Property News

Capital gains tax soars as buy-to-let investors ‘unload properties’

February 22, 2018

Capital gains tax receipts hit £5.5bn in January, leaving the Treasury on course to rake in as much as £8.8bn this tax year, according to analysis of the tax receipts by NFU Mutual, the financial advice firm.

The analysis suggests that the taxman is set to collect around £0.4bn, or 5%, more than in 2016-17, thanks in part to a sharp rise in the number of private landlords selling rental properties

HMRC usually receives a glut of capital gains tax receipts in January as people fill in their self-assessment tax forms, but with a growing number of buy-to-let landlords reducing the volume of properties they own, Sean McCann, chartered financial planner at NFU Mutual, points out that the Office of Budget Responsibility (OBR) estimates that receipts could hit £9.9bn in the next tax year.

“A large chunk of these receipts will be from people selling houses and flats they’ve been renting out.  In doing so, they are hammered by an extra 8% surcharge on standard rates of capital gains tax,” he said.

“The OBR forecasts show receipts increasing sharply to £13.3bn in five years’ time, which suggests that more and more buy to let investors are expected to unload properties as tax changes bite,” McCann added.

As most buy-to-let investors will know, anyone selling a property that is not their main residence will pay 18% or 28%, depending on the size of the gain and their other income.

McCann added: ‘’The slashing of tax relief on mortgage interest payments means that for a growing number of landlords, the figures no longer add up. Many have enjoyed rising property prices over many years and will seek to cash in, providing a tax bonanza for the Government.

“Many of our customers work in partnership with their spouse or civil partner to reduce their combined tax bills, taking advantage of each individual’s CGT allowance of £11,300, by transferring shares and property between them. However we’ve been warning our customers to watch out for potential tax traps. In some circumstances, transferring property between spouses could trigger a stamp duty charge.” 

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Top tips to keep your boiler warm this winter

February 22, 2018

Amid what is likely to be one of the coldest Februarys for a century the last thing you need – or expect – is for your boiler to grind to a frozen halt. For thousands of people in recent weeks, including many buy-to-let landlords, that is what has happened.

But you could keep your boiler in tip-top condition with these top tips for landlords from Direct Line for Business:

+ Keep your heating on low: Sudden cold temperatures can freeze your boiler’s external condensate pipe, which could cause your boiler to stop working. Insulating the pipes can help, or try keeping the heating on constantly but low when it’s very cold.

+ Bleed your radiators: If your property isn’t getting as warm as you think it should be, there may be air trapped inside the heating system. Releasing air from the system is simple but you will need a key which can slot into the radiators bleed valve. If you still have a problem after doing this, you may need to call in the professionals.

+ Keep your boiler maintained: Make sure you service your boiler and keep it maintained in accordance with the manufacturer’s recommendations. Check regularly for any warning signs such as leaks, cracks or noises as the sooner you can identify a problem, the easier it will be to fix.

+ Turn off services when property is unoccupied: If you do have an unoccupied property for longer than 30 days then it’s worth draining the water system and switching the utilities off. However, if it’s in the winter months then keeping your central heating system on at a minimum temperature can help prevent frozen pipes.

+ If you’re considering buying a rental property and would like more information on the responsibilities and obligations associated with being a landlord, or for more tips and guidance, please visit the Landlord Knowledge Centre.

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Councils restricted by new licensing conditions on private rented homes

February 22, 2018

Councils cannot use selective licensing conditions to impose new standards on private rented homes, the Court of Appeal ruled yesterday.

The case saw Accrington-based landlord, Paul Brown, challenge Hyndburn Council which sought to use its selective licensing scheme in certain areas of the borough to force the installation of carbon monoxide detectors and also to carry out electrical safety checks and implement their findings. 

Whilst the landlord had already carried out both of these requirements, he argued that imposing such standards through licensing schemes went beyond the powers available to local authorities, and this was a view supported by Court of Appeal yesterday.

Instead, the court and the landlord argued that rather than relying on licensing schemes which only cover certain properties, electrical and gas safety issues are best addressed by councils using the extensive powers they already have under the Housing, Health and Safety Rating System (HHSRS).

The HHSRS is the risk-based evaluation tool to help local authorities identify and protect against potential risks and hazards to health and safety from any deficiencies identified in dwellings. Crucially, this applies to all private rented homes, whether they require a licence or not.

The Residential Landlords Association (RLA), which supported Brown’s case, is calling for the guidance associated with the HHSRS, which was last published in 2006, to be updated urgently to reflect considerable changes in the sector since then, as this would better support councils to use and enforce their powers under this system.

The RLA policy adviser, Richard Jones, said: “This case was not about trying to stop Councils from imposing requirements.  It was about how they go about this ensuring that they use the proper processes which already exist.

“Today’s judgement is a reminder that councils already have extensive powers to deal with properties found to be unsafe and they must act in a legal manner.”

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Training session for landlords in Northumberland

February 22, 2018

A new training event will held in Northumberland next week to help buy-to-let landlords manage their tenancies and properties.

The training session, which will be led by Northumberland County Council in association with officials at the National Landlords Association (NLA), will cover a range of topics, including landlord safety, handling deposits and how to gain possession of a property.

The one-day course takes place on Monday, February 26, at Blyth Civic Centre and focuses on landlord safety.

This course, which costs £95 per person, will cover the essentials in ensuring landlords are providing a safe property to tenants.

Anyone interested in securing a place should email privatesectorhousing@northumberland.gov.uk

For more information on future landlord courses and events being held in Northumberland, click here

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Controversial Section 21 evictions investigated by tonight’s BBC Panorama

February 21, 2018

Do private tenants deserve more protection in terms long-term right to stay in a property, or would new rules make the housing crisis worse?

Tonight’s episode of Panorama, to be aired on BBC1 at 8.30pm, investigates the widely debated Section 21 no-fault eviction procedure and whether tenants deserve greater security, amid claims that no-fault evictions have trebled in the past eight years. 

In the show, reporter Richard Bilton meets the families whose lives are being turned upside down by their landlords because they were ordered to leave their homes with little by the way of notice or explanation.

But the show also features tenant eviction company, Landlord Action, which highlights the some of the main reasons why buy-to-let landlords turn to Section 21.

Panorama interviewed Paul Shamplina, founder of Landlord Action, and their senior solicitor, Emma Philips, about the rise of section 21 no-fault evictions.  

Commenting on the programme, Shamplina said: “When asked to appear on Panorama, I felt a necessity to present the landlords’ side on why so many use no-fault Section 21.

“The term ‘no fault’ is really a bit of a red herring. There is always a reason why a landlord ends a tenancy, but it’s a far cry from the headlines showing that landlords use it just to throw tenants out. 

“If a landlord has a good tenant, the last thing they want to do is get rid of a them. However, in our experience, the main reasons for serving Section 21 notices are for rent arrears, tenants requesting to be evicted so they can be re-housed or, most recently, because landlords wish to sell their property owing to impending tax liabilities.”

He added: “There are some very good tenants out there.  Sadly in some cases, they are being evicted through no fault of their own but rather because of their landlords’ circumstances, which must be very upsetting.  However, in my opinion, the abolition of Section 21 in England would compound the housing shortage.”

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Selective licensing is a minefield of regulation

February 21, 2018

In 2006, selective licensing was introduced, giving councils the power to force landlords to clean up their acts. These licenses allow the local authorities to check if the landlord’s properties are up to scratch and if they are managing the let properly. In an area where there is a selective licensing scheme in place, landlords must apply for a license if they want to rent out a property.

When they were launched, selective licensing schemes were only supposed to be introduced if the area had anti-social behaviour problems or low housing standards, but with such subjective criteria, they are popping up all over the place.

There are now 56 different selective licensing schemes in the UK with a further 26 to be added in 2018. This means there will soon be more than 80, plus RentSmart Wales – and each one is different

While in theory introducing these schemes should drive up standards, in practice, we still have a huge variation across the country and a minefield of regulation that most landlords are utterly perplexed by.

For landlords with one or two properties, it can be hard enough as many don’t realise their area even has a scheme, but for those with rentals all over the country, it can be very challenging.

Not only does each postcode area have a different set of rules to adhere to, but the schemes themselves are often so badly advertised that landlords are finding out 2nd or 3rd hand, or not at all. 

But, if landlords don’t have the correct selective licensing, and where applicable, HMO licensing and additional licensing in place, the penalties can be very high – as much as £30,000 per offence – plus they could also be banned from renting out a property in that area.

Given that the penalties are so harsh, it is imperative that landlords find out if they are in an area that has a selective licensing scheme in place. But that is not easy. 

For landlords in London, there is the London Property Licensing website http://www.londonpropertylicensing.co.uk/ but for those with properties outside of the capital, there is no one-stop-shop to go to.

One way landlords can ensure they are doing everything by the book is by instructing a professional and qualified agent. Not only will they be aware of the different schemes across the UK, but they should also know if and when any new schemes are introduced. They can then inform their landlords of any that affect them and help them put the correct licensing in place.

However, the question has to be asked – what has selective licensing actually achieved?

For a sector whose standards are already suffering from lack of regulation, having all these separate licensing schemes in place is only exasperating the problem. If legislation which gives tenants the right to sue their landlord if they are living in substandard conditions is passed, this will add a further layer of bureaucracy to supposedly tackle the same issue.

It has created a great deal of extra red tape and extra income for local councils and it feels to me like they are simply setting landlords and agents up for all fall, rather than trying to help them raise standards.

If we really want to improve standards in the private rental sector, selective licensing needs to be scrapped. In its place, we need a template that forces all local authorities to work to a standard model, because as it stands, I am struggling to see any positive impact the introduction of selective licensing has had on the industry.

Paul Sloan is operations director at Spicerhaart Lettings

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New buy-to-let calculator launched by LendInvest

February 21, 2018

A new buy-to-let affordability calculator, which works out the loan-to-value (LTV), annual rental yield and maximum gross loan amount for both individuals and limited companies, has been launched by LendInvest in a bid to offer a more accurate borrowing range and cover criteria for single properties, HMOs, and multi-unit freehold blocks.

LendInvest, which currently has a broker panel of more than 200 intermediaries, says that the new calculator has been designed to work together with its online buy-to-let application system, with loans available for between £50,000 and £5m on terms up to 30 years, at up to 80% LTV.

“Our priority is making sure the right technology is in place to make our brokers’ lives easier,” said Ian Boden, sales director at LendInvest.

“This new calculator is focused on delivering a simple, no-fuss experience for our intermediaries so they can make quick and accurate decisions for clients,” he added. 

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Register to attend free landlord investment show

February 21, 2018

Registration is now live for the National Landlord Investment Show which will take place at London Olympia next month. 

Hundreds of buy-to-let landlords and property enthusiasts will descend on the Olympia Conference Centre in March where they will be able to obtain free expert advice to help guide them with their investments.

With so much change and uncertainty in the market, the National Landlord Investment Show is a must-visit for all existing and prospective buy-to-let investors, with visitors able to attend seminars and stands covering all the biggest industry issues from the phasing out of mortgage interest relief to Brexit and its impact on the private rented sector.

The show, which takes place on Thursday 15th March, will feature a series of expert property panel discussions and seminar sessions, which will cover a number of topics, including universal credit, market trends, stamp duty, the restrictions on mortgage interest relief, and other tax implications.

The panel is free to attend for visitors that register their interest online and is on a first-come, first-served basis.

Registration is complimentary and can be done by clicking here.

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Letting market activity bounces back after Christmas lull

February 20, 2018

The private rented sector has enjoyed a strong start to 2018, according to the Agency Express Property Activity Index.

National month-on-month figures for new listings ‘to let’ sat at a record 60.9%, in January, while properties ‘let’ remained true to trend at 57.7%.

But looking at historical data, overall activity has slowed when compared to the increases made in 2016 and 2017.

November’s top performing region was the South West, with new homes to let increasing by 66.8% month-on-month, while properties let rose to sit at 83.2%. The South East followed suit with new listings ‘to let’ at 67.3%, again a record best month for the region.

Here are the prominent performing regions:

Properties ‘To Let’

Wales 84.80%

North West 82.20%

North East 71.40%

South East 67.30%

South West 66.80%

Properties ‘Let By’

South West 83.20%

South East 70.70%

West Midlands 68.10%

Yorkshire & Humberside 67.40%

Scotland 64.40%

The smallest increases in this month’s index were recorded in London. New listings ‘to let’ sat at 23.1% while properties ‘let’ sat at 14.7%.

However, looking back over the index’s historical data we can see that the figures have notably fallen compared to 2017 where new listings ‘to let’ sat at 67.7% and properties ‘let’ at 55.8%.

Commenting on the latest report, Stephen Watson, managing director of Agency Express, commented: “Following the December lull a spike in activity is always predicted.

“While month on month figures for January are robust they are heavily affected by the change in seasonal activity.

“This year we have seen growth, just not at the same rate as we have previously.” 

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Sharp rise in super prime tenancies agreed in London

February 20, 2018

With residential property prices in super prime London continuing to fall, an increasing number of would-be purchasers are turning to luxury rentals, reflected by greater activity in the capital’s super prime market, where tenants are prepared to pay as much as £18,000 per week for a home, according to a new report from Knight Frank.

Fresh data provided by the upmarket estate agent shows that the number of its super-prime lettings increased by 34% last year to 137, from 102 in 2016, with most of the properties let furnished.

Brits and Americans each accounted for a fifth of tenancies, followed by Russians, the French and Chinese.

With house prices falling in parts of the capital, a growing number of wealthy people are choosing to rent, partly to avoid hefty tax bills.

“The momentum of recent years is still gathering pace,” said Tom Smith, Knight Frank’s head of super-prime lettings. “Demand is resilient due to higher rates of stamp duty and the associated uncertainty over the short-term prospects for price growth in the sales market. A lack of clarity regarding Brexit has also been a factor.”

As well as more transactions, the deals agreed are now on a longer-term basis. The average length of a tenancy in 2017 was 589 days, which compared to 548 in 2016 and 528 in 2015, an analysis of Knight Frank data shows. 

There was also a record number of £15,000- plus per week deals last year, with 20 recorded compared to 11 in 2016.

Smith added: “There is increasingly the opportunity to rent the sort of high-quality stock that has come from the sales market that historically did not exist on the lettings market.”

“The clear message for landlords is that super prime tenants will not compromise on quality in the same way as buyers will not.”

Knight Frank also report that the prime central London sales market is now moving towards recovery.

Average prices above £10m rose 0.2% in the year to January 2018, the first annual increase in almost two years.

In a sign that more tenants are anticipating this recovery, there has been an increase in the number who have requested a clause in the tenancy agreement giving them first refusal to buy at the end of the tenancy.

“This option was rarely mentioned a few years ago but is now a frequent topic of conversation on viewings. Many landlords have nothing to lose with this ‘try-before-you-buy’ route,” said Smith. “The worst case scenario is that you have an income stream that covers your costs and the best is that you also have a sale at the other end.”

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Landlords to face remortgaging difficulties

February 20, 2018

Over the next few months, it is anticipated that tens of thousands of private landlords in the UK will face struggles in their quest to remortgage their property. A wave of investors obtained mortgages in March 2016, looking to avoid the 3% surcharge for new buy-to-let and second home buys, of which came into effect the month after.

With the end of their current deals closing in, a large proportion of landlords will now need to refinance, before automatically being put on the standard, yet significantly higher, variable rate set by their lenders. Many of these landlords will find it tough to remortgage, and there are a number of reasons for this.

Stricter lending criteria for buy-to-let mortgages

When compared to two years ago when the attractive mortgage deals were agreed, there are now much tighter lender criteria that may prevent landlords from remortgaging. There will be many circumstances where landlords are unable to remortgage, with the potential that their options will be limited and only able to do a product transfer with their lender. This significant lack of options and the difficulty in finding the finances that they need may see the number of landlords reducing significantly in the early stages of 2018.

Factors affecting buy-to-let mortgages

Over the last couple of years, there have been a number of changes that will all have an impact upon the buy-to-let mortgage market in some way or another. As the government have introduced new laws and regulations to the way that market works, landlords are likely to be affected, especially when looking to remortgage their buy-to-let property.

Tax relief reductions – The government have introduced a new regulation regarding the tax relief that landlords are allowed for their property. The amount in which the landlord can claim back as part of the tax relief has been reduced, and is set to continue to reduce year on year, until it reaches the new standard rate.

Stamp duty charges – In 2016, investors looked to snap up their properties before the stamp duty deadline, meaning that they would save thousands of pounds when compared to buying their property after the stamp duty deadline. The deadline had a huge role to play in the big spike in housing transactions in March 2016, but for any property purchases going forward, the stamp duty charge will apply to landlords.

Stress-testing rules – This was introduced with the sole purpose of reducing risk. Landlords are now required to generate more rental income under these new rules, to ensure that their mortgage costs are covered, even in the event that interest rates increase. As part of this, the rental income and mortgage payments are assessed, ensuring that interest rate increases won’t be detrimental to the landlord.

Difficulties for portfolio landlords

As a result of the regulatory changes in 2017, nearly three quarters of UK landlords with at least four buy-to-let mortgages, otherwise known as portfolio landlords, suggest that gaining finance for a property has been difficult for them to do.

As of September 2017, when a portfolio landlord looks to obtain finance for their next property, the lender is required to run extensive checks, focused around the affordability of the finance they are looking to achieve. As a result of this, landlords now have to ensure that each property within their portfolio is performing well, as any property not doing so may well remove the ability to obtain the loan. The opportunities for further growth may well be significantly hampered where portfolio landlords are concerned now, but ensuring that they are running a tight ship may help their cause.

Mark Burns is the managing director of property investment firm, Hopwood House.

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Government approves new selective licensing schemes

February 20, 2018

Plans to introduce new licensing schemes for privately rented homes across parts of North West London have been given the go-ahead by the Secretary State for the Department for Communities and Local Government (DCLG).

All private landlords who have properties in Dudden Hill, Kensal Green, Kilburn, Mapesbury and Queen's Park electoral wards will be required to have a property licence for each privately rented property from 1 June 2018, after the government approved the proposal to extend selective licensing in the five Brent wards.

The government’s approval to Brent Council's selective licensing application adds to the existing approved areas of Harlesden, Wembley Central and Willesden to extend the law to eight wards across Brent.

Cllr Harbi Farah, cabinet member for housing and welfare reform, said: “This is great news for thousands more of Brent residents. Brent Council is driving up housing standards in the private rented sector and cracking down on rogue landlords. We are hoping that the government will agree to extend selective licensing across more wards in the near future."

Brent Council has won 125 prosecution cases against rogue landlords, agents and subletters since 2016. 

