Tourist areas seeing ‘investor bidding wars’ for staycation properties

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Demand for buy-to-let and holiday let or staycation properties has risen to unprecedented levels as investors pile in.

One Lake District estate agent, Nick Elgey, of Hackney and Leigh says that they are seeing “competitive bidding wars” which are bringing soaring house prices particularly around areas like Keswick in the North Lakes.

“I have specialised in estate agency throughout Cumbria for more than 30 years but I have never seen such intense levels of activity,” he has said.

Mr Elgey puts the sudden rush in demand and the resulting increase in house prices down the uncertainty caused by the COVID-19 pandemic.

Houses that are suitable for letting it seems are “flying of the shelves” with sales being agreed very quickly when they come on to the market. 

The unfortunate result is that locals are being priced out of the housing market at a faster rate than ever. Lake district property prices have been increasing at a faster rate than the average UK price for years, but this is now an unprecedented boom.

“Once we advertise a desirable Lake District house, we normally receive enquiries from all over the UK”, says Mr Elgey.

Safe haven

The Lake District is seen as a safe haven for property investment especially in times when travel abroad is restricted and likely to be so for some time – the staycation boom is increasing demand for all holiday let properties, but when they located are in an area of outstanding natural beauty, and a national park, to boot, the attraction is even greater.

In addition to the attraction of having the property for occasional personal use as a regular holiday destination for the family, the trend to more home working and increased commuter distances, some are considering these properties as a main residence

Holiday lets

“They are seeking Lake District houses for recreational use as a second home or to earn rental income from holiday letting, especially following the staycation boom due to the pandemic and the record low bank base rate which is stagnating cash investments,” Mr Earley told local media.

Demand has always been high in the South Lakes, which are seen as ‘honeypot’ locations for holidays, but this is a new trend now evident in the North Lakes, with places like Keswick, Threlkeld, Braithwaite, and Pooley Bridge, near Penrith coming under the investors’ spotlight.

Victorian properties in Keswick are now selling for over £400,000 whereas only 18 months ago they would have gone for around £300,000. Rightmove’s statistics show that sales within a five-mile radius of Keswick rose by 25 per cent in 2020 over those recorded in 2018.

Read more stories about holiday lets.

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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

admin    Uncategorized     agents

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.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Help solve shortfall in rented homes with disabled facilities, landlords told | LandlordZONE.

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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.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – TOM’S VIEW: Covid has changed where people want to live and work | LandlordZONE.

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Landlords, lettings and deposits – expert advice from Hamilton Fraser Podcast – Landlords, agents and tenants survey the sector (2021)

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Eddie Hooker, CEO of Hamilton Fraser, Paul Shamplina, Founder of Landlord Action. Special guests Matt Hooker and Nick Hamatsos, Co-founders of deposit replacement membership scheme, Ome

Hamilton Fraser’s Property Podcast, ‘Landlords, lettings and deposits’ returns for the first episode of the year. Each episode offers landlords expert property advice on key industry topics across the private rented sector.

A year on from their first appearance on the podcast, Eddie Hooker, CEO of award winning Hamilton Fraser Total Landlord Insurance and Paul Shamplina, Founder of Landlord Action and Brand Ambassador at Hamilton Fraser, are joined by Matt Hooker and Nick Hamatsos, Co-founders of deposit replacement membership scheme, Ome. They explain the trials and tribulations of launching a new product during a global pandemic, and how landlords, agents and tenants are responding to a new deposit model in the market.

Matt and Nick also discuss the incredible insights gained from over 14,200 landlords, agents and tenants throughout the UK in the recently released co-branded private rented sector sentiment survey between Ome and traditional deposit protection scheme, mydeposits. Investigating topics such as self-management, landlord/tenant relationships, government support and perceived rental value, amongst other questions, the responses paint a largely positive picture for the future of the sector.

Eddie, Paul, Matt and Nick also give their opinions on what further private rented sector innovation could look like, and how this would impact landlords, agents and their tenants.

This year Eddie’s closing question encourages guests to delve deeper into what the future holds for the buy to let sector and asks, ‘What is unusual in the PRS now that will be commonplace by 2030?’ Their thought-provoking answers help to remind us that with a new year come new opportunities.

Don’t forget to listen out for brand new episodes of Hamilton Fraser’s Property Podcast with new special industry guests every episode!

Missed the previous podcasts in the series? Don’t worry, you can catch up with industry news here!

Previous guests include:

• Daniel Lee, Mortgage Broker at Total Landlord Mortgages
• Steve Bowen, Mediator at the Property Redress Scheme and experienced landlord
• Jonathan Schuman, established portfolio landlord and Owner of Magnet Properties
• Ben Beadle, Chief Executive of the National Residential Landlords Association (NRLA)
• Matt Hooker and Nick Hamatsos, Co-Founders of Ome, a new breed of deposit replacement scheme
• Sean Hooker, Head of Redress at the Property Redress Scheme
• Kate Faulkner, market analyst, commentator and co-author of ‘The Landlord’s Friend’
• Tessa Shepperson, residential property lawyer and Managing Director of Landlord Law

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords, lettings and deposits – expert advice from Hamilton Fraser Podcast – Landlords, agents and tenants survey the sector (2021) | LandlordZONE.

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BREAKING: Ministry of Justice consults on increasing some court fees for landlords

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The Ministry of Justice (MoJ) is planning to increase the fees it charges landlords to obtain warrants in order to evict, both for county courts and the High Court.

Warrants are the legal permission required for a landlord to physically evict a tenant after a Section 21 or Section 8 notice has been granted by a court.

These additional fees are to be put through a consultation and are part of an across-the-board increase in court costs after a five-year pause in rises.

Landlords will now have to pay £130 for each county court warrant of possession, which is the legal paperwork needed to begin a bailiff eviction, up from £121.

Those using the quicker High Court route who wish to seal a write of control will be charged £71, up from £66.

These measures, along with the other increases in fees, are expected to raise between £11 and £17 million a year for Her Majesty’s Courts and Tribunals Service (HMCTS).

Possession fees freeze

But landlords will be relieved to know that the more substantial possession claim fees, which range from £325 to £480 depending on the type and manner of eviction, are to remain the same.

“The proposal is limited to fees which are under-recovering compared to the estimated cost of the service and to fees which are enhanced, meaning they can legally be set above the cost of service,” the MoJ consultation says.

Responses to the consultation are required by the 17^th May and can be submitted via an online survey using the link above, via email or by post to: Fees Policy Team, Ministry of Justice, 102 Petty France, London SW1H 9AJ.

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Membership Renewal – Why would I?

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Today I received a renewal reminder from NRLA. Although it is true, when I was a new Landlord I found the original NLA useful and supportive, I do not feel they represent the Landlords any longer. Where is their voice for us?

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