Posts with tag: residential landlords

New organisation to drive professionalism in sector

Published On: April 18, 2016 at 11:07 am

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With residential landlords flocking to the sector in greater numbers than ever before, a new organisation promoting professionalism in the market has been launched.

The UK Apartment Association (UKAA), the first cross-industry organisation dedicated to the task, said it will focus on customer service and renter experience

Higher Standards

Championed by Housing Minister Brandon Lewis, the scheme has been designed to deliver more homes for rent with higher standards for tenants. What’s more, the UKAA plans to differentiate the multi-family housing market from the service provided by smaller scale buy-to-let landlords.

In a statement, Mr Lewis said, ‘I want to see the private rented sector respond to the nation’s housing needs by providing new forms of supply and improved quality and choice. I welcome the UKAA as a body that can help build the capabilities of the build to rent sector in this country, bringing together the needs of private renters with the institutional capital that wants to invest in meeting their demands.’[1]

New organisation to drive professionalism in sector

New organisation to drive professionalism in sector

Development

With over nine million renters in Britain and with demand still soaring, there are certainly opportunities for build to rent developers. In recent times, the numbers of developers and investors interested in projects have risen. However, there is still a way to go before renting is the professional and service led industry, driven by institutional investors, as seen in the states.

The first international partner of the US-based National Apartment Association (NAA), the UKAA will hopefully benefit from the experience its partner is able to provide.

Doug Culkin, president and chief executive of the NAA, said, ‘the NAA is eager to bring industry training, best practices and networking opportunities to the UK. In addition, our US members are increasingly seeing opportunities for global growth and are looking to NAA for guidance when entering a new market. Our partnership with UKAA will be invaluable to our association as we address the growing need for a global renting housing industry.’[1]

Founder of the UKAA and chairman of Chainbow, Roger Southam, also said, ‘This evolution of the rental sector is creating some interesting dynamics and raising many questions about what renting in the UK should and will look like. There is clearly a case for using the extensive experience gained by the US and working together to create a more professional market to ultimately give renters a better service.’[1]

[1] http://www.propertywire.com/news/europe/uk-multi-home-sector-2016041511803.html

 

Green Deal scheme cost taxpayer £17,000 per property

Published On: April 14, 2016 at 10:40 am

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Analysis into the now defunct Green Deal scheme-which served as the Government’s prime energy-saving programme-has revealed the cost of the initiative to the taxpayer.

The National Audit Office has concluded that each home that was improved under the scheme cost £17,000. As such, it has been concluded that the Green Deal did not offer value for money.

Failed expectations

As part of the scheme, householders were advised to take out loans to pay for energy-saving measures, such as loft and cavity wall insulation, or double-glazing. Many residential landlords were encouraged to take advantage of this scheme for their investment properties.

However, just 14,000 households took up the offer, which was well below expectations.

The Department of Energy and Climate Change spent £240m on the scheme, which ran between 2013-2015. The National Audit Office highlighted that a major flaw in the programme was that it was not tested with potential consumers before launching.

Green Deal scheme cost taxpayer £17,000 per property

Green Deal scheme cost taxpayer £17,000 per property

Increased bills

In addition, the National Audit Office noted that the Energy Company Obligation scheme running alongside the Green Deal has increased costs for energy providers, thus pushing up bills.

Amyas Morse, head of the National Audit Office, observed, ‘the Department of Energy and Climate Change’s ambitious aim to encourage households to pay for measures looked good on paper, as it would have reduced the financial burden of improvements on all energy consumers.’[1]

‘But in practice, it’s Green Deal design not only failed to deliver any meaningful benefit, it increased suppliers’ costs-and therefore energy bills-in meeting their obligations through the ECO scheme,’ Morse added.[1]

Campaigners are pleading with the Government to replace the Green Deal with another scheme as soon as possible. From this month, landlords have been unable to refuse reasonable requests from their tenants for energy efficiency improvements to be made on their rental home.

[1] http://www.bbc.co.uk/news/business-36043125

 

UK rents up 4.9% in Q1, outside of London

Published On: April 13, 2016 at 10:51 am

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Rents for new tenancies in the UK experienced more growth in the first quarter of 2016, according to new research.

