Three easy-to-miss legal updates every landlord should know about!

admin    Uncategorized     agents

With 168 rules and regulations to follow when letting a property, it can be a nightmare for landlords to stay up to date with legislation.

Here’s three upcoming changes worth knowing:

Right to Rent

If you’ve been letting to the same tenant for a long time or are new to buy-to-let, you might not realise the Government requires you to check whether your tenant is legally allowed to live in the country. Even if they have a British passport, you still need to carry out the checks. If you don’t, you could be fined thousands.

The good news is that you can carry out these checks remotely until 30th September. You can speak to the tenant via a video call and accept scans or photos of documents rather than having to see the originals.

There is also an updated code of practice that landlords must abide by, and it’s important to note that you cannot discriminate against prospective tenants who might be less easy to make checks on. Find more information here.

Landlord Licensing

There’s a lot of talk at the moment about the ‘Renters’ Reform Bill’, which has been on the cards for a few years now. It’s expected this year and is likely to scrap Section 21, as well as introduce other changes.

One of the proposals that’s often overlooked is the requirement for landlords in England to have some form of regulation. This already exists in the rest of the UK – landlords have to register themselves and their properties, and anyone managing a property in Wales must also be licensed. So it’s highly likely that, as a landlord in England, you’re going to have to be either registered, licensed and/or belong to a redress scheme in the not-too-distant future.

Then there’s the extremely complicated local authority licensing schemes in England. Mandatory nationwide licensing only applies to ‘large’ HMOs in England and Wales – properties with five or more people, forming more than one household. However, each council also has the power to introduce their own additional and selective licensing schemes, which can apply to any rented property.

To add to the confusion, selective licensing schemes only run for five years, after which they can be renewed, scrapped or replaced with a different scheme. Some councils are great at making sure landlords are aware of changes and new schemes, but some do the absolute minimum, meaning changes can easily be missed.

It’s essential for landlords – especially if you don’t live in the same council area as the properties you let – to stay on top of local licensing schemes. If you don’t have the right licence for your property or if you breach any of the licence conditions, the council could fine you up to £30,000. Your tenants, or where tenants are in receipt of benefit, the Council can, apply to the First Tier Tribunal for a Rent Repayment Order which could require you to repay up to 12 months’ worth of rent.

Smoke and Carbon Monoxide Alarms

In November 2021, the Government announced that there will be some changes to alarms coming soon. The proposed changes are quite cost effective and could protect you and your tenant, so we think it’s well worth implementing them now if you can:

1. CO2 alarms will be required in rooms with a combustion appliance (apart from gas cookers) in all tenures via building regulations – so for your home as well as the properties you let.
2. Landlords will need to repair or replace alarms if they’re reported as faulty. The cost of doing this is so low and they give such great peace of mind to protect tenants, it’s worth checking regularly that the smoke alarms are working properly.

How are you keeping up?

At Leaders we have expert agents who manage lettings compliance for our landlords. If you let through an agent, check how they stay legally compliant and if you self-manage, make sure you have a reliable way to keep up to date with ongoing changes.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Three easy-to-miss legal updates every landlord should know about! | LandlordZONE.

View Full Article: Three easy-to-miss legal updates every landlord should know about!

TONIGHT: Struggling to find property deals?

admin    Uncategorized     agents

Live online TONIGHT (Thursday 31st May) at 8pm! Brand new training all about how you can find better property deals in your area.

If you are struggling to find great deals, or don’t know what to look for

View Full Article: TONIGHT: Struggling to find property deals?

Failing Social Housing providers to be named and shamed

admin    Uncategorized     agents

The government will “name and shame” failing social housing providers as part of major reforms to give residents a stronger voice and drive up standards. This means social landlords providing sub-standard housing and services would be publicly called out on the government’s website and across social media channels.

View Full Article: Failing Social Housing providers to be named and shamed

NEW: Job advert for national landlord register manager reveals scheme will happen

admin    Uncategorized     agents

The Department for Levelling Up, Housing and Communities (pictured) is advertising for someone to investigate setting up a national landlord register.

Despite not having confirmed officially that there will be a such a register, the job advert is for a full-time policy advisor.

