Posts with tag: landlords

Tax changes are not having desired impact, says peer

Published On: February 3, 2017 at 10:46 am

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The head of one of the country’s biggest franchise agency groups has stated that the Government’s tax assault on buy-to-let will not impact the drivers that will ultimately lead to rental sector expansion.

Ian Wilson, head of MartinCo said in a trading statement to the City, that the fundamental drivers for the expansion of the private rental sector remain in place:

  • High migration
  • Low supply of new housing stock
  • Deposit issues for first-time buyers
  • Pension reforms for over 55’s

Performance

MartinCo suggest that total returns from buy-to-let investment during the past ten months have outperformed all other asset classes. The prospect of owning a rental property to obtain income in retirement, alongside benefitting from rising capital values, remains an attractive one.

Tax changes are not having desired impact, says peer

Tax changes are not having desired impact, says peer

Mr Wilson said: ‘We do not envisage the Government’s recent interventions in the buy-to-let sector significantly impacting our business. Buy-to-let investors have generally reduced gearing in their portfolios over the years since 2008 and are believed to be able to absorb rising interest rates.’[1]

‘We are well positioned to sell investment properties if investors decide to exit and our research suggests that larger buy-to-let investors would purchase this stock. Early indications from the mortgage industry show that investors are beginning to incorporate their activities into trading companies to avoid the stamp duty surcharge and to retain the benefit of interest tax relief on buy-to-let loans,’ Wilson added.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/tax-changes-not-hitting-buy-to-let-significantly-says-agency-chief

Housing chief slams Right To Rent

Published On: February 2, 2017 at 2:50 pm

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An industry peer has moved to lambast the Right To Rent legislation, suggesting that the Government is largely unaware of its impact.

Mr John Perry, senior policy advisor at the Chartered Institute of Housing, feels that the Government must rethink the scheme before it rolls out to Scotland, Wales and Northern Ireland.

Application

Writing in The Guardian, Mr Perry said that no one knows if the Right to Rent bill is achieving its objective or if it even being applied whatsoever.

Perry wrote: ‘The Home Office has admitted it cannot monitor the scheme and it’s a fair bet given the limited publicity that at least a proportion of England’s 1.8m private landlords are still completely unaware of it.’[1]

‘Refugees who have been accepted in the UK often have to wait many weeks for documents to prove it – and many become homeless because they can’t get either a social or a private tenancy. Meanwhile British people can also be affected if they have no passport or other accepted proof of UK residence, and there are a raft of other circumstances that could mean a person may not satisfy the checks,’ he warned.[1]

Housing chief slams Right To Rent

Housing chief slams Right To Rent

Checks

At present, Perry thinks that there are 11,300 daily Right To Rent checks, but as of December 2016, there were only 654 individuals without documents attempting to rent.

Concluding, Mr Perry said: ‘The additional work by landlords was estimated by the government to cost a staggering £4.7m a year. It’s time for the government to seriously reconsider the impact of right to rent on vulnerable tenants and would-be tenants before it is rolled out to Scotland, Wales and Northern Ireland. It’s simply not good enough to claim that the scheme has a deterrent effect when the proven benefits are so limited and there are regular reports of the damage being caused.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/right-to-rent-housing-chief-says-its-not-good-enough

Tenants outraged by Santander contract clause

Published On: February 2, 2017 at 10:20 am

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Tenants and housing groups have vented fury towards Santander, after the lender included a clause in its buy-to-let mortgage contracts that requires landlords to raise rents by, ‘as much as can be reasonably achieved.’

Despite the wording appearing in Santander’s contracts since 2011, it has only just come to light, as buy-to-let investors continue to feel the pressure of the raft of recent tax changes.

Outrage

A private landlord who spotted this clause in her contract, subsequently contacted industry Mortgage Strategy.

