Young Tenants being hit by Tax Hike on Landlords

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Landlord Tax:

ONE in five private landlords is now less willing to rent to young people as a result of tax increases being imposed according to new research published today.

With half of 16 to 34 year olds now living in the private rented sector, the Residential Landlords Association is warning that young tenants will be hit hardest by the changes as landlords consider moving out of the long term rental market.

Since April this year mortgage interest relief for landlords is being phased out to the basic rate of income tax only and landlords are being taxed on their turnover instead of their profit, unlike any other business.

According to the research by Sheffield Hallam University for the RLA, 19 per cent of landlords are less willing to rent to under-35s as a result of the tax increases. Previous studies have found that many landlords are moving to the short term holiday let market to avoid the tax increases, are looking to increase rents to cover the extra costs or are planning to sell properties so cutting supply for young people who need long term rental accommodation the most.

Following a commitment by the Communities Secretary, Sajid Javid, at the Conservative Party conference that the Budget next month would include incentives to encourage and support landlords offering longer tenancies, 52 per cent of landlords said tax relief for offering longer tenancies would make them more likely to rent to under 35s. 58 per cent said that reversing the mortgage interest changes altogether would make them more likely to do so.

Commenting on the findings, RLA Policy Director, David Smith, said:

“As Ministers work on a Budget aimed at supporting young people, today’s findings show that it will be this very same group that is hit hardest by tax rises on the private rental market.

“With many landlords considering changes to their lettings strategies to escape the hikes many young people will find it increasingly difficult to find the long term homes to rent they desperately need.

“Ahead of the Budget we are calling on the Government to scrap the tax hikes and support good landlords to develop the new homes to rent we need alongside all other tenures.”

• The RLA represents over 50,000 private sector residential landlords in England and Wales.
• The Sheffield Hallam University research for the RLA can be accessed here
• According to the 2015/16 English Housing Survey, 49.4% of all 16-34 year olds are in the private rented sector. Details can be accessed here
• Analysis by the RLA across the London has found that there has been a 75 per cent increase in the number of multi-listings on Airbnb between February 2016 and March 2017. Multi-listings are classed as individuals advertising more than one property on Airbnb. A UK wide survey by the RLA of almost 1,500 landlords has found that seven per cent reported that they had now started to offer properties as holiday/short term lets through Airbnb or a similar platform. These are properties that they would have previously been let longer term in the private rented sector. If this was reflected across the whole sector, this would mean a minimum of 134,400 private rented homes moving from the traditional private rental market to holiday or short let accommodation. Further details can be found in the RLA’s report here
• According to a survey of almost 3,000 landlords by the RLA 22 per cent plan to sell at least one of their properties over the next year, with just 18 per cent planning to buy additional properties to rent. This is despite 33 per cent having seen an increase in demand for homes to rent over the past three years. The research can be accessed here
• Research by BDRC Continental published in August found that 30 per cent of landlords have increase rents to cover the costs of increased taxation. Details can be accessed here

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Are landlords being left out in the cold…

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Winter Warning:

Landlords are being urged to take urgent action to avoid being left out in the cold this winter.

UK Landlords are being reminded by Upad to ensure that their investment properties are ready for winter, so that they avoid facing disgruntled tenants and potential void periods.  The warning comes after it was revealed that nearly half of private landlords fail to carry out routine maintenance on their portfolio before bad weather sets in.

Research carried out by online letting agent Upad.co.uk amongst over 4,000 private landlords shows how just 52% planned ahead by carrying out necessary checks during the summer months – a time when any issues can be rectified before they become more critical and when disruption to tenants can be kept to a minimum.

Speaking of the research findings, James Davis, CEO and founder of Upad and himself a portfolio landlord, said: “Whilst it’s encouraging to see a slight majority of private landlords investing the time and money to carry out certain routine maintenance checks, the fact remains that almost half are failing to do so.

“Those who don’t act in plenty of time, run the risk of any issues escalating and, therefore, costing more to rectify.  This is not only a drain on the landlord’s finances, but can also lead to unhappy tenants who may choose to look for alternative accommodation if the disruption becomes too much to live with.”

Amongst those landlords who do commit to routine inspections, 73% ensure checks and necessary maintenance are carried out on the heating boiler, yet only 55% extend this to all aspects of the heating systems including pipework and radiators.  A similarly low number extend their checks to outside the property with just 55% clearing drainpipes and guttering and 27% carrying out roof checks and maintenance.

