NEW: Study reveals boom in holiday lets investment as staycation trend sticks

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Nearly one in 10 adults is seriously considering buying a commercial UK holiday let over the next five years, according to new research.

A study by the Nottingham Building Society reveals that the staycation boom has inspired millions to think about making the investment, with 52% of those who already own a holiday let having bought them in the past two years.

Would-be owners are not just in it for the money, as 67% say they and their family would go on holiday there every year, which is probably a good thing as the research shows over half (52%) of owners have cut rents, with 27% reducing them by a fifth or more compared with last year.

Despite this, the majority (84%) reported that they made more income from the properties in 2021 than 2020, with nearly a quarter (23%) estimating income was 30% or more higher.

Spotlight

However, short-lets are increasingly coming under the spotlight, with campaigners around the UK pointing to their impact on the availability of rented properties.

Read more: the Ultimate Guide to short lets insurance.

A new government study is looking at tougher checks and a self-certification scheme for hosts, while there have been suggestions that regional mayors could get powers to ban second home owners from renting out their properties on websites such as Airbnb.

The government has already empowered councils to charge up to double the rate of council tax.

Read Tom Entwistle's probe into the holiday lets market.

View Full Article: NEW: Study reveals boom in holiday lets investment as staycation trend sticks

Minister defends decision to exempt PBSA from periodic tenancy proposals

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Housing minister Eddie Hughes has attempted to justify why institutional landlords who run Purpose Built Student Accommodation (PBSA) are to be exempted from the Government’s proposal to move all tenancies in the PRS to periodic ones.

Hughes was asked by Conservative MP for Hendon Matthew Offord (pictured) what his department’s rationale is for the policy decision within the Fairer Renting White Paper, which has annoyed many private landlords who operate student houses, whose tenants will – if the government’s proposals become law – have to be offered periodic tenancies.

In response, Hughes said: “PBSA is distinct to the rest of the PRS.

“It caters specifically to student needs, is often restricted to housing students due to planning constraints, and it is not designed to offer long-term accommodation.

“Standards in privately managed PBSA are upheld by Government Codes, which outline the obligations of PBSA landlords and set benchmark standards for the accommodation they manage.

Compliance

“Compliance with The Codes also ensures that problems or disputes can be resolved promptly if they do occur. Currently around 95% of PBSA providers are signed up to The Codes.

“PBSA developments are an important part of student accommodation supply.

“Under our proposed reforms to the private rented sector, private PBSA providers who are signed up to a government-approved code will be exempt from assured status and therefore the new periodic tenancy system.

“This will make sure that PBSA can continue to provide efficiently run housing in line with the academic year for the students that choose to live there.”

Landlords of PRS student houses, which will not be exempt, means students will have to be offered periodic tenancies of a fixed length instead of ASTs even though the nature of student renting means this will be difficult to navigate legally.

View Full Article: Minister defends decision to exempt PBSA from periodic tenancy proposals

How the changing letting market brings good news for landlords

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According to Paragon Mortgages, over the past 10 years there’s been a 110 per cent increase in the number of households aged between 55-64 that are renting privately.

Paragon’s data shows that there are 2.5m households aged over 35, compared to 1.9 aged 34 or younger, and there’s been a 115 per cent increase in the number of those living in a rented home for over 10 years and up to 20 years.

That’s good news because it brings stability to the market, longer term tenancies and secure rent payments.

Later life tenants

So, the fastest growing group of renters is in the middle-age bracket. Later life tenants living in privately rented homes has accelerated at a much faster rate than those in the under 35 age group, over the past decade, Paragon Bank’s analysis has shows.

In round numbers, the number of households aged 65 and over reached 382,000 in 2021, that’s up 38% on a decade before. The group aged between 55-64 reached 485,000, whilst those aged between 45 and 54 increased by 50 per cent to 691,000.

Conversely, there was a marked decline in the youngest age group: the number of 16 to 24 year-old households in the private rented sector declined by 3.7 per cent over the same period to 560,000, with those aged between 25 and 34 increasing by 6% to 1.37 million.

The figures appear to challenge the general belief that renting is for young people, renting until they manage to get onto the housing ladder. Evidence is building that shows renting is becoming embedded in the housing market, with people choosing to rent for longer or enter the rental market in later life.