Talking to the magazine, the landlord said: ‘The public views landlords as greedy, but how many people are aware that landlords are being forced to increase rents by banks such as Santander?’[1]

The Santander contract states that when rents are up for renewal the landlord must “get written advice from a qualified valuer [as to] whether the market rent at the date of the review is likely to be higher than the rent currently payable,’ she added.[1]

Santander requires a copy of the valuer’s advice in these circumstances and goes on to say: ‘If the valuer advises that the market rent at the date of the review is likely to be higher than the current rent, you will take all steps to ensure that the review takes place and leads to the maximum increase in the rent which can reasonably be achieved.’[1]

Reaction

One of the UK’s leading mortgage commentators, Ray Boulger, believes the clause, ‘does not square very well with the best interests of consumers.’[1]

Dan Wilson Craw of campaign group Generation Rent, noted: ‘This behaviour is undermining landlord-tenants relationships. Most of the time landlords won’t raise because they want to keep reliable tenants. Being forced to maximise returns will result in unnecessary churn in the market and the destabilisation of tenants’ lives.’[1]

James Daley, director of campaign group Fairer Finance, observed that the clause is: ‘Ethically, it’s absolutely the wrong thing to do. The market for rents should be competitive, and landlords should have the freedom to set rents that tenants can afford to pay and are willing to pay.’[1]

Tenants outraged by Santander contract clause

Tenants outraged by Santander contract clause

Disagreement

Responding to the criticism, a spokesman for Santander said: ‘The contract has been in place and remained unchanged since we entered the market in 2011. Landlords should set their rents at a prudent level that is fair for the tenant (based on market rates) and that ensures they can continue to service the debt. Our interest is that the landlord ensures they can continue servicing the loan.’[1]

‘Any potential to increase the rent is only that which can be ‘reasonably achieved’. There is plenty of discretion for the landlord to set a rent that they and the tenant agree, and no direct obligation imposed by us that the rent should be the maximum possible,’ they added.[1]

[1] http://www.telegraph.co.uk/investing/buy-to-let/santander-tells-buy-to-let-landlords-raise-rents-maximum/

 

More calls for the Government to reconsider tax changes

Published On: February 1, 2017 at 3:32 pm

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The Residential Landlords Association has once again called on the Government to reconsider its tax changes, as announced by former Chancellor George Osborne.

Instead, the Association wants the Government to utilise the extra revenue raised from the surcharge stamp duty to abolish proposed reforms to mortgage interest tax relief and stop landlords from having to increase rents.

Impact

Despite a number of experts predicting that Section 24 will have an adverse impact on the Private Rental Sector, the Government is still pressing ahead with its proposed changes.

The National Landlords Association claims that roughly 440,000 basic-rate taxpayers, or 2 million landlords-will be forced to move up a tax bracket from April this year.

New figures from HMRC reveal that the Government has raised £1.19bn in tax, £560m more than forecast for the entire year. Should this continue, revenues for the entire year will move past £1.58bn, nearly £1bn more than forecasted. This, the RLA believe, gives landlords room for a break.

A recent ARLA survey showed that 58% of landlords are considering reducing their investment in rental properties due to the proposed tax changes. 66% predict that the tax changes will put upwards pressure on market rents.

More calls for the Government to reconsider tax changes

More calls for the Government to reconsider tax changes

Windfall

RLA Policy Director, David Smith, said: ‘In raising nearly twice as much in just nine months as the tax was predicted to make in one year this Stamp Duty windfall gives the Government a chance to back the rental market and support the development of new homes which we desperately need.’[1]

‘At no stage has evidence been published to support the assertion that landlords are taxed more favourably than homeowners, or that they are squeezing first-time buyers out of the market. Assessments by the Institute for Fiscal Studies and the London Schools of Economics contradict the Treasury’s position completely. It is also nonsense for HMRC to suggest that one in five landlords will be affected by the mortgage interest changes, when what matters is the number of properties affected,’ he continued.[1]

Concluding, Mr Smith said: ‘The government has received far more money than it expected. We urge them to use this to support the country’s tenants and undertake a fuller impact assessment of a policy that has the potential to cause untold damage to the rental market.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/1/government-urged-to-reconsider-changes-to-tax-relief-for-residential-landlords

 

73% of tenants have self-funded rental improvements

Published On: January 31, 2017 at 11:00 am

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The latest consumer research released by Home services marketplace Plentific.com has found that 73% of UK tenants have spent their own cash in order to fund rental improvements.

