LATEST: Landlords to share in new £562m green fund to upgrade properties

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Landlords are set to benefit from a new fund that plans to upgrade 50,000 homes with green improvements.

The government has kicked off its £562 million funding programme to provide the UK’s least energy efficient and fuel-poor homes with cavity wall and loft insulation, heat pumps and solar panels in a bid to help them save up to £450 a year on their energy bills.

It’s part of an ambition to eradicate fuel poverty, manage energy bills and reduce carbon emissions from domestic buildings.

More than 200 local authorities across England and Scotland are sharing the cash.

Councils that have applied for and won funding so far include Aberdeen, which has £2.2 million to retrofit 100 homes, creating a decarbonised neighbourhood, with tougher wall insulation, new air-source heat pumps and solar panels, and Leeds, which has almost £10 million to retrofit up to 600 homes across the city-region.

The £500 million Local Authority Delivery Fund, part of the Green Homes Grant, makes up most of the funding and aims to help households with an income of under £30,000.

It will work with local authorities to ensure the money is targeted at those who need it most, including those living in private rented accommodation.

Referral routes

The Department for Business, Energy and Industrial Strategy tells LandlordZONE that councils will be able to identify deserving households through a variety of referral routes including the health and charity sectors or by criteria such as receipt of means tested benefits and council tax exemptions.

A spokeswoman says: “Interested landlords should contact their local authority to see if they are taking part in the Local Authority Delivery scheme.”

UK Business and Energy Secretary, Kwasi Kwarteng (pictured), adds: “This is yet another important step we are taking to eliminate our contribution to climate change and build back greener from the pandemic.”

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HM Treasury ‘Tax Consultation Day’ – Nothing on CGT or Stamp

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HM Treasury has published more than 30 tax updates, consultations and documents to, as they declare, ‘strengthen policymaking and modernise the UK tax system’. Click here to read the Command Paper

Of potential note for Landlords:

In England

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Phew! HMRC omits CGT from tax reforms but there’s a sting in the tail for holiday lets

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Today’s much feared HMRC tax updates have turned out to be good news for landlords, with none of the expected Capital Gains Tax (CGT) increases announced.

Instead, the changes are largely technical and will trouble landlords’ accountants more than their bank accounts.

But one update within the huge document published does concern second home owners and landlords with holiday lets in their portfolios.

Ministers want to clarify the tax position for second homes which, if they are for personal use attract council tax, but if ‘made available’ to rent on Airbnb or Cottages.com for example, pay business rates. These are usually lower because business rates are discounted for properties with a rateable value under £12,000, which most holiday lets are.

The owners of second homes that are not genuine businesses can reduce their tax liability by declaring that a property is ‘available for let’, but making little or no effort to actually let it out.

“It has been suggested, for example, that a property-owner may restrict the periods during which bookings can be accepted, ask for unrealistic rents or fail actively to market the property at all,” claims HMRC.

It says it is now going to legislate on the matter following a previous consultation.

Business rates

Soon, owners of second homes or holiday lets will have to rent their properties out for at least 70 days a year in order to pay the cheaper business rates tax, rather than just making the property ‘available to rent’. This would then mirror the current position in Wales, and Scotland too following its recent proposals which are of a similar nature.

“This will ensure that owners of properties cannot reduce their tax liability by declaring that a property is available for let while making little or no effort to do so,” says HMRC.

“Further details of the change and implementation will be included in the Ministry for Housing, Communities and Local Government’s (MHCLG) response to the consultation on the business rates treatment of self-catering accommodation which will be published shortly.”

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Inner London asking rents in meltdown, warn leading indices

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London has seen a dramatic fall in rents since the first UK national lockdown, with more people now searching for homes in Cornwall than the capital.

Knight Frank research reveals that as London has lost its lustre, rents collapsed during the past 12 months, hit by over-supply from short-let apartments re-joining the traditional lettings market, along with a lack of international students and corporate tenants.

Rental values in prime central London fell by 14% in the year to February, the steepest fall since September 2009, says the agent, while Hamptons Monthly Lettings Index for February found average rents in inner London fell 17.7% year-on-year, the largest drop recorded since the onset of the pandemic.

Grappling

City landlords are grappling with large-scale rent falls, agrees Zoopla, with areas such as the City and east London worst hit – even rents in the formerly trendy and popular Shoreditch are down by 30% year-on-year.

Tom Bill (pictured, below), head of UK residential research at Knight Frank, says: “It will take a year or more for some balance to be restored and rental values to recover to where they were before the pandemic.”

Rightmove reports that many renters are trading up for space which means the enduring appeal of London has waned as priorities changed.

Director of property data, Tim Bannister, explains: “The huge population of London means that traditionally it’s the most searched for location on Rightmove, but the appeal of the coast and the countryside over the past year has seen Cornwall crowned the new capital this year.”

