£450m government grants for 90,000 Heat Pumps

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Landlords don’t hold your breath as the Government announces £3.9 billion for decarbonising heat and buildings. Of this only £450m is allocated for grants of £5,000 to replace old gas boilers with new heat pumps. This would equate to 90,000 installations over 3 years for England and Wales.

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Detached homes see largest percentage rent increases

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Rents on detached homes increased twice as fast as the average for all UK properties during Q3 2021, according to The Deposit Protection Service (The DPS).

The average rents for detached properties during Q3 2021 rose £38 (3.52%) from £1,079 to £1,117

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NEW: Government’s latest ‘green homes deal’ to be revealed this week

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The government is expected to pledge to landlords and homeowners that installing a heat pump will cost no more than fitting a standard boiler by 2030 as part of its new Heat and Building Strategy due to be published this week.

Business and Energy Secretary Kwasi Kwarteng is set to announce plans to reduce the cost from £10,000 to £5,000 within three years along with a pledge to invest £60 million in heat pump innovation to make them smaller and easier to install.

However, landlords and heating experts have warned that any support will need to be easier to access than previous green schemes.

The government will announce 2035 as the cut-off date when natural gas boilers will no longer be installed in existing homes following its promise to fit 600,000 heat pumps each year by 2028 to help the UK meet its net zero target.

Low-carbon consultancy Gemserve says it understands that BEIS is considering an obligation on manufacturers which would require them to meet a minimum threshold of renewable heating system sales as a proportion of their total.

This proposal is similar to obligations placed on car manufacturers over recent years and has the potential to drive down costs.

Kevin Wellman (pictured), CEO of the Chartered Institute of Plumbing and Heating Engineering, tells LandlordZONE that he expects details of the Clean Heat Grant – which comes into effect next March – finalised, including which heating systems will be eligible.

He would also like to see a viable alternative introduced to the Green Homes Grant Scheme.

“It is important that any schemes are easy for landlords and qualified installers to access, as there is a real danger of a miss-match between supply and demand,” he says.

“In order to achieve the government’s aspirations for net zero, 100,000 installers need to be upskilled in low carbon technologies.”

Many landlords believe the targets are wishful thinking and that its aim to see all rented properties raised to an energy rating of band C or above by 2030 is a ‘pipedream’ unless upgrades are backed with financial and practical support.

Read the Commons guide to the Heat and Building Strategy document.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – NEW: Government’s latest ‘green homes deal’ to be revealed this week | LandlordZONE.

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Council Tax Liability – Quoting S6 Local Government Finance Act 1992?

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I started possession action due to persistent non-payment of rent in Autumn 2019. Possession was under S21 rather than S8 as advised by my solicitor. I obtained a court order on 27 March 2020 the day after the Govt ban on evictions.

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Rightmove Index up 0.3% in September with fierce competition over reduced supply

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The national average asking prices of newly marketed properties have risen by 0.3% (+£1,091) this month to hit a new all-time high of £338,462. Despite the traditional summer holiday lull, fierce competition continues among buyers for the record low number of available properties for sale.

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Landlords slam former Labour shadow chancellor’s ‘rent freeze’ proposal

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Former shadow chancellor John McDonnell has called for a year-long rent freeze to combat rising energy bills and the universal credit payment cut.

It follows the latest Household Resilience Study that shows 7% of private renters were in arrears in April-May, up from 3% in 2019/20, amounting to more than 780,000 renters.

However, his post on social media was quickly scorned by many landlords who posted that the move would only make PRS properties even more scarce.

One tweeted: “Why the obsession with landlords….I can tell you, you are widening the gap and causing far more good landlords to leave it to the bad ones. I’m getting sick of the perpetual one-sided argument.”

Another replied: “Why not suggest energy companies freeze prices or supermarkets freeze food prices. Are landlords just soft targets or seen as evil people for choosing BTL as an investment instead of stocks and shares like most MPs.”

Rent freeze

McDonnell has urged Rishi Sunak to impose the year-long rent freeze for all public and private sector tenants in England at the upcoming autumn Budget.

“Many families are facing a winter of worry and hardship from the cut in universal credit, hikes in energy prices and record rent rises,” he said.

“It’s a really tough and uncertain time for so many. A rent freeze will relieve many of them of major pressure on their household budgets this Christmas and provide increased security that they can afford to keep a decent roof over their heads. It will also assist the economic recovery from Covid by maintaining demand in our economy.”

Labour is also pushing the need for more social housing and believes that devolved and local government should be partners in the UK government’s objective of levelling up communities.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords slam former Labour shadow chancellor’s ‘rent freeze’ proposal | LandlordZONE.