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Bank of Ireland UK reduces BTL rates by up to 0.2%

February 20, 2018

Bank of Ireland UK has cut rates on its two-year fixed buy-to-let range by up to 0.2%, with rates now starting from 1.49%.

New two-year fixed rate deals include a 60% loan-to-value (LTV) deal at 1.49% and a 75% LTV deal at 1.82%.

The company has also reduced its residential rates by up to 0.14%.

Bank of Ireland UK’s 85% LTV rates now start from 1.4% for a two-year fixed, and 90% LTV rates start from 2.05%.

Alison Pallett, director of sales, Bank of Ireland UK, said: “We’re so pleased to announce the launch of this new and improved range, and happy to be continually supporting the broker market.

“Our new rates will further support our brokers to help even more customers.”

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New complaints system targets rogue landlords

February 19, 2018

A new rental complaints system has been proposed to help support private tenants who are forced to live in shoddy housing and squalid conditions, the government has announced.

In the private rented sector, there is currently no obligation for landlords to register with a complaints system. But the plans unveiled over the weekend by the housing secretary, Sajid Javid, aims to create a simple and effective complaints system that allows disputes to be resolved faster and consumers to access compensation where applicable.

Naming and shaming rogue landlords and homebuilders, as well as the introduction of a single housing ombudsman are among some of the options currently being considered.

An eight-week consultation on a new scheme to crack down on rogue landlords renting out overcrowded and dangerous homes is now underway.

Javid said: “For too long, tenants and homeowners have navigated multiple complaints procedures to resolve disputes about everyday household repairs and maintenance.

“Fixing this housing crisis is about more than just building homes, it’s ensuring people have the answers available when something goes wrong.”

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The PRS is increasingly relied upon to house young adults

February 19, 2018

Fresh research from the Institute for Fiscal Studies (IFS) which reveals that young adults are less likely to own a home than ever before reinforces the fact that the private rented sector (PRS) remains a vital part of the housing market.

The PRS, which provides homes to a fifth of the population and almost 2 million families with children, is now larger than the social rented sector, accounting for some 4.7 million households, according to the English Housing Survey, and this figures looks set to grow further.

The study by the IFS shows that for 25 to 34-year-olds earning between £22,200 and £30,600 per year, homeownership fell to just 27% in 2016 from 65% two decades ago.

Alejandro Artacho, CEO and co-founder of Spotahome, commented: “It is getting increasingly difficult for young adults to get onto the property ladder, and this is driving the growth of the rental market. Renting is now becoming the go-to accommodation option for many people.”

Additionally, there has been a considerable increase in the proportion of 35-44 year olds in the PRS, from 11% in 2006/7 to 29% in 2016/17.

David Smith, policy director for the Residential Landlords Association, said: “This huge increase in the number of young people unable to buy their own home means that more are renting and for longer periods. This shows the folly of government policy imposing higher taxes to deter investment in new homes to rent.

“The scale of the housing crisis demands a complete re-think from government with policies needed to support investment in homes to rent to meet the increasing demand.”

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How can landlords keep tenants happy?

February 19, 2018

Over recent months, the government and leading housing charities have put increasing pressure on landlords to improve the quality of rental accommodation and tenancy conditions. Earlier this month the House of Commons had a second reading of the Private Members’ Bill, which aims to raise standards of rental accommodation.

The government is pushing all landlords - both social and private sector- to ensure their property is fit for human habitation at the beginning and throughout the tenancy and this has accelerated in the wake of the Grenfell tower disaster.

Further legislation, which begins in April 2018, requires properties to have an Energy Performance Certificate (EPC) above an E rating, in order to be leased with a new tenancy. Much of this legislation is designed to drive out rogue landlords from the market and it remains to be seen if it will be successful.

 

However, the vast majority of landlords are providing good quality rental accommodation to their tenants. So what can they do to attract new tenants and keep them happier?

 

Recent research from ARLA [Association of Residential Letting Agents] shows that in December 2017, more agents had more stock on their books than at any time since early 2015. With the huge rise in Build-to-Rent accommodation and the growth of BTL landlords, tenants are now seeing a growth in choice. This means tenants can expect more from managers, so landlords need to set themselves apart to attract them.

 

Landlords need to ensure they have the right processes in place to attract good tenants and keep them happy during the duration of their tenancy. Our research shows that tenants want to be listened to and to believe that the person that manages them is professional. They don’t want a friend, rather an arms-length professional relationship. It’s their home until it’s not. They pay rent and expect a service. 

Communication is key. Listening to tenants involves largely reacting to issues during the tenancy and technology can be an excellent aid. There are smartphone apps now available that allow tenants to flag and track problems with a property, giving them the comfort and reassurance that they may have not experienced before in previous accommodation. Tenants are able to sign contracts and extend their tenancy, or action a break clause - all via a Smartphone app.

 

Responding to tenant queries quickly, giving them plenty of notice before entering the property for inspections and viewings and offering flexible leases, goes a long way to keeping them happy.

 

Impressing new tenants at the start of the tenancy is important too.  Processing an application quickly and efficiently will build goodwill and tenant trust.  By giving a tenant software that holds you accountable, the tenant is far more likely to trust you quickly during a potentially fractious part of their tenancy, the move-in.

When a landlord has a good relationship with their tenant, issues such as late, or no payment of rent and damage to property may be minimal. Maintaining a good relationship with a tenant requires some effort from the landlord and it won’t be achieved by putting tenants into a property and then ignoring them. Neither will it be developed by micro-managing and constantly checking on the tenants, while they are trying to get on with their lives. With the right processes in place, landlords can keep tenants happy and it can be a win-win for everyone!

Rochelle Trup is the finance director of Arthur, an online property management software company. 

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Property investors remain resilient

February 19, 2018

A third of property professionals in this country are set to add to their portfolios this year as appetite for opportunistic deals continues, remaining resilient despite a backdrop of increased challenges. 

Some 33% of the 109 property professionals surveyed by bridging finance lender mtf said that they planned to increase their portfolios in 2018, while 50% said they planned no changes.

No-one questioned planned to reduce their exposure to the UK property market, despite 40% of respondents stating that they did not think conditions for landlords and property investors will improve this year.

When asked what had been the biggest challenge for landlords and property investors last year, 43% cited the 3% stamp duty surcharge for buying an investment property, 21% identified economic uncertainty, new affordability rules was the third biggest challenge at 16%, 15% said accessing funding was the greatest challenge, while just  5% cited the phasing out of mortgage tax relief.

Of the 33% looking to expand their portfolios, 60% are seeking to acquire property in the South East of England, compared to 20% that said they were looking to buy in London, as investors look to diversify their portfolios geographically to broaden outside of the more expensive capital.

Tomer Aboody, director of mtf, said: “While there is continuing uncertainty, particularly over how the Brexit negotiations will unfold, UK property investors remain resilient.

“The fact that property professionals have continued to invest in the UK, despite the uncertainty and numerous challenges, bodes well for the future of the market.” 

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Rogue landlords in Burnley handed major fines

February 19, 2018

Two buy-to-let landlords in Burnley have been fined a total of £27,500 as part of Burnley Council’s campaign to clamp down on rogue operators in the private rented sector.

The authority’s housing team has served three notices to landlords for failing to licence their properties under the selective licensing scheme.

The notices relate to three properties in the Trinity and Queensgate selective licensing areas.

The penalties incurred were £12,500 for one landlord and two penalties of £7,500 for another landlord. The landlords have the right of appeal to a tribunal.

Cllr John Harbour, executive member for housing and environment, said: “The council is always willing to work with private landlords and support them in providing good quality and well managed properties for residents, and I’m pleased to say the majority of private landlords in our borough are professional and follow the rules.

“However there are a number of landlords who don’t follow the rules and don’t look after their tenants properly.

“The use of these powers support the ongoing work that the council carries out to tackle these so-called rogue landlords and sends out a strong message.”

The hefty fines handed to the two landlords highlight the fact that he council is “very serious” about raising housing standards in Burnley, according to Cllr Mark Townsend.

He commented: “This is part of our new strategy to ensure that everybody complies with regulations and really ups their game in this area.

“Unfortunately our policy of education has failed in the past but this shows we are prepared to take serious action against those who won’t comply.”

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Property remains the ‘preferred form of investment for so many people’

February 16, 2018

Residential property remains the long-term investment of choice for many Britons, illustrated by the high number of properties sold under the hammer at auction over the past couple of weeks.

More than 1,000 properties have been sold at auction so far this month, including plenty of tenanted properties, with hundreds more expected to be sold in the coming weeks, as the UK’s housing shortage continues to yield high investment opportunities.

“It is heartening to see that bricks and mortar continue to be the preferred form of investment for so many people,” said James Emson of Clive Emson Auctioneers.

He added: “With more homes needed right across Britain, it is no surprise that buyers are investing in land with development potential, particularly in urban or already expanding areas.”

Clive Emson Auctioneers sold land and property worth £17m last week, achieving an 85% sale rate after cataloguing 133 lots.

Emson continued: “Our packed February salerooms and exceptionally strong bidding show that without doubt the auction remains a hugely popular and utterly transparent method of buying and selling.”

Clive Emson’s auccess last week follows hot on the heels of a record-breaking 2017 - the most successful in the firm’s 30-year history with £160m of sales in total.

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How does GDPR affect small landlords?

February 16, 2018

The introduction of the EU-wide General Data Protection Regulation (GDPR) is a little over three months away, and the legislation will require landlords to process tenants’ personal data more rigorously and securely than many of us are used to.

Let’s start with the obvious: GDPR wasn’t designed with private landlords or people with second homes in mind. It was drafted to tackle some of the more egregious uses of personal data by tech giants such as Google and Facebook.

Nevertheless, the legislation applies to all of us and it’s important to have a basic understanding of how and why.

I have always said that the best landlords approach their portfolio, however small, as a professional business. Particularly with recent taxation changes, there are reasons not just to be businesslike, but legally operate as one. Perhaps GDPR is an opportunity and an incentive for all of us to implement strategies that make our operation as a whole more professional, effective and secure.

What constitutes personal data and do I process it?

With measures such as tenant referencing, it’s impossible to be a diligent, compliant landlord and not process some personal data, particularly if you self-manage. There’s a tendency to think of data as computer or cloud-based, and much of it is these days. But a filofax or ledger with tenants’ names, numbers and email addresses, dates of birth, and bank details, is just as relevant under GDPR. So too are digital scans or printouts of tenants’ IDs such as passports.

How can I handle data more securely?

There are some basic things each of us can do to make sure we comply with GDPR without creating masses of extra work for ourselves.

+ Ensure its physical safety. Keep tenants’ information in a locked cabinet or safe. This applies equally to paper copies, hard drives, USB sticks and anything else that carries personal data.

+ Ensure its digital safety. Password protect your mobile phones, computers and other devices. Be certain that your WiFi network is password protected and secure. Consider using a separate network for your business and home usage.

+ Be organised. Keep track of each tenant’s data and permanently delete anything you don’t need. Under GDPR a former tenant can ask you to delete all the information you have about them - so be diligent and make sure you can do so quickly and easily.

What does opting-in mean?

We need to always be clear about the legitimate reasons we hold or process any personal information. One of the significant grounds on which we can justify this is consent. The fact that a tenant has agreed to you recording and using their information is reasonable justification for you to, for example, save their contact information on your mobile phone so that you can contact them in an emergency.

Under GDPR, however, consent needs to be explicit - if you are relying on consent as a basis for holding someone's personal information, you need to have a record of their ‘opt-in’ to that purpose.

In our example above, just because a tenant has said that you can contact them in an emergency, this does not mean they have agreed to you doing anything else with their details. You would need to be able to show that your tenant also gave you permission to contact them and invite them to social events, and most certainly if you want to pass their information on to anyone else.

However, consent is not the only grounds you can have for processing someone's information.

For example, if you are in a business relationship with someone, you can process their information in order to maintain that relationship. So it is reasonable for landlords to contact existing tenants about their tenancy, or previous tenants about matters regarding their tenancy, for example the return of any deposit. It is also reasonable to record someone’s information if they have asked to rent a property from you: you need their details in order to do what they have asked you to do. You would, however, need to be clear with them if you were going to do a background check and pass their information on to someone else as part of that process: This would require clear consent.

Whatever you do, under GDPR you need to bear in mind that you should only be doing things with people’s information that they would reasonably expect you to be doing. Take time to think about what you are doing with their information in the context of the reason they gave it to you. 

If you get someone’s information from a third party, or you want to use it for something different from what they have previously agreed to, in most cases common courtesy will bring you in line with GDPR: Check with the person first.

The most important thing to remember, however, is to keep a written record of the actual consent - a signed document though a text message, email, fax, or digital log will be adequate.

What about partners?

Most of us use partners or contractors to help out with areas such as property maintenance. This tends to require some sharing of tenant details. Even if your handyman is a friend you’ve known for years, under GDPR you are responsible for ensuring that any data you share with them is safe. Have a chat with your suppliers and contractors when you are taking stock of your own security, and ask them to replicate what you’re implementing if necessary. As a business person you need to ensure that their terms of service to you include acknowledged responsibilities for data protection.

Do I need to register with the ICO?

Unless you have significant property holdings and process large amounts of personal data, it’s unlikely that you need to register with the ICO.

However, if you do suffer a security breach that compromises tenants’ personal information, you will need to report this to the ICO within 72 hours, as well as letting the tenants themselves know.

Any other tips?

Being a technology professional as well as a landlord, I would always advise that the security of off-premises, cloud-based data is going to be much stronger than anything you could achieve locally at home or in an office. Using a cloud-based PropTech service is a move to explore, particularly as it shares or passes the security burden of GDPR to the provider.

It’s tough to be a small landlord at the moment, and I can certainly see that GDPR could feel like an unwanted headache. However, GDPR should be viewed as an exercise in getting the fundamentals right rather than making a sea-change in how we work with tenants’ information. I’m likewise inclined to view it through the lens of the safety of my own personal data as well as that of my tenants, as well as an opportunity to professionalise.

Vik Tara is a landlord, the CTO of Technology Blueprint, a founder of Rentr, and the Director of CheckDocs - a document checking service for landlords and letting agents.

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Landlords urged to service boilers to reduce risk of heating system failure

February 16, 2018

Britain has been hit with a snow and ice warning that is set to put thousands of homes at risk of frozen and burst pipes, which is one of the most common boiler-related problems in winter.

The latest claims data analysis from Direct Line shows that there was a 5.2% increase in insurance claims for faulty boilers last year compared to the winter of 2015/16, and with temperatures set to plummet, experts are predicting the record for boiler claims could be broken again this winter.

The volume of claims for faulty boilers has been consistently increasing for the last five years.

Direct Line for Business is advising landlords that prevention is better than cure, warning they should not be complacent when it comes to maintaining their properties’ heating systems.

Calling out an emergency plumber to fix a broken boiler carries a premium, as emergency call out rates are on average 117% higher than average.

Christina Dimitrov, business manager at Direct Line for Business, said: “Being caught cold with heating issues in the winter months can be particularly unpleasant, so it’s vital that landlords make sure their properties have fully serviced boilers to minimise the risk of heating system failures.

“Landlords are legally responsible for securing a safety certificate for gas appliances each year and they also need to ensure the heating and hot water systems are maintained and functioning properly.” 

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Claim your free tickets for The National Homebuilding & Renovating Show

February 16, 2018

The National Homebuilding & Renovating Show takes place next month at the NEC in Birmingham, and you can now claim a pair of free tickets for the show worth £36.

Across four days - 22-25 March 2018 - visitors can speak to over 500 exhibitors and access free advice sessions, seminars and masterclasses on essential topics which can tackle any problem, from implementing the latest intelligent security systems to funding a remodelling project.

The event is a best-in-class marketplace for all the latest products and services provided by specialist companies in industries ranging from kitchens; bathrooms; doors and windows; heating; energy efficiency; architecture; design; financial services; planning permission and much more. Aside from providing advice and guidance, real case studies will be at the show to discuss the dilemmas they faced during their self-build/renovation experience, helping visitors with similar problems.

On site, visitors will be able to book bespoke consultations with celebrity experts who present their favourite TV property programmes. Charlie Luxton, sustainable architectural designer and presenter of Channel 4’s ‘Best Laid Plans’, will be on-hand to discuss homes of the future, new architectural ideas and eco living. Julia Kendell, interior design expert for BBC’s ‘DIY SOS The Build’ and ITV’s ’60 Minute Makeover’, will also be there to meet with visitors and talk about trendy interior adaptions and offer inspiration to anyone who wants to revamp their home.

The Advice Centre, a drop-in hub for one-on-one impartial guidance, is open to people who are interested in running ideas past property specialists with years of experience in their field. This show area will see the return of the Ask the Builder zone, where visitors will be given tips on locating approved construction workers from members of the Federation of Master Builders.

Visitors who are interested in free one-on-one appointments with chartered specialists from RIBA (Royal Institute of British Architects) will want to stop by the Ask the Architect area, which will cover a wide array of topics such as extensions, new builds, internal alterations and much more.

For objective tailored advice, the Ask the Expert zone will provide 15-minute consultations via interactive sessions with some of the UK’s leading property specialists. Visitors will be able to talk through their plans with various exerts.

To claim your free tickets, click here

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Free seminar for buy-to-let landlords

February 16, 2018

Buy-to-let landlords are being invited to take part in a free seminar in Cumbria next week.

The event, which will be held at The Melbreak Hotel, near Workington, will take place next Thursday, February 22, with a view to helping those in the property industry better understand the landmark changes to taxation that have taken place in recent years.

Open to landlords and property developers, the seminar, hosted by Lamont Pridmore, will cover changes to tax relief on repairs, changes to loan and mortgage interest relief and capital gains tax implications.

Starting at 4pm, landlords will also be able to ask questions of the firm’s local managing directors, Les Walker and Stuart Edger, who will share their expertise before attendees enjoy a light supper from 5.30pm.

Walker said: “Landlords have experienced a number of changes to the way their tax affairs are handled and having spoken with some in the profession it is clear that there is still some uncertainty about the impact this has had and what solutions best fit their portfolio of properties.

“With this in mind, this free event aims to comprehensively cover a number of the recent changes to ensure property investors are properly prepared and can make the most from the locations they have invested in or are seeking to purchase.”

Those who attend the seminar will also receive two free practical advice guides prepared by the company’s team that will cover the key property tax points for investors and residential property lettings.

Graham Lamont, chief executive of Lamont Pridmore, added: “We have a long history of supporting the region’s landlords and property investors, so we are really looking forward to meeting members of the sector at our upcoming event in Workington.”