It follows a commitment in the government’s Levelling Up White Paper earlier this year to explore the introduction of a landlord register, after first promising to bring forward reforms to drive improvements in standards in rented accommodation in 2021.

This new role will focus on looking at possible penalties and enforcement and leading on the data protection elements of a register.

Penalties

The job description explains: “You will lead and drive policy development and delivery related to specific workstreams on our work exploring a national landlord register – penalties/enforcement and data protection. This will involve significant, detailed policy work at all stages of the policy cycle, potentially including delivering legislation.”

The newly appointed advisor will lead and support stakeholder engagement, both internally and externally, representing the department’s views and position through the policy development process.

They will also work alongside departmental staff and a range of other government departments to, “understand the broader context of PRS and housing policy and ensure alignment with wider government policy”.

The job will be based in either London or Wolverhampton with a salary of between £36,337 and £39,598. Candidates have until 11^th April to apply.

“This is positive news that the government is planning for a national landlord register and that Ministers are taking it seriously, as the millions of English landlords who will need to join the scheme have been waiting to hear what the requirements will be for some time,” says Sean Hooker (pictured), Head of Redress at the PRS.

“We will of course work with the new recruits to help them implement a workable system. It makes logical sense that if you have mandatory redress, you have your register.

“In the meantime, we are running the pilot for the NRLA along with TDS.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – NEW: Job advert for national landlord register manager reveals scheme will happen | LandlordZONE.

View Full Article: NEW: Job advert for national landlord register manager reveals scheme will happen

Challenge for the PRS is how to adapt to accommodate more mature tenants

admin    Uncategorized     agents

Homes headed by a person over the age of 45 will account for at least half of all privately renting households by 2035, analysis conducted on behalf of Paragon Bank has found.

A report by the Social Market Foundation (SMF)

View Full Article: Challenge for the PRS is how to adapt to accommodate more mature tenants

How can investors build a buy-to-let portfolio?

admin    Uncategorized     agents

For a long time, investing in buy-to-let was seen as a sure-fire way to make money. But, over the last five years or so, regulatory and taxation changes have dented its appeal.

However, with inflation hitting a new 30-year high in January, mortgage rates still at historic lows and rental yields increasing, many investors are considering buy-to-let once again. Here are some past lessons that could help shape an investment strategy for the future.

Timing the house price cycle

Britain has seen unprecedented house price growth over the past 25 years. An investor who timed the house price cycle perfectly and always invested in the fastest growing regions would have seen double the average returns of someone investing in the slowest growing regions.

Between 1996 and today, a buy-to-let investment in the North East would have made the biggest returns, with high rental yields compensating for lower house price growth compared to southern areas. London, the region that’s seen the strongest capital growth, came third.

Crucially, we are not expected to witness the same magnitude of house price inflation over the next 25 years as we have seen over the past 25. Nevertheless, northern areas are forecast to see higher price growth until 2024, when a new housing cycle begins. From then, price growth across the South, especially London, is set to start outpacing the North once again.

Taking a long-term view is key, says Catherine Westerling, Head of Lettings at Hamptons. “Property has always performed strongly as an asset class on a minimum 10-year view, but a 20- to 25-year strategy is likely to be far more rewarding.”

Manage costs

The price an investor pays for a property makes the single biggest difference to returns. As Westerling explains. “It’s the old adage: you make your money when you buy, not when you sell.”

Recent tax changes have pushed up costs for individual landlords, particularly if they are higher-rate taxpayers, so many have put their properties into a limited company structure. There are now a record 270,000 buy-to-let companies in operation, with around two-thirds of these set up since 2016, when it was announced that mortgage interest would soon no longer be tax-deductible for landlords holding investment property in their personal name.

Leverage is crucial

The gains investors can make from house price growth are amplified significantly if they borrow as much money as they can to fund a purchase. When prices rise 10%, an investor with a £50,000 deposit and 75% loan to value mortgage will see a return of 40% on their initial investment, before the costs of servicing the loan.

