Landlords to get three more months to complete purchases before stamp duty cut-off

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Speculation that the stamp duty holiday could be extended until the end of June has been hailed as good news for landlords, although there are fears it could create another cliff edge when it’s finally lifted.

Chancellor Rishi Sunak is reportedly set to extend it by three months, in line with the easing of lockdown restrictions, amid concerns that it would otherwise create a cliff-edge, jeopardising hundreds of thousands of sales.

The Office for Budget Responsibility has forecast that there will be a significant slowing of the housing market if the holiday comes to an end on 31^st March and that house prices could drop by more than 8% this year.

However, Mark Hayward (pictured), chief policy advisor at Propertymark, says although he welcomes the news, extending the holiday will create another cliff edge.

He adds: “We know from our own research that the majority of estate agents expect to see an increase in the number of failed sales if the stamp duty holiday ends at a cliff edge so we need government to consider a tapered end to the holiday so that buyers aren’t forced to pull out at the last minute and the property market can continue to thrive.”

Questions also remain over whether the rumoured extension will apply to new buyers or only those caught in the transaction pipeline.

Earlier this month, a LandlordZONE poll revealed that nearly two-thirds of landlords want Chancellor Rishi Sunak to extend or modify the current stamp duty holiday.

It currently doesn’t include the 3% ‘second home’ tax still levied on anyone buying a property that isn’t their main residence, which is still payable. The National Residential Landlords Association is calling on him to remove this, or risk a supply crisis in the rental market.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords to get three more months to complete purchases before stamp duty cut-off | LandlordZONE.

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32% of PRS stock built before 1919

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The NRLA says the tax system is in urgent need of reform to support energy improvements to rented housing.

It comes as MPs on the Environmental Audit Committee last week concluded that the delivery of the Government’s flagship Green Homes Grant scheme has been “poor”.

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EXCLUSIVE: Portsmouth landlords slam university request to drop student rents

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Student landlords in Portsmouth are exasperated by its city university’s suggestion that they should introduce blanket rent reductions.

Vice-chancellor Graham Galbraith recently wrote to them suggesting they provide “fair rent relief” across the board during the coronavirus pandemic.

The letter said the college recognised the unfairness of being charged for unused accommodation so had offered an 80% reduction in rent costs to students in its own accommodation.

It suggested: “Supporting young people during these difficult times is important both for reasons of fairness and in recognition of the fact that students are the basis of your business and your long-term customers.”

When Portsmouth & District Private Landlords Association (PDPLA) pointed out that universities were still charging tuition fees and had also been offered bail-out loans by the government, while landlords had received no help, the university retaliated by explaining that it was a landlord too and had accepted the loss of income on its halls of residence.

Chairman Martin Silman tells LandlordZONE that reductions should be decided on a case by case basis and adds that many have stayed in their student homes rather than go back to their parents.

He says: “We encourage our members to look at each case individually and seek to come to a fair result for all in each case.

“I have student tenants on 50% rent, I have a couple whose contracts I cancelled as there is no chance that they will return this year, yet most of my student tenants are paying their full rent and living happily in my properties the same as any other year.”

University students on practical courses can return to university campuses for in-person teaching from 8^th March. A review is due by the end of the Easter holidays on whether all remaining university students can return to campus.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Portsmouth landlords slam university request to drop student rents | LandlordZONE.

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Mistakes young Buy-to-Let Landlords Should Avoid Making

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Becoming a buy-to-let landlord was traditionally the preserve of the post war baby boom generation as a way of providing a nice income stream for retirement. Having seen huge price appreciation throughout their lifetimes, this generation could really put their trust in property.

Many of these landlords of late have used cash drawn down from traditional pensions to invest in rental property, and the more savvy ones have used a limited company as they built their portfolios to try to avoid paying some of the tax grab introduced over the last few years.

However, studies have shown that the tax changes which have been particularly hard on high earners have resulted in a sell-off by some older investors, while a younger generation still see the benefits and are jumping on the band wagon. The average age of buy-to-let investors has actually come down, according to an analysis of the demographics of first time investors, by an average of 10 years since 2014.

Healthy tenant demand, record house prices and low interest rates are factors which are now making buy-to-let an attractive proposition to the younger investor. A generational shift could be underway as more young people realise that rental property ownership and the income you get from it can still be a relatively tax efficient way to provide income, if it’s done correctly.

But as the world famous investor explains about investing generally: it’s simple, but not necessarily easy. There’s lots to learn and it can be a steep learning curve, and that’s the case whether you use an agent or do-it-yourself.

Having the right knowledge and putting the right plan in place is important. Here, the Private and Commercial Bank, Arbuthnot Latham has provided some tips, and as they say, “some simple steps to help landlords save time, stress, and ultimately money, in the months and years ahead. The best approach is to work through a check list of considerations, things not to forget to undertake before investing.”

