London property PLC announces return to dividend pay-outs

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The London West End-focused commercial property landlord Shaftesbury Plc has reported an encouraging set of results announcing a resumed final dividend payment and a smaller loss than last time.

The financial results were helped by a “bounce back” in the London retail and leisure specialist’s prospects for its core tenant base of hospitality firms and fashion retailers.

The company says it has experience an “encouraging increase in demand for space and lettings; footfall and spending now starting to return.” It feels it is “Well-positioned for gradual recovery and sustainable growth.”

Brian Bickell, Chief Executive, says:

“After more than a year of unprecedented disruption, a revival in the West End’s broad-based economy is now underway. Since the start of re-opening on 12 April, we are seeing an encouraging increase in demand for space and lettings and a return of footfall and spending across our locations. Forecasts point to a sharp rebound in the UK economy but there remains the risk that the recovery could encounter delays and setbacks in the period ahead.

“We expect occupier demand to improve further as businesses seek to locate in our lively, holistically-curated villages. Importantly, the inherent flexibility in our portfolio, and our culture of innovation, will ensure we can continue to adapt our buildings to meet the fast-changing expectations of our occupiers. Growing footfall, prosperity and occupier demand will improve our cash income and earnings and stabilise investment yields.

“As the global pandemic recedes, we are confident that the unique appeal and features of London and the West End will continue to attract businesses and visitors on a scale matched by few other cities, underpinning the long-term resilience and prospects of our portfolio. With our proven, ever-evolving strategy, guided by our experienced, enthusiastic and entrepreneurial team, and supported by a strong financial base, Shaftesbury is well placed to return to sustainable long-term growth. “

Results released before Omnicron

Granted this release was written just before the onset of the Omicron virus strain, but after the initial negative financial markets’ reaction, the general advice from the epidemiologists is not to panic and markets seem to be recovering quickly after the initial shock. Despite this there’s yet again a degree of uncertainty around.

A general view of Carnaby Street, part of retail landlord Shaftesbury PLC’s property portfolio, as the spread of coronavirus disease (COVID-19) continues in London, is that those landlords heavily exposed to non-essential retailers and restaurants are still on a slow, yet steady recovery path.

The pandemic had a big impact

An indication of the impact the pandemic has had on the FTSE 250 company is that its buildings net tangible per share asset values fell by 15% to £6.19 pounds, while its overall portfolio valuation declined by just 5.4% on a like-for-like basis. This is small beer compared to many regional town and city retail valuation falls which in some extreme cases have been down as much as 50%.

Shaftesbury owns around 600 buildings in the heart of London’s West End. It made a loss after tax for the year ended 30 September 2021 of £194.9 million pounds, down from £699.5 million last time and the company has recommended a final dividend of 4 pence per share.

Two quoted UK property giants, Land Securities Plc and British Land Plc, were back in the black when they announced their half-year profit figures recently, partly helped by strong rent collection rates at the heart of their core portfolios, mainly offices and shopping centres.

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Minister agrees landlords will be hit hardest under proposed EPC upgrade rules

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The Minister for Business, Energy and Corporate Responsibility has acknowledged that the financial burden of green upgrades for homes falls more heavily on landlords than homeowners.

When quizzed during a Lords debate on raising standards in the sector, Lord Callanan admitted: “There are a number of financial packages private landlords letting to low-income tenants can take advantage of, but it’s true that there’s a dilemma in the PRS that the investment is made by landlords and the benefit is gained by tenants in terms of lower fuel bills.”

Peers picked up on yesterday’s report from the public accounts committee which slated the government’s green homes grant scheme, which shut prematurely earlier this year.

It said this had badly underperformed, only upgraded about 47,500 homes out of the 600,000 originally planned and risked damaging future efforts to deliver net zero.

Not convinced

Baroness Jones of Moulsecoomb said she was not convinced the department had fully acknowledged the extent of the scheme’s failure, and suggested: “If you don’t understand how badly you’ve failed, how are you ever going to deliver this green stuff that you clearly don’t understand?”

Lord Callanan insisted that it had learnt the lessons of the green homes grant fiasco and was taking that forward in initiatives such as the boiler upgrade scheme.

But he didn’t fully answer Baroness Thornhill’s question, asking for reassurance that the “failed one size fits all funding systems we’ve had previously won’t be repeated and local authorities will have more genuine autonomy to meet local need”.

Baroness Ritchie of Downpatrick also queried when we could expect a new long-term strategy so homeowners and landlords wouldn’t discover later down the line that they would need to undertake further work to meet changed standards.

Lord Callanan did provide an update on the government’s consultation in the summer about raising energy performance standards of rented properties to EPC band C by 2028. He added: “We will publish our response to that shortly.”

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SIX disadvantages of using spreadsheets to rack investment property finances

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Spreadsheets revolutionised how people do business. They got rid of pen and paper processes and dramatically increased efficiency.

But that was decades ago. When it comes to managing your investment property accounts today, spreadsheets no longer cut it. They’re prone to errors, time-consuming to keep up to date, and they’re not scalable.

1. They’re time consuming to keep up to date.

You’ll need to update your spreadsheet regularly. To do this, traditionally you need to sit down at a computer, go through your paper receipts and bank statements and manually enter each of your expenses one by one. This takes time and often it’s a tedious task that gets put off until the end of the tax year is upon you. And then you’ve got six months of accounts to bring up to date.

2. Prone to errors.

One of the biggest issues that people face when managing their books on spreadsheets, as mentioned, is manual data entry. Not only is this time consuming though, it often leads to errors. If you’ve got 100 or even 200 expenses that you need to enter and you’re trying to do so as quickly as possible, then a misplaced decimal or a mistyped digit can throw off your calculations by hundreds of pounds. On top of this, it is notoriously difficult to spot errors once they’re in the spreadsheet.

