry in the private rental sector, according to the latest report from the Association of Residential Letting Agents (ARLA).

The March Private Rental Sector report found that the supply of rental accommodation fell to the lowest level since the start of last year in March.

Demand was also down last month, with ARLA agents reporting an average of 33 prospective tenants registered per branch, down by 11% from the 37 seen in February. This is also down on last year, from an average of 33.

Worries in the Private Rental Sector as Supply Drops Sharply

Worries in the Private Rental Sector as Supply Drops Sharply

Supply has also dropped on an annual basis. In March 2015, the average number of properties managed per letting agent branch was 192. This year’s figure of 169 properties marks a decrease of 12% and is the lowest level seen since records began in January 2015.

However, the private rental sector appears to be healthy in Scotland, where agents had an average of 273 properties on their books. In Yorkshire and the Humber, agents have 207 properties to manage. Contrastingly, there are just 122 rental properties available per letting agent branch in London.

Due to the 1st April’s introduction of a 3% Stamp Duty surcharge for buy-to-let landlords and second homebuyers, two-thirds (65%) of ARLA agents predict that current and prospective investors will leave the market, causing a decline in the supply of rental properties. Indeed, many have questioned whether buy-to-let is still a lucrative investment opportunity.

In March, rent prices rose for a third (32%) of tenants, and three in five (61%) ARLA members fear that they will increase further as a result of the changes. It has long been considered that buy-to-let tax changes will push rents up for tenants.

The Managing Director of ARLA, David Cox, comments: “We don’t expect falling supply to stop here – the recent Stamp Duty changes are very likely to cause supply to decrease even further, as landlords withdraw from the market.

“Not only do our agents predict that rent costs will increase further, but rental homes may also face a decline in quality over time, as landlords struggle to keep up with maintenance costs alongside the higher Stamp Duty charge.

“While landlords adjust to the increase in costs, we can expect to see one of three outcomes prevailing in the buy-to-let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage.”