Three quarters of Airbnb users think the properties they visit are ‘regulated’

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Huge gap between expectations of short-lets platform users and the safety and regulation being delivered is shocking, a survey has shown.

The gap between consumer expectation and delivery on safety in the short-lets Airbnb-dominated sector has been revealed by a survey.

More than three-quarters (77%) of overnight guests want regular, independent inspections of all ‘pay to stay’ properties available on platforms such as Airbnb, while almost the same number (72%) assume that they’re already regulated.

The survey by Quality in
Tourism, which quizzed 2,000 guests who had stayed overnight in the UK over 12
months to October 2019, found safety and regulation was high on renters’ agenda
and 83%
supported the mandatory regulation of all Airbnb properties.

Many private landlords are
already highly critical of the current system which regulates the long-term let
sector – as well as hotels,
B&Bs and guesthouses – but not the growing ‘wild
west’ short-term lets market.

Quality in Tourism, which is a performance assessor for tourism and hospitality businesses in the UK, believes the lack of a level playing field between Airbnb and other types of accommodation means there is no way to hold amateur providers accountable.
And while there were thousands of successful, incident-free stays last year, it points to horror stories around the world including a balcony collapse, ceiling collapse, condemned buildings being rented, hidden cameras and fraudulent listings.
Deborah Heather, director of Quality in Tourism, says councils are just beginning to tackle the issue by considering mandatory licensing or regulation.

And the Scottish Parliament also recently moved to license all short-term lets.
But she urges councils to move fast. “Hosts can rent a spare room or even an apartment or house to a complete stranger, with little or no concern for that guest’s welfare,” she says.
“Consumers could be staying in unfit accommodation, some of which don’t even have basic safety equipment such as smoke detectors or carbon monoxide alarms.”

“Changes
need to be urgently made to level the playing field and align all operators to
become accountable and improve consumer safety, before it’s too late.”

Quality in Tourism is calling for new enforceable, mandatory
regulations that set out minimum standards and include compliance with fire safety,
food hygiene and building regulations.

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Yields FINALLY rising again, leading London letting agent tells LandlordZONE

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After eight years of shrinking or static yields, three key government political and regulatory initiatives have unintentionally begun to push them up again.

London landlords are seeing an increase in yields from their rental property for the first time since the early 2010’s, a leading letting agent has claimed.

Daniel Fisher, Regional Lettings Director at 29-branch estate agency Chesterton’s, claims the higher yields are the unintended consequences of three key Conservative policies.

These are Brexit, which has softened the sales market and lowered prices; the decimation of landlord mortgage interest tax relief, which has reduced supply as landlords quit the market; and the tenant fees ban, which has also persuaded more landlords to reduce or sell their portfolios.

This has all led to a reduction in stock but, despite a more sluggish economy in London caused by Brexit, Fisher has seen no let-up in demand from tenants seeking homes to rent, which has kept demand high.
“Landlords are achieving higher rents, there’s no question about that but I don’t think it’s making up for tax relief they’ve lost since the Section 24 changes began to bite,” he says.

“So I think landlords are still feeling a little hard done by.”

But Fisher says the landlords who stuck it out are now benefiting from the recent upswing in yields at the expense of those who reduced or sold their portfolios.

“We’re also seeing a lot of landlords turning their portfolios into companies,” he says.
“But saying all this, a lot of our clients are high net worth individuals who aren’t in the property investment game for yield – they’re looking for capital gain over the medium to long term.”

Fisher also says the tenant fees ban has been instrumental in pushing up rents, but this is not because landlords are consciously hiking rents to cover the extra costs.
“This isn’t landlords reacting politically to the fees ban – it’s just that the ban has created an imbalance of supply and demand and it is that which is increasing rents.”

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How much do you need to earn to secure a new home by this Sunday?

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The latest research by new home specialists,
Stone Real Estate, has looked at just how long it will take to earn the
equivalent of a 15% mortgage deposit for a new home based on the daily wage at
a number of different salary brackets.

Stone Real Estate looked at the net earnings
per day for various salary levels since the year began and at what point this
year or next, these earnings would have reached £43,975, the average 15%
deposit for a new build home (£293,167).

The data shows that for those on a wage of
£1.2m or above, the minor sum of £43,975 has been in the bag since yesterday,
just 26 days into the new year.  