For more information, email wendy@lamontpridmore.co.uk

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Investors should be ‘pouring’ money into the buy-to-let sector, says expert

February 15, 2018

Residential property price growth continues to prove resilient despite political and economic uncertainty, which is partly why buy-to-let remains the investment of choice, according to Sequre Property Investment.

Capital growth remains strong on the back of a prolonged shortage of new homes, sluggish listings and historically low mortgage rates, the latest house prices figures show.

House prices measured by the ONS House Price Index reveal that values ended 2017 on a high, with the UK annual growth rate for the year as a whole reaching 5.2% in December to stand at an average of £226,756, while transaction volumes for property acquisitions remained steady.

Graham Davidson, managing director of buy-to-let specialist, Sequre Property Investment, commented: “The increase of 5.2% only further cements why people should still be pouring into buy-to-let in 2018.

“A volatile stock market will push even more people to invest in property and despite changes to the tax law, buy-to-let is still producing high income. This simply reinforces its position as the number one investment choice.”

All regions saw positive annual growth, led by gains in South West with an annual growth of 7.5%.

“Location is an important consideration for investors looking to maximise their profit, Davidson added.  

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Nine out of ten landlords would like to ditch letting agents and go it alone

February 15, 2018

A number of buy-to-let landlords currently do not use letting agents to find or manage properties, and it has been suggested that many more would like to do the same.

Many landlords pay handsomely for letting and management services, and so would undoubtedly like to cut back, or scrap the need to pay agents’ fees.

The research reveals that 87% of landlords would be happier renting directly to their tenants, rather than via a traditional letting agent.

The survey found that landlord frustrations included high fees and poor service provided by letting agencies (52%), bad tenants (50%), managing repairs and maintenance (42%), new tax rules and regulations (37%) and finally general admin headaches (33%).

But the study should be taken with a pinch of salt because it was undertaken by HomeRenter, an online letting platform that aims to create an Airbnb style marketplace for the UK’s private rental sector, removing the need for a conventional letting agent.

However, Will Handley, CEO of HomeRenter, insists that there is a clear dissatisfaction from both landlords and tenants towards traditional estate agents.

He said: “The majority from both groups [landlords and tenants] feel the service provided is not up to scratch and would rather cut out the middle man and connect privately with their landlord.”

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BTL lenders see margins squeezed

February 15, 2018

Buy-to-let lending margins have been squeezed, with providers absorbing more costs to keep their rates competitive in the last quarter of 2017, according the latest results of the Buy to Let Mortgage Costs Index, published by Mortgages for Business.

Higher costs were fuelled by elevated swap rates, coinciding with the hike in the Bank Rate.

By the end of the year, two, three and five-year swaps, on which fixed rate mortgages are typically based, were higher than at the start of 2017.

But buy-to-let lenders, whose margins have been diminishing since July 2016, opted against passing on the increases to borrowers.

Instead, it seems they opted to squash their margins further, as they vyed for customers in light of fast-approaching year-end lending targets.

The data from Mortgages for Business reveal that, between the start and the end of last year, average lender margins over swaps had fell by 0.4% points.

Steve Olejnik, COO of Mortgages for Business said: “I doubt that lenders will consider lowering rates again. If anything, I would expect them to find ways of making up for the lost margins, particularly given that overall buy to let lending looks set to dip this year.”

The index also revealed that the effect of fees remained largely unchanged quarter-on-quarter, adding an average of 0.58% to the headline rate advertised to borrowers – the lowest amount since the start of 2013 when the index started tracking this data. Fees include lender arrangement fees, valuation fees and legal costs.

Lenders also increased the number of buy to let mortgage products without arrangement fees, probably as part of their drive to meet targets.

Fee-free products accounted for 16% of the market in Q4 2017, up from 14% in Q3 2017 and the proportion of products with percentage-based fees dropped from 44% in Q3 to 42% in Q4.

The proportion of products with a flat fee structure remained the same, although the average fee charged by lenders rose by £53 to £1,423.

Olejnik added: “Looking back over the last couple of years, flat fees have actually come down in price from over the £1,500 mark. The fact that they increased in Q4 could be a sign that borrowers are about to experience price hikes not only on the underlying costs but also at the point of sale.

“Now is definitely a very good time for landlords to review their borrowing arrangements.”

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Landlord given suspended prison sentence for illegal eviction

February 15, 2018

A buy-to-let landlord has been given a suspended prison sentence, handed a 16-week curfew and ordered to pay more than £10,600 after being found guilty of harassing and illegally evicting his tenant.

Simon Knight, 57, was convicted under the Protection from Eviction Act 1977 after changing the locks, preventing the tenant from getting in to the property and from accessing his belongings and essential medication.

Southampton Magistrates’ Court heard how Knight failed to formally terminate the tenancy of his property on Langton Road in Bishop’s Waltham, Hampshire, but rather embarked on a course of conduct intended to force his tenant to leave.

This included removing the tenant’s bedroom door and bed, padlocking the communal bathroom door shut and disconnecting the power to the shower.

According to Winchester City Council, the rogue landlord also failed to repair the oven, washing machine, tumble dryer and kitchen extractor fan. 

Knight was convicted following a trial at Southampton Magistrates’ Court.

He was sentenced to a 12-week jail term suspended for two years, with a 16-week curfew between 8pm and 6am. Knight must pay £2,000 compensation, the council’s £8,490 costs and a £115 victim surcharge.

Cllr Caroline Horrill said: ‘This result sends a strong message that the city council will not tolerate rogue landlords taking advantage of their tenants private rented accommodation being in an unfit or unsafe condition.

“Whilst we have a positive relationship with most landlords in the district, the actions of this landlord were evidentially unacceptable and resulted in real hardship for the tenant he illegally evicted.” 

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Paragon launches online portal

February 15, 2018

Paragon has launched a new online portal for buy-to-let mortgage customers and intermediaries, making it easier for borrowers to access a new further advance facility, including additional lending.

The new tool will also allow Paragon customers and intermediary partners to choose a new product at the end of their fixed term agreement and switch online.

John Heron, managing director at mortgages at Paragon, commented: “Our aim is to ensure dealing with Paragon is always as simple and easy as possible.

“These developments are a crucial step towards futureproofing our service to customers and intermediary partners – and are just a couple of examples of the many investments we’re making in our buy-to-let mortgage process.”

These new services are the latest in a recent succession of key developments from Paragon, following the launch of improved application management functionality for intermediaries across multiple platforms, the removal of valuation and admin fees on all Portfolio products, and the removal of the requirement of a floating charge on all applications from limited companies incorporated solely for the activity of holding and letting residential properties.

 

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RLA cautious over Labour’s proposal for pets in rented homes

February 14, 2018

The Residential Landlords Association (RLA) is seeking greater clarification from the Labour party after it put forward new proposals this week to allow tenants to keep pets as the default position in rented homes unless there is evidence that the animal is causing a nuisance.

A number of private landlords are reluctant to accept tenants with pets, which may explain why recent research by analysts Mintel found that fewer households now own a pet as more people rent rather than own their homes.

Opening the door to pet owners offers many potential benefits but can be a serious gamble, especially as pets are renowned for causing damage to properties.

David Smith, policy director for the RLA, said: “The proposal raises a number of questions which we will work constructively with the Labour Party to address.

“Will landlords be able to charge higher deposits to reflect the increased risks of damage to a property where pets are allowed? Will insurance premiums increase for landlords to reflect the greater risk of allowing pets to be kept as a default position? What happens in shared homes and blocks of flats where one or more of the tenants do not want, or are allergic to, a pet?

“Labour will need to respond positively to all these points if landlords are to have confidence in this suggested policy.” 

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Government approves new PRS licensing scheme

February 14, 2018

A proposal to introduce a new licensing scheme for privately rented homes in Nottingham has been given the green light by the Secretary State for the Department for Communities and Local Government (DCLG).

The City Council scheme covering around 31,000 privately rented homes in Nottingham is the largest outside London to be given approval by the Secretary of State.

A recent report by the BRE (Building Research Establishment) Group estimated that 21% of Nottingham’s private rented properties are likely to have Category 1 hazards – such as exposed wiring, a dangerous boiler, bedrooms that are very cold, a leaking roof, mould on the walls or ceiling and vermin infestation.

The council hopes that the new selective licensing scheme will help to make sure that these issues are addressed.

Cllr Jane Urquhart, the City Council’s portfolio holder for planning, housing and heritage, said: “I’m pleased that Nottingham’s selective licensing proposal has been approved by the government. In areas that are covered it will help to improve standards for private tenants and landlords will know exactly what they must do to be able to rent their properties out.

“Having a Selective License will allow landlords to demonstrate that they provide good accommodation for tenants.  The cost of licensing will be reduced for responsible landlords who gain Nottingham Standard Accreditation via DASH or Unipol. Tenants will also be able to check on both licensing and accreditation which will help to drive up private rented standards.

“This is a major step forward in improving living standards for many city residents.”

The new licence is expected to cost landlords who have Nottingham Standard accreditation in the region of £400, while those without accreditation will pay about £650. 

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TMW launches sub-2% five-year fixed rate BTL product

February 14, 2018

The Mortgage Works (TMW) will launch its first ever sub-2% five-year fixed rate buy-to-let mortgage deal today.

The new product, offered at a borrowing rate of 1.99%, is available to buy-to-let investors with a 50% deposit, subject to a £1,995 fee.

TMW also launches today a fee-free five-year fixed rate deal at 2.39% up to 50% loan-to-value.

In addition, there are selected rate reductions across the buy to let range of 0.15%, as well as new fee-free two-year fixed rate product options starting at 2.14%.

Meanwhile for those switching products rates now start at 1.99%.

Paul Wootton, managing director of TMW, said: “TMW is offering landlords a range of new buy-to-let deals with competitive rates in the market, including our lowest ever five-year fixed rate product. The aim is to help landlords to manage ongoing costs and offer a wider choice of options.

“This is particularly important in an environment where managing cashflow and costs has become increasing significant for both portfolio and smaller scale landlords.”

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Rent controls would ‘act against the interests of tenants’

February 14, 2018

Private rental prices paid by tenants continued to slow last month suggesting that rent controls may leave tenants worse off.

Rent paid by tenants to private landlords in Britain rose by 1.1% in the year to January 2018, down from 1.2% a month earlier, the latest figures from the Office for National Statistics (ONS) show.

In England, private rental prices grew by 1.1%, Wales saw growth of 1.4% while Scotland saw rental prices increase by 0.3% in the 12 months to January.

Private rental prices in London increased by just 0.2% in the 12 months to January, which is 0.9% below the average for Great Britain.

Over the same period, inflation, as measured by CPI (Consumer Price Index) was 2.7% and was 4% as measured by RPI (Retail Prices Index).

The Residential Landlords Association (RLA) argues that the figures show that calls by many in the Labour Party and elsewhere for rents to be linked to inflation would leave many tenants worse off.

RLA policy director, David Smith, said: “The figures show that rent controls are unnecessary and would act against the interests of tenants by making them worse off.

“Rent rises would be even lower if it was not for the punitive tax increases which the Government has imposed on the sector and which will begin to bite far more over the coming years.”

 

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Landlord fined £7,400 as council secures 125th prosecution against rogue operators

February 13, 2018

A buy-to-let landlord has been ordered to pay £7,400 after failing to obtain a license to rent out a property in North West London.

The unlicensed two-bedroom flat in Tunley Road, Harlesden, which would have cost £340 for a five-year selective licence, came to the attention of enforcement officers after the family complained to the council about their broken boiler.

The landlord, Errol Roy Thompson, claimed that he had begun to fill out an application for a selective licence in June 2016 but had failed to complete and pay the licence fee.

Thompson of Harpenden Close, Bedford, pleaded not guilty at the first hearing in August last year but changed his plea to guilty at the trial at Willesden Magistrates Court.

Cllr Harbi Farah, cabinet member for housing and welfare reform, said: “Mr Thompson was also sent a letter which specifically told him his property required a selective license. His failure to pay £340 has resulted in fines of more than £7,000 and a criminal record.

“The law is clear that any landlord who rents out a property in Harlesden, Willesden and Wembley Central needs a selective licence.”

Brent Council has won 125 prosecution cases against rogue landlords, agents and sub-letters since 2016. The convictions have resulted in more than £730,000 in fines.

 

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New platform to help landlords buy and sell property while tenanted

February 13, 2018

Many buy-to-let landlords are reluctant to sell a tenanted property because it can increase the chances of the sale falling through compared to selling a vacant property.

Tenants naturally want to avoid the uncertainty of potentially having to find a new home, but property website Vesta believes that it has created a platform that will help landlords reassure and support their tenants, encouraging them to cooperate during the sales process.

Vesta last week launched a new digital property marketplace for the private rented sector (PRS), designed to support growing institutional investment, which could bring the UK’s PRS more in-line with the US and other European markets.

The new marketplace also offers properties with ‘tenants in place’, ensuring that sellers earn all the way to completion, while buyers earn rental income from day one, and tenants avoid disruption to their lives. 

Russell Gould, Vesta’s chief executive, commented: “Within the next five years, we strongly believe that Vesta will be the norm for the residential investment property sector, bringing together housebuilders, buy-to-let sellers, buyers and property investors.”

Many homes in the PRS are owned by small investors who buy and sell properties that are vacant and unfurnished, but Gould argues that this is “costly, time consuming and often a painful experience for tenants and landlords”.

He added: “With less rental and capital growth on the horizon, costly tax changes relating to both stamp duty and interest set offs and tougher rules around mortgage terms, there’s an enormous potential in our trading platform to attract institutional investors, a government policy objective.”

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Proposed selective licensing scheme scrapped

February 13, 2018

A plan to introduce a new selective licensing scheme in Telford has been scrapped by Telford & Wrekin Council after more than 900 people replied to a consultation.

Under the original plans, private landlords in certain areas of Telford would have been required to acquire five-year licences before renting out their properties.

But after receiving hundreds of negative responses from local residents, as part of its public consultation, the council will now look to clamp down on rogue landlords and improve the local private rented sector by replacing its initial plans with a new set of five proposals called “Better Homes for All”.

Cllr Nicola Lowery, ward member for the Ironbridge Gorge, was among a number of local councillors to campaign against the proposal for selective licensing.

She said: “I greatly welcome the proposal of a more proactive approach from the council in applying their existing powers and their decision not to proceed with the proposal for selective licensing.  To introduce selective licensing at this stage would have been extremely damaging for reputable, good landlords and done little to improve housing standards, as there are existing sanctions available to tackle rogue landlords and ensure properties are adequately maintained.

“When considering whether to make a selective licensing designation a local housing authority should consider if there are any other courses of action available to it that would achieve the same objective. 

“Sadly, Telford & Wrekin council prior to consulting on selective licencing took minimal enforcement action on the powers they currently hold, which demonstrated that further action was needed and failed to fully consider the how the change in government legislation on Home of Multiple Occupation (HMO) would introduce mandatory licensing to all HMOs this October to address the existing issues.”

Lowery commended the Wrekin Landlord Association for what she described as a “proactive approach”, which in the end “greatly influenced this decision and lead to a highly positive outcome”. 

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New tenant app designed to improve communication with landlords

February 13, 2018

A new tenant app, designed to improve the communications between landlords and tenants, has been launched by property management software firm, Arthur.

The new app has been created to give tenants access to documentation, financial information, along with other important information about the property.

The app also enables tenants to raise and track all issues, while a late rent, an expiring tenancy, and an update to their issue can all be communicated effectively and efficiently.

Marc Trup, managing director of Arthur, said: “Tenants want to move into a new property as quickly as possible and with the least amount of hassle. We also know that when tenants have issues or problems during the tenancy, they want them resolved quickly and efficiently.

“We have designed the new tenant app to improve communication and speed up everything from signing tenancy forms, to notifying a landlord or letting agent of a problem with the property. Via the app, tenants can access aspects of their tenancy including documentation and rental statements and they can track the progress of a raised issue.

“Tenants don’t want to be bombarded with paperwork – they want to be able to sign all contracts digitally which means it can be accessed anywhere, at any time.  It means important documents can’t be lost or misplaced and improves the speed of the whole process, which can take a long time.” 

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Government must support ‘prominent role’ the PRS plays in housing sector

February 12, 2018

A mix of tax reforms and tighter regulation for the buy-to-let sector must not prevent private landlords from being able to run a successful property business or they will simply exit the market, according to Richard Lambert, CEO of the National Landlords Association (NLA).

Lambert was among several representatives from other PRS organisations, including the Association of Residential Letting Agents (ARLA Propertymark), the Royal Institution of Chartered Surveyors (RICS), the National Approved Letting Scheme (NALS) and the Residential Landlords Association (RLA), to meet with the Minister for Housing & Homelessness Heather Wheeler MP last week to discuss a number of issues facing the PRS.

The wide-ranging discussion touched on all aspects of the sector, from the regulation of letting agents and the banning of letting fees, to security of tenure and previous proposals to a specialised Housing Court to improve access to justice.

The year ahead will see a great deal of change in the PRS, with plans to extend mandatory HMO licensing, consult on introducing longer tenancies, and make minimum energy efficiency standards less lenient. 

But given the importance of the PRS, any proposed changes must ‘support’ the essential role landlords play in providing much-needed housing to millions of people in this country, according to Lambert.

He pressed the minister to think beyond simplistic calls for longer tenancies, and look at how best to incentivise landlords to offer a wider range of tenancies to cater for the increasingly diverse range of what tenants may need.

Lambert said: “I welcome the Minister’s willingness to talk to the NLA and other private rented sector representative organisations. With its self-professed focus on tackling the housing crisis, it is vital that the government recognises and supports the prominent role that the private rented sector plays in housing over twenty percent of UK households.

“Through the forthcoming ban on letting fees and other proposals the Government has shown it is more than willing to intervene in markets when it perceives them to be failing consumers.

“We urge the minister and her colleagues to work with the NLA and others to ensure that any intervention made is necessary, proportionate and maintains a fair regulatory regime within which landlords can continue to run their business.”

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Total amount millennials pay in rent starts to fall as more become homeowners

February 12, 2018

Tenants collectively paid a whopping £51.6bn in rent last year, which is £1.8bn higher than the previous year and more than twice what they paid in 2007, new figures show.

The hike in rent paid was fuelled primarily by both increasing rents and a rise in the number of households renting. The total amount of rent paid by tenants has increased annually for the last decade as the number of people renting has grown.

However, the amount of rent paid by millennials (born 1977-1995) has dropped by 2% as generation Z - those born after 1995 - picks up the baton, according to the research by Countrywide.