Overall, the Paragon figures show that those households aged 35 or over living in rented homes totalled 2.5 million, compared to 1.9 million aged 34 or below.

In general, this trend is good news for landlords as older people in tenancies, where they intend to stay longer, adds greater stability and security and therefore peace of mind for owners.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, has said:

“The private rented sector has evolved over the past decade and has seen strong growth in the number of middle-aged and later life tenants. The perception of rented property as being the preserve of the young is outdated.”

There is evidence that people are staying longer in their rented homes. There has been a 132 per cent increase in the number of households who have lived in their home for between five and 10 years over the past decade. There’s been a 115 per cent increase in those living in a rented home for between 10 and 20 years according to Paragon, while it says for those living in a rental property for between one and two years the increase was only 5%.

Again, Richard Rowntree says:

“There could be a number of reasons for the growth in older tenants. We are seeing a greater number of people living in rented accommodation for life, plus people are releasing the equity in their homes and opting to rent instead. The growth of single person households is also driving some of the growth.

“Landlords need to consider what these cohort of tenants need. For example, those between 35 and 55 are more likely to have family, so need larger detached or semi-detached homes, whilst those in later life require simpler homes to maintain that are close to amenities. In addition, tenants want flexibility about making adjustments to their homes, or keeping a pet.”

The number of tenants over 45 has more than doubled over last decade says Paragon.

View Full Article: How the changing letting market brings good news for landlords

NEW initiative unlocks thousands of landlords from Grenfell risk rules nightmare

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Thousands of landlords should be able to sell properties locked up by Grenfell risk rules following the launch of a government insurance scheme.

The Government Actuary Department (GAD) has developed the professional indemnity insurance scheme as many qualified professionals cannot currently get professional indemnity insurance to cover their External Wall System (EWS1) assessments.

These assessments are carried out to decide whether remediation work such as cladding removal is needed on a high-rise building after mortgage lenders became reluctant to lend to buyers of high-rise flats following the Grenfell fire.

GAD has supported the Department of Levelling Up, Housing and Communities to design and work out pricing of the scheme, which project lead Jacqui Draper (pictured) says was a complex and significant piece of work.

“We have estimated that claim costs will be £100 million, although there is no theoretical cap on the total size of claims that could be made,” she adds.

“We also advised DLUHC on the level of premiums needed to recoup the expected claims and operating costs.”

September launch

The scheme is set to launch in September and the government has teamed up with a selected insurer which will be administering the policies to qualified professionals.

Earlier this year, the government announced that leaseholders would not have to pay for remediation work on properties between 11m-18m high, making developers responsible for funding works. After initially saying ‘qualifying leaseholders’ would not include landlords, it included ‘accidental’ landlords with no more than three properties in total.

View Full Article: NEW initiative unlocks thousands of landlords from Grenfell risk rules nightmare

7 Steps For Recession Success Over The Next Five Years

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7 steps to succeed in recession over the next 5 years presented by Ranjan Bhattacharya at the Baker Street Property Meet.

History is repeating itself, it’s like we’re back in the 1980s!

However, Uk property investors can use this past and present data to predict the future of property over the next five years and get ahead.

View Full Article: 7 Steps For Recession Success Over The Next Five Years

EXCLUSIVE: Can landlords still access councils’ empty homes funding?

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Landlords with empty properties are being urged to take advantage of council cash to help fight the housing shortage.

About 300 councils currently offer a scheme – mainly loans to carry out repairs – although some provide grants, usually ranging from £5,000 to more than £25,000.

However, since 2015 when central government funding stopped, councils have had to find the cash from their own budgets.

Kent County Council’s No Use Empty scheme, for example, offers short-term loans of between £25,000 and £175,000, while Preston Council will offer to buy an empty property and renovate it for its use.

Often councils will only offer grants on the condition that landlords then take tenants in council temporary accommodation.

Camden’s Landlord Empty Property Grant scheme offers £15,000 for a bedsit up to £80,000 for a large building and has provided 56 grants – mainly for flats – since 2013/14.

It believes that many empty homeowners might struggle to repay a loan and that loan schemes can be complex and a burden to administer, says councillor Meric Apak (pictured) cabinet member for better homes.