In addition, reinvesting rental income back into a portfolio increases returns significantly. Nationally, the average portfolio built-up over the last 25 years on the back of rising house prices and reinvested rental income would be 55% smaller if rental income was withdrawn each month rather than reinvested.

Balance is best

The most successful landlords have a balance of geographies so they can benefit from the current high yields in northern areas as well as the longer-term capital growth from southern locations, Westerling explains.

She adds that landlords also seek to hold a mix of property and tenure types and include properties that can have value added by a refurbishment or extension. “At the end of a refurbishment an investor has increased the property’s rental value and capital value, while also improving a mortgaged property’s loan to value”.

For further analysis and expert advice, access Hamptons’ new Buy-to-Let report and sign-up to the webinar on 31st March here.

DISCLAIMER

@ Hamptons 2022 purpose of general information and Hamptons accept no responsibility for any loss or damage that results from the use of content contained therein, including any errors or negligence from third party information providers. It is your sole responsibility to independently check and verify the facts contained within this report. All opinions and forecasts within this report do not in any way represent investment or other advice. Reproduction of this report in whole or in part is not allowed without the prior written consent of Hamptons.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – How can investors build a buy-to-let portfolio? | LandlordZONE.

View Full Article: How can investors build a buy-to-let portfolio?

Plans revealed to speed up possessions for landlords – FOUR years after consultation

admin    Uncategorized     agents

The government has finally promised to set out how it will improve the possession process for private landlords in the courts – almost four years after it first asked for their views on how to make efficiencies.

Its consultation quizzed tenants and landlords on whether a separate Housing Court was needed and Justice Minister Kit Malthouse has now announced that a policy response to the call for evidence would come later in the spring.

He says the Department for Levelling Up, Housing and Communities has committed to work with the Ministry of Justice to make the process quicker and easier.

Its report published at the time – November 2018 – revealed how some landlords reported that it took too long to get to possession order stage using a Section 21 notice as there was often an underlying reason for wanting possession, such as rent arrears.

Read the consultation document.

The main delays in the process related to enforcement; from the possession order being granted, it took a further 10 weeks to gain possession.

The research also found some backlogs and bottlenecks in court administrative procedures due to pressure on court resources caused by lack of staff, closure of courts, a high workload and outdated IT.

However, much has happened in the past few years, with Covid-related court delays pushing the possession process into many months rather than weeks and the government promising to get rid of Section 21s in its upcoming Renters Reform Bill.

In a Parliamentary written response, Malthouse also said the Home Office had no plans to introduce a policy relating to police data sharing relating to eviction of tenants through the courts – however, there is already a well-established national database of rogue landlords.

But as LandlordZONE has reported in the past, very few landlords ever make it onto the dataset. Latest government data released in August last year showed just 43 are listed.

LandlordZONE has asked the Ministry of Justice for an update on when the initiative will start.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Plans revealed to speed up possessions for landlords – FOUR years after consultation | LandlordZONE.

View Full Article: Plans revealed to speed up possessions for landlords – FOUR years after consultation

EXCLUSIVE: Portsmouth landlords battle council ‘ineffective’ HMO licensing

admin    Uncategorized     agents

Portsmouth’s landlords have urged their council not to go ahead with plans for an additional licensing scheme covering more of the city’s HMOs.

Its current scheme covers 1,400 larger HMOs but it plans to extend this to about 2,000 three- and four-bed houses in a bid to improve standards and rid the sector of rogue landlords. A consultation launches on 23^rd May.

Portsmouth’s first additional licensing scheme ran from 2013 to 2018 but was not renewed after doubts about its effectiveness.

Last year, LandlordZONE reported that despite heralding its current licensing scheme’s success, it had fined just seven landlords and agents in 2020.

Portsmouth and District Private Landlord Association believes additional licensing would not help resolve problems around HMOs.

Chairman Martin Silman (pictured) tells LandlordZONE that it will have no effect on noise, parking and anti-social behaviour because smaller HMOs generally don’t create these problems.

Instead, with additional licensing focused on squeezing out the smaller rooms and raising standards across the sector, prices will be pushed up, while landlords will ask whether it’s worth continuing to have smaller HMOs.

