Posts with tag: buy-to-let landlords

Buy-to-let tax changes criticised by Savills

Published On: March 1, 2016 at 10:28 am

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Savills has become the latest high-profile organisation to slam the upcoming buy-to-let tax changes. The firm believe that not a single alteration in legislation will assist first-time buyers get on to the ladder, as desired by Chancellor George Osborne.

Wrong tactics

Lucian Cooks, Savills’ director of residential research, noted that, ‘none of the measures aimed at buy-to-let investors will directly help the prospective first-time buyer overcome the underlying deposit hurdle. Neither will Government schemes eliminate this issue for the bulk of younger households. Therefore, the underlying demand for private rented accommodation is likely to continue to rise.’[1]

Undoubtedly, the changes to the private rental sector will cause a comprehensive shift in investment patterns.

‘For those (investors) requiring debt, we believe these measures will mean that future investment will be more targeted at lower-value higher-yielding stock, albeit avoiding markets heavily reliant on welfare payments, given the Government’s ongoing austerity agenda,’ Cooks continued.[1]

Buy-to-let tax changes criticised by Savills

Buy-to-let tax changes criticised by Savills

Mortgages

Utilising data from the Council of Mortgage Lenders, Cooks suggests that just 31% of available stock in the private rented sector comes with a mortgage. This indicates that the mortgage interest problem could be lesser than some analysts believe.

With this said, the proposal is sure to affect cash surpluses landlords are able to achieve. Cooks observed, ‘our calculations indicate the net cash surplus on the average buy-to-let property will fall from £2,900 to £1,100 over this period.’[1]

‘This assumes a property worth £227,400 with a mortgage of £119,700 and generating a gross income yield of 5%. Those with greater levels of debt or invested in lower yielding markets will be more affected, he concluded.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/current-buy-to-let-changes-wont-directly-help-first-time-buyers-savills-warns

 

Loophole Means Buy-to-Let Landlords Could Rent Out Starter Homes

Published On: February 29, 2016 at 12:44 pm

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A loophole in the Government’s Starter Homes scheme means that buy-to-let landlords could rent out discounted homes intended for first time buyers, according to the Liberal Democrat leader, Tim Farron.

The Starter Homes initiative, announced last year, offers new build homes to first time buyers under 40 at a 20% discount. The Government hopes to build 200,000 of these properties by 2020.

However, Farron warns that there is currently no requirement under the legislation for the person that buys the home to live in the property.

The Liberal Democrats claimed that the loophole could mean that wealthy parents give their children lump sums to buy the homes, which could then be

Loophole Means Buy-to-Let Landlords Could Rent Out Starter Homes

Loophole Means Buy-to-Let Landlords Could Rent Out Starter Homes

rented out.

Additionally, there is nothing to stop a property investor making a deal with a first time buyer who bought a starter home at a discounted price to share the profits of selling the property on or letting it.

However, the Department for Communities and Local Government (DCLG) insists that ministers are “clear that Starter Homes will not be buy-to-let properties”.

The Government will soon begin consulting on rules as part of the Housing and Planning Bill to include letting restrictions on Starter Homes.

The Lib Dems have also raised concerns that homes bought through the scheme can be sold on at market rates, meaning that just one generation of first time buyers will benefit.

Farron believes: “The Government’s plans for Starter Homes are very badly designed and will fail to help the right people. They will be snapped up by the sons of millionaires and make them a huge profit.

“Those who can’t turn to the bank of mum and dad should not lose out. It is vital the Government makes changes to its housing policy.”1

A spokesperson for the DCLG responds: “We want to ensure that anyone who works hard and aspires to own their own home has the opportunity to do so… We are clear Starter Homes will not be buy-to-let properties and will be consulting shortly on rules to include letting restrictions.”1 

The Chief Executive of housing charity Shelter, Campbell Robb, comments: “Whilst the Government is offering these discounted homes to a select few, for those who aren’t so lucky, all they’re offering is more time spent in expensive and unstable private renting, or living with mum and dad well into their 30s.

“This crisis can be turned around, but only if the Government moves beyond schemes that only help the well off, and starts investing in homes that ordinary families can actually afford as well.”1 

We will bring you the latest property news and landlord law at LandlordNews.co.uk.

