Experts fear office values could follow retail into decline

admin    Uncategorized     agents

Experts think that history may repeat itself, just as when valuers were caught out in recent years for valuing retail stores and shopping centres too optimistically.

The warning signs were there early on, but these were often ignored by valuers until an increasing number of empty shops resulted in dramatic reductions in property values. Covid merely accelerated that, with shop closures in lockdown and a rapid shift to online orders.

The same fate could befall offices especially as when large scale occupiers such as HSBC, Barclays, Deloitte, JP Morgan, Stan­dard Life Aberdeen and Fidelity have have all indicated there could be a major shift in their modus operandi, a move to much more home-working.

As vacancies start to rise, when leases run their terms, rents will fall dramatically, as will property values. According to The Times newspaper, available London office space has recently increased to almost 20 million sq ft, from the 10-year aver­age of 14 million sq ft, as many businesses are now seeking to sublet space they no longer require.

Investors in large office blocks, insurance companies and property funds in the main, rely on annual valuations given by the main property agents and consultants including: Colliers International, CBRE, Knight Frank and Cushman & Wakefield. Can investors in these funds still rely on valuations when these professional valuers have marked underlying property assets down a mere 0.2% to 0.3% per month?

The profes­sional accounting body, The Institute of Chartered Account­ants in England and Wales, has expressed concern about a lack of objective evidence for property valuations in investment company accounts.

The Institute has said:

“We sometimes find there is very little evidence to support valuations, and where there is a formal valua­tion by a specialist valuer, little or no evidence of evaluating their compe­tence and objectivity, the relevance and reasonableness of assumptions, or completeness and accuracy of source data.”

According to its website CBRE values around two-thirds of Britain’s top UK real estate investment trusts and is a valuer to three major office landlords reporting results last week. Great Portland Estates, Land Securities and the Workspace Group showed only modest changes in their portfolio valuations with falls of 2.4%, 1.9% and 4.9% respectively.

Nick Knight, head of UK valuation at CBRE, has said:

“Has the effect of Covid brought an internet moment to the office sector that is comparable to retail? I think it’s quite early to make that call. We know that companies are moving to hot-desking, a lot of organi­sations are looking to reduce their foot­print, availability has risen and that’s impacting on forecasts and rental values in the valuation world.”

“There is a view emerg­ing that the longer people have been in lockdown, the more they’ve realised what the office gives that they are not having at home.” Mr Knight says that CBRE be­lieves there will continue to be strong demand for offices with good amenities and “wellbeing characteristics that help companies to attract talent.”

­

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Experts fear office values could follow retail into decline | LandlordZONE.

View Full Article: Experts fear office values could follow retail into decline

Build-to-rent VS buy-to-let battle of the suburbs begins

admin    Uncategorized     agents

Landlords are getting some competition in the suburbs where developers have started to build rafts of new family rental homes.

Legal & General is the latest house-builder to set its sights on the growing ‘suburban build to rent’ sector, with an ambitious plan to create 1,000 family homes each year from 2024.

Savills reports that of the 66 completed suburban build to rent schemes in the UK, all are located on the edge of major employment hubs, while most have schools, shops, medical centres, access to major roads and bus stops within a 1km radius.

Amenities in the schemes are more geared to families, with common features including playgrounds, electric car clubs, a community centre and exercise facilities.

Entirely urban

It adds that while there are 2.3 million households in the private rented sector, until recently new developments had been skewed almost entirely to urban, high-density markets.

Legal & General has recognised the untapped potential in a market forecast to grow in excess of £200 billion, and aims to meet increasing demand for single family homes with its schemes.

It promises they’ll be: “community-focused and service-led, offering residents choice, security of tenure and flexibility”. Developments will consist of a mixture of houses and low-density apartments, while ticking all the boxes for post-COVID requirements, with home offices and more extensive outdoor space.

David Reid, MD of Legal & General suburban build to rent, says it will provide high quality rental housing options for the growing number of families across the UK.

