False comparisons on renting in London help no-one

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The Independent has in an article* today claimed that renting an ‘average London flat’ is more expensive than living in most European hotels. A headline grabbing shock statistic ….. but is it actually true? When taking a closer look at the facts there are clear inconsistencies with the newspaper’s statistics. In the article it is […]

… LandlordZONE.

View Full Article: False comparisons on renting in London help no-one

Dispute Resolution Procedure at Rent Review – Calderbank offer

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Basically, what is known as a Calderbank offer is a ‘without prejudice;’ offer to settle a dispute to avoid the extra costs and associated risks of a full referral. From Calderbank v Calderbank [1976] and originally confined mainly to family property disputes, an offer of settlement made before the trial of an action and contained in […]

… LandlordZONE.

View Full Article: Dispute Resolution Procedure at Rent Review – Calderbank offer

False comparisons on renting in London help no-one

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The Independent has today claimed that renting an ‘average London flat’ is more expensive than living in most European hotels. A headline grabbing shock statistic ….. but is it actually true? When taking a closer look at the facts there are clear inconsistencies with the newspaper’s statistics. In the article it is claimed that latest […]
View Full Article: False comparisons on renting in London help no-one

Right-to-Buy policy may make housing crisis worse

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BREAKING NEWS – The government’s Right-to-Buy policy for housing association tenants has not been accurately costed, is open to wide-scale abuse and may make the housing crisis worse, claim MPs. The Chairman of Public Accounts Committee (PAC) has said that the controversial “Right to Buy” scheme introduced in the Chancellor’s budget last year was not […]

… LandlordZONE.

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Dip in house prices, despite surge in sales

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First Dip in house prices in eight months shows House Price Index. The LSL Acadata monthly House Price Index reports on transaction numbers and the movement of average house prices in Scotland and in England and Wales, including regional data. It uses the actual prices at which every property in England and Wales was transacted, […]

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View Full Article: Dip in house prices, despite surge in sales

Radical action needed to protect tenants

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Radical action is needed to protect tenants from the grip of criminal landlords, as new data points to worryingly low levels of enforcement of rented housing regulations by local authorities.
According to Freedom of Information data, collected by the Residential Landlords Association (RLA), among the 255 councils that responded, just 827 prosecutions had been taken out against landlords over the last five years following notices to improve a property being issued.
View Full Article: Radical action needed to protect tenants

Mixed Messages on Buy-to-Let…

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There are mixed messages coming from the industry about Buy-to-Let and this article gives a flavour of those views coming out of recently published research reports:

On the one hand some say the figures are showing a surge in rental property sales in the first quarter of 2016, more landlord investment than there’s been for some time, and increased returns over last year. On the other hand reports are coming in that landlords are losing confidence in the profitability of renting.

One report produced by PropertyLetByUs.com claims that just one in five landlords believe there is still money to be made in the buy-to-let market, following the raft of new tax rules and stringent regulations to have hit landlords hard over the last 12 months.

The research study carried out amongst 500 landlords in April 2016 shows that over half of the landlords who purchased buy-to-let property in the last three months did so to beat the Chancellor’s stamp duty reforms and that 43% of landlords are considering putting their properties into a limited company to beat the tax rises.

However, PropertyLetByUs.com claim that only 5% of landlords have actually sold buy-to-let properties because of the increased tax burden and just 6% plan to reduce their property portfolio and invest their capital in stocks and shares.

So, despite all the rhetoric about death of buy-to-let profits, says Managing Director Jane Morris, only one in six landlords is seeing a reduction in their profits:

“Our research shows that landlords are fairly upbeat about the BTL market and many of them appear to have strategies in place to off-set the tax hikes.  Many landlords are opting for incorporation, at the same time as raising rents. The latest figures from the HomeLet Rental Index reveal that between January and March 2016, rent on new tenancies signed on rental property outside of London were, on average, 4.9% higher than in the same period of last year.”

