Posts with tag: tenants

Property price inflation to cancel out Stamp Duty

Published On: April 1, 2016 at 9:31 am

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Today sees the additional 3% stamp duty surcharge come into force on buy-to-let and additional properties in England and Wales.

However, new analysis from national estate agent, Jackson-Stops & Staff suggests the reforms will fail to have the desired effect of putting off buy-to-let investors.

Inflation

Following a surge in investment during the run up to the deadline, there are already signs that purchasers will not be deterred by the changes. A key reason for this is that many investors will see property price inflation compensate them for the additional stamp duty, within one year or less.

Jackson-Stops & Staff warn that the greatest losers of the stamp duty reform will be tenants, with landlords ultimately passing on their additional costs to rental prices.

Research from the Association of Residential Letting Agents (ARLA) indicates that the majority of landlords keep their investment property for more than one year. Data shows that 33% of landlords keep their buy-to-let property for between 11-2o years. This suggests that many landlords reap benefits from house price growth in the long-term.

[1]

Level playing field

Nick Leeming, Chairman at Jackson-Stops & Staff, noted, ‘the Government, through it’s new stamp duty surcharge, is trying to make the playing field more even between property investors and first-time buyers by eating into landlords’ profits.’

‘Our message to landlords is that when you do the sums and look at the direction of house prices, placing money in bricks and mortar is still by far the best investment vehicle. If property prices continue on their trajectory, within a year or less of buying their investment property the vast majority of landlords would have earned back all the money given through stamp duty, even with the new 3% surcharge, by doing nothing at all-just sitting back and watching the price of their home increase. Therefore the idea that the stamp duty tax will act as a deterrent is a fiction, as for most landlords it won’t amount to a significant figure,’ he added.[1]

Property price inflation to cancel out Stamp Duty

Property price inflation to cancel out Stamp Duty

Demand

Continuing, Leeming observed, ‘the Bank of England has clearly noted that the 3% stamp duty surcharge is unlikely to ease buy-to-let demand from investors and has now announced its own intervention to cool the market. From a landlord’s perspective it appears as though UK institutions are out to get them. Around half of all privately rented homes are owned by landlords with buy-to-let mortgages, providing homes for people who choose to rent as a lifestyle choice or are trying to get onto the housing ownership ladder.’[1]

If the research is correct, eight of ten regions of England and Wales will find capital gain will negate additional stamp duty payments within a year. The two regions where predicted capital gains on an average priced home do not cover the increase are in the North East and North West.

Concluding, Mr Leeming said, ‘the North East and North West regions of the UK, where house price growth is more restrained at present, are the only regions where landlords will find capital growth in the first year does not eclipse the new stamp duty they would have to pay. These two regions are also the only two where home owners currently pay no stamp duty on the average home as the average property price still remains under £125,000, the price level where stamp duty first bites. Tenants here are more likely to see landlords in future pass on this additional cost via rent and we also anticipate investors to be more assertive when they negotiate on buying a home, which will be reflected in lower offers.’[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-to-be-compensated-for-stamp-duty-rise.html

More deposit disputes going way of landlords

Published On: March 24, 2016 at 12:04 pm

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Categories: Landlord News

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New data has indicated that more landlords and agents are being awarded 100% of disputed amounts at adjudications than tenants. This is the first time this has happened since the inception of the tenant deposit schemes in 2007.

Pay-outs

Figures from the TDS show that last year, 19.8% of all disputes raised by landlords or letting agents resulted in a 100% pay-out to them. 19.2% of all disputes made by tenants resulted in them receiving a full pay-out. The remaining 61% of cases saw the disputed money shared between the parties.

In 2014, 20.25% of total disputes raised by tenants saw them received a full pay-out, in comparison to 18.21% to landlords and agents. In previous years, tenants have been awarded the total deposit more often the landlords and letting agents.

Jax Kneppers, Founder and CEO of Imfuna, suggests that these results are a sign that landlords and letting agents are giving more documented information at adjudications. He notes that, ‘for the first time, landlords and agents are now more successful than tenants at winning 100% of deposits. This is a significant achievement-an 8.5% increase year on year.’[1]

Digital age

Mr Kneppers went on to say, ‘more and more landlords and agents are recognising the power of digital professional inventories and mid-term inspections and this is why the balance is starting to shift. Many landlords and agents are ensuring that the condition of the property is fully recorded at the start of the tenancy, with a comprehensive inventory, along with a thorough check-in and check-out report.’[1]

‘Historically, many tenant disputes have gone in favour of tenants, as there was simply not enough evidence to support the landlord or agent’s damage claim.  The most common mistake in most inventories is the lack of detail.  Often there is not enough appropriate photographs and any accompanying description to show the condition of the property and its contents. For example, many landlords and agents fail to record the condition of sinks and bathroom fittings, as well skirting, doors, floor coverings and kitchen units.  If an inventory is not a professional and thorough report on the property, then it is not worth the paper it is written on,’ he continued.[1]