Our size and commitment to the housing market across tenures, means we’re in a strong position to lead the way in this nascent sector, delivering well-managed, service-led communities which provide a reliable and positive alternative to home ownership,” he says.

Read more about build to rent.
What does build to rent mean for private landlords?

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Build-to-rent VS buy-to-let battle of the suburbs begins | LandlordZONE.

View Full Article: Build-to-rent VS buy-to-let battle of the suburbs begins

LATEST: CGT can be reformed to help BOTH landlords and HMRC, say accountants

admin    Uncategorized     agents

Permanently reducing the Capital Gains Tax (CGT) rate for investment property and raising the general rate would keep both landlords and the taxman happy, according to a leading accountancy body.

The Association of Accounting Technicians (AAT) suggests effectively splitting the difference by only having two rates instead of the current four, so charging 14% for the basic rate and 24% for the higher rate, irrespective of what the asset is.

There are currently four different rates: 10% for basic rate taxpayers and 20% for higher rate taxpayers and two separate rates for residential property with 18% for basic rate taxpayers and 28% for higher rate taxpayers.

It follows warnings from property experts that the Government tax advisor’s idea to raise CGT rates up to the levels of income tax – currently 28% on residential property and 20% on other assets – so that higher rate taxpayers face a flat rate of 40 or 45%, could cause a mass exodus of landlords.

Phil Hall (pictured), head of public affairs & public policy, tells LandlordZONE: “This would be a simplification (two rates instead of four) and being lower for residential property investors than it is at present would also help to encourage more house sales.

The 4% increase for other assets would generate additional income for the revenue but would still be much lower than the big increases, to bring into line with income tax rates, that others have suggested.”

Landlord Pete Coleman who’s based in Scarborough, reckons it could be a good workable solution.

He tells LandlordZONE: “I’m a retired accountant and wish to be a retired landlord but still have two properties, both in Whitby, that I’ve had since the 1970s and won’t be selling while CGT is so high – and I’m worried it could go even higher.” 

Read more about the CGT proposals.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: CGT can be reformed to help BOTH landlords and HMRC, say accountants | LandlordZONE.

View Full Article: LATEST: CGT can be reformed to help BOTH landlords and HMRC, say accountants

COVID stories: My £35k battle to evict rent arrears tenant from apartment

admin    Uncategorized     agents

A desperate landlord stuck in an Airbnb for months while her tenant refuses to pay rent or move out has featured in a BBC investigation into the current and and harsh evictions regulations and their effect on landlords.

Lilyana Markova, who works in a cosmetic clinic and bought her property as a buy-to-let investment, tells LandlordZONE she now has losses totalling £35,000 in back rent, court fees and legal costs, and despairs of ever getting the flat back.

Despite finally securing a Section 21 order against her tenant, with help from Landlord Action – after years of part or non-payment – the court hearing was suspended on 5^th April and she’s now waiting for another date.

Lilyana’s problems were made worse when she was evicted from her central London rented flat in September as the landlord needed it back for a family member.

Tough times

She’s now struggling to pay her own bills, and while friends have been helping out, she isn’t sure how much longer it can go on.

“It’s been so tough for me,” Lilyana tells LandlordZONE. “This woman doesn’t respect me and owes me so much money yet I can’t do anything. It’s really frustrating.”

Lilyana rented out her two-bedroom flat to the woman and her three children near London city airport, using letting agent Re/Max in September 2017.

Rent payments were erratic or non-existent from the start but when she tried unsuccessfully to serve a Section 21 notice in 2018, the tenant countered with a compensation demand for problems caused by damp.

Lilyana paid up in the hope that she would leave the property but when she didn’t, Landlord Action stepped in late last year and kicked off the eviction process.

Her story was featured on BBC London News last night as part of an investigation into rent arrears and evictions broadcast just hours after the government revealed it latest evictions regulations.

She and Landlord Action founder Paul Shamplina (pictured) are both featured in the film. “Despite all this, Newham Council have just asked me why I don’t want her as a tenant anymore. It’s so unfair – I don’t understand how this can happen.”