Generation Z now collectively spend £5.5bn in rent, doubling over the last year, but this amount was matched by baby boomers (born 1946-1964), which also remain important to the rental market. 

Proportion of total rent paid by each generation

 

Pre-1945

Baby boomers

(born 1946-1964)

Generation X

(born 1965-1976)

Millennial

(born 1977-1995)

Generation Z

(born after 1995)

Total rent

2006

£0.7

£3.6

£8.5

£7.5

£-

£20.3

2007

£0.7

£3.9

£8.3

£9.7

£-

£22.6

2008

£0.8

£4.6

£8.6

£12.7

£-

£26.6

2009

£0.8

£4.8

£8.4

£14.6

£-

£28.6

2010

£0.7

£5.5

£8.7

£18.2

£-

£33.2

2011

£0.8

£5.3

£9.4

£21.3

£-

£36.8

2012

£0.8

£5.4

£9.3

£24.4

£0.1

£39.9

2013

£0.8

£5.5

£9.7

£26.6

£0.1

£42.7

2014

£0.8

£6.1

£10.2

£30.0

£0.3

£47.5

2015

£0.8

£5.8

£9.4

£31.0

£1.1

£48.2

2016

£0.8

£5.9

£9.4

£30.9

£2.7

£49.7

2017

£0.8

£5.5

£9.5

£30.2

£5.5

£51.6

Source: Countrywide

Total rent paid by each generation (billion)

 

Pre-1945

Baby boomers

(born 1946-1964)

Generation X

(born 1965-1976)

Millennial

(born 1977-1995)

Generation Z

(born after 1995)

Total rent

2006

£0.7

£3.6

£8.5

£7.5

£-

£20.3

2007

£0.7

£3.9

£8.3

£9.7

£-

£22.6

2008

£0.8

£4.6

£8.6

£12.7

£-

£26.6

2009

£0.8

£4.8

£8.4

£14.6

£-

£28.6

2010

£0.7

£5.5

£8.7

£18.2

£-

£33.2

2011

£0.8

£5.3

£9.4

£21.3

£-

£36.8

2012

£0.8

£5.4

£9.3

£24.4

£0.1

£39.9

2013

£0.8

£5.5

£9.7

£26.6

£0.1

£42.7

2014

£0.8

£6.1

£10.2

£30.0

£0.3

£47.5

2015

£0.8

£5.8

£9.4

£31.0

£1.1

£48.2

2016

£0.8

£5.9

£9.4

£30.9

£2.7

£49.7

2017

£0.8

£5.5

£9.5

£30.2

£5.5

£51.6

 

The rate of rental growth in January remained unchanged from the end of 2017.

But on an annual basis, the average cost of a new let rose 2.4% from last year, unchanged from December 2017. 

Excluding London, average rents across Great Britain rose 1.9%, compared to annual growth of 2% in December.

Rental growth has accelerated in the capital while Scotland, the South East and the South West saw growth rates slow. The North East was the only region to see rents fall.

New lets

 

Jan-18

Jan-17

y-o-y

Greater London

£1,704

£1,649

3.3%

South East

£1,042

£1,024

1.8%

South West

£787

£766

2.7%

East of England

£925

£925

0.0%

Midlands

£669

£651

2.7%

North

£623

£610

2.1%

Scotland

£624

£621

0.6%

Wales

£646

£638

1.1%

Great Britain

£958

£935

2.4%

Great Britain (Ex London)

£766

£752

1.9%

 

Johnny Morris, Research Director at Countrywide, said: “The rental market grew in 2017.  More people joined the rented sector and average rents increased, meaning 2017 saw the highest total rent bill so far.

“As millennials age, more are becoming homeowners, so the total amount they’re paying in rent has started to drop.  But the Generation Rent title still applies.  Any fall will be much smaller and slower than seen by previous generations as less become homeowners.

“For the second month running rental growth in London has outstripped the rest of the country. Stabilising rents in central London alongside rises everywhere else in the capital has pushed the rate of rental growth to the highest level for 22 months.  While the rate of growth outside London remains higher than for most of last year, it has picked up to a lesser extent.  Across northern England rent rises are running at half the rate of 2017.”

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Rental prices edge up again in January says Homelet

February 12, 2018

Rental prices continued to rise in January, albeit marginally, according to the latest HomeLet Rental Index.

The average rent agreed on a new tenancy signed in January was £909 per calendar month (pcm), up from £907pcm in December, the data from the insurance firm shows.  

Rents have increased by an average of 2.4%, or £17pcm, compared to the same month a year ago; the average monthly rent stood at £892 in January 2017.

On an annualised basis, rents rose in 11 out of the 12 regions of the UK covered by the research, led by gains in Wales.  

The North East of England was the only region to see rents fall.

Recent reports from HomeLet had suggested that rents were approaching an affordability ceiling, particularly in areas of the country where rental price inflation was previously highest.

While landlords should be mindful of tenants’ ability to pay higher prices, it would appear that rental prices may yet offer room for growth in the short-term. 

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Profits at Nationwide fall due to ‘subdued buy-to-let mortgage market’

February 12, 2018

Nationwide has seen profits fall following a drop in buy-to-let mortgages as demand for rental properties continue to fall.

It is currently a challenging time for buy-to-let landlords due to recent tax changes, with the stamp duty surcharge and phasing out of mortgage tax relief continuing to bite, while new rules coming into play with regard to letting are also expected to have an adverse impact on the market in the near future.

The consequent fall in demand from buy-to-let investors has contributed significantly to the drop in profits at Britain’s largest building society to £886m in the last nine months of 2017 – down 6% compared with the same period a year earlier.

Joe Garner, Nationwide's chief executive, said: “A subdued buy-to-let mortgage market, plus sustained competition, slowed the pace of growth in our mortgage book.”

The decline in the number of buy-to-let acquisitions was illustrated by a recent IMLA report, which revealed that net investment in buy-to-let property had fallen by 80% from £25bn in 2015 to £5bn in 2017 due to excessive regulatory intervention on the sector.

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Sharp rise in serious mortgage arrears

February 12, 2018

There has been a significant increase in the number of landlords who are seriously behind with their mortgage payments, new figures show.

During the final quarter of last year, there were around 1,200 buy-to-let mortgages in ‘significant arrears’, up 20% on the corresponding period in 2016, according to UK Finance.

The data suggests that some landlords may be starting to struggle financially, following a series of tax changes.

In addition to the buy-to-let mortgages in significant arrears, which means that the landlord owes more than 10% of the outstanding balance, there were 5,100 buy-to-let mortgages in less serious arrears of 2.5% in Q4 2017 – an increase of 2% year-on-year.

Some 600 buy-to-let mortgaged properties were repossessed in the fourth quarter of 2017, which was unchanged from the previous quarter.

The figures suggest that more landlords may be starting to struggle financially, following a series of tax changes, including the introduction of the 3% stamp duty surcharge for additional property purchases in April 2016 and the existing phasing out of income tax relief for landlords.

Recent research found that one in five landlords plan to reduce the number of properties in their portfolio over the next 12 months. 

David Cox, chief executive of ARLA Propertymark, said: “Landlords are facing burden after burden placed on them by the government, which is significantly increasing financial compliance requirements.

“This is, in turn, causing landlords to fall into financial difficulties.”

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Close to half of BTL landlords looking to expand portfolios

February 9, 2018

Almost half of buy-to-let landlords are looking to expand their property portfolios despite recent tax changes in the industry, according to a new poll.

Despite the existing phasing out of mortgage tax relief and the introduction last year of the 3% stamp duty surcharge for those acquiring an additional home, including a buy-to-let property, many landlords are currently looking to add to their portfolios, the latest Mortgages for Business’ Property Investor Survey has revealed.

Despite the range of changes having an adverse impact on the buy-to-let market, 44% of landlords surveyed said that they plan to expand their portfolios during the first half of this year.

Steve Olejnik, chief operating officer of Mortgages for Business, said: “The results show that many landlords are more optimistic about the future of property investment than some commentators would have you believe.

“Of course, there will be some who will choose to leave the sector but this will create opportunities for those who are in it for the long-term.”

In terms of what properties landlords are interested in, three quarters - 75% - said vanilla buy-to-let would form part of the mix, with HMOs also being a preferred option.

Limited companies as borrowing vehicles were the popular choice for those expanding their portfolios with 58% opting for this route, while a further 20% advised they would be purchasing both personally and via a corporate structure.

But just over half - 54% - of landlords who responded to the survey said that they had not sought any professional advice relating to how the tax changes might affect them, which Olejnik said “is a worrying statistic”.

“This means we must continue to raise the issue with landlords every time they approach us for finance,” he added. 

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Prime London housing market report – rents rise in Q4 2017

February 9, 2018

Rental values in prime London increased by 2.5% in the final quarter of 2017, up 1.2% on the corresponding period in 2016, led by gains in prime central London, new figures show.

The newly released LonRes Prime London Lettings Index reveals that rents rose 6.3% in Q4 2017, compared to 3% in Q4 2016), owed in part to a supply-demand imbalance in the market.

Both prime central London and prime London saw fewer properties come to the market in Q4 2017, falling by 8% and 19% respectively, contributing to the growth in rental values.

In contrast, rents fell in prime fringe parts of the capital, which includes postcodes such as SE1, SE11, SW4, SW5, SW6, SW11, W4, W6, W9, W10, and this may coincide with the fact that this was the only region monitored by LonRes to see an increase in new instructions, up 8% on Q4 2016.

Overall, the number of properties let across the LonRes three prime areas rose by 7% over 2017 compared to 2016.

While fewer properties were let over Q4 2017, 5% fewer than in Q4 2016, the number of homes let at the top-end (£3,000 plus a week) increased by 24% year-on-year.

Marcus Dixon, Head of Research, LonRes, said: “A combination of fewer homes [to rent] reaching the market and increased demand, particularly at the upper end, meant achieved rents rose by 3% across prime central London in the fourth quarter compared with the same period a year earlier.

“The [rental] market remains sensitive to levels of new supply, but has continued to benefit from would-be owner-occupiers deciding to rent instead.”

You can read the latest LonRes residential review by simply clicking here.

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What is the most profitable London borough for Airbnb hosts?

February 9, 2018

Buy-to-let landlords looking for an impressive return on investment in the capital through Airbnb stays should look to invest in East London, new research suggests. 

The study, undertaken by Airbnb management company Hostmaker, found that Newham, Havering and Greenwich are currently the most profitable London boroughs for Airbnb hosts. 

According to Hostmaker, which analysed data from AirDNA, Newham tops the list with an impressive 6.8% return on investment, with Havering and Greenwich offering investors 6.5% and 5.7% respectively over the last 12 months.

With the average price of property in Newham currently £363,126, local hosts have been receiving high levels of interest in their properties, with occupancy levels surpassing 55.5%, putting the East London borough top of the list for returns on investment on properties.

The top 10 London boroughs by ROI:

Newham 6.8%

Havering 6.5%

Greenwich 5.7%

Hounslow 5.7%

Tower Hamlets 5.7%

Southwark 5.7%

Lambeth 5.5%

Barking and Dagenham 5.1%

Kingston upon Thames 5.0%

Merton 4.9%

Nakul Sharma, Hostmaker’s CEO and founder, said: “This is an encouraging sign for those looking to invest in London property. Short term lets offer an opportunity to deliver higher returns through flexible rental solutions. These results are a positive announcement for potential investors and can help alleviate the stress of stamp duty on those looking to sell up and move into the capital.

“As stamp duty continues to deter landlords, there is a strong appetite among homeowners for short term lets which provide respite for those looking to boost their revenue. This does not require any change in planning or usage of the property, unlike traditional buy-to-let properties which require buy-to-let mortgages, creating a major barrier to property investors.” 

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New free tenancy agreement tool launched for DIY landlords

February 9, 2018

A new free Assured Shorthold Tenancy (AST) contract creator tool that allows DIY landlords to create a bespoke, legally-binding tenancy agreement in a matter of minutes has been launched by TheHouseShop.

The AST tool, which enables landlords to download and print the contract free of charge, guides users through the contract creation process whereby they fill in all the relevant details for the tenancy and tailor specific clauses to suit their needs.

The resulting tenancy agreement is based on a contract created exclusively for TheHouseShop by established law firm, Shakespeare Martineau.

Jayne Gardner, partner at law firm Shakespeare Martineau, commented: “All too often we see landlords experiencing disputes with tenants that could have easily been prevented if the correct contracts had been in place from the outset. Many landlords, particularly those who are new to the business, often overlook the importance of a watertight tenancy agreement, and for many, this can be a costly mistake.

“Having a system that can support landlords to gain easy access to robust and legally-binding tenancy agreements is a game changer. Not only does it make the process more efficient, but it recognises the need for ‘jargon free’, bespoke legal support.”

The AST tool builds upon the suite of services that TheHouseShop already offers landlords.

Landlords using the online marketplace can now access free property advertising, tenant referencing checks, online rental calculators, end of tenancy cleaning, CP12 Gas Certificates, EPCs, home improvement services, guaranteed rent collection, downloadable landlord guides and more.

Nick Marr, co-founder of TheHouseShop, explained: “The vast majority of the landlords we work with adopt a DIY approach to running their rental business and do almost all of the work themselves. The legal side of the process can often seem daunting, especially for accidental or “newbie” landlords, and creating a tenancy agreement that will guarantee the safety of their property and protect their interests is hugely important.

“We discovered that a lot of our landlords were using old and out-of-date contract templates to draw up their tenancy agreements, or were struggling to find something that suited their needs. This meant that in some cases, landlords were making potentially risky amendments to the contracts themselves or using basic templates that didn’t actually cover everything they wanted to include.”

“Our new AST tool gives landlords the power to create a bespoke, watertight, legally-binding tenancy agreement themselves, without spending a single penny. The fact that a DIY landlord can now create a professional rental contract in a matter of minutes and know that they have covered their back from a legal perspective, means there is one less thing for them to worry about.”

You can view the new AST tool and test it for yourself by clicking here

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Property remains a ‘popular investment choice’

February 8, 2018

With savers continuing to receive poor returns from banks and building societies, thousands of people unsurprisingly continue to turn to residential property as a means of supplementing their income, supported by record-low mortgage borrowing rates, solid demand from tenants and stable yields, as buy-to-let consolidates itself as the investment of choice. 

Despite a challenging 2017 for the buy-to-let market, characterised by tax and regulatory changes, investment in buy-to-let continues to outperform most major asset classes, as Britain’s rented sector continues to expand, with a sixth of the population – some 10 million people – now living in accommodation rented from private landlords, which is roughly double the volume recorded in 2000, according to Knight Frank.

The latest ONS Wealth and Assets Survey covering the period July 2016 to June 2017 found that almost half of Britons - 49% - considered that property would make the most of their money, continuing the rising popularity for this option since July 2012.

This compares with 22% for employer pension schemes, the second most popular option, while the popularity of ISAs and savings accounts has followed a decreasing trend

Reflecting on the findings, Paul Latham, managing director of Octopus Investments, said: “Property has long been a popular investment choice and as the results suggest, is becoming more so, as house price growth continues and returns on savings remain low.

“The recent fall-off in cash ISA subscriptions would seem to indicate that many savers aren’t happy with the returns on offer from savings accounts – especially when you consider that today’s climate of inflation means the purchasing power of the cash held within ISAs will actually be shrinking in real terms.

“In this context, it’s perhaps not surprising that property – a ‘tangible’ investment choice which has long been a firm favourite for British investors – has grown in popularity over the last year or so.”

 

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Property manager hit with £10,500 fine for unlicensed HMO

February 8, 2018

A company and the manager of a house of multiple occupation (HMO) in South Hampstead, north-west London, have been hit with a hefty fine following legal proceedings brought by the Camden Council.

Manager of the property, Benjamin George Wilson, aged 40 from Barnet, having earlier pleaded guilty to operating an HMO without an HMO licence, was found guilty last Friday at Highbury Corner Magistrates Court of numerous safety regulation breaches and fined £10,500, plus £3,000 costs.

Highpad Ltd pleaded guilty to operating an unlicensed HMO at an earlier hearing, but the company, which is also associated with the landlords, was also found guilty of several safety breaches and was fined £9,500 plus ordered to pay £3,000 costs.

Acting on tenant concerns, council officers visited the property in late 2016 and found a lack of fire safety, a lack of a handrail on some stairs, an oven that posed a fire risk, windows in poor condition and a leaking sink.

In addition, as a result of the poor conditions, a suspended prohibition notice was served for a basement room due to poor levels of light and an improvement notice served to address other hazards.

Having failed to manage the property adequately and for a lack of the respective licence, the council brought the prosecution.

Cllr Meric Apak, cabinet member for Better Homes, commented: “Anyone who owns or manages an HMO – that’s a home occupied by three or more people who form more than one household - needs to have a licence.

“All landlords should also keep their property to a safe and liveable standard. As with this case, Camden Council will take whatever action is required in order to protect those who live in our borough.”

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Rents rise across every UK region for the first time in 19 months

February 8, 2018

The average cost of renting a home is now increasing across every UK region for the first time in 19 months, the latest Landbay Rental Index reveals.

The index, which is powered by MIAC, reveals that rents grew by an average of 0.07% in January, marking what is expected to be the start of a year of sustained rental growth for the UK.

The average UK rent now stands at an all-time high of £1,198 per month, a 0.66% increase on this time last year.

Rents in the capital, at an average of £1,876, remain around 2.5 times the rest of the UK, at £760, which is still £16 a month shy of the £1,893 record set in May 2016.

Much has been made of the sinking rents in London, which have fallen in every month since that record was hit in May 2016, but the capital is no longer exerting such downward pressure on the national average. Rents in London edged up by 0.03% in January, softening the annual decline to -0.54%.

John Goodall, CEO and founder of Landbay, said: “Landlords who turned their backs on London when rents started to dwindle may now want to reconsider. House prices have declined in the capital for four consecutive months and, combined with positive rental growth of 0.03% in January, yields will now be climbing.”  

While every region saw rising rents in January, the speed of rental growth has not been consistent across the UK.

At a country level, Wales saw 0.1% rental growth, while Northern Ireland lagged behind at 0.01%.

From a regional perspective, the East Midlands experienced rental growth of 0.18% in January alone, followed by 0.13% in the East of England. Meanwhile, rents in the North East paralleled the 0.03% growth seen in London.

Recent forecasts from Savills have predicted that rents will rise by 2.5% this year, and by a cumulative 15.5% over the next five years.

This forecast reflects the current state of the buy to let sector, which has faced a number of tax and regulatory changes that threaten to exert upward pressure on rents.

If rents do continue to rise, it suggests that the increased cost and compliance pressures on landlords are beginning to flow through into higher rents for their tenants.