1 http://www.independent.co.uk/news/uk/politics/loophole-means-buy-to-let-landlords-could-exploit-government-starter-homes-a6899056.html

Available UK housing at 14 year low

Published On: February 29, 2016 at 12:37 pm

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Landlords hurriedly completing deals before the new tax changes take effect in little over one month has contributed to the supply of available UK housing slipping to its lowest level for 14 years.

A report from the National Association of Estate Agents shows investors looking to avoid the extra 3% stamp duty charge on buy-to-let and second homes is seeing already low stock drop still further.

Lows

The January Housing Market report indicates that the number of properties available per member fell to 33 during January. This is the lowest level since December 2002, where only 25 properties were available per branch.

On the other hand, demand for housing increased in January, with an average of 453 house hunters registered per branch. This was the highest recorded since July 2015 and a 21% increase from December, where there was a seasonal lull in activity.

In addition, 72% of estate agents reported an increase in interest from buy-to-let landlords. This was up from 44% in December.

29% of all sales made in January were to first-time buyers, up by 5% from December.

Available UK housing at 14 year low

Available UK housing at 14 year low

Falling supply

Mark Hayward, managing director of the National Association of Estate Agents, said, ‘our findings this month reflect what we are seeing across the market which is that landlords are trying to complete on sales ahead of the changes to stamp duty on additional homes in April. It continues to be a sellers’ market as demand outstrips supply.’[1]

‘The number of sales made to first time buyers has increased this month and we should expect to see their market share rise after April. The fact that housing supply has reached a 14 year low really highlights the need for the Government to push the house building programme to the very top of their agenda and help more first time buyers make their first step onto the housing ladder,’ Hayward concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-property-sales-agents-2016022911613.html

 

Most common struggles faced by landlords revealed

Published On: February 26, 2016 at 10:44 am

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A new investigation has looked at the struggles landlords face and the most common demands put on them by their tenants.

According to the survey conducted by property management specialists London Shared, one-third of buy-to-let landlords said that the full-on nature of the role made it more stressful than they first imagined.

Responsibilities

The research quizzed 500 UK landlords, who noted that the job of being a landlord is far from straightforward. Worryingly, 76% of landlords said that their tenants do not understand their responsibilities as renters. 10% of landlords said they had experienced anxiety problems due to the behaviour of their tenants.

Many landlords said that they are call for 24 hours, with 34% saying that they had received calls in the middle of the night from renters.

Of the landlords questioned, the top five minor issues that they said they have been called out for were:

  • Unblocking the drain (23%)
  • Lost Keys (19%)
  • Turning the heating back on (14%)
  • Changing a light bulb or fuse (13%)
  • Mowing the lawn (7%)

Repairs

Another worrying stat was that 43% of respondents to the survey said they were unsure of their responsibilities when repairing a property.

Just 24% of landlords said they were clear on their legal obligations for adequate HMO licensing and just 18% said they knew they had to apply for a HMO licence.

Additionally, the survey found that landlords spend an average of 11 hours per month managing their rental property. 83% said they spent up to £5,000 per year on property repairs from their rental accommodation.

Most common struggles faced by landlords revealed

Most common struggles faced by landlords revealed

Arrears

A major source of landlords’ stress was underlined by 40% of those questioned saying that they had received their rental payments late. Of those that said that they had received late payments, 18% said they had defaulted on their bills.

When looking further at those that have either had late or missed payments from their tenants, 11% said they were unable to pay off their existing debt. 22% said they had to go to court to reclaim money owed to them by their tenants.

Many landlords were found to be dependent on their rental income to pay off their mortgage, with over half stating this was the case. 23% said they used rental incomes to renovate their homes, while 13% said it paid for their children’s rental fees.

Notices

Some tenants are causing such a problem for their landlords that 24% said they had to serve notice on them. Of those that served noticed, the main reasons for doing so were found to be rent arrears (69%), property damages (44%) and inappropriate behavior (24%). Furthermore, 18% said that they served notice as their tenants sublet the property without consent and 11% after finding out their tenants were using the home for illegal purposes.

Despite it being illegal to live in a property once an eviction warrant is given, 44% of tenants who had been served notice refused to leave. As such, 25% of landlords said that this caused them extra financial stress. 13% of landlords admitted that they wished their rental property was managed by somebody else!