Latest figures from the HomeLet Rental Index show that rents on new agreements signed for properties outside of London were 4.9% greater than in the first three months of 2015. Average rents now stand at £755 per month.

In London, those signing new tenancy agreements were faced with average rents 7.7% greater than those one year ago.

Greater than inflation

Data from the HomeLet report indicates that rents continue to rise well ahead of inflation, with demand still showing no signs of cooling. These results however come ahead of reforms, such as increases in Stamp Duty, which are forecasted to have a substantial impact on the buy-to-let sector.

In addition, results from the report show evidence that residential landlords soared to the market ahead of the changes. HomeLet recorded a marked increase in enquiries for landlord insurance. 37% of insurance policies taken out by landlords were few new properties, in comparison to 24% in the same period in 2015.

London saw average rents for new tenancies rise to £1,536 and the region has once again seen prices increase more quickly than in other areas of the country. The gap between the capital’s rent rises and that of the rest of the UK is 2.8%.

Only the North West of England saw rents fall in the three months to March.

UK rents up 4.9% in Q1, outside of London

UK rents up 4.9% in Q1, outside of London

Continual increase

Martin Totty, Chief Executive Officer at Barbon Insurance, said, ‘we’ve continued to see increases in rents on new tenancies in almost every part of the UK during the first quarter, as the private rental market has responded to the pressures of an imbalance between demand and supply.’[1]

‘External factors may now come into play: the stamp duty increase has already had an impact and that surge in the acquisition of property by landlords could now cause a short-term increase in the supply of rental property in some areas of the country. In the longer term, changes to rules around buy-to-let mortgage interest being offset against tax bills, coupled with the Bank of England’s instruction to lenders to apply more exacting criteria on buy-to-let lending, may have a limiting effect on supply,’ Totty added.[1]

Concluding, Totty said, ‘despite these factors, we expect the private rental sector to continue to play a crucial role in a housing market where population growth will continue for the foreseeable future according to official projections.’[1]

[1] http://www.propertyreporter.co.uk/landlords/new-rents-outside-the-capital-rise-49.html

 

Will new regulations slow buy-to-let market?

Published On: April 11, 2016 at 11:51 am

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Over the past year, residential landlords have been subjected to a whole host of new regulations. Alterations to mortgage interest tax relief, an increase in stamp duty surcharges on buy-to-let purchases and changes to the wear and tear allowance are just some of the initiatives aimed at cooling the market.

Should the Bank of England press ahead with its plans for tighter mortgage lending criteria, this will be a further blow to buy-to-let landlords.

Intentions

The Bank of England believes the stricter lending criteria will cut the amount of buy-to-let borrowing by between 10%-20% in the next three years. Until presently, landlords have needed between around a 25% deposit to secure a buy-to-let mortgage.

Changes proposed by the Prudential Regulation Authority-the Bank of England’s regulatory sector-has called for lenders to make more stringent checks on landlords. This is to ensure that they can afford the mortgage repayments on their property. In addition, it has called for banks to test if landlords would still be able to afford monthly payments should interest rates rise.

Will new regulations slow buy-to-let market?

Will new regulations slow buy-to-let market?

Slowing Tactics

Jane Morris, Managing Director of PropertyLetByUs, observed, ‘this new lending criteria is a move at slowing down the booming buy-to-let market, which has seen a rush of landlords purchasing property to beat the stamp duty rise, which comes into effect this month. We have seen a sharp increase in the number of landlords placing properties with us over the last six months and since January, landlords sign ups have increased by 50-60%.’[1]

‘However, the market is very likely to slow down over the next few months, with Britain’s 1.8million landlords now facing the brunt of the increased taxes and new mortgage restrictions. The buy-to-let market provides the UK with essential housing for over 2.5million tenants and has been unjustly targeted by the government,’ Morris continued.[1]

Concluding, Morris noted, ‘landlords will need to find ways to protect their profits and income.’ She feels it is inevitable, ‘we will see rent rises and many landlords will be reviewing their fixed costs.’[1]

Finally, she said, ‘it is certainly a good time to review lettings costs, as some landlords could make significant savings on their letting agent finder and fully managed fees.’[1]

[1] http://www.propertyreporter.co.uk/finance/is-btl-lending-getting-tougher.html

Budget was “Reasonably Positive”, Believes Finance Expert

Published On: March 22, 2016 at 10:32 am

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Thankfully, the Budget 2016 did not focus too heavily on residential landlords, and what it did include regarding the private rental sector was mostly expected.