Watch the BBC London news episode.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – COVID stories: My £35k battle to evict rent arrears tenant from apartment | LandlordZONE.

View Full Article: COVID stories: My £35k battle to evict rent arrears tenant from apartment

Excellent tenant wants a 20% rent reduction?

admin    Uncategorized     agents

I have an excellent tenant who pays £1500 every month. With 2 months left on the contract, I asked for his intention on renewal. He said he would renew, but only at £1200 per month.

I said I would do some research and let him know.

The post Excellent tenant wants a 20% rent reduction? appeared first on Property118.

View Full Article: Excellent tenant wants a 20% rent reduction?

BREAKING: Home Office warned of impending failure of Right to Rent checks system

admin    Uncategorized     agents

Letting agents have written to the Home Office this morning to warn that its controversial Right to Rent scheme is likely to face ‘widespread failure in compliance’ once the Covid pandemic ends.

ARLA Propertymark, which represents some 8,000 estate agents around the UK, has taken issue with the government’s temporary ‘adjusted checks’ system for Right to Rent during Covid.

This has enabled agents and landlords to complete checks without having to meet tenants in person.

But this temporary measure is now eight months old and therefore ARLA says hundreds of thousands of tenancies have been secured using this system.

But the government’s Covid regulations stipulate that once the pandemic is over, these tenants will have to be re-checked for their Right to Rent within eights weeks.

“Recent sampling of our members has shown that almost all Right to Rent checks in that period have been carried out using the adjusted check method, in order to comply with public health guidance,” the letter days.

“Given the volume of checks that will now have built up, the majority of letting agents and landlords will undoubtedly fail to comply with the requirement to deliver retrospective checks.”

Digital storage

ARLA says tenants are unlikely to appreciate being checked twice and are less likely to co-operate second time around, and that the need to check twice will cause a huge bureaucratic and digital storage problem for landlords and agents.

This, the organisations claims, will be on top of the huge expansion of the Right to Rent scheme which from next month onwards will include EU citizens who have not yet applied for Settled Status.

“In this context, and with the time that has now lapsed since the introduction of adjusted checks, it is essential that the Home Office moves to accept adjusted Right to Rent checks on tenancies that started during the period under which the public health crisis requires minimal face to face dealings,” says Timothy Douglas, Policy & Campaigns Manager at Propertymark (pictured).

“I ask that you consider the benefits to tenants, landlords and letting agents of removing the need for retrospective, duplicate checks in order to ensure that landlords and letting agents can meet their legal requirements and support moves to the new points based immigration system through the first half of 2021.”

Read more news about the Right to Rent checks.
More advice on Right to Rent compliance.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Home Office warned of impending failure of Right to Rent checks system | LandlordZONE.

View Full Article: BREAKING: Home Office warned of impending failure of Right to Rent checks system

Social Housing reforms to speed up complaints procedure for residents

admin    Uncategorized     agents

Major reforms to support housing tenants in England and ensure social landlords raise standards where needed have been announced by the Housing Secretary Robert Jenrick.

The social housing white paper ‘The Charter for Social Housing Residents’, sets out reforms that will speed up the complaints procedure for residents by improving access to the Housing Ombudsman

The post Social Housing reforms to speed up complaints procedure for residents appeared first on Property118.

View Full Article: Social Housing reforms to speed up complaints procedure for residents

Substantial rent arrears cases are now exempt from eviction ban

admin    Uncategorized     agents

From today (17 November 2020), possession cases with severe rent arrears will be exempt from the ban on evictions, meaning bailiffs and High Court Enforcement Officers can move to enforce warrants and complete evictions. However, this will only apply to cases where the equivalent of nine months’ rent arrears had accrued prior to the 23rd March 2020

The post Substantial rent arrears cases are now exempt from eviction ban appeared first on Property118.

View Full Article: Substantial rent arrears cases are now exempt from eviction ban