Posts with tag: landlords

How has Brexit impacted on market conditions?

Published On: July 13, 2016 at 11:41 am

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Categories: Property News

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A new investigation has looked at the impact that the Brexit result has had on the number of property listings in major UK towns and cities.

Figures from the Property Supply Index, compiled by HouseSimple, suggests that 68% of locations saw listings slide in June. London saw a 13% drop.

Index

In order to compile its Property Supply Index, HouseSimple looked at the number of new properties put onto the market every month, in over 100 major towns and cities. The analysis also looked at all London boroughs.

Results indicate that Lichfield and Winchester saw the largest drop in supply in June, with new property listings down by 37% and 36.5% respectively. Interestingly, four out of the top ten largest fallers were located in the South of England.

The table below shows the ten UK towns and cities that saw the largest falls in new listings in June, in comparison to May:

Town/City Region % fall in new listings in May vs. April
Lichfield West Midlands -37.0%
Winchester South -36.5%
Chesterfield East Midlands -34.9%
Salisbury South West -33.3%
Exmouth South -29.8%
Hartlepool North East -29.6%
Bangor Wales -29.5%
Grimsby Yorkshire and the Humber -27.6%
Bath South West -24.4%
Weston-Super-Mare South West -19.9%

[1]

How has Brexit impacted on market conditions?

How has Brexit impacted on market conditions?

Despite the majority of areas seeing falling supply in June, a few regions experienced rises. The largest increases were located in the Scottish towns of Inverness and Stirling, where new listings were up by 30.5% and 18.5% respectively.

Uncertainty

Alex Gosling, CEO of HouseSimple.com, observed, ‘fear and uncertainty over the Brexit vote definitely had an impact on buyer and seller confidence in June, with many sellers holding off putting their properties on the market until the result was known. Now we know and although the decision has come as a bit of a shock, at least a degree of uncertainty has been taken out of the equation.’[1]

‘The property market can now roll up its sleeves and get on with it. Nothing has fundamentally changed overnight and people still need to buy and sell homes whatever the market conditions.We still have a supply shortage, and this may well counter any fallout from Brexit. There were concerns about the London market faltering, but demand is still strong in the capital and the weak pound should attract foreign investors looking to pick up bargains – particularly at the top end of the market,’ he continued.[1]

Concluding, Mr Gosling said, ‘for the rest of year, we may see a small dip in prices as there are choppy seas ahead, but it’s certainty not the end of the world levels predicted by some doom-mongers. Supply should hopefully edge up, as fears around the impact of Brexit dissipate and sellers feel more confident about market conditions and the wider global economy.’[1]

[1] http://www.propertyreporter.co.uk/property/has-brexit-hit-buyer-and-seller-confidence.html

HMO yields greater than other rental property types

Published On: July 13, 2016 at 8:57 am

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Categories: Landlord News

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The most recent report from Mortgages for Businesses shows that HMO’s are outperforming all other types of rental property in terms of yields.

Average yields on a HMO stand at just below 10% since 2011.

Rising product numbers

Buy-to-let products have risen during the second quarter of the year, in comparison to the first, albeit more slowly. Products increased by an average of 75 in quarter two, compared to 142 in the first three months of the year.

This slower rise during the second quarter can be attributed to lenders creating separate offerings, with more stringent stress test calculations for borrowers.

Remortgaging followed a similar trend and house purchase activity slid to levels seen in 2015. This was due to the surge in investment transactions before the Stamp Duty deadline.

LTV increases

Average LTV values of HMOs also increased quarter-on-quarter, from 62% in Q1 to 75% in Q2. When data from the last five years is analysed, LTV’s on HMO’s have remained steady, averaging 69%.

LTV’s on vanilla buy-to-lets have also stayed consistent, averaging 67% during the same period.

However, LTV’s for multi-units and semi-commercial property have seen a more up and down few years. The average LTV of a multi-unit stood at only 56% in quarter two of this year, in comparison to an average of 64% in the last five years. Average LTV’s for semi-commercial property was 60% in the second quarter of the year.