More deposit disputes going way of landlords

More deposit disputes going way of landlords

Importance of inventories

Inventories are a crucial part of the dispute process and provide information for landlords and tenants about the condition of a property. As Knepper notes, ‘inventory reports should contain a full description of the condition of the property, noting detail on every aspect of damage and its location at the start of a tenancy. Good photographs provide vital evidence and should be of a high quality when printed up to A4 or A3 size, so that any damage can be clearly seen.’[1]

Concluding, Knepper warns, ‘Unless landlords and agents have a water-tight inventory, they are at risk of disputes and expensive repair bills. Our research shows that landlords and agents who have switched from analogue to digital inventories, have seen their tenant deposit disputes drop by more than 300% and their success rate at adjudications improve by an average of 75%.’

[1] http://www.propertyreporter.co.uk/landlords/landlords-are-finally-winning-the-dispute-war.html

Stamp Duty to drive rents and cut supply

Published On: March 23, 2016 at 10:52 am

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New research from the Association of Residential Letting Agents (ARLA) has suggested that the stamp duty reforms for buy-to-let properties will push rental prices up for tenants. In turn, the firm warns this will lead to a further decline in available properties.

Rise and fall

Data in the report from ARLA shows that 52% of letting agents recorded an increase in buyers looking to beat the deadline and invest in buy-to-let property. This represented a 47% increase from data recorded in January.

However, 63% of agents feel that once the deadline has passed, the supply of property will fall as landlords are slowly forced out of the market.

57% of ARLA members believe rents will rise after the stamp duty reforms come into force, with landlords pushing their increased costs through to tenants.

Impact

David Cox, managing director of ARLA, noted, ‘the stamp duty changes are now imminent and as well as hitting small landlord’s, they will also impact institutional investors. Although members are reporting a rush from landlords trying to snap up their buy-to-let investments now, it’s likely that we’ll see the buy-to-let market drop like a stone come April and probably not pick up again until next year. This will most certainly cause rents to increase, with supply dropping, as competition for the limited availability of properties intensifies.’[1]

Demand for buy-to-let properties rose by 19% during February, with around 37 prospective tenants registered per member branch. Interestingly, the supply of rental properties on agents’ books actually increased to 176 in February, rising from 172 in January.

Stamp Duty to drive rents and cut supply

Stamp Duty to drive rents and cut supply

Intensifying

‘The demand for housing continues to intensify as supply remains an issue across most of the country,’ Cox continued. ‘We are concerned that the government rhetoric of wanting to help people onto the housing ladder does not tally with their action of continuing to target the rental market with additional costs. Some landlords will simply withdraw from the market whereas others who can take the hit of the extra stamp duty will simply raise rents to cover the extra costs.’[1]

‘The dream of home ownership will remain out of reach for many as we move closer towards becoming a nation of forever renters,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/arla-landlord-stamp-duty-will-see-btl-market-dr0p-like-a-stone.html

 

Many Housing Benefit Tenants in Wales Now Subject to Universal Credit

Published On: March 22, 2016 at 9:27 am

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Yesterday, many housing benefit tenants across Wales became subject to the Government’s new welfare system, Universal Credit.

Many Housing Benefit Tenants in Wales Now Subject to Universal Credit

Many Housing Benefit Tenants in Wales Now Subject to Universal Credit

Under the new scheme, claimants are paid one monthly payment, rather than up to six individual payouts. As housing benefit is included within the Universal Credit system, landlords must be aware of the changes.

Additionally, while housing benefit was previously paid directly to the landlord, tenants are now responsible for paying their rent each week or month. You must communicate effectively with your tenants to ensure that you are aware of their financial circumstances.

Since January, many areas have moved onto the Universal Credit scheme, and we have been devoted to providing you with weekly updates of where the system is now in place. For the previous areas, see last week’s story: /universal-credit-rollout-continues/

We will continue to provide information for landlords on financial changes within the housing sector.

If you have rental properties in the following postcode areas of Wales, be aware that as of yesterday, any housing benefit tenants you have will now be in receipt of Universal Credit:

  • CF15 7, CF15 9, CF35, CF37, CF38, CF39, CF40, CF41, CF42, CF43, CF44, CF45, CF48 2, CF72 and CF83 1 in Cardiff.
  • SA11 5 of Swansea.

As your tenants move onto the new system, be aware that some claimants are being forced into debt by long waiting times or changes to their finances.

It is important to communicate with your tenants in order to avoid rent arrears. If you are concerned about your tenants struggling to pay the rent, the best way to protect your investment is with rent guarantee insurance, which ensures you still get paid if the tenant defaults.