Liz Williams, a Marketing Consultant from Ledbury, has first-hand experience of dealing with a mid-winter maintenance issue whilst renting a property:

“My husband and I moved to Herefordshire from London just before our first child was born and decided to rent whilst looking for our dream family home.

“Christmas fell just two weeks after Samuel was born and whilst we spent Christmas with family, we returned home on Boxing Day with thick snow on the ground to find that our boiler had stopped working.  Calls to the lettings agent proved futile given the time of year, but we fortunately had the contact details of the landlord who agreed to pay for a night in a nearby hotel for us.

“On returning home to be present for a constant stream of heating engineers, we found ourselves camping out in our lounge to keep ourselves and our new-born baby warm near the fire and an array of portable radiators.

“The boiler was eventually mended but we always felt the landlord himself should have had a better grasp on its overall working order and that he certainly should have been better prepared with the necessary contacts to call upon in an emergency situation such as this.”

John Socha has been a landlord for over 20 years and now operates a portfolio of 25 properties in Northampton.  For him, pre-winter maintenance checks aren’t just about avoiding inconvenience when things go wrong:

“Being on top of essential maintenance before bad weather sets in, isn’t just about maintaining positive relations with your tenants, as important as that is, it also makes sound financial sense.

“Far from taking a ‘sticking plaster’ approach when things go wrong, I’ve instead decided to invest up front to mitigate potentially more costly repairs at a later stage.

“For example, all of my properties with gas central heating are signed up to a yearly maintenance and servicing policy.  This not only means that it is regularly checked with any niggles rectified, but also that, should something go wrong, the tenant can call the engineer out, safe in the knowledge that they’ll have the issue dealt with quickly.  For me, I’m also reassured that there won’t be any of the extortionate costs that can be associated with emergency call outs

“Of course, issues aren’t always linked to the heating and so, once autumn leaf-fall is over, I ensure that all the gutters on my properties are cleared.  I’ve also recently changed all exterior lights to LEDs so that there’s less frequent need for bulb changes and have checked that outside taps are suitably insulated.”

James Davis concludes:

“Whilst it’s easy when you don’t live in a property to be less aware of its overall condition, we advise landlords to commit to regular maintenance checks and, therefore, avoid small issues escalating to larger, costlier, ones.

“John is a great example of this.  He appreciates that there’s no point in scrimping on essential maintenance and that small improvements and regular checks, can pay dividends via improved tenant relationships and less inconvenience all-round.”

For further information about Upad and its services, contact www.upad.co.uk or call 0333 240 1220.

See Also: Do you know if your property insurance cover is correct? – here

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Early release of agreement on sold property?

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I’m about to sell a house which is still tenanted. We have Exchanged and Complete in three weeks.

Out of the blue, my tenant has said he has to move because of his job, two months before the end of his tenancy agreement.

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Benefit tenanted properties to get energy grants…

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Energy Grants:

Private (BTL) landlords who rent to housing benefit tenants could be inline for help with energy efficiency grants as the government decides to support a programme to improve the EPC rating of properties inhabited by tenants claiming housing benefits (HB).

The idea behind the initiative, ahead of the impending legislation enforcing minimum energy efficiency standards next year, is to allocate a grans to housing associations, private landlords or tenants, where the current EPC rating of the property is E or below.

This would mean that those properties let to HB tenants which have is little or no insulation, or are powered by an old gas boilers, or oil, electricity or LPG could qualify for financial support to bring them up to current minimum energy efficiency standards.

This follows promises at the recent Conservative party conference to improve the lot of private tenants.

In those households that qualify, and apparently this does not include flats, energy suppliers will install a free replacement energy efficient boilers, and/or insulate the property’s walls or loft.

The energy suppliers will be contracted to carry out these installations in the qualifying properties, depending on the location and type of property, but the householder will not need to be an existing customer, as this obligation will extend to all UK households.

The Energy saving Group says that installing a new A-Rated Boiler will reduce carbon emissions and can save tenants around £300 per year on fuel bills. This will be a part of the Home Heating Cost Reduction Obligation (HHCRO) scheme or “Affordable Warmth Grant” which is aimed at addressing fuel poverty in across the UK.

These boilers have an efficiency rating of A and will provide heat and hot water using less fuel, thus reducing the home energy costs for tenants claiming benefits.