The pre-April 1^st surge in landlords investing in buy-to-let property will no doubt create a bubble of new rental properties in some parts of the UK, somewhat distorting the market.  However, when things settle down, it is likely that longer term the tax changes will have an impact. This will discourage some potential new landlords, and limit the supply of rental property, resulting in raised rent levels for tenants, at least in the short-term until supply begins to catch-up with demand.

This is supported by Paragon Mortgages’ claim that the number of landlords planning to buy a new buy-to-let property has dropped by a third since the stamp duty surcharge kicked in on 1 April with 9% of landlords planning to buy a property over the next three months, as opposed to 14% in the previous quarter.

Paragon argues that rather than buying new rentals, many landlords will concentrate on upgrading their existing portfolios and consolidating their finances with a view to improving their credit profiles.

Already Paragon are seeing a de-leveraging trend, a move to reduce outstanding debt relative to their portfolio value which overall they claim has reduced from 38% in the final quarter of 2015 to 36% today. Two thirds of landlords in the 200 landlord survey now have borrowings of less than half the value of their investment property portfolios, and this is likely to fall further as they implement plans to avoid the impact of mortgage interest relief withdrawal, over the next 4 years.

Average net rental yields have remained steady at 4.7%, say Paragon, for the third consecutive quarter and exposure to debt is reducing with over half of landlords spending less than a quarter of their rental income on interest payments.

John Heron, director of mortgages at Paragon, writing in their PRS Trends Q4 2015 Report says the private rented sector is facing a great deal of change:

“Paragon Mortgages latest PRS Trends report comes against a background of more negative sentiment around the buy-to-let market driven by a sharp change in government policy towards the sector. The latest data was gathered just prior to the Autumn Statement which saw the Chancellor announce a 3% increase in stamp duty for purchases of second homes and buy-to-let properties.

“Respondents to the survey have, however, had several months to digest the implications of the government’s changes to the taxation of rental income, and sentiment around these changes is now starting to come through in the data. While there has been a slight dip in optimism in Q3 – this is to be expected given the level of change the market is expected to see. Despite the changes in the pipeline, our landlord panel remains generally optimistic about the PRS, and about their portfolios.

“On the question of how many properties landlords expect to have in their portfolios in 12 months’ time, a majority of landlords expected to retain their position – with no change in the size of their portfolios over the coming year. This sentiment is less positive than for the same period in 2014, when landlords expected to see modest growth in their portfolio. It does, however, represent a recovery from the first two quarters of 2015, when landlords expected to see a reduction.

“Some landlords are responding to this uncertainty by planning fewer new purchases and investing in their existing portfolios. At the same time credit profiles are very robust and improving, a picture that is somewhat at odds with the picture being painted in some quarters.”

The Your Move and Reeds Rains Report points out that invested landlords have experienced a financial boost in the last year because of what they have called the “buy-to-let tax dash.”

Some of the findings of the Your Move Report can be summarised as:

• A flurry of buy-to-let property interest in March has pushed total annual returns to 12.2% for existing landlords

• Across England & Wales rent rises have averaged 3.0% over the last year, to now stand at £791 per month

• The Midlands Powerhouse has pushed rents to record levels, reaching £597 in West Midlands and £613 in East Midlands

• A minority of tenants are still feel a financial squeeze, with 9.1% of rent in arrears, up from 8.8% last month.

Your Move and Reeds Rains claim therefore that existing landlords have already felt an unexpected financial boost from the Government’s stamp duty hike aimed at new buy-to-let purchases. Taking into account both rental income and capital growth, but before property-specific costs such as maintenance, the Your Move findings show that the average existing landlord in England and Wales has seen total returns rise to 12.2% over the twelve months to March.

This is up from 10.7% seen a month before, over the twelve months to February, and say Your Move is also the fastest annual rate of return for existing landlords seen since November 2014, when the same measure last reached 12.3%.

While this is good news in the short-term for existing landlords, the surge in capital values has suppressed rental yields for those aspiring to become landlords, or looking to grow their property portfolio. As rents rise alongside property prices, rental yields are proving relatively resistant to rising purchase prices says Your Move. However the gross yield on a typical rental property in England and Wales (before taking into account factors such as void periods) is now 4.9% as of March 2016, compared to 5.1% in March 2015.