For all of the latest advice for landlords, remember to visit LandlordNews.co.uk.

Rental Demand Looks Set to Remain Strong

Published On: March 21, 2016 at 3:21 pm

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Landlords need not worry about rental demand waning, as new research indicates that private tenants are set to remain in the private rental sector for many more years to come.

Rental Demand Looks Set to Remain Strong

Rental Demand Looks Set to Remain Strong

Hamptons International has found that it will take no less than 46 years for an average single Londoner to save a 15% deposit to buy their first home.

Using figures from the third quarter of last year, Hamptons found that it takes the average single buyer in the UK 13-and-a-half years to save a 15% deposit, without assistance from their family.

Regionally, those in the North East are able to save for a deposit the quickest, with single buyers having to wait just under eight years.

Buying a home with a partner or friend is the best option for young buyers, as it cuts the time to save significantly. For the average couple working full-time, it will take three-and-a-half years to save a 15% deposit across the UK. In London, it takes eight years, while buyers face just two years of saving in the North East.

Therefore, it is unsurprising that the Help to Buy: London scheme received so much interest in its first few days.

The Help to Buy ISA scheme will also help reduce the time it takes to save for a deposit. The Government bonus of up to £3,000 will cut the time a single first time buyer must save for by between nine and 12 months, believes Hamptons.

Additionally, the introduction of the Lifetime ISA, announced in the Budget 2016, will help savers even more. First time buyers in England and Wales will be able to save almost three years faster using the ISA. In London, they can save a huge 19 years faster.

Despite this, it is clear that many households will be forced to stay in the private rental sector for many more years.

Hamptons assumes that households can save 22% of their income, after spending on accommodation, utilities and food.

And while single first time buyers may be able to save in the long-term, there are currently just 16 areas where they will be able to afford their own home.

The Shocking Difference in Rent Prices Around the UK

Published On: March 19, 2016 at 8:36 am

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A national self-storage firm has analysed average rental properties around the country to highlight the shocking difference between rent prices, particularly between the north and south.

StoreFirst.com has revealed what a private tenant can rent for £800 or less per month in the UK’s ten largest cities, from a three-bedroom house in Manchester to a single bedroom in a London flatshare.

The company found that the average UK rent price, excluding London, was £740 per month in January this year, up by 5.5% on last year’s £702.

Unsurprisingly, London was the most expensive place to rent, with the single bedroom flatshare in Whitechapel costing £800 a month.

The average rent price in the capital is a huge £1,510 per month.

The cheapest London borough for renters is Havering, which has an average monthly rent price of £1,161. Kensington and Chelsea was named the most expensive, at £2,720 a month.

Behind London, the most expensive place to rent in the UK is the South East, with an average monthly rent of £933.

The Shocking Difference in Rent Prices Around the UK

The Shocking Difference in Rent Prices Around the UK

In Birmingham, tenants can rent a furnished, two-bedroom terraced house with two reception rooms for £800 per month, or a two-bed apartment with parking for £725.

A two-bed flat with a separate utility area is £750 in Bristol.

However, the more shocking differences are found the further north you go.

In Manchester, a spacious three-bed terraced house with a cleaner costs £795, while £5 more gets you a two-bed apartment with parking.

But Liverpool is even cheaper – a two-bed duplex apartment costs £725, while you can also find a four-bed terraced house with a garden for the same price.

Tenants in Leeds can get a two-bed apartment in the city centre with a Juliet balcony for just £650.

In Bradford, a three-bed semi-detached house with a garden and parking for two cars is £800 per month. Alternatively, a four-bed detached house with parking, a double garage, en suite shower and breakfast bar costs £750.

The best value for money was found in Sheffield, where a three-bed terraced house costs £675, while a two-bed unfurnished house is £495 a month.

What can you get across the border in Scotland?

Tenants in Glasgow can rent a two-bed semi-detached house for £750 per month, or a three-bed house with a garden for £700.

In Edinburgh, a two-bed flat with a communal garden costs £799.

The three cheapest areas in the UK were the North East at £528 per month, Northern Ireland at £582 and Wales at £595.

The Operations Director at StoreFirst.com, Oliver Kitson, comments on the findings: “When looking at the prices of rentals going up predominantly in city/town centre locations, it’s clear to see that renters are getting much less space for their money in the rental market. Despite Government schemes like Help to Buy and Help to Buy mortgage guarantees, it doesn’t seem as though people are ready, financially, to become homeowners.

“With average property prices being over eight times the average wage, it’s not difficult to see why.”1

If you are a landlord struggling to set the perfect rent price for your area, this advice will help: https://www.justlandlords.co.uk/news/setting-perfect-rent-price-property/

1 http://www.24dash.com/news/housing/2016-03-15-800-links-a-three-bedroom-house-in-Manchester-to-a-single-bed-London-flat-share