Charter for rent cheats

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PLANS to cap security deposits for private rented housing to six weeks rent risk creating a charter for rent cheats warns the country’s leading landlord body.

Research by the Residential Landlords Association’s (RLA) has found that 40% of private landlords have faced tenants not paying their final month’s rent in the past three years.

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HMRC and s24 advice – How lazy can you get?

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The financial year end is almost upon us so I phoned HMRC and asked the question in claiming interest do I do the calculation myself – input 75% of my interest paid or do I input all the interest I have paid and their system will do the calculation.

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Latest UK House Price Index shows annual increase of 4.9 per cent

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House Prices:

The UK House Price Index (UK HPI) published 20^th March shows that house price changes for England, Scotland, Wales and Northern Ireland are down since December 2017, but the annual rise (year-to-date) is positive at 4.9 per cent.

The January 2018 data shows:

• an annual price rise of 4.9%, which makes the average property in the UK valued at £225,621
• on average, house prices have fallen by 0.3% since December 2017

Data for England alone shows:

• house prices have fallen by 0.5% since December 2017
• an annual price rise of 4.6% takes the average property value to £242,286

The regional data for England indicates that:

• the South West experienced the greatest monthly price rise, up by 1.4%
• the North East saw the most significant monthly price fall, down by 5.5% and
• London experienced a monthly price rise, up by 1%

The chart below (Source: HM Land Registry) gives a region by region breakdown of average house prices (January 2018) and price changes since December 2017:

Repossession Sales in England 

Figures for repossession sales by volume for England show the lowest number of repossession sales in November 2017 was in the East of England, with the highest number of repossession sales occurring in November 2017 was in the North West.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Latest UK House Price Index shows annual increase of 4.9 per cent | LandlordZONE.

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Deposit Cap will be charter for rent cheats claims RLA

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Rental Deposits:

Plans to cap security deposits for private rented housing to six weeks rent risk creating a charter for rent cheats warns the country’s leading landlord body.

Research by the Residential Landlords Association’s (RLA) has found that 40 per cent of private landlords have faced tenants not paying their final month’s rent in the past three years.

The new cap is proposed in the Government’s Draft Tenant Fees Bill and the RLA is calling for this to be increased to eight weeks to cover the costs if the final month’s rent is not paid and to ensure there are sufficient extra funds to deal with any major problems some tenants leave behind.

The RLA is also warning that the Bill risks becoming a missed opportunity to improve the position of tenants. It is calling for proposals to enable tenants to transfer deposits from one home to another rather than having to raise fresh funds each time they move as they wait for their last deposit to be paid back.

It also wants the tenancy deposit process to be brought into the 21st Century by enabling papers confirming that deposits have been protected to be sent to tenants electronically which currently cannot happen.

The Office for Budget Responsibility has again warned that plans to ban letting fees paid by tenants could lead to rent rises as a result of fees being passed on.

Commenting, David Smith, the Policy Director for the RLA said:

“Ministers need to address the problem of tenants failing to pay rent every bit as strongly as rogue landlords. It is not unreasonable that landlords should have the security to know that funds are available to cover the unacceptable practice of those tenants who do not pay their rent at the end of the tenancy and, in some case, leave the property in an unacceptable state.

“In a quest for quick popularity, the Government’s plans risk becoming a missed opportunity for fundamental reforms to improve tenants’ ability to access rented housing.”

The research findings are contained within a report by the Residential Landlord Association’s (RLA) research exchange, PEARL. Almost 3,300 landlords responded to its questions.

The Residential Landlords Association: The home for landlords

• The RLA represents the interests of landlords in the private rented sector across England and Wales. We’re home to over 50,000 landlords nationwide, with a combined portfolio of over a quarter of a million properties.
• RLA PEARL’s report, The Impact of Taxation Reform on Private Landlords, is available here – Page 23 notes: “The next question asked landlords whether they had ever experienced their tenants not paying their final month’s rent in the past three years. The majority of landlords responded that they had not experienced this (60%), however, at 40% of landlords who have experienced this, this is still a significant issue.”
• The Office for Budget Responsibility’s Economic and Fiscal Outlook for March 2018 can be accessed here – Page 94 notes, “it is possible that a ban on fees would be passed through to higher private rents. If this was the case, it could affect our housing benefit spending forecast.”
• The RLA’s written evidence to the Housing, Communities and Local Government Select Committee inquiry into the Draft Tenant Fees’ Bill can be accessed here

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Deposit Cap will be charter for rent cheats claims RLA | LandlordZONE.