Adrian Gill, director of lettings agents Your Move and Reeds Rains, comments:

“New tax changes intended to benefit owner-occupiers are now making it more expensive to become a landlord, at least for the time being. Ultimately this will only punish tenants and aspiring first-time buyers – driving out buy-to-let landlords will reduce supply leading to lower choice and higher rents for those that can least afford them.

“In particular, this month’s new stamp duty surplus has driven an extra wedge between those aspiring landlords planning to invest in additional homes to let, and those existing landlords who have already built up their portfolios. That difference will not last for long. But by making it more expensive to invest in property, it will hamper the healthy growth of the private rented sector. Over the longer-term there will still be a sharpening shortage of homes available, and rents will rise in line with any extra costs – so being a landlord will remain a profitable investment, though tenants will just see unnecessarily higher rents in order to price-in the extra bill for the taxman.

“In the short-term, there has also been a scramble to buy property before the deadline. As a result, a flurry of interest from property investors has boosted values, and delivered a bonus for existing landlords through faster capital growth. In search of political points, the Chancellor would do better to help tenants rather than punish landlords – but the most ironic part of the new tax regime is the additional bonus to the wealth of current landlords.”

It’s early days yet, but the impact of structural changes faced by the private rented sector is likely to be less severe than many first thought. Landlords will develop their coping strategies and there is still good money to be made in buy-to-let over the long term. But adjustments will have to be made and every landlord is going to have to take a long hard look at their finances. The changes are likely to affect all landlords in some way, but a minority, those with high borrowings, will be affected most.

… LandlordZONE.

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Landlord given 10-year Criminal Behaviour Order over state of properties

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A landlord has been issued with a 10-year Criminal Behaviour Order, after a court found he had been causing harassment, alarm and distress to his tenants through the poor standards and management of his privately rented properties.
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National Landlord Investment Show is heading to Maidenhead

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Due to the success of the Landlord Investment Show in other areas of Berkshire we are delighted to announce the show is heading to Maidenhead.

Maidenhead has been flagged up many times as a top buy-to-let hotspot.  The Royal Borough has been named highly in a list of the best places in the UK to invest, placing it above larger towns and cities.

Maidenhead Train Station will benefit from a number of improvements in preparation for the new Crossrail service.  From December 2019, four Crossrail trains an hour will allow passengers to travel right through central London without having to change trains. Two trains an hour will run between Maidenhead and Reading.

Our show will attract Landlords, Investors, Developers & Property Professionals.

Come to the show and find out what the investment opportunities are on offer!

Come and meet over 40+ exhibitors who will be exhibiting on the day plus attend over 10 seminars in two seminar rooms.  The seminars are delivered by leading industry experts on subjects such as Legal/Evictions, Finance, Buying at Auction, Investment Opportunities plus much more.

Exhibitors include:

• Legal Services

• Buy-to-let mortgages

• Landlord Insurance

• Referencing

• Letting Agents

• Online Agents

• Property Management

• Local Council

• Tenancy Deposit Scheme

• Landlord Tax Advice

• Landlord Associations

• Buy to let opportunities

• Local Tradesman

The Show will take place on Wednesday 18th May 2016

Doors Open – 9am – Close – 3.30pm – FREE ENTRY – FREE PARKING

Location: Holiday Inn Hotel, Manor Lane, Maidenhead, Berkshire, SL6 2RA

Register and attend the show to receive a maximum of 5 CPD points towards your landlord accreditation.

This is a MUST attend event! – Book Your Free Tickets Here

… LandlordZONE.

View Full Article: National Landlord Investment Show is heading to Maidenhead

Letting agency fined over redress scheme

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A North-East lettings agency, Let Belle Vue, has been fined £3,000 for failing register with one of the government approved schemes. Since the Lettings Agency Work and Property Management Work Order came into force in October 2014, all letting agents must by law to protect customers by signing up top one of the schemes. Let […]

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View Full Article: Letting agency fined over redress scheme