Buy-to-let homes benefit from stamp duty cut

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Rishi Sunak implemented a stamp duty ‘holiday’ in his summer statement for second and additional homes – starting today – which is great news for the private rented sector

Private landlords have welcomed the Chancellor’s announcement to reform stamp duty for buy-to-let properties.

The 3% levy on the purchase of additional homes by landlords in England and Northern Ireland will immediately change, from covering the first £125,000 of a property to the first £500,000. After that, the rates will be 8% on the next £425,000, 13% on the next £575,000 and 15% on the remaining amount. These measures last until 31^st March 2021, which is longer than many people expected.

Companies as well as individuals buying residential property worth less than £500,000 will also benefit from these changes, as will companies that buy residential property of any value where they meet the relief conditions from the corporate 15% Stamp Duty Land Tax charge.

Landlords have also welcomed the fact they can now apply for funding towards energy improvements to rental homes; the Government’s £2 billion Green Homes Grant will provide at least £2 for every £1 that homeowners and landlords spend to make their homes more energy efficient, and up to £5,000 per household. 

The National Residential Landlords Association has campaigned for support for landlords to improve the energy efficiency of their homes – which it believes will benefit tenants through lower utility bills. Chief executive Ben Beadle says: “Improving the energy efficiency of rental housing is good news for tenants, landlords and local economies. We encourage all landlords to make use of this as it will mean housing standards are improved, tenants will save money and it will reduce carbon emissions across the whole sector.”  He adds that while the change to the stamp duty rates for the purchase of rental homes is welcome, it could go further. “The additional rates should be scrapped in cases where landlords invest in properties adding to the overall supply of housing. This includes investing in new build and bringing empty homes back into use.”

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Buy-to-let lenders pull the plug on products

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The impact of lockdown on income and jobs, along with fears about university students paying rent, has impacted on some lenders’ mortgage offerings

Big-name lenders have ditched HMO and student let mortgage products amid uncertainty around coronavirus, the job market and student accommodation

Paragon has told investors it’s ‘not currently accepting applications on properties that are, or will be, let to students’ – in what it calls a temporary revision. A spokesman says: “We are committed to serving our buy-to-let mortgage customers. However, as a prudent lender, we have made some changes to criteria, including limiting maximum LTVs to 75% and temporarily suspending our activities in some areas, such as student lets, to ensure we focus on our core product offering.”

Meanwhile, The Mortgage Works isn’t offering HMO mortgages. A spokeswoman says: “We withdrew the HMO product range at the end of March due to physical valuation constraints during the lockdown. This proposition remains under review.”

Fewer lenders have HMO products compared with earlier in the year, says Daniel Lee, principal of Legacy Financial Consultants, who tells LandlordZONE that he’s not processing many applications for HMOs or student lets. Says Lee: “From a bank’s point of view, they’re not confident about the ability of some tenants in HMOs to pay their rent in the current climate – they will often be the first to become unemployed. The student rental market has also been the most affected in the private rented sector by Covid and there’s uncertainty about where students will be studying next term, while some haven’t paid their rent.”

Lee says his HMO portfolio landlords aren’t interested in expanding their portfolio at the moment and that if a client now approached him looking for student lets he would ask them to think it through. “When a market leader pulls out, if affects the pricing. The lowest rate I can find on a two-year re-mortgage fixed rate 60% loan-to-value is 3.05% for a corporate client,” he adds. “When big names like TMW and Paragon pull out you need to sit up and take notice.”

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Major works with ever rising costs

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Can anyone guide me to the right ‘body’ who can give leaseholders advice on ever rising costs of major works to our building. It went for tender with the lowest tender being chosen, it was not going well pre-lockdown and now they are back to work the contractor has ‘found’

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Rogue landlords hit with £10,000 fines for HMO breach

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Royal Greenwich clamps down on unlicensed landlords as it pauses efforts to add to schemes in the borough later this year

Four landlords in Royal Greenwich have each been fined £10,000 for letting out an unlicensed HMO.

The unlicensed properties include a two-bedroom HMO in Plumstead rented to four separate tenants, a five-bedroom HMO in Charlton rented to seven separate tenants, a three-bedroom HMO in Woolwich rented to three separate tenants, and a three-bedroom HMO in Charlton rented to three separate tenants; in each of these properties the tenants were sharing a kitchen and bathroom. 