Minding your own business

Whether you are doing it for the first time or you are a portfolio landlord, it is important you keep on top of your record keeping.

Good record keeping not only helps you keep track of income and outgoings, but it is also important for staying on top of administrative tasks, like when insurance renewals are due. It can also be a lifesaver if you are unfortunate enough to face a tenant dispute.

Planning for periods with no rent

It is fair to say you will experience periods when your property is vacant; generally this is after one tenancy has ended and you are advertising the property for new tenants. If you manage it well, you may have a new tenant lined up to move in soon after the previous tenant leaves, but you cannot assume this will happen. On average, a house will be vacant for up to 4 weeks a year.

You need to allow for this either by holding a contingency sum in your bank account or by retaining the surplus rent, after mortgage and other costs, in the account to cover you when no rent is coming in. As a minimum, it is worth holding the equivalent of three month’s rent to help you through these periods.

Thinking ahead, allowing for unforeseen costs

You need to think about the costs associated with a rental property. Not just the mortgage, but insurance, maintenance and the costs involved with keeping up-to-date with legislation; such as current energy efficiency requirements and gas safety certification.

Have your contingency fund available to cover this, and as with vacant periods, think about keeping it topped up by retaining surplus rent in your bank account.

Dealing with the tenant deposit correctly

If you do not deal with the tenant deposit correctly you open yourself up to being fined. Legislation is quite strict around this area, so it is important you are familiar with procedures and the paperwork you need to provide to your tenant.

Make sure you have thoroughly checked the property before handing it over to your new tenant. Draw up a detailed inventory (take photographs) of the property and any contents included in the rental agreement. Provide a copy to your tenant before they move in.

Carrying out regular inspections of the property

By undertaking a regular inspection, you have the opportunity to check the property to ensure it is being looked after, but this can also give you the opportunity to catch up with your tenant.

Not only does this allow them to draw any issues to your attention, so you can deal with them before they become a major problem, but also gives you the chance to check on them, find out about their work situation and any plans for the future. You may come away with a view that they are planning to stay longer term or may be struggling financially.

Allowing for buy to let tax changes

You should be aware of tax changes brought in over the last few years and how this may impact your income or ability to raise the level of mortgage you are seeking.

Taking advice from a specialist tax accountant before you commit to buying a property is crucial. Not only will this help you understand your allowances and liabilities but may also help you decide how you buy the property (in personal names or a limited company vehicle) and any potential implications on your other income.

Low Rental Yields

Rental yield is a percentage figure calculated by taking the annual rental income and dividing this by the amount you have invested in a property. It is worth doing your homework to get an idea of the level of yield you can expect to achieve on the property type and area you are looking to invest in.

For instance, two smaller properties (e.g. two or three-bed terraced houses) may provide a better yield than if you invest the same amount in one larger four + bed house. This will also drive the amount of borrowing that you can have on the property as this is assessed on the income the asset produces rather than a loan-to-value (LTV) request.

Choosing the right location

Location, location, location – it’s a fact that you need to think about the location when purchasing a property to rent. Get to know the area and its reputation. Think about your future tenant and if the property is right for renting in that area.

If you choose an area with a poor reputation or poor transport links, you may struggle to achieve the rent you are aiming for.

Another consideration: Is the property type right for the location? For instance, an HMO (House of Multiple Occupancy) in an area with little need for this type of property is less likely to provide you with a good return on your investment than if it were in close proximity to a university.

Meeting the tenants or vetting them properly

You have invested a large sum of money in your property and are about to entrust it to a stranger. If you are using an agent, do your research. Are they reputable? Yes, you want to make sure your relationship with them is good, but do they treat tenants properly as well? If the tenants are happy, they’re likely to take better care of your property. Similarly, it is good practice to make sure potential tenants are vetted properly, ideally you should meet them yourself before you commit to the tenancy.

It is worth finding out a little about them and their reasons for the move. Also, if you can begin to build a relationship with them it will help for the future.

Choosing the right insurance cover

Insurers look at a buy-to-let property differently to owner-occupied homes. You will need specialist landlord cover, as standard household insurance is unlikely to cover your rental property.

Insurance cover not only considers the building (and contents if you are letting a furnished property) but other risks such as periods when it will be vacant or if serious damage is caused by your tenant. Having the right cover in place now, could save you from substantial cost in the future.

Arbuthnot Latham & Co was established in 1833, a London-based private banking, commercial banking and wealth management arm of the Arbuthnot Banking Group PLC, with regional offices in Manchester, Bristol and Exeter and an international branch in Dubai.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Mistakes young Buy-to-Let Landlords Should Avoid Making | LandlordZONE.

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Cladding and owners liquidation?

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A very nice apartment block in one of Surrey’s towns is owned by O&H Ltd. They have applied for administration in June 2020, but not much has been passed onto flat’s leaseholders. However, it looks that the things are going to move.