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Conveyancing Service

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Buy, Sell or Remortgage with our online conveyancing service

We understand that purchasing or selling a property can be one of life’s most stressful experiences.

That’s why we promise to make sure your home move is as quick

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Stoke-On-Trent petition to reject Selective Licensing

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North Staffs Landlord Association (NSLA) have started a 38 Degrees petition “We urge Stoke-On-Trent City Council to reject Selective Licensing.”

The NSLA have reported that: “Every rental property in the designated streets will have to have a licence

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Unfair practice by Council re hazards in house?

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I have a buy to let property where the tenant asked the Council to assess the house using the Housing Health and Safety Rating System (HHSRS). She had not raised, with me, any concerns about the condition of the house beforehand.

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The Great Pet Debate

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Pets in Lets:

It’s the age-old debate between landlords and tenants. Should a landlord allow a tenant to rent their property if they have a pet? If we look at the ‘No pets allowed’ plastered over every advert and a resolute mantra from lettings agents, it’s clear that most landlords do not allow pets in their buy-to-let. But perhaps it’s time to reconsider this stance, with a few conditions of course.

Dogs Trust conducted research and found that 78% of pet owners had difficulties finding a rental property that would accept their furry friend. Plus, 1 in 3 property owners could not find anywhere that would accept their pet. It’s also reported that tenants with pets take up to 7 times longer to find a rental property that is willing to accept them. There are good reasons as to why a landlord would be hesitant to accept a pet:

• Damage to property such as ripped carpets, shredded curtains and scratched wooden floors
• Pets, particularly dogs, could cause a disturbance to neighbours with late night barking
• It may affect tenants in the future if they are allergic to animals
• It may cost more to clean the property once the tenants have left
• Flea infestation, which is expensive to remedy
• For a fully furnished let, cats and dogs are likely to damage furniture from chewing and scratching

This list is hard to ignore and may give many landlords the resolution to continue rejecting tenants with pets. However, the Dogs Trust research also found that 47% of landlords didn’t give any reason for not allowing a tenant to keep a pet. Perhaps the ‘No pets’ mantra has simply been reinforced in the industry without real thought to individual circumstances.

A naughty 14% of tenants keep pets in a property, without asking for their landlord’s consent, so perhaps a reasonable agreement, such as a higher deposit or a guarantee the property will be professionally cleaned, would be a better approach?

The private rental sector now accounts for 21% of the housing market, more than 5 million, households. And this figure is only set to increase as house prices rise faster than wages. And from Upad’s research, 40% tenants have been renting for 4 or more years – showing that longer term renting is here to stay. With that in mind, should the no pets rule be relaxed, to allow tenants to settle into a rented home just a property owner would be able to?

What, you may be asking, are the advantages to letting to tenants with pets?

• Pet owners are likely to stay longer at a property, considering the difficulties they face finding a suitable rental
• They may be more likely to look after the property well, to prove that their pet won’t cause any problems
• Landlords could charge a higher rent. A Upad tenant survey found that 24% of pet owners would be willing to pay that extra rent
• The property may let faster, avoiding dreaded void periods, with so many pet owners struggling to find a rented a property to accept them.

You may not be convinced, and we don’t blame you. It’s important to consider the potential damage caused by pets and protect your investment. If you do decide to accept pets, make sure to ask for a higher deposit to cover any damage caused and carry out regular inspections to make sure the property is looked after.

You could also ask for vet records, to ensure the pet is up-to-date with vaccines and flea treatment. We’d recommend asking the tenant to agree to pay for a professional clean at the end of the tenancy, and this will avoid any deposit disputes over cleaning.

But always ensure you have a detailed, professional inventory check-in and check-out to show any changes in the property condition. If your “no pets” resolve may be softening, LetwithPets offers fantastic advice on protecting your investment if you do decide to allow pets – they offer free information on pet clauses, pet references and pet deposits.