HMO yields greater than other rental property types

HMO yields greater than other rental property types

Consistent yields

David Whittaker, managing director of Mortgages for Business, said, ‘we now have five years’ worth of data against which investors can benchmark their portfolios. Both Vanilla BTL and HMO property offer fairly consistent yields. Fort the more cautious investor and for those who like a mix of risk within their portfolio, 6.1% average yield on a standard BTL still represents a good return. And for the more experienced investor, HMOs certainly perform better than all other types of rental property averaging just below 10% since 2011.’[1]

‘Average yields on multi-units grew to a very positive 9.5%, well above the five-year average of 7.4% demonstrating that landlords can often achieve greater yields by taking on more complex property types. Semi-commercial property performed less well than expected considering these buildings are not subject to the residential stamp duty surcharge. Going forward it will be interesting to see whether any trends develop as more investors are expected to move into this niche,’ Whittaker added.[1]

[1] http://www.propertyreporter.co.uk/landlords/hmos-outperforming-all-other-types-of-rental-property.html

TDS encourages organisations to apply for funding

Published On: July 12, 2016 at 11:34 am

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Categories: Finance News

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Organisations supporting private landlords and tenants have been invited to ask for a share of a £70,000 funding pot.

The TDS Charitable Foundation is designed to assist in driving up standard in the private rental sector.

Bids

For 2016, the amount of money available to fund projects aimed at improving the sector has been increased. Both landlords and tenants have been urged to submit their bids before the deadline, which is on Wednesday 10th August.

Specifically, the Foundation is looking at making funds available to commission a feasibility study, which will look at establishing a research centre for the PRS in England and Wales.

Examples of organisations who have successfully applied for funding in the past include Designs on Property Ltd. This firm was awarded £15,000 to fund a group of 12 independent reports on the sector. The first of these looked at the typical trends of a buy-to-let landlord and was published this month.

TDS encourages organisations to apply for funding

TDS encourages organisations to apply for funding

Vital

Leading property expert Kate Faulkner observed, ‘without the funding from the TDS Charitable Foundation we would not have been able to carry out this independent research, which I believe is vital if we are to fully understand the industry in which we work and start challenging the misperceptions surrounding the private rented sector.’[1]

‘I’d never applied for funding before but there was plenty of support available at every stage of the process and I would really encourage anyone who thinks they have a project that meets the objectives of the foundation to apply,’ she added.[1]

Prof Martin Partington, chairman of TDS and the TDS Charitable Foundation, said, ‘our not-for profit status enables us to use part our surplus income to raise standards in the industry we serve by reinvesting in education and training and promoting best practice and as an organisation this is something we are passionate about.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/funds-available-to-help-raise-standards-in-the-private-rented-sector

PCL rents in check despite rising demand

Published On: July 11, 2016 at 9:26 am

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Yearly rental value growth in prime central London was down again during June, according to a new report.

The investigation by Knight Frank revealed that annual rents were down by 3%, despite an increase in rental demand for properties in the capital. Large stock levels and uncertainty in the financial market is keeping this growth steady.

Economic and financial uncertainty

The report indicates that the rise in rental stock is partly down to the ongoing uncertainty in the sales market. Early figures are suggesting that some vendors are holding fire on letting their property until further clarity over Brexit is established.

However, demand remains strong and the number of new prospective tenants registered in June was the largest seen since September 2015. Meanwhile, the number of new tenancies agreed in June of this year was nearly the same as in May.

Tom Bill, head of the capital’s residential research at Knight Frank, said, ‘for investors able to see through the current bout of political uncertainty, there are also grounds for longer-term positivity.’[1]

Yearly yields

Gross yields in June stood at 3.1%, substantially greater than the current record-low yield on ten-year Government bond of around 0.8%. Bill notes that financial indecision has been heightened since before the Brexit vote, something he feels will cause tenants to rent for longer.

Bill observed, ‘more broadly, uncertainty over the result of the referendum has been replaced by uncertainty over the more nuanced question of the UK’s relationship with Europe and demand will strengthen further as clarity emerges surrounding key negotiating positions. As this process unfolds, it should be remembered that no candidate for prime minister has indicated any willingness to relinquish London’s role as Europe’s leading financial centre during negotiations with the EU.’[1]

PCL rents in check despite rising demand

PCL rents in check despite rising demand

Tax cuts

Chancellor George Osborne has suggested that he may move to cut corporation tax, meaning London will strive to stay competitive in comparison to other European cities.

Mr Bill feels that the possibility of an interest rate cut in Britain is likely to push activity up. He noted that the likelihood of further cuts by central banks in other countries will lead to overseas investors to look for higher returns on offer from rental property in London.