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Selling BTL – Notice period required during Covid?

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Due to section 24 and being a higher rate taxpayer I am looking to sell one of my BTL houses in Oxfordshire and require some advice regarding the minimum notice period required for the tenants to vacate.

The 1 year AST tenancy ends on April 1st 2021 and then goes onto a periodic tenancy with 2 months notice required.

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Covid diaries: ‘How an abusive tenant (and the evictions ban) cost me £14,000’

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Oxfordshire landlord Max Carter has been in touch with LandlordZONE to highlight how the government’s Covid evictions ban has helped turn one of his properties into a financial liability.

The former Royal Marine says he has spent a year battling one of his tenants, who is now 12 months and £14,000 in rent arrears and who has been a ‘difficult character’ to deal with and more than occasion, abusive.

Carter, who has a number of rental properties, says the tenant initially moved into a house he owns but then transferred to another larger property which had become vacant within his portfolio.

“It all started off very nicely,” says Carter. “In return for a lower rent he did a little bit of repair work for us on other properties but some of our tenants then began complaining about inappropriate messages he had sent them.

“He then moved to my grandmother’s former home which is a beautiful property in rural Oxfordshire (pictured) near to Chinnor, but we soon discovered that it had been damaged.

“This included tonnes of concrete poured on the front garden, walls blocked up and doors that had been damaged by his dogs.”

The tenant then stopped paying the rent and Carter invited him to move out but when this didn’t happen, he then started the possessions process to evict him and is now waiting for a court date.

Evictions regulations

“It’s been complicated by the changes to the evictions regulations which have made the process much longer and in the meantime we’re losing money,” says Carter.

“We’ve stuck to the letter of the law but he’s been extremely rude and been taunting us and saying he will declare himself bankrupt to avoid paying the arrears.”

Carter secured a court date for 29^th December last year but this has been delayed due to Covid and he still waiting for a new date. He says the tenant has also made derogatory remarks to the local council about him when talking to its housing team about being re-housed, including threats of violence.

“I have been very tempted to his suggestion to move out as long as I drop all claims to rent arrears but I realised all I’m doing is creating the same nightmare for the landlord of the next house he rents,” says Carter. “But I don’t feel that’s the moral thing to do.

“Landlords work hard to create homes they can rent out and use as a pension pot when they retire but then tenants like this come along, take liberties, are difficult and turn the properties into financial nightmares, and at the moment the law protects them.”

LandlordZONE has tried to contact the tenant for comment but so far without success.

Vote on this – take our landlord Twitter poll on the government’s approach to evictions during Covid.

Read more about rent-dodging tenants.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Covid diaries: ‘How an abusive tenant (and the evictions ban) cost me £14,000’ | LandlordZONE.

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LATEST: Rental market set for ‘huge rush’ to move once lockdown eases, says portal

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More than a third of tenants plan to move home once lockdown restrictions have eased, according to new research, as supressed demand floods into the market.

Online booking platform Spotahome reports that 38% of tenants are waiting for the pandemic to subside before handing in their notice, despite the market remaining open.

A further 21% haven’t moved because of shielding, quarantine or being unable to travel to their chosen location, while 16% say they can’t afford to rent their current property as they’re on furlough or have lost their job and so might have no choice but to move.

The survey of 1,322 tenants asked them about their feelings towards the current rental market while lockdown restrictions remain in place and found that 77% feel safe renting, although Covid continues to be a concern for 23%.

Affordability worries

Other worries are affordability, with 29% of tenants reporting that getting by on their remaining income once the rent has been paid is their biggest concern.

Meanwhile, 20% said the state of their property was a concern as their letting agent or landlord had failed to rectify problems.

A lack of outdoor space (17%) or the size of their rental home (15%) were also worries, while a fear of eviction due to rental arrears and inadequate wi-fi were both cited by 5% of renters.

Head of data and analytics, Jorge Alonso (pictured), says: “The good news is that for the large part, tenants feel safe and while finances are a concern, they aren’t the driving issues for the vast majority.

“Uncertainty, space and quality of living conditions are far more important and this is a trend that is likely to remain as we’re eased back to normality.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Rental market set for ‘huge rush’ to move once lockdown eases, says portal | LandlordZONE.

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Property tax relief restrictions on personal remortgage?

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Hello Everyone, Can anyone clarify the following.

Is tax relief on mortgage interest for personal remortgage funds available if :
1. Funds are withdrawn for personal use and not reinvested?
2. Remortgage funds are reinvested, but exceed the purchase price of the properties?

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Tenants in breach and need to vacate for full rewire?

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I wonder if somebody could give me some advice? I have a property which is let to an Eastern European couple. My electrician has been round to do his electrical report. He has advised me that the property requires a full rewire but as “there appear to be up to 10 people living in the property”

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