This article has been supplied to LandlordZONE® by online letting agents Upad

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – The Great Pet Debate | LandlordZONE.

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Bank of England’s BTL changes make it harder to get a mortgage

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Six months after the Bank of England’s (BoE) latest attempt to cool the buy to let market, almost two thirds of landlords (63%) who are aware of the changes say it is now harder to get a mortgage.

The changes

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Landlords can no longer afford to be Ostrich-Like on rates

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The good news is that research has identified landlords as being the biggest winners from the recent decade plus run of low interest rates. Owner occupiers tend to take out mortgages that repay both interest and capital whereas landlords with buy-to-let mortgages are usually repaying just the interest.  This is one of the reasons why the era of low rates ushered in by the financial crisis of 2007-8 was such a big plus in making being a landlord look so attractive.

Of course, the situation is changing and landlords can no longer bury their heads in the sand about interest rates.  The only way is up.  The Bank of England has been dropping very heavy hints over the past months about the need to raise rates to get back to some sort of normality following the market crash.

We saw the first base rate rise last November which took the rate from 0.25% to 0.5% but most forecasters do not expect this increase to be the last.  The Bank’s Monetary Policy Committee meets again this week on March 22^nd but that may be a little too early to see the next hike.  The month of May looks more likely with possibly one more rate rise after that before the year is out.

Much has been written about the landlords who dashed to grab two-year fixed rates mortgages to buy properties just ahead of the April 2016 increase in Stamp Duty and they will certainly be returning to the lending market.  But there will be other landlords who have not looked at their mortgages for much longer than that.

Undoubtedly there will be a number of landlords still on SVRs either because a fixed rate expired, or they have drifted onto this rate with their existing lender or perhaps because of historical reasons due to changed personal circumstances.  Whatever the reason these landlords are going to wake up to a very different mortgage market today.

Firstly, the number of lenders and deals on offer has increased considerably over recent years.  When we at Property Master seek to match landlords against the best deal for them we are now scanning 90 plus lenders but that is just the start.

Each lender will offer a range of fixed rate mortgages for a range of different Loans to Value so there can be a bewildering variety of choice.  And it is not always the lowest rate that represents the best value.  Landlords also need to factor in arrangement fees which can total up to £2,000 which can take the shine off what looked like the cheapest offer.

Many landlords wanting to revisit their rate may well be concerned about redemption fees.  Is it worth paying a fee to find a new lending deal?  The answer is with rates going up it may well be the right thing to do.  If a landlord is on a comparatively high interest rate and there is a mortgage deal that is much cheaper it can be worth biting the bullet and paying a redemption fee to gain the lower rate.

The other big change some landlords who have been out of the market for a while will notice is their now more formal status as portfolio landlords.  Since last year landlords with four or more properties will now have to, if they haven’t done so before, run their properties much more like a business.  New stricter lending criteria which came in from last year for this class of landlord has hastened the greater professionalisation of the marketplace.

Portfolio landlords should expect to be asked to provide a range of paperwork to any prospective mortgage lender to prove that each property within their portfolio is performing well in terms of rental returns.  Any one property not pulling its weight could potentially lead to a lender declining to lend.  It pays to prepare in advance to convince a lender you are a good bet.

Finally, the regulatory environment around the private rental market continues to tighten and this means landlords need to manage their finances much more closely.  As we know landlords used to be able to deduct the full amount of their mortgage interest costs from the income they make but now this is being reduced year on year until it reaches a basic rate tax reduction only.

This lost income should spur landlords into leaving behind unattractive interest rates.  Likewise, pressures around the need to comply with new regulations such as the new Minimum Energy Efficiency Standards due to take effect on April 1^st or changes around landlord licencing should also be a spur to action.

The private rental market is changing fast and coupled with the new higher interest rate environment the need to find the best mortgage deal is more important than ever.  Despite the threat of higher rates and the ending of sources of cheap borrowing for banks such as the Term Funding Scheme there are still some very attractive mortgage rates around – especially if landlords are prepared to fix their rate for five years.

How much longer these offers will continue for is very difficult to predict.  We are seeing record applications at the moment which suggests many landlords are seeing the need to get their finances onto a new footing before it is too late.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords can no longer afford to be Ostrich-Like on rates | LandlordZONE.

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