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BlueZest – new 85%LTV Buy to Let lender

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As from today, we have direct access to Blue Zest, the new lender offering 85% Loan to Value Buy to Let mortgages. (85% for London and the South East, 80% for the rest of the UK)

Blue Zest comment: “Our advanced technology provides us with the capability to deliver a mortgage within 60 minutes.

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State Bank of India – 2.84% BTL 5 year fixed 75% LTV £995 fee

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The State Bank of India is carving a niche for itself in the Buy to Let mortgage market with competitive 75% Loan to Value rates and criteria.

The Bank will accept applications from first time landlords. They also allow Multiple Units

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RLA Secures £1.5m Energy Funding Pot for Members

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Energy Efficiency:

The Residential Landlords Association (RLA) has secured a £1.5m funding pot from energy company E.ON to install energy efficiency improvements in members’ properties – the only funding dedicated exclusively to work on Private Rented Sector (PRS) homes.

From April 2018, unless a valid exemption applies, landlords must have an Energy Performance Certificate (EPC) rating of E or above to let homes out to new tenants or renew leases under the new Minimum Energy Efficiency Standards (MEES).

However, many are struggling to fund works in the current climate, with 34% of landlords who rent out an F or G rated property saying they are unable to afford to make the improvements needed to bring it up to an E rating or better. 1

Now, through this relationship, qualifying landlords can apply to E.ON to carry out a range of energy efficiency improvements to their rental properties and to access finance for other energy efficiency works.

The funding is specifically targeted towards landlords with tenants on benefits whose properties are falling below the required EPC rating.  The works are available subject to a property survey and a benefit assessment. Qualifying benefits include:

• Pension Credit – Guarantee Credit
• Child Tax Credit or Working Tax Credit
• Employment and Support Allowance (Income based)
• Income Support
• Universal Credit

RLA landlords can apply for:

• Free cavity wall and loft insulation
• Funding towards the cost of E.ON installing external wall insulation for solid wall properties
• Funding towards the cost of E.ON installing a boiler upgrade or replacement, with a range of finance options available to enable members to spread the remaining cost of a new energy efficient gas boiler. ON is a credit broker not a lender.
• Free EPC and CP12 certification following installation of energy efficiency measures

Measures are subject to terms and conditions. For more information see eoninstall.com

According to the English Housing Survey3 there are 298,000 Private Rented Sector (PRS) properties in EPC bands F and G, with the RLA’s latest figures showing the average amount spent by a landlord to bring a property to a band E or above is £6,781.

Andrew Goodacre, RLA Chief Executive, said:

“The RLA is delighted to secure the £1.5m of funded works from E.ON for landlords  to install the vital energy efficiency improvements. These  funded works will benefit qualifying landlords by easing the upfront costs of improvement works and tenants through reduced energy bills.

“Hundreds of thousands of properties are not currently meeting the minimum standards set to be introduced next April and we would urge any landlords who believe they fit the criteria to get in touch to find out exactly what they are eligible for.”

Nigel Dewbery, Head of Energy Efficiency at E.ON, said:

“Whether landlords have in the past been put off by the perceived hassle, expense, or their own lack of knowledge around the subject of energy efficiency, the clock is definitely ticking on the need to improve properties and we’re really pleased to be working with the RLA to support members to prepare for the new legislation.

“In a recent survey we conducted with landlords4, we found over a quarter (28%) said they feel worried about the cost of making their property compliant. To answer this we’ve developed a range of services to give them the support they need, from online account management that allows landlords to better control their property portfolios through to a range of insulation and heating services to make rented properties more energy efficient.

“We hope working with the RLA will enable us to support landlords with a range of funding options to bring down the costs of achieving the standards whatever measures they require to upgrade their property.”

The £1.5m has been offered as part of the Energy Company Obligation (ECO) scheme that places legal obligations on large energy suppliers to fund energy efficiency measures in domestic premises.

The current obligation period runs until 30 September 2018 and members of the RLA are able to benefit from this offer up to this date.

Anyone who would like to check their eligibility and find out more about which options are available should contact the E.ON on 0330 400 1794 or visit the RLA website here.

Following initial contact with the RLA the application will go through a simple three step process.

1. E.ON will assess applications and arrange a free property survey.
2. During the survey, specialist energy experts will explain what improvements are possible and will calculate which measures will increase a property’s performance and comply with the upcoming regulations.
3. E.ON will then provide applicants with a quote detailing all the costs and funding available, along with finance options if required to spread the upfront costs.