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Insurers claim this is subletting and Landlord doesn’t have control?

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Sadly, following a bad experience, one of the sites was converted into a Cannabis Factory. After usual arguments, AGEAS accepted liability and paid for lost damage around say £50k (Insured losses) uninsured cost (£20k).

The loss was in Jan

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What’s the latest in the rental market in 2021?

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According to our latest rental indices for 2021, in the first Quarter we saw rents being flat to slightly falling year on year – on a UK basis. This was mostly due to the comparison to the previous year when Covid was only just starting to become news, as opposed to the third lockdown we experienced at the start of this year.

The data suggests that the fall is minimal, with all Belvoir offices across England, Wales and Scotland showing the average rent recorded for Q1 2021 as £809 per month, which was just 1% lower than Q1 2020. Considering the huge impact of the pandemic on the economy, it’s pretty incredible how rents have held up during this time.
This is reinforced by looking at the data for Q2 2021 which showed far more positive results pretty much everywhere across the country as demand seems to be seriously outstripping supply. In the second quarter, when we compared a more open market versus the first lockdown, rents rose by 1.25% and when comparing the Q2 2021 average rent of £810 to the average rent for the whole of 2020, there was a slightly bigger year on year increase of 1.5%.

Although as anyone that invests in different parts of the country knows, the trends differ depending on the area and indeed the property type.

Houses remain in short supply and high demand

Looking at the Q2 results in 2021, 5% of surveyed Belvoir offices suggested prices for flats decreased (16% in Q2 2020), 12% saw flats rents staying the same (37% in Q2 2020), while 83% saw an increase (just 47% in Q2 2020).
For houses, the picture was stronger for rents with no offices reporting falls in Q2 2021, 5% staying the same and the majority – 95% increasing. In contrast, in 2020, a similar percentage of offices (7%) saw rents fall, 26% stayed the same while 67% saw an increase, so overall, rents for houses remained strong throughout the pandemic and are now increasing pretty much everywhere.

Although houses outperforming flats from a rental and price perspective is a trend we have reported on prior to the pandemic, there is no doubt that Covid has exacerbated it, not just in the rental market, but the buying/selling market too.

How do rental trends differ around the country?

We survey a selection of Belvoir offices to find out what’s happening ‘on the ground’ to demand and supply as well as rents. This is really helpful to existing landlords and investors to understand the direction of travel of their local area, but also for new investors, especially those looking to invest in an area they don’t know. Whether you are local or from outside the area, contact your local Belvoir office for great advice on buy to let and where and what to invest in locally.

Here’s this quarter’s selection of feedback from offices, but don’t forget there are over 40 individual town and city reports from Belvoir experts in our latest rental index!

Although rents in Q2 are up year on year, on average, in London it’s been a bit of a bumpy ride, however it appears the corner has been turned. Nick Kirby, who is based in Wembley, confirms static rents and demand for all properties during Q2 2021. However, he predicts in Q3 that both rents and tenant demand are likely to increase for all properties. And for those looking to buy, Wembley currently has an over-supply of two bed flats.

For more detailed reports from offices in London, including: Sidcup, please refer to the full report.

Moving to the Midlands, the Leamington Spa office run by John Warburton explained that both house and flat rents remained unchanged during Q2 2021. One change they are seeing is more call for two bed properties due to people now sharing, which has resulted in a slight rent increase. Overall, John reports there has not been a huge amount of movement in the area due to lockdown/Covid. Tenant demand for flats decreased, increased for houses and remained stable for HMOs. As elsewhere, tenants are looking to rent where they have gardens/outside space. Looking to Q3 2021, rents for flats and room rents are predicted to stay the same with house rents increasing. Demand is likely to increase across the board as there is a ‘super-lab’ opening in the area.

For more detailed reports from offices in the West Midlands, including: Stoke on Trent, Stone, Tamworth, Telford and Shrewsbury, please read the full report.

In the East rather than West Midlands, Alison Emms from Newark explains that in Q2 2021, a lack of supply and high demand is causing large increases in all rents for both flats and houses, and this trend is likely to continue during Q3 2021. Newark mainly has a shortage of two and three bed houses to rent.

For more detailed reports from offices in the East Midlands, including: Melton Mowbray, Long Eaton, Milton Keynes, Nottingham, Boston, Derby West and Burton, please refer to the full report.

Heading further ‘up north’ to Chester, Gordon Rogers says that rents are static for flats in Q2 2021, but houses in general have seen an increase. Both rents and tenant demand are expected to continue rising over the coming quarter for all properties.

For more detailed reports from offices in the North West, including: Bolton, Warrington and Burnley, please refer to the full report.