However, spare a thought for those buying in
London where the average new build cost is £502,228 and a 15% deposit equates
to £75,335, as they would have to be on a wage of £2.1m or above to hit the
threshold as of yesterday.

In contrast, those just starting out on a wage
of £20,000, would have to work for 937 days, 912 days more, just to hit a 15%
mortgage deposit on the average new build home, meaning they won’t reach the
same point until 26th July 2022! 

This is again higher in London, where it would
require someone on £20,000 to work for 1,604 days or until 23rd May 2024 just
to earn the required deposit of £75,334.

Raking in £50k a year? It would still have to
work until 4th March next year (428 days) or 3rd January 2022 in the capital.

From £70,000 a year and up you’re on track to
save the average UK new build deposit before 2020 is out, taking 241 days on a
£100k salary and just 58 if you’re earning £500k.

In London, you need to be earning £200k to make
the cut by August of this year (235 days), while £500k will see you reach the
sum in just 100 days!

Even when taking life’s other expenses into
account and working on the basis of saving just 20% of your net income, those
on £400,000 or more would still have tucked away enough to afford a 15% deposit
on the average UK new build this year!

Founder and CEO of Stone Real Estate,
Michael Stone, commented: 

“For many aspirational homebuyers across the UK
and particularly in London, the financial hurdle of compiling that
all-important mortgage deposit is huge and it can take them years of saving in
order to get to that point.

Of course, life makes it impossible to save
100% of our income and while it may take you even longer tucking away 20% of
your net income, doing so will soon provide you with a very firm foundation and
luckily for most of us, the Bank of Mum and Dad will help to reduce the time it
takes to get a foot on the ladder considerably.

The silver lining of this long savings slog?
Yes the initial hurdle is high, but the reward is one of the most fulfilling in
adult life and when buying a new home you’re not only getting great value for
money, but your investment will require little to no maintenance for the
foreseeable. 

Not only this but a new home will hold its
value much better than an existing property and even during periods of market
uncertainty as we’ve seen recently, new home buyers have enjoyed robust price
growth and a great return on their hard-fought investment.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – How much do you need to earn to secure a new home by this Sunday? | LandlordZONE.

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Daily politics update: Carbon monoxide alarms

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Proposals to extend regulations concerning carbon monoxide alarms are being considered by the government. Barry Sheerman MP (Labour, Huddersfield) has received a response to his written question asking if the government will bring forward legislative proposals to require carbon monoxide alarms in both private and social-rented homes with a carbon fuel-burning appliance. Under the Smoke and […]

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Landmark property investment tax ruling given on Andrew Lloyd-Webber case

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Investors who lose money on risky property investments, can now claim their losses against tax following a First-tier Tribunal ruling.

Off-plan property buyers now have more
confidence to invest in potentially risky developments after a tribunal ruled
they can claim tax relief on losses if
their investment fails.

Investors
scored a victory when the
First-tier Tribunal (Tax) ruled in favour of Andrew Lloyd Webber against HMRC for his capital gains tax
rebate claim, over the development of a luxury beachside mansion in Barbados
which was never completed.

Lord Lloyd-Webber and his wife won their legal
battle after the tax authority said they could not offset £6.25m they had lost,
for tax purposes. 

Lord and Lady Lloyd-Webber invested in the Clearwater Bay
property development project in 2007, entering into contracts to buy two plots
of land and two villas, due to be part of a large holiday homes complex. 

But the couple’s planned £14.3m venture failed in
February 2009 when property developer Cinnamon 88 suspended construction during
the financial crisis.

They had claimed the sums paid as capital losses, which
they’d tried to offset against other capital gains realised by them, but this
was rejected by HMRC.

The Tribunal subsequently ruled that the £6.25m had been
paid by the Lloyd-Webbers for the acquisition of their rights under the 2007
Contracts.

It agreed that relief should be allowed in these
circumstances, saying this was consistent with the “real world” approach to
capital gains and losses established by the courts.

Nick Clayton, partner at Herbert
Smith Freehills, says the
ruling is a welcome source of comfort to other investors. “The decision gives
effect to the reality of an investment in off-plan property, by recognising
that, whether or not the property is ultimately acquired, the investor has made
an investment and made a loss on it,” he says.

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Delay to Minimun EPC Band E for Scotland’s PRS

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Hot off the press from a SAL Mailing to their members:

Scottish Association of Landlords (SAL) has been advised by The Scottish Government that it intends to postpone the introduction of the minimum EPC requirement until 1 October 2020 due to delays in finalising the regulations.