The four landlords were prosecuted following complaints to the London borough, which has had an additional licensing scheme since 2017. It says it is working to actively identify unlicensed properties and will take enforcement action against rogue landlords; in March, it paused its consultation into a new selective licensing scheme – including Woolwich Common, Glyndon, Woolwich Riverside, Shooters Hill and Plumstead wards – until the social distancing measures have been lifted.

Councillor Jackie Smith, cabinet member for community safety and integrated enforcement, says that everyone in the borough deserves good quality accommodation. “Our licensing enforcement is instrumental in ensuring that landlords maintain high standards for their tenants,” she says. “Most of our landlords are following the rules, but for those that aren’t, we encourage you to come forward and license your property before you are caught and risk being fined up to £30,000.”

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Covid-19 Mini Budget: What this means for property investors

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Rishi Sunak delivers his mini budget (summer economic update)

The Chancellor announces SDLT stamp duty holiday for property purchases and its great news for property investors, UK property investment.

Watch this video below as I provide analysis on what this means for property investors.

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Appeal Court supports landlord’s rights of entry

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On 1 July 2020, the Court of Appeal handed down its decision in Rees v Earl of Plymouth [2020] regarding a farm tenancy and the landlord’s reserved right of entry.

The case is a significant decision supporting landlords’ rights of access and their freedom of action, particularly in the case of farm tenancies and access to tenanted land, but also for tenancies generally.

In this case the tenant farmed the holding under two tenancy agreements, one granted in 1965 and one in 1968, both now protected tenancies under Agricultural Holdings Act 1986.

The landlord had obtained outline planning permission for housing on the land comprising the farm, where the environmental conditions attached to the planning permission required the landlord to undertake various landscape, wildlife and habitat surveys on the farm.

These surveys included, amongst other things, digging trial pits and boreholes; placing surveyors’ reference pins on the land, and leaving ‘remote bat detectors’ on the land for several days at a time in order to study the bat population.

The case related to the extent of a landlord’s ability to rely upon tenancy reservations to enter onto and carry out works on the tenanted land and came to the Court of Appeal following a High Court case where the Judge had said that a restrictive approach to reserved rights of entry in a tenancy should be taken.

The High Court’s conclusions had been supported by previous cases including Possfund Custodial Trustee Ltd v Kwik-Fit Properties Ltd and Heronslea (Mill Hill) Ltd v Kwik-Fit Properties Ltd, which previously had supported the notion of restricting a landowner’s freedom of movement when relying upon a landlord’s broad-based reservations of rights in tenancy agreements.

This meant an approach which would prevent entirely any intrusive surveys or other works being carried out that might cause interference or damage to the land.

The successful appeal brought against this conclusion by the High Court is now based on a Court of Appeal judgement given by Lord Justice Lewison, and is considered important as he is a leading legal authority on property law issues.

This judgment sets a useful reference point for landlords, particularly agricultural landlords, who seek to rely upon broadly-worded rights of entry in leases. These rights clauses inserted in order to conduct necessary works and such other activities as environmental, landscape or habitat surveys, though such rights should not be construed as permitting substantial or serious interferences with the tenant’s quiet enjoyment.

Tenancy agreements should include specific provisions for a landlord’s right of entry to be exercisable in such cases. The Court of Appeal’s decision makes it difficult be too specific on exactly what is permitted, stating that everything is considered on a case-by-case basis and that one would expect “material” disturbance or damage to be expressly authorised by the terms of the lease.

What is “material” is open to debate, but a sensible interpretation of the landlord’s rights should be taken into account set against the purpose of entry, which should be reasonable and necessary.

Rees v Earl of Plymouth [2020]

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Implications of mortgage payment holidays, BBL & CBILS on future loan applications

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Jack Bertolone, Operations Director at Brooklands Commercial Finance, discusses with Kate Faulkner the impact of the pandemic on the UK housing market and the implication of mortgage payment holidays, BBL & CBILS on future loan applications.

Kate Faulkner is a UK property analyst and a regular commentator on BBC

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