Goodall added: “With all the tax and regulatory changes landlords have shouldered over the past couple of years, an uplift in rents has been on the cards for a while, and is likely to continue into 2018. Stamp duty changes pushed up transaction costs for landlords back in 2016, as have a raft of new regulations from the PRA landing in 2017.

“Furthermore, the Bank of England’s Term Funding Scheme comes to an end this month, pulling away one of the crutches that has allowed many mainstream lenders to keep mortgage rates so low.

“This, together with gradually rising interest rates, will eventually push up borrowing costs for banks, and consequently for landlords, who will have to pass some of these costs onto tenants in the form of higher rents.” 

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Greater demand for retirement rentals

February 8, 2018

There has been a rise in the number of people wanting to step off the housing ladder and rent in retirement because of the various benefits it offers, according to retirement rentals specialist Girlings Retirement Rentals.

The company report that an increasing number of older people are looking to downsize and sell their homes and rent as it enables them to release their capital and use it to invest in their future.

The number of retirees and older people moving into rented accommodation increased by 13% between 2012 and 2016 with the number of retired renters having soared by more than 200,000, according to figures from the National Landlords Association.

The research suggests that a number of factors are swelling the number of older tenants, including higher property maintenance costs, difficulty in downsizing and the need for the elderly to move closer to other family members.

“Increasingly we see a growing number of older people downsizing to rent in purpose built retirement developments, especially if they are granted the security of an Assured Tenancy, which provides the same security of tenure as home ownership,” said Gillian Girling, chief executive, Girlings Retirement Rentals.

Girling pointed out that there are also “financial benefits” to renting.

“If people have a property to sell they can then invest the equity or use it to supplement their retirement income,” he added. 

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Expat demand for buy-to-let property increases

February 8, 2018

There has been a sharp rise in the number of expats in Australia looking to invest in UK buy-to-let property, despite tougher lending criteria, new figures show.

Despite tougher mortgage lending rules, there has been a 29% increase in the volume of expats based in Australia seeking to enter the UK buy-to-let market, according to Cherry Mortgage and Finance.

There are more than 1.1 million Brits living in Australia and the UK-based expat mortgage broker believes, based on recent enquiries, that many wish to buy property back in the UK, either as a pure investment, or as something they intend to live in the property again upon their return.

Matthew Fleming-Duffy, managing director of Cherry Mortgage and Finance, said: “It would be good to see this change and following the joint press conference held by Theresa May and Australia’s prime minister Malcolm Turnbull last year. This may indeed become a focus of renewed co-operation between our countries, as Australia is a key destination for many British expats.

“We receive a large volume of enquiries from expats in Australia and have a handful of lenders that will arrange buy-to-let loans for them.

“Typically, UK expats are looking to invest in buy-to-let property whilst living in Australia, perhaps as a way to provide an income in retirement, or even to live in upon their return.

“On the whole, we receive enquiries from people in all walks of life including white collar workers, teachers, engineers and those employed in the medical profession.

“It has got a lot harder to get a mortgage in the UK if you don't live there - even if you're a British expatriate. We saw a few lenders withdraw from expat lending last year, as a direct result of the EU Mortgage Credit Directive.” 

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A fifth of landlords in outer London forced to reduce rents

February 7, 2018

Weaker demand from tenants has resulted in rental price falls in parts of the capital, as some landlords are being forced to reduce rents in order to attract new renters.

With significantly more properties to choose from, tenants are firmly in control when it comes to the private rented market in outer London, as reflected by a drop in rents in many parts of the city over the past year.

Some 16% of private landlords in outer London have reduced rents over the last 12 months, according to a new study by the National Landlords Association (NLA).

The research also reveals that the proportion of landlords raising rents in outer London is the second lowest in the UK after the North East, despite the fact that almost a quarter - 23% - of landlords across the capital have been able to increase the amount they charge to tenants.

The South West had the highest proportion of landlords who were able to increase their rents, at 42%.

Richard Lambert, CEO of the NLA, said: “These findings do not mean London is suddenly going to become more affordable for renters, but it seems to confirm that the trend of a softening of tenant demand in the capital is well-established.

“Both landlords and tenants are continuing to look outside of the capital to other centres and areas commutable to London which, if anything, will only serve to push up prices in those regions.”

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Investor interest in buy-to-let nosedives

February 7, 2018

 

There has been a significant decline in buy-to-let acquisitions since 2015 owed primary to tax and regulatory changes, new figures show.

A new IMLA report reveals that net investment in buy-to-let property has fallen by 80% from £25bn in 2015 to £5bn in 2017 due to excessive regulatory intervention on the sector.

The government’s decision to introduce a number of measures to curb the growth of buy-to-let landlords has had an adverse impact on the market.

The introduction of higher stamp duty purchasing costs, the scrapping of the wear and tear allowance, the phasing out of landlords’ mortgage interest tax relief, have deterred many experienced buy-to-let investors as returns continue to fall.

The report notes the positive effect that buy-to-let has had on the PRS. It estimates that between 2000 and 2017, UK buy-to-let landlords invested £289bn into the sector, meeting rising tenant demand by bringing 1.8 million properties into the rental market.

But more than a fifth - 21% - of landlords have indicated that they plan to reduce the size of their portfolios due to tax and regulatory measures introduced in the last two years. 

Kate Davies, executive director at IMLA, commented: “The raft of regulatory and tax changes that have hit the buy-to-let market in the last year have far-reaching effects that are still yet to be fully realised.

“We know that the majority of people regard owner-occupation as the tenure of choice, but for many this is not an immediate option. We also know that those who would in the past have rented from their local authority or Housing Association now need to rent privately.

“Various interventions by government have apparently been aimed at encouraging more first-time buyers and making investment in buy-to-let less attractive to existing and potential landlords. But the PRS plays a vital role in our housing supply and it’s essential that a sensible balance is struck, if tenants are not to be disadvantaged by shrinking stock and higher rents.”

The IMLA is urging the government to reassess the impact of the recent far-reaching regulatory changes to buy-to-let investment and allow a period of policy consolidation.

“Our nation’s PRS investors provide a vital service that’s vital to millions of UK tenants. We need to support and protect a sector that does so much for so many,” Davies added. 

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Renting a home is ‘out of reach’ for many young people

February 7, 2018

We all know that buying a home is a distant dream for many young people without wealthy parents, but there is growing evidence to suggest that renting a property is also out of reach for hundreds of thousands of young people.

With recent research by credit report provider Noddle revealing that the average rental deposits across the UK is edging closer to £1,000, many would-be renters simply cannot afford to leave the family home.

The survey of 2,000 renters and landlords also found that landlords also often reject prospective tenants because of their credit history.

Jacqueline Dewey, managing director of Noddle, commented: “Our latest research suggests that it's not just buying property that's become increasingly difficult for young people today; renting is also out of reach for many too.

“As demand for rentals becomes greater, especially in the big cities, landlords can pick and choose who they want in their properties. Credit checks are becoming more and more important in the tenant selection process.”

Dewey’s views are shared by Ajay Jagota, founder of deposit-free renting firm Dlighted.

He believes that tenancy deposits are an “unnecessary obstacle” preventing many people from being able to rent a home. He also has reservations about standard tenant credit checks.

He said: “Standard tenant credit checks tell you so very little – just whether or not people have been made bankrupt or had County Court Judgments made against them This tells you next to nothing about their suitability as a tenant.” 

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Ombudsman Services moves away from ‘broken’ housing market

February 7, 2018

Using an ombudsman has long been a pretty successful way of trying to resolve a complaint with a property firm without going to court, but Ombudsman Services (OS) sprung a surprise yesterday when it announced that it was withdrawing from complaints handling in the property sector as it launches a major dialogue with consumers to help tackle what it described as an ‘imbalance in power’ in the housing sector.

The not-for-profit organisation, which also operates in the communications and energy sectors, is one of several services which clears up disputes in the property sector, including the Property Ombudsman and the Housing Ombudsman Service.

OS will begin a managed withdrawal from the existing schemes it operates for surveyors, managing agents, estate agents and letting agents by 6 August 2018.  

OS envisages a similar model currently used in the Finance and Energy sectors; an effective regulator supported by a single ombudsman and a strong advice and advocacy service for consumers. 
 

To ensure that the new model addresses issues currently faced by consumers, OS wants to consult with the public about the shape of the service, understand key ‘pain points’ for renters, tenants and homebuyers and model potential demand. 
OS’s chief ombudsman Lewis Shand Smith commented: “Redress in the housing sector is a really confusing picture for all involved. The patchwork of ADR and ombudsman schemes is a mystery to consumers and therefore is incredibly difficult for them to navigate. 

“We are ceasing what we’re currently doing in the housing sector in a professional and planned way, because we believe it is not adding value. Rather than continue to offer a broken solution to a broken market, we are stepping away to listen to what consumers actually want.

“There are models in other sectors that work far better – for instance the single ombudsman model in financial services and the scheme we operate in energy which handles around 40,000 complaints every year. 

“We fully support Sajid Javid regarding the need for a single ombudsman for housing – only then will the housing sector be able to restore trust and ensure that consumers get a much better standard of service.

“Housing is one of the biggest issues we face as a nation and a fair, balanced, redress system will make sure that it serves the whole of society. We want to work to develop a model that works for everyone.”

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Fake landlord sentenced to six years in prison

February 6, 2018

An unscrupulous individual pretending to be a private landlord in order to scam more than £10,000 from unsuspecting tenants before going on the run has been sentenced to six years in prison.

James Bennett, 32, listed rooms on Spareroom for rent, taking £725 deposits from househunters and giving them tenancy agreements.

But Bennett had no consent to rent out the rooms in Brixton, Elephant and Castle and Tooting, south London, and was in the process of being evicted.

He committed the offences between late 2015 and December 2016, obtaining more than £10,000.

Many of the victims only found they had been defrauded when they turned up on the agreed day to move in, leaving several homeless, including one individual who had to spend Christmas in a hostel.

The conman was tried and sentenced to six years behind bars in his absence at Inner London Crown Court in December for 17 counts of fraud.

Bennet, who has previous convictions for fraud offences, was finally found by police last week, and given an additional month in jail for failing to appear at court.

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Police seize up to £50,000 worth of cannabis in raid

February 6, 2018

Police in Plymouth have seized up to £50,000 worth of cannabis in a raid.

Officers searched a rented property in Plymouth Hoe, finding hundreds of plants on Sunday.

The estimated value of the plants is £40,000 to £50,000.

Police arrested six men at the address on suspicion of supplying the class B drug.

The men, aged between 25 and 35, were arrested during the early hours of Sunday following inquiries made by police officers in the local area.

In addition, officers seized a large quantity of cash.

The men were all later released under investigation and inquiries continue.

The incident came just hours after another Cannabis farm was discovered at a rented property in Plymouth

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Major fine imposed ‘should act as a lesson to all landlords’ in the PRS

February 6, 2018

A buy-to-let landlord has been fined almost £34,000 for putting tenants at risk.

Harbhajan Singh Dhami pleaded guilty to not one, but 32 housing offences at a HMO (house in multiple occupation) in Merridale Lane, Wolverhampton.

Fire hazards, electrical issues, damp and a pile of waste were among the main issues found by inspectors last summer at the property, which had been converted into flats without consent, making it a HMO that should be regulated under the HMO regulations.

Dhami, of Ednam Road, Wolverhampton, and his company Dhami Accommodation Ltd, received fines, charges and costs totalling £33,995, at Wolverhampton Magistrates Court.

Cllr Peter Bilson, deputy leader and cabinet member for city assets and housing, said: “We are determined to bring to task landlords who are not complying with housing laws and building regulations.

“Our residents’ health and wellbeing is of paramount importance to us and this case should act as a lesson to all landlords in the private sector.

“Thankfully, the majority of landlords in Wolverhampton abide by the rules and regulations and co-operate with the council.

“The council takes very seriously its commitment to monitoring the private housing sector and we will continue to do so to ensure tenants’ living standards are of the highest quality.”

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TMA adds Chorley Building Society to its lender panel

February 6, 2018

TMA Club has added Chorley Building Society to its lender panel, offering members immediate access to a wide range of buy-to-let products, including a recently launched product exclusive to intermediaries.

Products for those approaching retirement, freelancers or the self-employed, as well as those who have recently experienced a life event, which they have recovered from, but has impacted their credit profile, are among the latest range offered by Chorley.

The society’s exclusive buy-to-let product has a discount variable rate of 3.49% for the first three years, which is available to borrowers with three or less buy-to-let properties.

The product is available at up to 80% loan-to-value (LTV) with the minimum loan size of £80,000 and a maximum of £1m.

“TMA’s lender panel shows no sign of slowing down in 2018, with yet another fantastic addition,” said Rob McCoy, senior product and business manager at TMA.

“This re-affirms our commitment to continuously expanding the products available to our Directly Authorised advisers,” he added. “We expect the addition to be very popular with our members and look forward to working with them.”

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London property hotspots – where should you invest in 2018?

February 5, 2018

With 65,000 affordable new homes planned to be built in London per year, it would appear that the capital is offering new opportunities when it comes to house buying.

London Mayor Sadiq Khan’s draft London Plan means that the London property map will be greatly altered. With high prices in parts of central and inner London, young buyers have had to look at other areas if they want to invest in property.

London opportunities

With a range of regeneration projects and transportation upgrades, parts of London that would not normally be top of a property shopping list are being revitalised, creating brand new hotspots and opportunities that are hard to ignore. The Mayor’s London Plan has set out targets for each borough in the city as well as identifying ‘Opportunity Areas’ in which large amounts of investment are being channelled.

These ‘Opportunity Areas’ are priority zones where development and regeneration are to be accelerated. It not only outlines a plan for a city, it is a map of areas that property investors should look to as early as possible if they want to reap the benefits further down the line.

There are as many as 30 areas designated for this attention, and the process has already begun in Stratford and Nine Elms. It now seems that Charlton Riverside, Colindale, Cricklewood, Harrow, Kensal Canalside, Catford, New Cross, Ilford, Southall, Park Royal, Woolwich, Thamesmead and Abbey Wood are next in line for a period of regeneration.

Travel zones

Until now, developers have tended to focus their attentions on the areas surrounding Travel Zones 1 and 2. However, there is now a shift towards areas from Zones 3 to 6 where homes can be built at a comparatively more affordable price for buyers. Currently, prices range from £250,000 to £800,000 with great variations only a few tube stops apart. 

The focus on these areas is thanks to the development of Crossrail, which will make some of these districts more accessible.

The real hotspots

One of the hottest areas to consider in London at the moment is Tottenham, thanks to a £1 billion regeneration scheme. With a planned 10,000 new homes and 5,000 new jobs over the next seven years, a £400m redevelopment of Tottenham Hotspur’s stadium and the potential to become a key interchange station on the proposed Crossrail 2 route, it is an area that cannot be ignored.

At Forest Gate, you can buy a property for an average price of £442,000 and get a rental yield of 4.1%. The Elizabeth Line is due to begin running later this year, putting the area less than 20 minutes from important areas such as Bond Street and Canary Wharf. This typically undervalued area has a healthy rental potential at the moment, with plenty of scope for increases in the near future.

The departure of the BBC from White City has left it ripe for transformation. Billions of pounds are being spent to reinvent the area with the inclusion of 950 homes, as well as offices, restaurants, bars a hotel and private members’ club. A new campus for Imperial College is the final piece in the puzzle to explain why people are already flocking here.

Regeneration is also sweeping across Wembley, with more expected in areas such as Whitechapel and Tooting Broadway. Lewisham is becoming popular as buyers are able to skip studio flats in favour of two and three-bedroom properties, but prices here may change if the proposed expansion of the Bakerloo Line takes place in 2023. Whilst Wood Green remains untouched for the moment, the approval of Crossrail 2 will change all that.

Buying a property in London has never been easy, but moving away from the typically popular areas to these up and coming hotspots could prove to be a profitable investment.

Mark Burns is the managing director of property investment firm, Hopwood House.

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Did you miss the tax return deadline?

February 5, 2018

The 31st January deadline to submit your self-assessment tax return for the year ended 5 April 2017 has come and gone, but almost 750,000 people now run risk of £100 fine because they failed to submit their self-assessment on time.

HM Revenue & Customs said almost 10.7 million taxpayers had submitted their self-assessment return before the deadline, typically because they are self-employed, run their own business or have untaxed income or capital gains, such as from a buy-to-let property, a trust or investment portfolio.

But of the 11.4 million returns due, around 745,500 were still outstanding, HMRC said at the end of last week. These people are now at risk of paying a penalty.

Whether you have just started out as a buy-to-let landlord or you are an established property investor, you were required to file your 2016/17 self assessment tax returns last week, and unless you have a a reasonable excuse or had only registered to complete a return in the last three months, HMRC will be issuing you with a £100 late filing penalty, on top of any tax you owe.

In addition to that, you have just extended HMRC’s enquiry window, according to Paul Haywood-Schiefer, personal tax assistant manager at accountancy, tax and advisory practice Blick Rothenberg.

 

He explained: “Usually HMRC have 12 months from the date of submission to enquire into your tax return. However, where the return is submitted late, this is extended to the next “quarter day” which will be the 30 April, 31 July, 31 October or 31 January, depending on when you submit the form.”

 

Haywood-Schiefer advises that continued failure to file has further consequences.

 

He continued: “It is really important not to bury your head in the sand about this. You might feel a bit more relaxed because the deadline has passed, but it is really important to get your return completed and submitted as soon as possible. 

 

“HMRC will chase you for it, but if the return has still not been filed by 1 May, HMRC will begin to issue £10 daily penalties for the next 90 days.

 

“Continued failure to file after six months and 12 months will lead to further penalties of 5% of the tax liability or £300 [if greater]. Don’t let it get this late, because after 12 months, much harsher tax based penalties can arise.”

In addition to failure to submit the return, there is also the tax due to consider. It is one thing that you have not completed your tax return, and it may be that you are still trying to get a few last pieces of information together, but if you know you are going to have a liability it is worth making an estimated payment to HMRC in advance, according to Haywood-Schiefer.

 

He commented: “The reason for this is that interest will accrue daily on the balance of any tax due until payment is made to clear it. If you pay too much, you can claim the difference back from HMRC once you’ve submitted the tax return and regularised the position.

 

“Interest is not the only amount charged on outstanding tax to HMRC. If the tax liability for the year to 5 April 2017 is not cleared by 2 March 2018, HMRC will apply an additional 5% surcharge. You may not have calculated the tax by then if you still haven’t submitted the tax return, but once you do, HMRC will calculate the surcharge and apply it. This is another reason to make an upfront payment while you are finalising the return.”