Homely

Of course, tenants living in rented accommodation for a considerable period will want to make their property feel like a home. As a result, many make improvements such as putting up pictures or shelves. Should these changes not be considered necessary, a landlord can choose not to foot the bill, leaving tenants out of pocket.

In terms of how much the average tenant spends on these improvements, the breakdown is fairly even by price:

  • 26% spent less than £100
  • 24% spent between £100 and £500
  • 23% have spent more than £500

Looking at improvements by age, the research shows that older renters tend to spend more. 27% of those over 55 spent over £500 on improving their rental property, as opposed to only 15% between 18-34.

73% of tenants have self-funded rental improvements

73% of tenants have self-funded rental improvements

Regional Improvements

By region, Sheffield led the way, with the highest rate of tenants making improvements while renting found in the Steel City. 85% were found to have spent their own money to improve their rental property. In London, 74% said they had footed the bill for upgrades.

On the other hands, only 40% of tenants in Leeds paid for their own improvements.

Liverpool and Glasgow topped the list of regions paying the most for improvements, with 33% of renters here paying more than £500.

Plentific spokesperson Stephen Jury: ‘Whilst tenants can consult and charge their landlord for any necessary changes, our findings show that most renters will pay for and conduct some home improvements themselves. Our research illustrates the importance of personalising the living area to generation rent and making it more than just rental space.’[1]

[1] Plentific Press Release, Over 70% of renters have footed the Bill for home improvements, 31.01.17

Plans approved for £20m student development in Sheffield

Published On: January 30, 2017 at 2:51 pm

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Sheffield has been buoyed with the news that planning consent has been awarded for a £20m student accommodation scheme in the city centre.

The City’s council gave the go-ahead for London-based developer Southern Grove to build a new 246-bed development last week. Situated adjacent to the University of Sheffield’s Engineering Faculty, Steel City will include modern accommodation and networking facilities, with a rooftop bar.

Exciting

Chief Executive Andrew Southern noted: ‘Securing planning permission for this scheme will enable us to create an exciting development that will break away from the traditional concept of student halls of residence. We are working in close collaboration with Axis Architecture, the masterminds behind this striking building and with Steel City we’ve put together a high-quality redevelopment that stiches a modern twist back into the traditional 19th century fabric of that area.’[1]

‘As well as enlivening and regenerating an underused site, Steel City will benefit Sheffield in a number of other ways, including job creation, increased economic activity, and the freeing up of traditional family housing stock for local people,’ he continued.[1]

Work on the project is due to begin in the Spring, with the building scheduled for completion in time for the 2019 academic year.

Top of the class

Just last year, Sheffield, home to the University of Sheffield and Sheffield Hallam University, was named the best city for graduates. This was based on:

  • average graduate salary
  • average rental cost
  • average house price
  • monthly utilities
  • disposable income
  • the cost of a pint (just £2.70 on average!)

Research conducted by property website The House Shop found that Sheffield had the cheapest rental and living fees. A two-bedroom house cost £667 per month to rent on average. The average purchase price was found to be £119,806.

Nick Marr, co-founder of The House Shop, observed: ‘Sheffield has been the big winner here, with the perfect combination of low rents, affordable house prices, good graduate starting salaries, cheap pints and plenty of shops, pubs, restaurants, clubs and bars to keep new graduates entertained.’[1]

Plans approved for £20m student development in Sheffield

Plans approved for £20m student development in Sheffield

Buy-to-let

The growing popularity of the city has led to demand for property increasing, not just for students but for those relocating from areas such as Leeds and Manchester. Sheffield is also a very attractive region for buy-to-let investors.

In 2016, Sheffield was named as the third city for buy-to-let property investment opportunities after Leeds and Manchester. The average rental yield in the city is currently 5.3% per year, according to Urban.co.uk.

Adam Male, co-founder of Urban, said: ‘Universities in the North are incredibly popular, and for  parents with children studying in the area, this region  presents itself as a prime place to invest. With massive transport investments planned for these areas as well as more businesses moving North, a buy-to-let  in these areas is not only likely to offer short-term financial  gains, but a solid long-term investment too.’[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/1/plans-approved-for-20m-sheffield-development