One finance expert explains how last week’s Budget will affect property investors, believing that the changes are “reasonably positive” for private landlords.

Nova Financial’s Paul Mahoney begins: “The announcements were a mixed bag for property investors.

Budget was "Reasonably Positive", Believes Finance Expert

Budget was “Reasonably Positive”, Believes Finance Expert

“The Stamp Duty Land Tax (SDLT) changes were confirmed as expected with a slight surprise regarding that it will apply to limited companies purchasing over 15 properties. Some were hoping the changes would be delayed, but that wasn’t to be.”

Indeed, many industry experts had called upon the Government to either delay or scrap the Stamp Duty plans.

Although the Chancellor’s announcement that the 3% Stamp Duty surcharge will be implemented on 1st April as planned, it was somewhat surprising that large-scale property investors will also be subject to the change.

Mahoney explains further tax changes: “The personal income tax threshold was increased, and the higher tax rate threshold increased. This is good news for smaller landlords who earn limited income or were borderline with the higher threshold, and also for those able to split income with a lower earning partner.

“It gives some breathing space and further ability to avoid the mortgage interest deductibility changes from the summer Budget, which will now only affect those earning more than £45,000 – up from £42,000.”

Additionally, Capital Gains Tax (CGT) changes were announced.

Mahoney gives details: “CGT was reduced by 8% for all levels of income, but unfortunately, residential property has been excluded from this change, which potentially makes commercial property a more attractive option for some, but in reality, the status quo has been maintained for residential landlords.

“Commercial property SDLT has also been increased with a change to a similar threshold system as residential property.”

So what will affect you?

“Overall, not much has changed for residential landlords, aside from a slight increase in the tax-free threshold and higher tax threshold, which is positive. We therefore view the Budget as reasonably positive, given that the negatives were already known.”

Previously, Mahoney has explained how all of the forthcoming changes to the buy-to-let sector will affect residential landlords: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

27% of landlords unaware of tax changes

Published On: March 16, 2016 at 12:23 pm

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A concerning new investigation by property crowdfunding platform Property Partner suggests that nearly a third of landlords are unaware of the upcoming tax changes.

27% of residential landlords surveyed by the website said that they had limited or no awareness of the tax changes that are just around the corner.

This worrying statistic comes just two weeks before the increases in stamp duty on buy-to-let property purchases come into force. What’s more, today’s Budget is likely to include yet more changes to the sector.

Division

Further data from Property Partners’ study shows that 59% of current landlords are putting plans for further investment on hold. The remaining 41% said that they are firmly committed to investing in buy-to-let property.

38% said that their investment methods would change, with them still investing in residential property, but through crowdfunding platforms.

Dan Gandesha, chief executive of Property Partner, said, ‘on the evidence of our research, landlords are deeply divided over how to respond to the Government’s clampdown on buy-to-let.’[1]

‘A significant minority are desperately buying up available stock to beat the April stamp duty deadline, causing a surge in prices. Do these people really understand how the government’s tax changes will impact their profits?’ he questioned.[2]

27% of landlords unaware of tax changes

27% of landlords unaware of tax changes

Cautious

Gandesha went on to say that, ‘luckily the majority of landlords are taking a much more cautious view, with many choosing Property Partner as a better way to access residential property investment, without the hassle, expense or tax implications.’[2]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/3/third-of-landlords-still-unaware-of-industry-tax-changes

[2] http://www.gainsboroughstandard.co.uk/news/property-news/more-than-half-of-landlords-plan-to-stop-investing-in-traditional-buy-to-let-1-7790803