He says: “One of the most successful approaches available to us is to use grants to support empty homeowners to undertake any works required, in return for which we ask them to house a homeless household we are working with.”

Action on Empty Homes says take-up is better wherever the scheme is more generous, but believes that with housing waiting lists getting worse, it’s a good way to help.

“It’s worth finding out whether your council does it,” campaigns manager Chris Bailey tells LandlordZONE.

“For those landlords looking to buy property at auction in up-and-coming areas, these are more likely to need some work, so it makes a lot of sense to look at a scheme that will help you.”

It believes a new national empty homes strategy would create a national fund to support councils in bringing tens of thousands of long-term empty homes back into use and says council tax rises alone are unlikely to be effective. “Carrots are needed as well as sticks,” adds Bailey.

Read more about empty homes.

View Full Article: EXCLUSIVE: Can landlords still access councils’ empty homes funding?

LATEST: Five letting agents kicked out of private rented sector after failing landlords

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Five estate agents have been kicked out of the property industry after failing landlords clients, it has been revealed.
Out of the half-dozen firms, RB Estates in Reading was the worst offendor, The Property Ombudsman (TPO) reveals.

A complaint against them came from a landlord when tenants set up a cannabis farm in their property.

The landlord complained about the quality of the referencing checks conducted by R B Estates (main picture) who classed the tenants as a group of professionals.

TPO found a number of significant concerns with the referencing process and several failings and made an award totalling £5,910 which included the loss of three months’ rent).

Closed down

The award is likely to be too late for the landlord – the agency has closed down.

Other agents stripped of their TPO membership, who therefore cannot carry on trading legally, including Slough firm Kingdom Property Services Ltd, which failed to hand over rent totalling £1,726 and Westminster-based Silverstone Properties London Ltd, which badly failed landlords on many occasions by poorly managing rented homes.

Silverstone traded as a Belvoir branch under the firms franchise model, but this office has now been taken over by the head office.

The other firms are SW London firm George Proctor & Partners, who recommended to a landlord a contractor who turned out to be a cowboy builder, national firm Rentify (which has subsequently closed down) which charged a landlord for work without informing him why.

As part of TPO’s process, notification of these expulsions are shared with all relevant bodies, including both Local and National Trading Standards for further investigation.

The memorandum of understanding between TPO and other redress schemes prevents agents from registering with another scheme until outstanding awards have been paid to consumers.

View Full Article: LATEST: Five letting agents kicked out of private rented sector after failing landlords

LATEST: Leicester ploughs on with selective licensing despite landlord criticism

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Leicester is going ahead with its selective licensing extension in three areas of the city, charging landlords £1,090 per property – the highest fee in the Midlands.

The council is introducing the scheme in parts of Westcotes, Fosse, Braunstone Park and Rowley Fields wards, while another will include Stoneygate, and a third cluster will focus on part of the Saffron ward, impacting 8,853 properties.

Interestingly, it seems to be giving landlords plenty of leeway as those who make a late application – after 10^th April 2025 – will only get a penalty of £200 added to the full licence fee.

As well as offering a 10% discount for those properties with an EPC rating of C or higher, landlords who apply within the first six months of the 10^th October launch date will also get a 10% discount.

EMPO believes that as similar schemes across the East Midlands have demonstrated, selective licensing doesn’t improve anti-social behaviour, bins on streets and deprivation.

Business development manager Giles Inman (pictured) tells LandlordZONE: “Our experience shows discretionary licensing schemes, without exception, deliver increased rents as landlords pass on the cost of licensing to tenants.

“With the cost-of-living crisis and the change in the Energy Price Cap in October 2022 and January 2023, the merits of implementing an expensive licensing scheme at this time will surely raise some eyebrows.”

Assistant city mayor for housing, councillor Elly Cutkelvin (pictured) says it finds some of the worst conditions in the private rented sector.

She adds: “We are committed to working with and supporting landlords and tenants to improve the quality of private-sector rented housing in the city and protecting the most vulnerable people by ensuring their housing and their landlords meet a higher standard in terms of management and safety.”