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Agent ordered to pay £25k for illegal lettings

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Letting agent Olympia Estates Ltd has been ordered to pay out £25,000 for illegally operating two properties, following a long-running investigation by a London Council. The Paddington-based letting agent didn’t apply for a House in Multiple Occupation (HMO) licence on the two properties and was found to be trying to evade the licensing process. The […]

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Freeholder excavating below our ground floor flat?

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Dear All, Firstly thank you to the website and its members for all the informative content which has been of enormous help to us throughout the years!

We currently own a ground floor flat on a very long lease.

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Home ownership grows amongst the young…

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Home Ownership:

The number of young people now owning a home has grown to the point where it matches the number renting. The “bank of mum and dad” and help-to-buy are beginning to redress the balance.

Go back to 1918 and less that one-quarter of households were privately owned.

But with increasing prosperity after WW2 there was a surge in house building which brought that balance closer to three-quarters. With rising incomes came access to mortgages and private renting declined; home ownership was transformed, particularly from 1980 to 2003 – helped by a large scale sell-off of social rented properties – and it peaked at 73 per cent of all English Households around 2003.

However, post 2003 home ownership and social housing have gone down again with just 64 per cent of residential housing in England now owner occupied, around 10 per cent is rented from housing associations and 7% from local authorities.

In the 80s and 90s private renting accounted for less than 10 per cent of households, but this proportion was transformed by the growth of buy-to-let from the mid 1990s onward, reaching almost 20% in 2013-14. This proportion of households in the private rented sector (PRS) has remained relatively unchanged ever since – for the sixth year in a row, according to the English Housing Survey’s (EHS), figures for 2018-19 released this month.

The ready availability of buy-to-let mortgages, the assured short-hold tenancy – giving landlords the confidence that they could to recover their property relatively easily if things went wrong – low interest rates, and increasing asset prices, have all conspired to boost buy-to-let and private landlording. It’s only recently that Government policy has started to reverse the trend with an increasing tax burden on landlords and more regulation of the PRS. The help-to-buy scheme is helping more and more first time buyers onto the housing ladder.

The “bank of mum and dad” and help-to-buy have started to redress the renting / ownership balance, or at least slow down the booming buy-to-let industry, with the number of young adults now owning a home reaching the same level as those renting for the first time in six or seven years. According to the EHS, ownership rates among 25 to 34-year-olds rose from 38 to 41 per cent last year, roughly equalling private renters – see the chart.

Daniel Tomlinson, policy analyst at the Resolution Foundation think tank says, “The 140,000 increase means that, for the first time since 2012, young adults are as likely to own as live in private rented accommodation”

However, the small shift from renting to ownership, which in any case is stated Conservative policy, is somewhat off-set by the rise in renting by the baby boomer generation, where renting in this cohort is definitely on the rise. Ten per cent of 55-64s now rent privately, which compares with 7 per cent a decade ago, and those renting social homes increased from 14 to 17 per cent.

But despite Generation Rent’s gravitating toward home ownership, the home ownership rate among young households is still one-third lower than it was in the early 2000s. There are millions of young adults who can’t afford to get onto the property ladder, and while house prices keep increasing faster than wages, that elusive deposit threshold keeps getting further out of reach for those without help from other sources.

The average deposit required of a first time buyer rose by 7 per cent last year reaching £46,187, according to the Halifax, while the equivalent in London is £109,885, up 2 per cent on 2018; but this did not stop 356,767 buying in 2019 compared to 193,940 in 2009.

The fact remains that millions of young adults, including double earners with professional careers, many who have grown up in privileged circumstances, often cannot afford to buy basic accommodation for themselves. When it comes to starting a family they reach desperation point, because their situation contrasts so starkly with their own childhood home.

With a reversal in generational fortunes, on a national scale, the government realises it has a problem on its hands and long-term it strains on the social fabric. Owner occupation helped millions of baby boomers, ordinary working people, get the means to accumulate wealth.

As Conservative policy proffers, help people build a tangible stake in their future, get a lower propensity to withdraw labour, and of course, they vote conservative. Home owners generally have more control over their lives and more money to leave to the next generation.

Housing tenure
balance in England is a problem which the government will have to
face up to, a problem which the Boris Johnson Government is about to
grapple with. But of course, it is not alone: it is a problem facing
every other western democracy.

English Housing Survey Headline Report, 2018-19

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