“The number of small, nice homes for three or four nurses or dockyard contract workers will decrease and the number of mega-HMOs will rise in response to the high demand and high prices that this will create,” says Silman.

Knock-on

“This has a knock-on inflationary impact on both local rents and local house prices which increases the pressure further for more affordable rents and affordable homes.”

Some councillors have also voiced support for city-wide selective licensing of the whole PRS and while Silman believes the evidence does not support this, he fears this could be the next step.

The council has estimated it will need to employ the equivalent of 18 extra full-time employees to help manage the new additional scheme, which would be funded by new fees of between £829 and £883 for a five-year licence.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Portsmouth landlords battle council ‘ineffective’ HMO licensing | LandlordZONE.

View Full Article: EXCLUSIVE: Portsmouth landlords battle council ‘ineffective’ HMO licensing

Rent control campaigners hit by HUGE setback as Spain ends ‘disastrous’ experiment

admin    Uncategorized     agents

Rent controls have been scrapped in the Catalan region of Spain after they failed to make housing more affordable.

The caps were imposed in a bid to rein in soaring housing costs, but instead the law made property investment in Barcelona less attractive as yields dropped due to lower rental incomes while house prices continued to rise.

Its government has now declared the rental law as unconstitutional.

The news is pertinent as many parts of the UK are currently pushing for similar constraints on the private rental sector; Bristol is bidding to become the first city to introduce rent controls, while London mayor Sadiq Khan continues to campaign for similar powers, Jersey’s Reform Party has proposed measures and the Scottish government is also consulting on proposals.

Spain’s property hotspot, Barcelona had attracted many second-home buyers and investors during the last few decades, according to Mohammad Butt (pictured), Barcelona office director at Lucas Fox estate agent.

He says: “This is great news for Barcelona, as the end of rent capping will allow investors to fully capitalise on purchasing in an international city which offers an attractive and safe return on their investment.”

He added that the European Central Bank had indicated a possible interest rate increase in order to regulate inflation.

“Now is the time to be requesting a mortgage whilst rates remain low,” says Butt.

“The return of foreign investors with the lifting of travel restrictions and quantitative easing programme within the EU has been the main driver for the Spanish recovery and real estate market.” 

Read more: The history of renting in the UK and rent controls.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Rent control campaigners hit by HUGE setback as Spain ends ‘disastrous’ experiment | LandlordZONE.

View Full Article: Rent control campaigners hit by HUGE setback as Spain ends ‘disastrous’ experiment

TRENDS: Tomorrow’s landlords will be more invested in holiday lets, says new research

admin    Uncategorized     agents

The future of landlording is to have a more bucket-and-spade flavour than at the moment, new research among younger wannabe investors has discovered.

One if five UK adults have thought about buying a short-let holiday property in the UK to rent out, spurred on both by travel restrictions during the pandemic but also growing awareness of the ecological effects of plane travel, says Suffolk Building Society.

Those keenest to consider such an investment are younger people between 18 and 34 years old, half of whom either live in London or the West Midlands.

Holiday lets

The building society says this increased interest in holiday-let properties is mirrored within its own lending team, with both the volume of, and total value of, completions for new holiday let purchases doubling between 2020 and 2021.

It also says that this new cohort is evenly split between those inspired by Covid to get into holiday lets, and those who had always planned to.

Devon and Cornwall are the locations that most wannabee holiday-let landlords were considering, followed by the Lake District, Peak District and Yorkshire Dales.

“It’s easy to understand why the idea of owning a holiday let is so attractive,” says Charlotte Grimshaw, (pictured) who heads up Suffolk Building Society’s mortgage broker division.

“As people were limited to holidaying in the UK, often within an area they know and love, their eyes were opened to the opportunity of increasing their income, as well as enjoying a property for personal use too

“However, intermediaries should also advise their clients to take the time to understand the market, and check out the competition before falling in love with a property that isn’t viable in terms of lettings.” 

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – TRENDS: Tomorrow’s landlords will be more invested in holiday lets, says new research | LandlordZONE.

View Full Article: TRENDS: Tomorrow’s landlords will be more invested in holiday lets, says new research