 

Right To Rent scheme slammed by peer

Published On: February 25, 2016 at 12:43 pm

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A senior Liberal Democrat peer has accused the Government of hypocrisy over the Right To Rent scheme.

Baroness Hamwee has slammed the notion of landlords or letting agents being jailed for housing an illegal immigrant. She believes that the potential presence of an illegal migrant is due to, ‘the government’s failure,’ in protecting Britain’s borders.

‘Immigration Officers’ 

Writing on the Politics Home website, the Baroness said that Right to Rent, ‘turns landlords and agents into immigration officers.’

Continuing, she criticises the Government for allowing the scheme to roll out nationally, while the pilot scheme in the West Midlands was still continuing. ‘It could hardly be said that the pilot was of adequate size, or a representative sample and that the scheme does not make discrimination all too easy,’ she noted.[1]

‘The great majority of landlords, owning one or two properties, are amateurs who let out a property to supplement pensions or top up salaries. It is these landlords who are likely to be caught out,’ Hamwee added.[1]

Right To Rent scheme slammed by peers

Right To Rent scheme slammed by peers

Discrimination

However, Baroness Hamwee believes it is not only migrants that could be discriminated against through this legislation. She feels that, ‘the 12 million Britons who do not have a passport will find it difficult to prove their right to live in their own country, like all the non-British residents who have a legitimate right to be here but whose documentation is not easily identified.’[1]

‘It is likely that the extra administration costs (created by a government keen on deregulation) will be passed on to tenants. The government’s own estimates indicate that this will amount to an extra cost to tenants of £17.9m over 10 years,’ Hamwee concluded.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/right-to-rent-peer-accuses-government-of-hypocrisy-over-migrant-checks

 

Supply of rental accommodation slips further

Published On: February 25, 2016 at 11:51 am

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A worrying new investigation by the Association of Residential Letting Agents suggests that the supply of rental accommodation is at its lowest level since records began.

What’s more, demand for accommodation was up slightly in January.

Decline

Supply of rental accommodation slips further

Supply of rental accommodation slips further

After months of steady decline, January saw the number of properties registered per letting agent branch slip by 5%. The total currently stands at 172 properties, down by 10 on December 2015.

However, renters north of the border have much more choice, with 280 properties registered per member branch in Scotland. In London however, demand for property is being driven up by lack of supply, with just 116 properties available per registered branch.

Rising demand

Demand for rental property rose in January, following a lull in December. One average, 31 would-be tenants registered per member branch during the last month. This is still lower than in January 2015, when 38 tenants were registered per branch.

Growing demand was underlined by the number of agents reporting rent hikes in January. 30% reported a rise in rental values, the largest since September 2015.

‘Supply of housing continues to be a problem and tenants bear the brunt of this with more people competing for properties at higher prices,’ noted David Cox, managing director of ARLA. ‘The majority of tenants find that it is impossible to save very much at the end of the month to put towards buying their own home. Our recent Cost of Renting report found that a fifth of those renting in the UK do not expect to ever be able to afford to buy a home and unless we act soon to build more properties, this number will only get higher,’ he continued.[1]

Reforms

The upcoming stamp duty changes on buy-to-let and second residential homes is causing concern in the sector. 63% of ARLA members believe the Chancellor’s reforms will drive landlords out of the market. This in turn will lesson supply still further, with 58% of ARLA members believing that reforms will also push up rental costs.

Mr Cox went on to say, ‘a few weeks into the new-year and the April deadline for the stamp duty surcharge is looming and interest from buyers looking to invest in buy-to-let properties and beat the deadline is ramping up. The final details of the new tax will be revealed at the Budget in March but we are not expecting to see the Government back down on this policy.’[1]

‘The findings from our members echo our concerns that efforts to penalise buy-to-let will ultimately impact those entering and currently in the rental market, as by increasing rents landlords will seek to recoup their costs. Rent costs are already rising exponentially and tenants are feeling the strain of a crowded marketplace. We just need more houses; it’s a simple as that,’ he concluded. [1]

[1] http://www.propertyreporter.co.uk/landlords/where-have-all-the-rental-properties-gone.html