However, lower London rents are now attracting greater numbers of renters from outside the capital who are opting for city-centre living post-pandemic says Knight Frank; tenants moving to prime central London came from an average of three miles away in the second half of 2020, up from 1.5 miles in the second half of 2019. 

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LATEST: Help solve shortfall in rented homes with disabled facilities, landlords told

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The National Residential Landlords Association (NRLA) has called for greater cooperation between landlords and local authorities to resolve the urgent need for more adapted private rented accommodation. 

It wants councils to give landlords more information about disabled facilities grants and says while 14.8% of people with disabilities live in the private rented sector, only 8% of these grants go to private renters.

NRLA research found 79% of landlords had no knowledge of the grants but that after finding out more, 68% were more willing to adapt their properties.  

The NRLA believes local government should take the lead on the increasingly important issue by taking practical action now, before the UK’s adaptation challenges become even more acute. 

According to Social Market Foundation research, the number of private rented sector households headed by someone aged 65+ is set to double by 2046. 

Tenancy options

The NRLA’s new report – Adapting the Private Rented Sector – explains that it would be in everyone’s interest for responsible tenants to have longer tenancies and for landlords to outline their willingness to provide a variety of tenancy options.

“It is our experience that landlords would be keen to facilitate such tenants, which would be to the benefit of disabled, older and vulnerable tenants looking for stability in the PRS.”

Meera Chindooroy, NRLA deputy director, campaigns, public affairs & policy, says there has been a lack of engagement with landlords on the issue. She adds: “The acute problems facing those with accessibility needs requires urgent attention and it is imperative that steps are taken now to ensure that a challenge doesn’t become a crisis for the sector.” 

The NRLA has now launched its new guidance to support landlords in better managing tenant requests for home adaptations.

This explains: “A common concern and misunderstanding is that adaptations look institutional and medical, affecting how desirable the property is for renters. In fact, adaptations can be carried out in an ‘inclusive’, attractive, contemporary way and can be a positive feature, including increasing the potential marketability.”

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TOM’S VIEW: Covid has changed where people want to live and work

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As the work from home or office debate continues, many bosses are scratching their heads, wondering how they will entice workers back to their offices, and the outcome will have knock on effects for both commercial and residential landlords.

Commercial landlords are still pondering on how the pandemic and its after effects will affect the demand for commercial space. We’ve already seen its dramatic affect on retail space, with home deliveries driving many retailers on-line, some giving up on their high street presence entirely.

For residential landlords, there will almost certainly be change: change in demand patterns both in the type of properties required and the changes in demand across locations.

Although some business leaders with large offices and thousands of office-based employees have come out stating they will revert back to normal working, Goldman Sachs is one example, it would seem that by far the majority have accepted that work patterns will never be the same again.

Many of these are already working on their spaces, preparing them for a return to the office that will be much different from before. For example, in many offices the big desk will be gone forever, with break-out spaces, conference and meeting spaces, training facilities and even sleeping pods becoming the new norm for the office.

Tom Roberts of L&G Investment Management says that people might not need such big desks, but require more spaces to be able to breakout and collaborate.

Pandemic acceleration

“For me the concept that you go to work to get your head down, is something that will change quite significantly in the coming years, and again be accelerated by the pandemic,” he adds.

“When you need to talk to people and have meetings, that’s when you need to be in the office for that interaction where you can share ideas. So I think there will be a flexible approach going forward and many employees will adopt it.

“If you are facing one of those days to write and various sets of numbers to go through, the reality, in my opinion, is that you are better doing that at home, providing you have the space and the environment to do so, where you can get your head down and concentrate without distraction.”

Of course, this style of working will not suite everyone or every type of occupation, but there’s a significant number that will be in this category, and that last point Mr Roberts makes has big implications for residential landlords in the future.

Providing suitable space becomes an issue. Working on the kitchen table or in a bedroom is no longer an option for long-term comfortable living. Separate and peaceful workspaces, free from family background sounds, whether this is a completely separate study/office in the property or a garage / garden shed office, will become major attractions for many renters.

The changes will also have implications for where rental properties are located. If people are in the offices for just two or three days per week, then longer commutes become acceptable. 

City exodus

Overnight stays in the cities, where workers are commuting long distances, will have implications for transport authorities, hotel operators, and Airbnb style short-let landlords.  At the same time, the exodus from the cities to the suburbs, and even the rural countryside, will affect the demand patterns for rental property.

Commuter belts around our major cities could easily double in size as workers adapt to longer commutes and long-term hybrid working, allowing millions to dramatically change their lifestyles from city living to everyone’s dream of the rural idyll.

Commuting to a big city just two or three days a week will make it feasible to live on the coast, near the lakes, near other national parks, without adding overmuch to the hours already spent on the roads in a car or on the public transport commute.

Landlords need to think very carefully about how these likely trends will pan out in reality when considering new investments, or adapting their current properties to home-friendly working.

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