 

For those people who may not be able to pay the tax, there is help at hand.

 

HMRC can offer something called time to pay arrangements. If HMRC accepts the circumstances of an individual - you will be expected to provide a detailed breakdown of incomings, outgoings and assets - are such that they meet their criteria, they will then arrange a payment schedule with the individual to pay off the tax owing over the course of a few months.

 

This is without incurring any further penalties other than having interest accrue on the outstanding tax.

 

However, the personal tax assistant manager said that for a time to pay request to be considered you must have submitted your tax return so that the tax can be calculated.

 

“Therefore, don’t delay in getting that return completed and filed as soon as possible,” he concluded. 

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Cannabis farm discovered at rented property in Plymouth

February 5, 2018

A major cannabis farm was discovered over the weekend at a house in Plymouth city centre after two police community support officers (PCSOs) detected the strong smell of the plants whilst patrolling the area on foot around Ilbert Street, PL1, where the property is located.

As a result of their suspicions, a team of officers used a battering ram to force their way into the building, where they discovered the marijuana plants.

Hundreds of cannabis plants were found, many between three and four feet and ready to be cultivated, on Saturday night by PCSOs Luke Holman and Matt Boon from the Stonehouse neighbourhood team.

PCSO Holman told The Herald: “Fortunately Saturday wasn’t windy and we were able to narrow it [the smell] down to one property.

“All the windows were closed up and the curtains open. We looked through the letter box and saw a number of air fresheners and a lot of unopened post piling up.

 “We managed to get to the back of the property and view the courtyard.”

It is not yet clear who lived at the property, which one neighbour said was managed by a local letting agency.

But it has been suggested that the operation may have been run by a specific crime organisation, such as the notorious Vietnamese crime gangs.

PCSO Holman added: “The set up was very professional. If you combine the value of the plants, how long they had been growing and the possibly turnover of each crop, the value of the electricity stolen and the cost of the equipment, we can estimate that this offence involves hundreds of thousands of pounds.

“If fuels other crimes and we need the public’s help to target these offences.”

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Foundation Home Loans launches cashback offer

February 5, 2018

We all know that regulatory changes to lending in this country has made it harder for portfolio landlords to secure a mortgage, and that is why Foundation Home Loans has decided to launch a new cashback buy-to-let product to help ease the burden.

Fresh figures from Foundation Home Loans, based on research by BDRC Continental, shows that almost three quarters of portfolio landlords have found it more difficult to secure a mortgage since the Prudential Regulation Authority (PRA) changes were introduced at the end of September 2017.

Some 70% of landlords with over four buy-to-let mortgages and 51% with between one and three mortgages said they had found obtaining finance a challenge since the regulation came into effect last year.

Jeff Knight, marketing director at Foundation Home Loans, said: “The wave of changes to the market have proved challenging for portfolio landlords – and nearly three quarters have found it more difficult to secure a mortgage since the PRA changes were introduced.”

Foundation Home Loans has launched a new cashback buy-to-let product for portfolio landlords, available up to 70% loan-to-value, which offers £500 cashback following completion of the loan and has 1% arrangement fee.

It has a five-year fixed rate of 3.89% – available to both individuals and limited companies – and a five-year fixed rate of 3.99% for HMOs and MUBs.

The minimum loan size for this product is £150,000 and the maximum is £500,000.

Knight added: “We wanted to step up the level of support we offer, particularly when it comes to upfront costs, to help those choosing to re-mortgage or extend the size of their portfolio.

“This new cashback product is the latest step in our goal of becoming the go-to lender for portfolio landlords, and we are constantly reviewing our offering to ensure we achieve this.”

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Landmark legal decision could see rogue landlords forced to give up all earnings

February 2, 2018

Criminal landlords who crammed up to 40 migrants inside their semi-detached townhouse in north-west London face losing hundreds of thousands of pounds they made in rental income after Brent Council this week became the first council in the country to use the Proceeds of Crime Act (POCA) against them.

Harsha Shah, her daughter Chandni, and brother-in-law Sanjay Shah, rented their four bedroom property in Wembley through estate agent Jaydipkumar Valand, receiving between £40 and £75 per week in cash over a five-year period by the tenants who resided in filthy and dangerous living conditions.

Harrow Crown Court heard how tenants were made to sleep in bunk beds, which blocked all fire exits, leaving His Honour Recorder Rubin QC with little alternative but to order the POCA to recover criminal assets that the Shah family obtained.

Edmund Robb, counsel from Prospect Law who represented Brent in the hearing, commented: “This judgment represents a landmark ruling from the Crown Court which allows local authorities to initiate confiscation proceedings under POCA 2002 for criminal offences linked to safety and amenity regulations.

“Rogue landlords cannot now hide behind previous case law to avoid being required by the courts to pay back rents and other benefits obtained whilst their tenants lived in squalid and dangerous conditions.”

The Shah family now face paying a confiscation order for financial benefit gained or saved as result of contraventions of the Management of HMO Regulations 2006 and breaches of licensing conditions that could amount to more than £360,000.  

This covers repairs they neglected to fix and financial gain made from their racketeering.

Cllr Harbi Farah, cabinet member for housing and welfare reform, said: “This is a landmark legal decision for our zero tolerance policy against rogue landlords. We will use all the powers we have to put an end to tenants living in misery, and this includes the Proceeds of Crime Act.

“We want to work with landlords and agents to improve the standard of living in the private rented sector, and we urge those responsible to licence their properties and comply with licensing conditions.”

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What should landlords be aware of going into 2018?

February 2, 2018

The buy-to-let property market is currently experiencing a wave of reforms, with the government looking to alter the way in which the market operates. With so many changes to regulations, taxes and also lending rules, it can be confusing for landlords to know where they stand going into 2018.

Introduction of PRA rules for ‘portfolio landlords’

Portfolio landlords (those who own four or more buy-to-let mortgaged properties) are facing new PRA rules that are likely to have a significant effect on them and their investment portfolio. The Prudential Regulation Authority rules have been designed to provide tougher criteria for new investment lending, based on each aspect of your portfolio. If you are looking to make another investment, lenders will now be required to assess each aspect of your existing portfolio, and if even just one element of it is not succeeding, your application may not be granted.

Entering into 2018, you should look to keep all of your paperwork in check, displaying all of the key aspects to your investments, with up-to-date records. If you do have an underperforming property, it may be wise to sell the property before making your next investment.

Changes to mortgage interest tax relief

In recent times, landlords were able to deduct the full amount of their mortgage interest costs from the income that they make, yet this figure has now dropped to 75% and is set to continue to drop over the coming years. The figure will drop to 50% in the 18/19 financial year, again to 25% in the 19/20 financial year and once again in the 20/21 financial year where a basic rate tax reduction will be given to landlords.

Non-portfolio landlords are able to reduce such issues by remortgaging their property, helping to save money on the interest that they have to pay. The current mortgage interest rates within the UK are substantially lower than previous years, therefore if landlords were to remortgage, they could get lower interest rates and receive less of a hit by the changes to tax relief.

Energy Efficiency Standards

Set to be introduced in April 2018, landlords are soon to be required to have their entire rental properties in line with the new standards, of which are part of the ‘Minimum Energy Efficiency Standards (MEES). This will require having an energy rating of at least an E, and failure to comply with this will mean that the property will be illegal to rent out and the landlord may receive a penalty of up to £4,000.

Right to Rent legislation

The Right to Rent legislation was initially introduced back in February 2016, requiring landlords to make sufficient checks into whether or not tenants have the right to live within the UK. Such checks should be made against all potential tenants, including British people, and this would include the use of passports or visas.  Should passports or visas expire during the term of their tenancy, the landlord should request an updated copy, further ensuring that they are still able to live within the country.

Licensing for landlords

At this moment in time, it is currently down to the appropriate local council as to whether or not a landlord is obliged to sign a code of practice, and this has previously been debated as to whether it should be a UK-wide system. Some are currently only applicable to those landlords letting out HMO’s, but there are some areas that make them compulsory for all of their landlords.

There are approximately 300 councils within the UK that currently operate with a similar scheme in place, or are at least looking to introduce one. With this in mind, you should look to see if you are likely to be effected by this, as there are potential fines to be faced with.

Finances for mortgages

With recent announcements stating that the Funding for Lending Scheme and the Term Funding Scheme are to be closed, landlords may find that mortgages may begin to increase in the near future. Despite record lows for mortgage rates, the closure of these schemes and potential further increases to the UK base rate may lead to increased mortgage rates.

In addition to this, data suggests that rental yields fell on average from 4.8% in 2016 to 4.4% in 2017 in England and Wales, meaning that landlords may well face reduced profits moving forward within the current market.

Other notable points to consider

Further points that you may wish to consider include:

Ombudsman scheme – This is to be introduced in order to help resolve landlord and tenant disputes, and will require all landlords to register with a redress scheme. It is advised that you monitor the situation to see whether or not a governing body will be launched.

The stamp duty surcharge – The introduction of a 3% stamp duty charge was not happily welcomed by property buyers, and yet it is still in place. This is an important element to consider when calculating your finances for your investment, meaning that you will be fully aware of everything related to finance and expenses.

A ban of letting fees – The Government recently introduced parliament to a draft bill, outlining the banning of letting fees charged by letting agents within England. As part of this, holding deposits will be capped at a maximum of one week’s rent, and security deposits will be capped at a maximum of six week’s rent.

Database of previously banned landlords – If approved by parliament, a database of previously banned landlords in England will be produced early in the year.

Protection of tenant deposits – Since 2007, landlords have been required by the law to place their tenant’s deposit into a secure, government-approved deposit scheme, to ensure that it is well protected. Failure to do so will see tenants taking the landlord to court, where the landlord will face damage costs of up to three times the amount of the deposit. Any disputes regarding deposits at the end of the tenancy agreement will be resolved by the scheme, with no additional costs.

Mark Burns is the managing director of property investment firm Hopwood House.

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Legal challenges launched against Right to Rent policy

February 2, 2018

Two separate legal challenges have been launched against government's 'Right to Rent' policy.

The scheme, which requires landlords to check the immigration status of new tenants, has left many landlords reluctant to rent to those without a UK passport.

Two cases have now been taken to court that could end up reversing the policy.

The first involves a woman who is facing eviction after her landlord was notified that she did not have consent to be in the UK, after the Home Office lost her passport when she applied to extend her visa.

Her lawyers are arguing that the policy is not compatible with the Human Rights Act.

Derek Bernardi of the Camden Community Law Centre, who is acting on behalf of the woman, told the press: “The government says that the right to rent policy will crack down on rogue landlords but this case is the perfect example of how it impacts vulnerable people.”

The second case is being brought by the Joint Council for the Welfare of Immigrants (JCWI). 

The group argues that the scheme is therefore “disproportionate and discriminatory”.

“The right to rent policy is designed to encourage irregular migrants to leave the country by making them homeless,” Chai Patel, legal policy director at JCWI told Politics.co.uk.

Patel continued: “The problem with it, apart from the inhumanity of that proposition, is that there's no evidence it works. The Home Office hasn't shown that the scheme will do anything to increase voluntary departures, which have actually reduced since the scheme came into force.

“Worse, the scheme causes discrimination against foreign nationals even if they have immigration status. It also causes discrimination against British citizens who don't have passports.

“Faced with our evidence, the Home Office has buried its head in the sand and refuses to review the scheme before forcing it onto Scotland, Wales and Northern Ireland. We have no choice now but to challenge this pernicious and ineffective policy through the courts.”

The legal bids to overturn the Right to Rent policy has been backed by the Residential Landlords Association (RLA).

RLA policy director, David Smith, said: “When this policy was first discussed we warned the Government of the unintended consequences of the Right to Rent scheme. How can a landlord be expected to know what every passport in every country is supposed to look like?

“For the overwhelming majority of landlords it makes no commercial sense to limit their access to a large proportion of the prospective tenant market.

“It is the fear of criminal sanctions for getting it wrong which is causing many simply to want to play it safe.

“Landlords should not be used as scapegoats for the failures of the border agencies. It is time to suspend this controversial and unwelcome policy.”

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How to improve the rental market for tenants

February 2, 2018

Landlord licensing, a database of rogue landlords and improved rent controls are among some of the primary measures proposed by renters seeking to improve the rental market for tenants.

A new YouGov survey of just over 2,000 people conducted by rental marketplace has revealed what those renting in believe would make life better for tenants, with the introduction of mandatory landlord licensing, whereby all landlords would be forced to apply for a formal “landlord license” when renting out a property, selected as the most popular option to improve the renting experience for tenants.

The second most popular option was the introduction of a searchable “online rogue landlord database”, where tenants could look up a potential new landlord to check for any illegal or unprofessional activity. While there is already a basic rogue landlord database in the capital, there is not a single, comprehensive database with national coverage.

A better form of rent control was identified, such as imposing a maximum cap on rental prices, was the third most popular option among renters.

Nick Marr, co-founder of rental marketplace TheHouseShop, said: “Especially in London where the rental market is so competitive, most people will have a friend or family member who can tell them a horror story about a nightmare landlord or a terrible rental property.

“And the fact that, in many cases, these landlords can continue letting out sub-standard rental properties with no way for future tenants to know about their chequered past seems like an oversight from a regulatory point of view.”

*Survey results have been re-based to remove "don't know"s

When finding a new place to live, renters generally know little about what they are signing up to – especially what the landlord will be like to deal with, according to Dan Wilson Craw, director at campaign group Generation Rent.

He commented: “It’s not surprising that there is so much support for measures like licensing and a database of dodgy landlords.

“The database would allow renters to avoid the worst operators, while licensing will provide extra confidence that landlords meet minimum standards.”

“Rent is too high for a start, but the threat of a rent increase can discourage renters from asking their landlord for repairs – so some form of rent control is also essential.”

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Legal & General announces Brighton as next city for Build to Rent homes

February 1, 2018

Legal & General has announced that it will be creating 200 new Build to Rent (BTR) homes in Brighton as part of its wider approach to address the UK’s housing shortage, having acquired a prime city centre development site.

Subject to planning consent, this will be the city’s first ever BTR development.

Dan Batterton, BTR Fund Manager at LGIM Real Assets, said:  “Brighton is a vibrant city where people want to live and work. This acquisition represents a rare opportunity to acquire land in an unrivalled location and to deliver the first institutional-grade BTR scheme. We look forward to working with the Council to support Brighton’s talented workforce with the homes they deserve.”

Legal & General now has a total housing pipeline of more than 70,000 units, of which just over 1,900 are BTR homes with an expected gross development value across the portfolio of more than £500m.

This is Legal & General’s seventh BTR scheme, with existing sites progressing well in Birmingham, Leeds, Bristol, Salford, Bath, and Walthamstow. 

Mathieu Elshout, Senior Director Private Real Estate at PGGM, commented: “Our successful venture with Legal & General continues to materialise at pace through a range of BTR-development programmes across the UK. This is in line with our ambition to build long-term partnerships with prominent local real estate players.

“In these partnerships we focus on City’s like Brighton which represent strong economic regions with significant potential for further growth. Brighton has a severe housing shortage and our investment will help address this by creating a highly sustainable and high-quality BTR offer for the City.”

Legal & General has £1bn of firepower to invest in developing new large scale rental development properties which will provide rental income for pension funds to pay their pensioners, and create an economic stimulus for UK urban regeneration areas, delivering new jobs and growth.

James Lidgate, CEO at Legal & General Homes, said: “Brighton is a thriving City with a hugely talented workforce. The UK needs urban centres that are fit for purpose and can support a creative, sustainable community like Brighton.

“Our BTR pipeline is growing at pace and it is exciting to see the impact that our developments are making to our UK cities.”  

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Buy-to-let landlords urged to invest in key northern cities

January 31, 2018

Buy-to-let investors seeking the best returns should look at investing in key northern cities where the gap between asking and achieved prices is narrowing.

Regional cities like Manchester and Birmingham are increasingly skewed towards sellers, as strong demand from buyers continues to place upward pressure on house prices.

Graham Davidson, managing director of buy-to-let specialist, Sequre Property Investment, said: “As expected, key northern cities are dominating UK growth.

“Manchester and Liverpool have remained among the strongest contenders with other cities such as Nottingham and Birmingham also among the top areas for property growth.

“For buy to let investors, these [northern cities] are the cities to be looking at over the next 12 months.”

Cities in the south are experiencing the opposite trend, which is why many buy-to-let investors are currently refraining from buying property in London and other southern cities.

Listing prices across London have experienced greater levels of discounting, averaging now at 4% compared to 0.5% in 2014. Discounts of up to 10% were registered in inner London, where property price falls are occurring.

This means that the capital is increasingly becoming a buyer’s market despite its weak 1.8% growth rate, according to property market analysts at Hometrack.

Davidson continued: “Those who haven’t already moved away from the London market are advised to act quickly – not only have the rental yields remained virtually non-existent, but capital growth is also declining.” 

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Rate of rental price decline moderates in prime central London

January 31, 2018

Average rents in prime central London recorded a fall of 3.1% over the course of 2017, but the rate of decline has slowed, suggesting the imbalance between supply and demand in the current market has eased a little, the latest rental report shows. 

Despite falling rents, the market has remained active. This activity has been from needs-based tenants at the lower end of the market, fuelling demand for smaller properties, as well as from super-prime tenants at the top end and affluent students, according to the report from Savills.

It also reveals that rents in the prime markets outside London have also dropped by 1.5% over the 12 months.

Despite the dip in rents, London was recently named the most expensive city in Europe for renting accommodation for a third consecutive year, according to new research.

The average price of an unfurnished, three-bedroom apartment in prime areas of London is £5,398 a month, while the European average is £1,705, figures from consultancy ECA International show.

But according to Savills, prime country rental markets have remained stronger than London over the longer term, with five year growth of 3.7% compared with falls of 5.7% in prime London and across the market, with activity levels varying by location.

Given existing market stock levels, especially the high volume of new build properties, Savills expect rental falls to continue in the short term, with a fall, over 2018, of 3% in London and 1% in the commuter belt.

Markets outside the capital have far less new build stock in the pipeline and have experienced smaller falls, with a view that they will recover slightly more strongly over the next five years.

Savills is urging landlords in prime areas of London to bear the current climate and supply in mind, remaining ‘flexible on price’ and ‘focused on the condition of their properties’ to remain competitive with the new build stock.

The rising popularity of short-term lets means tenant’s expectations have changed, and to appeal to a younger demographic, Savills is urging landlords to consider what they include in a rental package and remain flexible on terms.

Savills forecast that capital values are likely to increase at a stronger pace than rental values over the next five years, with a forecast of 20.3% growth in prime central London, 10.2% in outer prime London, and 14.2% in the commuter zone by 2022.