Once the initial contact has been made improvements could be in place within three to four weeks.

For more information about landlords’ obligations under the new MEES rules coming in next year click here

1. From the report “The Safety and Energy Efficiency Conditions of the Private Rented Sector” here
2. The offer is subject to terms and conditions and will be discussed on application. Visit eoninstall for further information.
3. The English Housing Survey data can be accessed here
4. E.ON’s 28% statistic was based on research commissioned by E.ON involving 200 residential landlords carried out by OnePoll between 17/03/17 and 23/03/17.

The RLA represents over 50,000 private sector residential landlords in England and Wales.

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Advice on delay to contracted tenancy start please

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Hi all, I’m a tenant looking for advice.

I have signed a fixed term AST and paid the associated deposit and first month’s rent. The contract began on the 18th of October.

The letting agent called on the morning of the 18th to delay my getting the keys until the afternoon.

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UK Build to Rent hits 100,000 mark

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Build to Rent in Scotland:

The latest published research by the British Property Federation (BPF) suggests that Build to Rent (BTR) is approaching the 100,000 unit milestone at 95,918 homes now completed, under construction or at the planning stage.

Many housing industry professionals now see BTR as a big part of the solution to the UK’s housing crisis and a move towards the type of property market which is popular in parts of Europe and the United States.

Thanks to recent Government efforts to tackle the housing shortage in this regard, BTR starts have seen around a 40 per cent increase over compared the first quarter of 2017, but according to Hazel Sharp Webb, head of BTR & PRS, Rettie & Co, writing for the Scotsman newspaper, little more than 1 per cent of this investment is being directed at Scotland.

However, she says, “…this may be partly due to some misconceptions about the sector in Scotland and not enough positive information about why Scotland is an attractive proposition for BTR. However, she says, “it should also be recognised that tenancy reform is creating a lot of political “noise”, particularly the apparent keenness of some councillors to use Rent Pressure Zones (RPZs) as a form of reinstatement of the old rent controls.”

Playing down the possibility of the introduction of rent controls in Scotland and their effects on investment decisions, Ms Sharp Webb says, “RPZs may or may not be used and, in any case, they limit rent increases on existing tenancies only.”

The new Private Residential Tenancy, which is due to come into force in Scotland on 1 December this year, will have no initial tenancy term, which is definitely a concern for investors, as well as for Buy to let (BTL) landlords in particular.

However, says Ms Sharp Webb, “…residents may have no real need or desire to move around if they are living in a professionally managed, high quality home. Under the new tenancy, there also continues to be a number of reasonable grounds for landlord possession of property, even though (rightly) tenants will now have greater security of tenure.”

Others in the industry see this as an “idealistic” view as to the way these tenancies will work out in practice, especially if tenants fail to pay rent and look after the property, and only time will tell if they prove successful for landlords and tenants.

Ms Sharp Webb argues that Scotland benefits from relatively low entry prices; strong yields; multiple dwellings relief on Land & Buildings Transaction Tax; and more certainty around the regulatory regime, relative to the rest of the UK.

“Our main cities also have significant shortfalls in housing supply at a time of rising demand from increasing populations. At the Movers & Shakers Scotland BTR Forum, held in Edinburgh last Thursday, the Scottish Government proposed a new Rental Income Guarantee Scheme (RIGS), which should send a positive message out to [BTR] investors that the Government is intent on encouraging and growing the BTR sector in Scotland, says Ms Sharp Webb.

“This is effectively a form of government-backed insurance for schemes in the fledging [BTR] sector, with decisions post application to the scheme taking no more than two months. A new planning advice note for BTR has also been published and “The Build to Rent Opportunity in Scotland”, commissioned by the government, was launched on Thursday, she says.

In the note the Minister for Local Government and Housing, Kevin Stewart, says:

“Build to Rent is an important part of the Scottish Government’s approach to growing and improving the private rented sector”.

Scotland needs to get on the map with BTR, says Ms Sharp Webb, “…especially in our main cities. While rent controls may offer the perception of easy solutions, the fundamental problem of lack of housing supply means that innovations like BTR must be grasped while they still can.”

Build to Rent in Scotland

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Universal Credit on Pause

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MPs have voted 299 to 0 for Labour’s motion to ‘pause and fix’ Universal Credit before further roll out after the majority of Conservative MPs decided to abstain and some voted with Labour.

John Bercow, the speaker of the House of Commons

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