Further south, in Tunbridge Wells, Natalie Boardman reports all house rents increased by around 20%, while flat rents rose by 10% during Q2 2021. This is quite rare versus other areas, mostly rents only increase or decrease around 4/5% in our experience of running the Index. However, Natalie goes onto say that rents are predicted to remain unchanged over the coming quarter as they are already high, and further increases are not sustainable. Tenant demand for flats is also likely to remain unchanged but decrease for houses as demand for family homes may ease slightly now the SDLT holiday has passed, and those who needed a rental are now in one. In addition, as hospitality fully opens, more jobs will keep demand for smaller properties at the same level. Natalie confirmed low stock across the board.

For more detailed reports from offices in the South East, including: Andover, Southampton, Tadley, Haywards Heath, Thanet, Harlow and Swale, please read the full report.

And for those investing across the border, Rob Price from Cardiff and Pontypridd confirmed rents and tenant demand increased for every property type during Q2 2021. Flat and house rents are predicted to continue increasing over the coming quarter, with room rents remaining static, but demand increasing across the board. There is a shortage of most types and size of property, and Rob also confirmed, that this year many tenants have taken a cautious approach and remained at rental properties longer.

So, from a rental perspective, we can see that rental trends are, in the main, either pretty positive or predicted to increase in Q3 2021.

PRS fundamentals stay incredibly strong throughout the pandemic

Although it’s essential to understand what’s happened to rents during the pandemic, it’s also worth knowing if any of the key trends for landlords and tenants have changed too.

Firstly, we looked at whether tenants were more or less likely to ‘stay put’ during and post the pandemic. Not surprisingly, many tenants decided – or had to – stay put during the pandemic, and our stats show slightly less people were staying for less than a year and more staying for over 12-24 months. However, as we move out of lockdown during Quarter 2 2021, it appears that tenant trends are returning to normal.

Secondly, we considered whether landlords are more likely to experience void periods, but found there wasn’t much change throughout the pandemic and currently, void periods tend to be two weeks or less.

Although there is much talk of rent arrears in the press and we did see some increases in rental arrears, most tenants have continued to pay and in Quarter 2 2021, the offices surveyed tend to have either no rent arrears or less than three properties per branch with an issue.

One of the key benefits of working with a quality agent like Belvoir is whether you are a tenant or landlord, the chances of an eviction are always very low and although evictions rates fell to almost zero during the pandemic, once the rules were relaxed, most offices starting evictions again are still only evicting two or three tenants per branch.

Finally, we asked franchise owners whether landlords had been more or less likely to buy and sell property which would affect future stock levels. Overall, we didn’t see a big uptick in landlords selling up, but we did see some landlords holding off during the start of lockdown whereas so far this year, we’ve seen more landlords come back into the market.

So, although the pandemic has had a devastating impact on many markets and people across the UK, overall, the private rented sector, including both tenants and landlords has survived incredibly well, suggesting that buy to let remains a good investment into the future.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – What’s the latest in the rental market in 2021? | LandlordZONE.

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The attractions of Holiday Lets

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In the absence of viable alternatives, with ultra low interest rates and soaring property asset prices, investment in property has become a phenomenon of 21st century Britain and holiday lets, holiday homes and holiday letting businesses are no exception.

Tax advantages  

In addition, there are some valuable tax advantages with holiday lets over buy-to-let properties. For example, capital gains tax on profits when you sell is lower with holiday lets and as it’s a business you can claim more expenses from your rent every year to reduce income tax.

Tax advantages like these can be a real boost when you see that some properties have achieved 25% increases in the first decade of the 21st century and this has continued.

Don’t think that your holiday cottage need be beside the sea: many of the tourist hotspots and Heritage Trail cities such as York, Stratford, Bath and Edinburgh can attract very good rents in the high season, and in some cases all year round, enabling you to easily cover mortgage costs.

City properties offer a safer year-round bet as it’s easier to continuously attract occupants off season, and you can always take advantage of the accommodation yourself, if you want to, as an added bonus. However, there are restrictions to “own use” in the tax rules – see below.

Tax Incentives for a Holiday Letting Business

Note, these rules can change – always check the latest rules on the valuable tax advantages

Holiday lettings is recognised as a business (generating earned income) by HM Revenue & Customs, unlike other forms of property letting which HMRC class as investment income (unearned income)

There are some valuable tax incentives for letting your property as a holiday home, but there are some exacting HMRC rules which you must follow:

– Your accommodation must be available for letting to the public for at least 210 days of the year and actual letting must be at least 105 days.

– Any one occupier (or group) cannot stay for more than 31 days in any period of seven months, but they can for the remaining five months.