‘Landlords will need to take a mid-term view to see the forthcoming years as an opportunity for asset wealth generation’, the report concluded. 

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The Scottish rental market is ‘a great place to invest’

January 31, 2018

Rental price growth north of the border continued to outstrip the rest of the UK with an annual rise of 1.7% in the year to December, although prices did dip by 0.2% month-on-month, Your Move report.

The company’s buy-to-let index reveals that the average rent (seasonally adjusted) north of the border stood at £571 per calendar month (pcm) at the end of the year.

Four of the five Scottish regions saw rents increase in the year to December, led by growth in the Highlands & Islands where prices are 7.1% higher year-on-year, hitting an average of £623pcm.

Average rents also increased in the past year in the East, Edinburgh & Lothians, Highlands & Islands and South regions.

Glasgow & Clyde was yet again the only region to see a year-on-year price decline, with average rents in December reaching £548pcm, which is down 4.2% year-on-year.

According to Your Move, the average yield has remained at 4.8% since September, but this is slightly lower than the 4.9% at the corresponding point last year.

Brian Moran, letting director at Your Move Scotland, commented: “2017 demonstrated why the Scottish rental market appears to be a great place to invest. With a typical return of 4.8% a year, Scottish property offers more than the average returns of 4.4% in England & Wales.”

“While its currently positive news, landlords need to be aware of changes to legislation which could will affect them in the future.”

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Landlord ordered to pay more than £4k for ‘appalling’ property

January 31, 2018

A but-to-let landlord in south east London has been penalised for allowing his elderly tenants to live in a property that was found to be in an “appalling” state with insufficient heating and significant mould.

After ignoring several warnings, Mohammed Nadem Yasin was taken to Bexley Magistrates’ Court by Greenwich Council where he was fined £1,000 and ordered to pay £3,053 costs and £100 surcharge.

Environmental health officers found that the rental property in Lakedale Road, Plumstead, had insufficient heating that could not go above 16 degrees.

They found various other issues including broken electric storage heaters, lack of thermal insulation, a non-working smoke alarm, lack of ventilators in the bathroom and kitchen, flammable polystyrene ceiling tiles throughout the home, broken roof tiles and gaps to the balustrade on the stairs and landing.

The landlord pleaded guilty to failure to comply with an improvement notice under Section 30 of the Housing Act 2004.

Cllr Jackie Smith, cabinet member for community safety and environment, said: “This property was in an appalling and potentially dangerous state and the landlord appeared to have a complete disregard for the health and well-being of the elderly couple who paid him rent to live there.

“I hope this case serves as warning that we will not hesitate to take action against landlords who flout the law and rent out sub-standard homes.” 

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Financial demands placed on tenants ‘has never been greater’

January 31, 2018

With tenants privately renting from a landlord now typically paying more than half of their income in rent, a growing number of young adults are finding it harder to save up for a deposit for a home of their own.

Private rents currently average £907 a month across Britain, although the figures are skewed by high costs in London, according to the latest HomeLet Rental Index.

“With rent prices at record highs, the financial demands placed on tenants looking to secure a property has never been greater,” said Leon Ifayemi, CEO and co-founder of SPCE.

“The amount of money required upfront can be significantly high, and the risk of losing some of a deposit can cause notable financial stress to those attempting to move to another property,” he added.

SPCE recently commissioned an independent survey among 2,000 UK adults uncovering the challenges faced by UK renters when attempting to claim back their deposit.
 

Some 16% of renters surveyed claimed that their landlord or letting agent has unfairly taken money from their tenancy deposit. Yet when it comes to challenging unfair claims, the research reveals the tenants are not confident or aware of the legal processes involved.  
 
The study revealed that 19% of UK renters have lost money from a tenancy deposit due to damages being incurred to the property during their time living in it, with this figure rising to 28% for millennials, and doubling to 40% for UK students.

Around 13% tenants admitted losing money through a tenancy deposit due to damage that was done to the property by one of their fellow housemates, while 14% reported losing their deposit due to problems with the property that existed before they had moved into the house or flat.

Ifayemi added: “More should be done to increase awareness of the frameworks in place for those seeking to challenge unfair attempts to take money from a tenancy deposit – this is a legal right that cannot be ignored, with students as well as young people generally clearly requiring greater support and education as to their tenant rights.”

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The government is “in the pockets of rogue landlords”, says Corbyn

January 30, 2018

Labour leader Jeremy Corbyn has accused the Tory government of intentionally not fixing the housing crisis after revelations that thousands of private renters are living in substandard conditions.

Reacting to a report in the Guardian on Sunday, in which it was claimed that more than half a million people aged under 35 are estimated to be living in rented properties so hazardous they are likely to lead to residents needing medical attention, Corbyn said that the government is allowing people to live in hazardous conditions because it is, according to him, “in the pockets of rogue landlords”.

Responding to the story, the Labour leader said: “The squalid and unsafe conditions that hundreds of thousands of people face are at crisis level. The broken housing market is in urgent need of a complete overhaul.

“The Conservatives can’t fix the housing crisis because they’re in the pockets of property speculators and rogue landlords, not on the side of tenants.”

Corbyn has made no secret of his desire to offer tenants greater powers.

In an interview with The Independent two months ago, he claimed that giving private tenants greater security against eviction would reduce homelessness.

He told the online newspaper: “I am very committed to housing and dealing with homelessness. I think it’s a moral litmus test for the country: do we just put up with so many rough sleepers or do we do something about it.

“What we [a Labour government] would do is bring in a more regulated private rented system with particular emphasis on longer tenancies.”

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Panel recommends that short lets should be curbed in Scotland

January 30, 2018

Buy-to-let landlords in Scotland should not be permitted to use Airbnb, and equivalent websites, to rent out their properties for longer than three months, according to fresh proposals put before the Scottish government.

Short-term letting hosts should be restricted to renting out their properties for just 90 days under the plans, with landlords forced to pay business rates if they exceed this, an expert panel has suggested.

But the panel, which was created by the Scottish government and made up of representatives from Airbnb and VisitScotland, among others, believes that the 90 days should be in addition to peak festival periods.

A report produced by the panel stated: “There is clearly a delicate balance to strike in preserving the fabric of communities and accommodating tourists who are attracted to major city centres in Scotland.

“We do not wish to see the hollowing out of communities in cities, or a growing rise in aggression towards tourists – as has been seen in some other popular European cities like Barcelona.”

Last week Greens housing spokesman Andy Wightman MSP, who has campaigned on behalf of constituents, said: “Our concern is not so much with people renting out a room in their own house, that's a traditional Airbnb model.

“We're concerned with the conversion of whole residencies to commercial short-term letting, so having a blanket restriction is in my view not very sensible.

“They [Airbnb] are being used as a route to market by commercial operators who see it as a very cheap way of advertising the availability of a flat, which is used 100% of the year for commercial short-term letting.

“If AirBnB had a 90-day policy that would cut them out.”

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Investors eye ‘real estate opportunities’ rather than new assets

January 30, 2018

Fresh research into how investors are planning to manage their financial strategy in 2018 shows that more than half - 53% - are planning to direct their capital into traditional asset classes, such as property, in the coming 12 months, opting out of alternative opportunities such as cryptocurrencies.

With house prices growing in the UK, albeit at a slower rate, the survey found that 63% of investors still consider property as a safe and secure asset in the current market.

The survey of more than 2,000 UK adults, carried out by Market Financial Solutions, also found that 18% of investors will consider investing in at least one property in 2018.

The government’s stamp duty cut for first-time homebuyers in the 2018 Autumn Budget has also been positively received, with just 25% of the investor community saying that they think the decision will be ineffective.

Responding to the potential impact of Brexit on the UK’s financial landscape, the research found that 77% of investors do not think Brexit will affect their long-term investment strategy, and said that they have not changed the way they have invested their money since the EU referendum in June 2016, while 58% of investors now have less confidence in the strength and unity of the Conservative government than they did 12 months.

While confidence towards the Government has clearly been shaken by the shock General Election result, multiple Cabinet reshuffles and slow pace of Brexit negotiations in 2017, today’s research shows that investors still have a positive long-term view for the year ahead,” said Paresh Raja, CEO of Market Financial Solutions.

He added: “Interestingly, despite the hype surrounding new asset classes such as cryptocurrencies, the majority of investors are still placing traditional investments – such as property – at the top of their list in 2018.”

Reflecting specifically on the property investment market, he commented: “House prices may not be growing at the same rate they previously have, but with projections suggesting we will see double figure growth in property prices over the next five years, investors are clearly still keen to capitalise on real estate opportunities.

“Over the coming 12 months it will be interesting to see how events both in the UK and internationally impact investors’ intentions – particularly their willingness to embrace risk or adopt a more conservative approach.”

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Landlords benefit from falling mortgage rates

January 30, 2018

The average two-year buy-to-let fixed mortgage deal at 75% loan-to-value (LTV) has fallen to a record-low of 2.47%, as many landlords across the UK continue to see their annual mortgage costs fall.

The mortgages costs are falling despite the fact that there was a marginal rise in average mortgage rates towards the end of 2017 as November brought the first interest rate rise in 10 years, the latest figures from Private Finance show.

Though the buy-to-let sector is facing many challenges, one area where landlords have benefited is falling mortgage rates.

But seeking independent advice is becoming increasingly important for landlords to find and be accepted for the best deals, according to Shaun Church, director of Private Finance.

He said: “With house prices on the rise, too large a loan can negate any savings made from low rates, so landlords need to consider all aspects of their mortgage.

“There are particular challenges for portfolio landlords, classed by the Prudential Regulation Authority as those with four or more buy-to-let properties. These landlords now face much more stringent affordability tests and must demonstrate the profitability of their entire portfolio to be accepted for a loan. An independent mortgage broker can help investors navigate these tricky waters and find the most affordable and suitable option for them.”

Average interest-only mortgage costs by region

Location

Average annual interest-only mortgage costs (Jan 2018)

Average annual interest-only mortgage costs (May 2017)

Difference in cost (£)

Liverpool

£2,440

£2,421

£19

Nottingham

£2,574

£2,521

£53

Cardiff

£3,680

£3,811

-£131

Southampton

£3,896

£3,999

-£103

Greater Manchester

£3,034

£3,050

-£16

Coventry

£3,312

£3,293

£19

Edinburgh

£4,567

£4,506

£61

Leicester

£3,018

£2,999

£19

Brighton and Hove

£6,681

£6,993

-£312

Bournemouth

£4,393

£4,645

-£252

 

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London’s housing crisis putting greater pressure on the PRS

January 29, 2018

The housing crisis is the greatest challenge London faces. Years of not building enough new homes, including affordable housing, mean many young Londoners are now being priced out of the city they grew up in.

The latest English Housing Survey, the government's annual analysis of the housing market, reveals that the proportion of renters in the capital has hit 30%, up from 28.1% last year.

Lucian Cook, an analyst at Savills, said: “These figures demonstrate how London is at the sharp end of the housing crisis, with severely restricted access to home ownership putting increasing pressure on the private rented sector.”

Across Britain, the number of households that live in private rented homes has increased by 74% in the past 10 years, and they are spending on average 41% of their income on rent, which is significantly higher than the 19% of income that mortgaged households pay on housing costs.

These latest figures illustrate just how difficult the housing market is, particularly in London, according to Charles McDowell, Aldermore’s commercial director. 

He said: “As usual, it is unfortunately first-time buyers who are in the firing line. Most worrying is the figure showing homeownership amongst those under the age of 45 has dropped by one million since 2010 – with those aged between 25 and 34 still the largest group to rent privately. 

“Due to the changes to the buy-to-let market, we believe the cost of renting is likely to increase. This will ultimately affect the ability of renters and aspiring first-time buyers to save for a deposit, making the goal of homeownership even further out of reach. Unless something significant is done, this perpetual cycle will only continue.” 

 

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The young prioritise property over pensions

January 29, 2018

The future of the pensions industry has been dealt a further blow as young people feel saving for property is more important than retirement.

A new study, conducted by Commercial Trust Limited, found that two age demographics; those aged 20-29 years old and those aged 30-39 years old, have been the only ones to record continued year-on-year market share growth for buy-to-let purchase applications since 2015.

“The figures suggest that younger people can see the value in investing in bricks and mortar – and perhaps this is an indicator that they perceive property investment as a sounder investment than pensions in the longer term,” commented Andrew Turner, chief executive at Commercial Trust Limited.

“What is also interesting from these statistics is that rather than seeing an increase in buy-to-let applications from people reaching retirement age, we have seen a fall in market share from 2015 to 2017,” he added. 

Turner points out that much was made of the April 2015 changes to pensions, commonly referred to as Pension Freedoms.

He continued: “Under the old rules, people with a defined contribution were allowed to take up to 25% of their investment as a tax free lump sum and were compelled to purchase annuities with the remaining 75%.

“However, Pension Freedoms allowed people to use their entire fund as they wished, with speculation that this would lead to a surge in the number of buy-to-let investments from retirees, looking to receive rental income and potentially capital growth, to fund their retirement.

“Whilst Commercial Trust saw an initial burst of application activity from the over 60s in 2015, this has not been sustained through the two subsequent calendar years. Since 2015, the market share for this demographic has fallen from 25% to 18.8% for 2017.

“The biggest market share continues to come from those aged 40-49 years old, with three years of consistent application activity, which consistently accounts for just under a third of all purchase applications and has seen just a 0.8% fluctuation over the past three full years.”

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Rental stock hits all-time high

January 29, 2018

The number of properties letting agents managed in December reached a record-high, according to ARLA Propertymark’s December Private Rented Sector (PRS) report.

The 200 properties managed in December 2017 is 6% higher than the same month in 2016 when agents managed 188 properties on average per branch.

The data also reveals that the percentage of tenants experiencing rent increases remained at 16% in December – the same amount as November when it fell to the lowest level since regards began in January 2015.

The number of tenants successfully negotiating rent reductions dropped from 3% in November to 2.6% in December, indicating a seasonal slowdown in the number of contract negotiations.

Demand for rental properties increased slightly in December, from 58 prospective tenants registered per branch in November, to 59. 2

David Cox, ARLA Propertymark chief executive, commented: “London is officially the most expensive city to rent a property in Europe, according to recent data from ECA International. This could be due to the fact letting agents in the capital are only managing an average of 130 properties – 35% lower than the national average and the lowest level in the country.

“We need to tackle housing stock to reverse this and stop seeing rents increasing for tenants. The cost of living is already rising at an unsustainable rate and with the added pressures of rising rent costs, the dream of homeownership falls out of reach for many, even with the Government cutting stamp duty for first-time buyers.

“However, it’s positive that we finished the year with the number of properties available for tenants at a record high. Here’s to a positive year for renters; cheaper rents, good living standards and a rental market which works for everyone.” 

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Mansfield BS launches family buy-to-let deal at 100% ICR

January 29, 2018

Mansfield Building Society has launched a new family buy-to-let mortgage that enables landlords to let out their property to a close family member with an Interest Coverage Ratio (ICR) as low as 100%.

The family buy-to-let product has been tailored for those landlords only wishing to charge close family members rent equal to their monthly mortgage payment.

The Society says its product is being introduced in response to identified trends which show a growing number of people buying property for relatives to live in. 

Landlords must have a minimum earned income of at least £20,000 with sufficient uncommitted income to support the ICR shortfall.

The mortgage, a three-year discounted variable rate, is available from 4.24% up to 75% loan-to-value with a £199 application fee and an £1,800 completion fee.

Mike Taylor, head of products at Mansfield Building Society, said: “By allowing uncommitted personal income to be taken into consideration, we believe that we’re providing a terrific option for landlords looking to purchase [or remortgage] a property to let out to parents, siblings or children.

“We feel it’s important that, where uncommitted personal income is available, landlords should have the opportunity to choose a property that is appropriate for their family circumstances and needs without having to charge excessive rental payments purely to meet strict ICR calculations. 

“We can see this type of lending appealing to those looking to give loved ones independence and security whilst retaining and accumulating wealth in the property over time.

“Not only does this new product show how the Society’s pragmatic underwriting can support niche markets, it is also offering increased choice, something that we believe fits well with our mutual ethos.”

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Revealed: Britain’s top 10 buy-to-let hotspots

January 26, 2018

Liverpool, Nottingham and Cardiff are among the latest hotspots for buy-to-let investors looking for the best returns.

The latest edition of Private Finance’s buy-to-let (BTL) hotspots analysis reveals that Nottingham and Liverpool are now the best performing property investment locations with the highest net rental yields at an average of 6.2%.

According to the research, Liverpool has retained its position since the last study in May 2017 despite lower rental yields due to falling rental prices in this area, while Nottingham has moved up from second position thanks to a £121 increase in average monthly rents.

In third position is Cardiff, with average yields of 6%, helping the city rise four places in the top 10 buy-to-let hotspots, again thanks to a notable increase in average monthly rental prices, from £946 to £1,301.

Southampton, up from 11th, and Greater Manchester, up from 5th, also make up the top five buy-to-let hotspots in January 2018, with both destinations offering rental yields of 5.9%.

Overall, rental yields in the top 10 hotspots have increased by an average of 0.9% since May 2017.

Shaun Church, director of Private Finance, said: “Finding the right buy-to-let location is a careful balancing act. Too large an initial investment makes it difficult to achieve a healthy yield, but landlords must also be confident that property values will appreciate at a higher rate than mortgage borrowing to achieve a long-term profit.

“Strong rental demand is also key to prevent lengthy void periods that can damage affordability. While there has been some movement in the top 10 buy-to-let hotspots, larger cities and university towns tend to offer the greatest opportunity for investors as they offer the highest rental demand.” 

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BTL investors buying property at auction were ‘cautiously optimistic’ last year

January 26, 2018

Auctions are a great way to acquire property competitively, with a wide range of great investment deals often going under the hammer, illustrated by new data revealing that buy-to-let landlords acquiring property under the hammer continue to achieve high yields on Assured Short Hold Tenancies.

The analysis, based on yields of tenanted rental properties presented in Allsop auctions, reveals that an average yield on Assured Short Hold Tenancies of 8.95% was achieved in 2017.

Yields in London on average rose from 5.34% in 2016 to 6.04% in 2017, which could be attributed to higher rents in London and lower capital costs.

Demand from overseas investors remained strong, thanks in part to the weakening of sterling last year, a result of the UK’s decision to leave the EU.

In 2017, Allsop Residential Auctions raised a total of £425m, achieving a success rate of 79%, as plenty of investors, including buy-to-let landlords, snapped up properties under the hammer. 