Concluding, Bill said, ‘this search for yield will be allied to a favourable currency play due to the current weakness of Sterling. Meanwhile, other fundamentals that remain unchanged after the referendum include the supply shortfall and projected population growth over the next decade in London, factors that will continue to underpin demand for rental property.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/prime-central-london-rents-remain-in-check-despite-greater-tenant-demand

Diversity of landlords make communicating rules difficult

Published On: July 9, 2016 at 9:20 am

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Categories: Landlord News

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A new report has suggested that the diverse nature of landlords makes it almost impossible to fully communicate new rules and legislation.

The study, entitled ‘Who are individual landlords providing private rented accommodation?’ was penned by industry expert Kate Faulkner, with assistance from the TDS Charitable Foundation. This organisation works to further education on housing rights and legal obligations.

Changing obligations

Results from the survey found that many landlords have varying professions alongside their work as an investor. Teachers, doctors, librarians and army officers were just a few roles of landlords completing the survey.

40% of respondents to the investigation said that they were ‘accidental landlords.’ Whilst trying their upmost to do right by their tenants, many of these landlords are left confused by changing legislation. Worryingly, one in five respondents were found to do no research before letting out a property.

Kate Faulkner believes that the private rental sector should work more closely to inform landlords on legislation and in turn create a safer sector.

She noted, ‘there are currently 145 lettings rules and regulations on letting. Not only do they seem to be changing all the time but they can vary from one local authority to another. It’s no wonder landlords are confused and struggle to keep up with the law, particularly if they are letting out property in another part of the country to where they live.’[1]

Diversity of landlords make communicating rules difficult

Diversity of landlords make communicating rules difficult

Collaboration

Faulkner has called for those in the private rental sector, such as lenders, letting agents and local authorities, to collaborate, in order to provide landlords with the tools needed to let a property legally.

‘We would like to see the private rented sector working together to promote trusted and consistent sources of information about preparing a property to let legally, about changes in the law, property maintenance and of course, where to turn for independent, qualified advice, Faulkner stated.[1]

‘However, because landlords are such a diverse group of people and with many self-managing their properties, it makes it extremely difficult to communicate with them, unless they actively seek out information for themselves . Even if they do their own research about rules and regulations, it can be still be confusing and the report suggests experienced landlords struggle too. This is why they need a clear source of information they can turn to,’ she continued.[1]

Concluding, Faulkner said, ‘in addition, to encourage best practice, we would also like to see the Government introduce incentives for landlords to stay within the law, such as tax breaks or special deals which reward those that are renting legally and safely.’[1]

[1] http://www.propertyreporter.co.uk/landlords/landlord-diversity-makes-communicating-new-rules-virtually-impossible.html

New HMO licensing scheme for landlords in Barnet

Published On: July 7, 2016 at 11:31 am

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Categories: Landlord News

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A new property licensing scheme has been introduced for buy-to-let landlords operating in the London borough of Barnet. This follow the decision made by the council’s housing committee earlier on the year to raise more money at landlords’ expense.

The scheme, which started on Tuesday 5th July, applies across the borough and applies to some HMO’s containing four or more people that are not related.

Licensing

This additional licensing involves residential properties more than two storeys high, flats on the second floor or higher and owner occupied properties with four or more inhabitants.

What’s more, the scheme includes ‘section 257 HMO’s’, which are buildings that have been converted into self-contained flats and meet specific criteria. However, this aspect of licensing only applies to three storey buildings where the building and flats are owned by the same person.

According to Barnet Council, there are almost 6,000 HMOs in Barnet, of which almost 3,900 will need to licensed. There is strong support for the scheme, with 75% of those consulted giving their approval to the changes. However, less than 20% of this support came from landlords and letting agents, with the bulk of the support coming from tenants, residents and further organisations.

New HMO licensing scheme for landlords in Barnet

New HMO licensing scheme for landlords in Barnet

Fees

Landlords who apply for a license within three months of the scheme declaration will be eligible for a five-year term. Any applications received after this date will only be eligible for a one-year licence.

Fees will also rise, with five-year terms commanding £1,008 for five people. The same one-year licence will cost £665.

Barnet council leader Richard Cornelius noted, ‘there is no doubt that well managed HMO’s have an important role to play in helping meet our housing needs. From research we know though that people living in HMOs can be vulnerable and at increased risk of being exploited by landlords. Our recent survey of people living in HMOs was a cause for concern.’[1]

‘For these reasons we are taking action to help drive-up standards of HMOs across the private rented sector to encourage good landlords and crack down on rogue landlords who expose their tenants to unnecessary health and safety risks through substandard accommodation,’ Cornelius added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/new-licensing-scheme-to-cost-landlords-upwards-of-650-a-year