– You cannot claim the tax incentives when you use the accommodation yourself, or when the property is not available for letting.

– The property must be fully furnished.

– The lettings must be at full market rent, not a peppercorn rent for friends and relatives.

– Your rental income is subject to income tax, but ALL expenses are allowable.

Allowable Expenses against Holiday Lettings Business Income

• Repairs and maintenance
• Decorating
• Heating & lighting
• Legal and letting agent’s fees
• Management fees and cleaning costs
• Insurance
• Mortgage interest payments

Losses & Tax Advantages – Holiday Lettings Businesses

– In addition, if the business makes a loss, which it is likely to do in the early years, you can offset this against any other income you may have from any other source and thereby reduce your overall tax bill.

– Married couples can maximise tax allowances by having the property in the name of the lowest earner. This is particularly advantageous if the lowest earner is in the lower rate tax band and the higher earner is in the higher band.

– When you sell you holiday letting you will be subject to capital gains tax as you would if you sold a buy-to-let property, BUT at a more advantageous.

– You can avoid paying capital gains tax altogether if you invest the proceeds of your sale in another holiday letting property within 3 years – this is known as roll-over relief.

– Roll-over relief can also be used to avoid paying capital gains tax on sales of other types of businesses, where the proceeds are invested into a Holiday Lettings Business.

Your income and expenses for your holiday let business must be declared to HMRC on your annual self assessment tax return due any time from 31 October through to 31 January.

Mortgages for Holiday Homes and Lettings

One way to finance your holiday let is to increase the mortgage on your main residence.

Borrowing against your own home may mean you can buy a second home outright, or at least put down a substantial deposit.

Alternatively, you may want to buy an established holiday letting business from the owner which may include a portfolio of holiday cottages or town houses. Business finance is available from the banks.

Insurance for Holiday Homes and Lettings

In these days of higher risks and a litigious public, adequate insurance cover is vital. The types of cover you need to consider are:

• Buildings cover – your mortgage company will insist on this
• Contents cover – your own contents should be adequately covered, whilst your guests should cover their own contents and accidental damage to your property.
• Public liability – covers you for civil actions brought by guests who may sustain injury on your property.
• Employee liability – you are likely to employ casual labour in the process of running your small business and this cover is a legal requirement.
• Loss of rental income cover – this can be had for a small percentage of the annual rental income.
• Cancellation insurance – in case guests let you down.
• Personal accident insurance – in case you are incapacitated at critical times.
• Motor insurance for business use – you are likely to use you vehicle for the holiday letting business.

Holiday Letting – Bookings Scams

There have been many instances of holiday makers falling for bookings scams, but there have also been several instances of bookings scams on landlords reported recently. The aim of these is usually for the person booking the holiday to obtain your bank details, or sends a dud cheque / money order for more than the actual booking, then asks for a refund BEFORE the cheque clears. Always make sure the funds are in your bank before giving refunds and NEVER disclose you bank details.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – The attractions of Holiday Lets | LandlordZONE.

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Buy-to-let acquisitions rises in landlords over 60 following re-opening of housing market

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The number of buy-to-let acquisitions made by landlords nearing retirement age increased by more than half following the re-opening of the housing market – more than any other age bracket.

There was a 52% increase in buy-to-let purchases made by landlords aged between 60 and 64 in the 12 months to the end of June 2021 compared to the same period the previous year, according to Paragon Bank. However, as a proportion of the overall market, this age bracket remained the second smallest at 5% of buy-to-let purchases.

Distinct spike

MD Richard Rowntree says the distinct spike could have been prompted by low returns from savings and stock market volatility as older investors looked to boost retirement income. “The pandemic may have also led to an increase in people around this age deciding to either take redundancy or early retirement, which would have given them potential access to a lump sum of money to invest, or they are simply experienced landlords who took advantage of the stamp duty holiday to lower their purchasing costs,” says Rowntree. “Of course, sadly, inheritance can also result in a one-off cash boost.”

Encouraging

Landlords aged between 40 and 44 recorded the second highest percentage increase at 49%, while this group also saw the greatest increase as a proportion of overall purchases, rising from 15.2% of the market in the year to the end of June 2020 to 16% this year. The third highest increase was among 55 to 59-year-olds (45%), while over 65s recorded the smallest increase at 26%.

Rowntree adds: “It was also encouraging to see the majority of purchases in terms of absolute numbers being made by those aged between 35 and 50. This suggests that there’s a strong pipeline of younger landlords growing portfolios.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Buy-to-let acquisitions rises in landlords over 60 following re-opening of housing market | LandlordZONE.

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