View Full Article: LATEST: Leicester ploughs on with selective licensing despite landlord criticism

Tribunal makes blatant ‘one set of rules for tenants, another for landlords’ judgement

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A First Tier Property Tribunal has admonished a council for coming down too hard on a sub-letting and benefit-claiming tenant who flouted housing rules.

Fenland District Council had fined Vasil Iliev £35,000 for non-compliance of HMO regulations and renting an unlicensed HMO, but the tribunal reduced this to just £3,500 after it ruled there was no evidence he had exploited the occupants.

Housing officers discovered eight Bulgarian men living in four bedrooms at the flat above a takeaway in Norfolk Street (pictured), Wisbech, which was in a poor state of repair with four category one hazards (excess cold, fire, food safety and domestic hygiene, pest and refuse) and one category two hazard (electrical deficiencies).

Worst ever

One officer said the property was ‘the worst condition’ he’d ever seen and was unsuitable for housing. An Emergency Prohibition Notice was issued and the tenants moved to temporary accommodation.

Iliev claimed he was only a tenant and that the occupants were not paying rent but merely contributing £60 per week towards the bills and that he was helping them out.

Although the tribunal agreed the property was an HMO, it ruled that the council had only assumed Iliev was the landlord and didn’t try to establish the extent of his interest in the property.

Read more: the difference between an HMO and a bedsit.

It added that he had tried and failed to run the takeaway downstairs and then allowed members of the community to occupy the flat for a short period – well below the market rate of at least £100 per room or £400 a week.

Professional landlord

It said: “He is clearly not a professional landlord and the arrangement was not at a commercial rent.

“There was also no evidence that he had any knowledge of the requirements for private sector lettings or licensing. Since the applicant is in receipt of benefits it is likely to take a very long time for him to pay this amount and it is clearly sufficient to deter him from reoffending.”

Read the judgement in full.

View Full Article: Tribunal makes blatant ‘one set of rules for tenants, another for landlords’ judgement

What landlords letting abroad need to know about Making Tax Digital

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Letting out property abroad can be a great way of generating extra income.

The property might have been bought primarily as an investment but for others or it could be second or holiday home let out when not in use.

There are plenty of things to think about, though. Different countries have different rules on renting out properties, and you may have to obtain and pay for licences.

You will also have to consider how you will manage the property remotely and the many other issues from insurance to maintenance.

Another important thing to think about is tax.

There are already a number of issues to consider, but now Making Tax Digital (MTD), the UK’s government initiative that aims to revolutionise the way that we all report and pay tax, is changing the landscape again.

Regular reporting

Making Tax Digital for landlords will require regular reporting of your finances using MTD-compatible accounting software, such as that offered by Sage, or a ‘bridging’ software that can take data from sources such as spreadsheets and make it accessible to HMRC’s own software.

Using a good accounting software package has a number of benefits, including allowing you to manage your bookkeeping, invoicing and expenses all in one place – which also helps you to keep on top of your tax affairs.

MTD currently applies to businesses registered for VAT. As the staged rollout continues, most individuals currently using Self-Assessment will have to make the change to MTD by April 2024 for income tax accounting and reporting.

This includes landlords, but only generally if the income from their properties is greater than £10,000 per year.

MTD also applies to sole traders, however, and the incomes from the rental and any sole trader businesses are combined for the purposes of tax reporting under MTD. This also applies to rental income from foreign (non-UK) property.

There’s a difference between making a mistake and deliberately trying to avoid tax, of course, but even making an honest mistake can land you in hot water.

One of the key differences between the existing tax reporting system – which is generally done annually – and MTD is a ‘regular obligation’ to provide quarterly updates.

Penalty points

If you fail to meet submission deadlines, you will accumulate ‘penalty points’, and if these build up, fines will automatically be applied. A new penalty system is also set to be introduced for late payments.

Letting property abroad also has a number of tax considerations that are not specifically connected to the change to MTD, beyond the requirements to make regular update submissions.

And there may be local taxes on foreign properties to be aware of, for example, which could include purchase taxes, tax on sales, income tax on rents, and annual taxes related to the property value.

Also, you may end up being taxed twice on your rental income, but you can normally claim tax relief to get some, if not all, of this tax back.

View Full Article: What landlords letting abroad need to know about Making Tax Digital