In total 1,222 residential lots were sold by Allsop with an average value of £348,000.

Gary Murphy, partner and auctioneer, commented: “Investors in 2017 remained active and cautiously optimistic in the auction room. As a result, we raised a similar total to 2016, proving that appetite exists for the right stock, sensitively priced.

“This year, buy-to-let investors face further hurdles with the tapering of tax relief and tougher lending criteria applied to portfolios of four or more properties. We may see the smaller investor look to disinvest, whilst others will adjust their portfolios and seek value in the regions. Prices will continue their correction, particularly in London and the South East, where they are likely to remain static.

“2018 will not be without its challenges but there will be opportunities.”

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Mortgage tax relief cut doesn’t add up for BTL landlords

January 26, 2018

The phasing out of mortgage interest relief from last April will soon start to make it harder for buy-to-let landlords to make a profit, especially those who have acquired property with a buy-to-let mortgage since 2014, according to new research.

Fresh analysis by ratings agency Standard and Poor's (S&P) Global shows that 62.5% of landlords who acquired property with a buy-to-let mortgage between 2014 and 2016 are likely to make a net loss by the time mortgage interest relief has been withdrawn altogether in 2021.

S&P estimate that the change will reduce profits by around a fifth and have the greatest impact on recent buy-to-let borrowers in the South East and London.

But buy-to-let landlords in the north of England have also been identified as being at serious risk due to low levels of rental growth in both the North East and North West of England in recent years.

S&P credit analyst Alastair Bigley, who conducted extensive research for the report, said: “The proportions of loss-making loans will increase as the tax system becomes less generous between now and 2021.

“We calculated that, if rents cannot be increased, 60.4% of the loans originated in the 2014, 2015, and 2016 vintages will become loss-making compared to the sample average of 4.0% by the time the tax changes become fully effective.

“We view a fire sale scenario, where large amounts of BTL property is placed for sale, which in turn could affect the wider housing market quickly and disproportionately, as unlikely.

“We believe the phased introduction of the full impact of changes in income tax treatments will give borrowers time to adjust their strategies to the new landscape.”

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Government confronts unfair practices in the leasehold market

January 26, 2018

We have seen a significant amount of publicity recently surrounding the sale of leasehold houses and the imposition of significant ground rents. Such has been the negative publicity that the Conservative party promised in its 2017 election manifesto to "crack down on unfair practices in leasehold" and followed up after the election by issuing a consultation paper on entitled ‘Tackling unfair practices in the leasehold market’.

The consultation, which ran until 19 September 2017, has since received over 6,000 responses from freeholders, tenants and developers, signifying the high interest in the issue.

The government’s response to the consultation has proposed the following changes:

Leasehold ban

The sale of new leases on residential houses (no mention of flats) will no longer be permitted except where this is necessary, for example shared ownership or to preserve buildings of architectural or historical importance. This will be applied to new and existing freehold houses but not to developments already being constructed where leases have already been granted at the date of the consultation response.

Help to Buy

The government wishes to strongly discourage the use of Help to Buy equity loans for the purchase of leasehold houses in advance of any new legislation.

Ground rents and lease extensions

Ground rents for new leases of houses and flats will be reserved to zero or a peppercorn (meaning no rent at all) will be applied to leasehold properties.

Existing leasehold properties

There will be reforms to make purchasing a freehold or extending a lease much simpler, faster and cheaper. The sale of properties on a leasehold basis could still be permitted but there are proposals for a simplified formula for calculating leasehold buyouts and lease extensions, which is predicted to be in place by the end of 2018. There will be a further consultation on this. Additionally, leasehold owners could be given the right of first refusal, if the landlord wants to sell the freehold. 

There are plans to provide leaseholders with clear support on the various routes to redress available to them (e.g. negligence claims against conveyancers) and encouraging developers to continue support schemes for homeowners effected by excessive ground rents. Also, the government is looking at closing a 'loophole' to prevent mandatory possession orders being sought when leaseholders are classed as assured tenants under Ground 8, Schedule 2, Housing Act 1988. Under the existing rules, if ground rent exceeds £250 per year or £1000 per year in London, the lease can be classified as an assured tenancy and the grounds for possession become available.

Equivalent rights for freeholders on managed estates

At present owners of freehold houses on estates with shared facilities, such as open areas and estate roads, do not have the same rights as tenants of leasehold houses to challenge the reasonableness of service charges. The government is proposing equivalent rights to challenge unfair service charges to ensure they are reasonable when paying for the use of communal areas and facilities in mixed use estates or private developments.

The government is also considering changes to rentcharges to prevent the owner of a rentcharge from being able to take possession of the property for non-payment.

Re-invigoration of commonhold and unfair terms in residential leaseholds

The Law Commission has been tasked with a project to consider how commonhold can be made to work as originally intended. The consultation highlights that a key reason for the failure of the commonhold is due to the financial incentives for developers in building leasehold.

The government also proposes to work with the Law Commission to consider whether unfair terms apply when a lease is sold on to a new leaseholder. The Law Commission proposes to look at lease terms, particularly “cases where ground rents increase exponentially, high-fixed service charges and fees on assignment.”

The timetable for these changes is unclear, leaving doubts as to whether there is enough parliamentary time to address these changes with sufficient vigour in the current political climate. There is a lot of public pressure for change so it appears inevitable now that there will be some legislation to address the issues raised in the consultation, but the Government needs to ensure that legislation is not rushed through without sufficient consideration to the impact it will have on housing development.

It is perhaps timely that the long running legal battle and pending Court of Appeal decision in Mundy v  Sloane over the calculation basis for extending a lease is due (at time of writing we had not seen a decision). This case involves a flat in Chelsea with a lease term of less than 23 years remaining. The freeholder is seeking £420,000 to agree a lease extension. If a ruling is given in favour of Mundy, the tenant, the cost of extending a lease or buying a freehold could be dramatically reduced. The form in which the valuation models for lease extensions and freehold purchases will take remains undecided. For the interim, leaseholders are left with little option than to wade through the developing case law to ascertain whether they are receiving a fair bargain.

We of course await draft legislation and it is not clear when legislation will actually be enacted and implemented. However, the consultation is likely to have an immediate impact on the market as it raises awareness and removes the element of surprise around not owning the freehold, which was a theme of the reply to the consultation. Consequently, buyers may be hesitant to accept new houses sold on leasehold basis or those subject to ground rents. However, existing leaseholders could remain the most affected as mortgage companies become more reluctant to lend against those properties, making them unsellable. The government has pointed to this in its reply to the consultation but it remains to be seen what legislation might follow that helps existing leaseholders.

Kassra Powles is an associate lawyer at Browne Jacobson

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Landlord ordered to pay over £10k for poor property management

January 26, 2018

A buy-to-let landlord in Tiptree has been fined for poor property management that left a family in Poor living conditions.

Mohibur Rahman, of Corporation Road, Chelmsford, was ordered to pay £10,323 after being found guilty of two offences in relation to a flat in Bryanita Court, which is located in the Essex village.

Colchester Council’s private sector housing team first became aware of problems when the owners of a business on the floor below complained of water leaking through the ceiling of their premises.

An Abatement Notice was served upon Rahman in respect of the leak, considered to be a statutory nuisance under the Environmental Protection Act 1990 (Part III).

Eventually an investigation was launched and officers inspected the property on 14 June 2017, together with plumbers employed by the council who stopped the worst of the leaks.

During this inspection, six more ‘Category One’ hazards were discovered, which included overcrowded conditions, bad sanitation caused by poor plumbing and hygiene in the kitchen and bathrooms, a lack of fire safety precautions, damp and mould, and a risk of burns from scalding water.

Following a further inspection on 20 July and failure to comply with the orders, the council began legal proceedings resulting in the prosecution.

Rahman, who did not attend the hearing, was ordered to pay a £5,000 fine, £5,152.92 costs and £170 victim surcharge, following the successful prosecution by Colchester Borough Council..

Cllr Tina Bourne, portfolio holder for housing and communities, said: “Poor living conditions can cause immense unhappiness and put lives at risk.

“Despite repeated attempts to engage with the owners of this property, the Prohibition Order intended to protect residents was ignored.

“Colchester Borough Council takes its duty to enforce housing standards very seriously and we always take action where we find that accommodation is not being responsibly managed, so I am pleased with the result of this prosecution.”

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Is the health and safety of your tenants being unwittingly compromised?

January 25, 2018

As a landlord you will undoubtedly be aware that you are responsible for the safety of your tenants, and that includes ensuring that gas appliances, fittings and chimneys/flues provided for tenants are safe, in accordance with the Gas Safety (Installation and Use) Regulations 1998.

But fresh research from Cover4LetProperty.co.uk, the landlord insurance specialists, suggests that some private landlords may be unwittingly breaking the law and potentially comprising the health and safety of their tenants.

Some 6% of private tenants surveyed said that their boiler was last serviced over a year ago, while one in five (20%) of tenants are unaware when their boiler was last serviced.

Somewhat surprisingly, 86% of private tenants are unaware of their rights regarding the energy efficiency of their rented property.

Richard Burgess, director at Cover4LetProperty, commented: “While it is the responsibility of a landlord to ensure that the boiler is serviced annually - and an obligation under their landlord insurance policy - our research highlighted that 6% of tenants said the last time their boiler was serviced was over a year ago.”

He added: “Our study also showed that just 14% of tenants were aware of the new legislation relating to energy performance ratings which come in to force April this year.

“Landlords whose properties do not meet minimum requirements for energy performance standards by April 2018 may face very stiff penalties.

“While we specialise in helping landlords with protecting their property portfolios, we urge them to understand their legal obligations relating to health and safety and energy efficiency.”

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Increase your profits with these top tips

January 25, 2018

There are plenty of changes that you could make to ensure 2018 is more profitable, with Simple Landlords Insurance advising buy-to-let landlords to focus on the basics this year to pave the path to profit.

The experts at Simple Landlords Insurance have compiled the followed 10 tips:

1.    Revamp your relationships - Happy tenants are less risky, and more profitable over the longer term. Take steps to ensure that you deal with queries and concerns as quickly as possible, and proactively check in with your tenants on a regular basis.

“Keeping your tenant happy is paramount to the success of your property business,” says Carl Agar, founder and managing director of letting agency Big Red House. “A quick phone call every three months gives you the opportunity to ensure they are.”

2.    Connect with your contract - Understanding the exact nature of your relationship with tenants is also crucial. Familiarise yourself with the details of your contract, especially if it’s been created ‘off the shelf’, and make amends to suit your property, tenants and circumstances. This will minimise the scope and time it takes to deal with any disputes.                              

3.    Inspect and maintain – Research from Simple last year showed that less than one in four landlords inspect their properties at least once a year. If you want to avoid nasty surprises, go on the front foot and undertake regular visits to check everything is in order.

Similarly, promise to carry out any required maintenance within a specific time period to guarantee your existing tenants will be satisfied, and avoid the potential costs of finding new tenants.

4.    Create the perfect space – That means for both you and your tenants, especially if you one of the 23% of landlords who have experienced periods of unoccupancy of at least 2 months. Creating a home where your ‘ideal’ tenant feels immediately comfortable – or letting your tenant put their own stamp on it - could make all the difference, says Bindar Dosanjh, property mentor, and founder of the Female Property Alliance and Smart Core Wealth.

“That may mean clearing your entrance way. It may mean moving the furniture around. It may mean a splash of colour, a mirror or clearing the clutter. The benefits of a property with ‘move right in’ appeal are clear.  Picture yourself in the property and identify what will appeal to potential tenants.”

5.    Grow your knowledge – With over 100 pieces of legislation in force, the buy-to-let market is complex, and shows no signs of simplifying in 2018. As a result it’s essential to read up on any changes, both existing and new. Also take advantage of other resources available, including joining a Landlord Association and attending events. Check your local authority or Landlord Association website for upcoming events in your area.     

“Going out and socialising may be the last thing you feel like doing at the end of a long day, but meeting other landlords, agents and entrepreneurs really can reap dividends in terms of finding out what’s happening property-wise in your locale,” Agar says.

“You may even find a partner for a great property deal, or get help with a property-related issue that had been bothering you a while. Also, the more that landlords can be represented by such groups, the more successful the sector can be at fending off unwanted legislation.”               

6.    Review your lending – Whether it’s testing the market for a better deal, revaluing your property to check your LTV, or reviewing your existing arrangements to understand the implications of revised lending requirements, now is the time to check you’re paying not a penny more than you have to in order to service your debt.

7.    Start a ‘Rainy Day’ fund – In these uncertain times, it is prudent to allocate funds to cover any unforeseen expenses. This may entail setting up a separate, ring-fenced account exclusively for your rental properties. Keep it clear, keep it clean, and you’ll feel more confident you can weather any storm.

8.    Check your insurance – Our figures show that only 41% of landlords have a dedicated landlord insurance policy which means a large number are either out of pocket or dangerously underinsured. Don’t take any chances, especially if your circumstances have changed but your insurance hasn’t. Check your policy, check your rebuild value (building sum insured), and don’t be afraid to pick up the phone to your insurer before there’s a claim to be made.

9.    Stay ahead of the curve – If you have additional funds at your disposal, find the best property hotspot for any new investment. Key considerations include improved transport infrastructure, regeneration or redevelopment plans and ‘retail result’ – take advantage of market research that prime retailers have conducted before opening a new store, and consider following their lead.

10.  Embrace technology – Take full advantage of the information age. There’s software out there that can help you systemise and manage your properties, and Community Landlord groups are a great way to gain and share advice. Technology can also help you promote your properties and test your property against the market.  The world is now at your fingertips…. so feel free to explore it from your smartphone.

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Skipton’s ‘popular’ BTL mortgage deals offer ‘great value’

January 25, 2018

Skipton Building Society has cut rates on selected buy-to-let mortgages, as competition between mortgage lenders remains strong.

The new buy-to-let range includes a two-year fix at 1.78% for those with a 25% deposit, subject to a £995 fee.

There is also a new fee-free five-year fixed rate deal at 2.5% for those with a 40% deposit.

Both of these deals are for landlords acquiring property.

For buy-to-let landlords remortgaging, Skipton has introduced a new range of two-, three- and five-year fixed rate products.

The two-year deal at 2.63% is availble to those with a 25% deposit, while the five-year fixed rate deal at 2.45% can be accessed by those with a 40% deposit. Both deals are fee-free, while all of Skipton’s buy-to-let range offers free valuations.

Kris Brewster, head of products at Skipton, said: “Skipton’s buy-to-let deals continue to prove popular and we believe this new range offers great value for purchases and those wishing to remortgage their portfolio.”

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Landlord fined £29k for putting tenants’ lives ‘at risk’

January 25, 2018

Dangerous electrical mains installation, ‘defective’ sanitary fitments in both the bathroom and kitchen, and a ‘lack of automatic fire detection’, were among just some of the issues uncovered during an inspection of a rental home in Derby that led to the property’s owner being fined just over £29,000.

Buy-to-let landlord Adrian Ernest Dart was described by the prosecution as an ‘absentee landlord’, after an inspection in September 2016 by Derby City Council’s housing standards team found that his property in the city had ‘serious defects’ that put tenants’ lives ‘at risk’.

The council’s housing standards team said that the Normanton house was in the kind of disrepair that would allow fire to spread quickly.

Derby Telegraph report that other dangers identified by inspectors included trip hazards, mould and the potential for structural collapse.

The house was said to be in ‘such a state of disrepair’ that the council ‘felt it necessary to carry out urgent repairs’. An improvement notice was issued ‘but not acknowledged’, with the council spending £8,030 on remedial work that ‘remains as a charge on the property until the debt is paid in full’.

At Southern Derbyshire Magistrates’ Court, Dart pleaded guilty to a charge of non compliance with an improvement notice, served under the Housing Act 2004, and was fined £6,500.

Additionally, he was ordered to make a contribution of £2,436 to the council’s prosecution costs, and to pay a victim surcharge of £170, and ‘due to the seriousness of the case’ alongside his ‘lack of engagement’ with the council’s team, an additional fine of £20,000 was added, for a total of £29,106.

This meant that his fine was the ‘largest fine ever given out for a housing offence in Derby’, with the city council aiming for this to ‘act as a warning to other landlords’.

Cllr Fareed Hussain, cabinet member for housing and urban renewal, commented: “The council’s housing standards team is dedicated to improving living standards for private tenants in Derby and ensuring their safety and well-being is a top priority.

“We are pleased to have achieve this result and hope it serves as a reminder to all landlords to provide suitable accommodation for their tenants.”

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East of England sees fastest growth in rents

January 24, 2018

The average rent in England and Wales hit £850 a month in December, up 2.2% year-on-year, led by gains in the East of England, according to Your Move’s latest England & Wales Rental Tracker, previously named the Buy to Let Index.

Rents in the East of England, which contain many rural areas, commuter towns and major cities, including Cambridge and Norwich, outstripped all other regions in 2017, rising by 3.3% in the past month alone. The average rent in the region now stands at £893 per calendar month (pcm), up from £864pcm in the corresponding month in 2016.

Reflecting on the new data, Sue Maher, branch manager of Your Move in Peterborough, said: “We are seeing a large shift in commuting patterns as tenants look to relocate away from London, to towns like Peterborough and Norwich who are attracting a wide range of employers.

“The City Hospital in Peterborough, for example, attracts many doctors and nurses to the area and local business parks house the offices of Travelex, Thomas Cook, Mastercard and Amazon to name a few.

“As a result, these areas are predominately rented by young working professionals and families, rather than students or older residents.”

Other areas posting strong price increases were the East Midlands, where rents grew by 2.8% to reach an average of £651pcm and the North West, which saw 2.7% year-on-year growth to reach an average of £635pcm.

In both London and the North East rents have dipped in the last 12 months.

The yields achieved by buy-to-let investors remained unchanged in December, with the typical yield across England and Wales stood at 4.4%, the Your Move data found.

Martyn Alderton, national lettings director at Your Move and Reeds Rains, said: “The rental market in England and Wales ended 2017 on a positive note for landlords, with rents, overall, up 2.3% compared to a year ago, and average yields across the country now at 4.4%.

“However, behind these figures lie fluctuations particularly in relation to the fall in average rents in London and strong growth in average rents in other regions.”

Buy-to-let investors in the North East of England continue to enjoy the highest return at an average of 5%.

At the other end of the scale, properties in London delivered the lowest yield, at just 3.2% in December.

Alderton added: “In many ways, the rebalancing of the rental market across the country should be seen as a good thing as demand spreads to other areas and keeps the market robust.

“London still remains one of the most popular and expensive places to rent, yet we are now seeing strong growth in demand for rental properties in the regions around the capital.”

 

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