3. Reporting is difficult

As an investor, you want to be able to analyse various aspects of your finances from your P&L to your vacancy rates. Generally, generating a report that is understandable and pleasant to look at is at best a challenge and at worst, impossible when you use spreadsheets. What this means is that investors who use spreadsheets don’t have the clarity and insight into their finances that those with proper rental accounting software do.

4. No data visualisation

It’s also a challenge to create visuals from a spreadsheet. While you can generate basic graphs, doing much more than that just isn’t feasible. Data visualisation is important to better understand your historical data and to create projections for the future so you can scale your portfolio.

5. They’re not scalable

Spreadsheets are difficult to maintain, they’re hard to use communally, they’re prone to errors, you can’t access the data you need; these problems only get worse as you get more properties.

6. Making Tax Digital is coming

In April 2024 landlords will need to be compliant with the new making tax digital system being brought in by the HMRC. This system requires landlords to keep digital accounts and use software with digital links to submit quarterly updates and end of year submissions. With this new regulation, the HMRC are pushing landlords to operate more professionally, to adopt modern solutions and create professional businesses.

Ultimately, MTD is coming, and in order to stay compliant, landlords need to be looking at software to better manage their portfolio finances. This makes now a good time to start exploring solutions.

It’s time to find suitable software

We’ve outlined the challenges that come with managing your investment property through spreadsheets.

Whether you like it or not the government is forcing a change and you will need to adopt a modern system, whether that’s bridging software, accounting software, or an industry-specific solution. This though isn’t all bad.

This is an opportunity for landlords to bring their operations into the modern day and to gain all the benefits that software offers.

Good income and expense tracking software will save you time, make your accounts more accurate, even help you increase your operations profits. They will allow you to stay compliant with new regulations, and perhaps most importantly, they will give you the ability to run reports and visualise your data in a manner that allows you to create long term financial plans.

What makes a good landlord software?

There are a few key things to look for in the software that you select.

The first is you want to be taking advantage of Open Banking innovations. What this means is the software that you choose should allow you to connect your bank account so that you can view and reconcile transactions in real-time. This removes the need for manual data entry and reduces errors, and it will save you a huge amount of time.

Other key features to look for include a mobile app, so that you can access and update your data wherever you are, the ability to digitise receipts at the point of sale, digital storage for receipts and important documents, and it should have quality reporting and data visualisation tools.

Finally, you’re going to want to consider whether you go for general accounting software like Xero or QuickBooks, or whether you should go for an industry-specific software such as Landlord Studio.

The advantages of tailored software are that its designed to be easy to use and hard to make mistakes with. QuickBooks and Xero are general accounting software that require greater knowledge and have a steeper learning curve. They’re harder to use specifically when it comes to managing property accounts.

Consult with your accountant to see what they think best, and of course, to try various solutions before you decide to see what’s right for you.

Find out how Landlord Studio can save you time, keep you organised, and help you stay compliant.

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Office of Tax Simplification CGT review put on ice by the Treasury

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Chancellor, Rishi Sunak, commissioned a report from the Office of Tax Simplification (OTS) to look at ways of simplifying the collection of Capital Gains Tax and IHT.

The OTS had recommended in the report that CGT be increased in line with income tax rates to 20% at the basic rate and 40% at the higher rate.

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Social housing delivery was on the increase pre-pandemic

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Market analysis by real estate debt advisory specialists, Sirius Property Finance, has revealed that the level of social housing being built not only hit a 13 year high prior to the outbreak of COVID-19 but social housing as a percentage of all homes built also hit its highest levels since 2015/16.

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3 months periodic after 3 months rent in advance?

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Hi, Can anyone advise me, please?

I use 6-month ASTs with monthly payments which would rollover to monthly periodic, but I’ve had some tenants offering 3 months rent in advance at the start of a 6 month shorthold tenancy.

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INTERVIEW: Ground-breaking local landlord group battles on despite council cuts

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A grass-roots landlord group in Essex has vowed to continue working to raise standards despite the imminent arrival of selective licensing in their local area and council funding cuts.

Although the Southend llicensing scheme has been deferred until next spring, the South Essex Alliance of Landlords and Residents (SEAL) is still leading by example and has urged landlords in other towns and cities to gain a collective voice.

Southend’s landlords got together to oppose selective licensing when it was first suggested back in 2011, as they were also frustrated there wasn’t anywhere to go for advice about improving standards.

They managed to win a reprieve and set up a steering group to share information about topics such as anti-social behaviour and rubbish collection. Members aimed to demonstrate to the council that problems could be dealt with satisfactorily, leaving it to concentrate efforts on non-SEAL members.

Funding

It set up a scheme whereby members put SEAL identification stickers in their properties so that renters could call a helpline to tackle anti-social behaviour and also won community funding which helped pay for subsidised bin stores. The group is also an effective lobbying oirganisation, often quoted in local media on PRS issues.

“It was a way of educating landlords,” secretary Judith Codarin (main pic) tells LandlordZONE. “We did it for the good of the sector and proved how many decent landlords there are.”

Unfortunately, council cuts and staff changes, as well as a renewed push towards licensing, meant that by 2018 there were no longer the resources to continue the partnership in the same form.

The group was again forced to oppose the new proposal, questioning whether it would have any impact on bad landlords.

Despite the set-back, Codarin believes there are now stronger lines of communication.

“Having a collective voice is really worthwhile because when the selective licensing issue came up again there were people we could talk to at the council,” she adds. “It’s given us confidence and the council values our input. We will continue to be as proactive as we can.”

PIC credits: Shutterstock/SEAL/Southend Echo

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