Interest Rates Have Risen To 2.25% – What does This Mean For UK Property Investors

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Interest Rates have risen by half a percent, to 2.25%. What does this mean for UK property prices and our housing market and how will this affect property investors?

How high will interest rates even go?

What should you do now with your existing buy to let properties?

View Full Article: Interest Rates Have Risen To 2.25% – What does This Mean For UK Property Investors

New short-lets charter to tackle noise and litter created by holiday makers

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North Devon Council has launched a best practice charter to tackle problems caused by the rapid growth of short-term lets in the county.

In partnership with the UK Short Term Accommodation Association (STAA), which hopes the initiative will soon go national, it’s a set of guiding principles for property owners, managing agents or hosts.

This includes the need to provide a clear code of conduct for guests, to provide neighbours with a 24/7 contact number to use if they’re bothered by noisy parties, and to ensure rubbish gets dealt with properly.

Last year it was reported that North Devon, which covers holiday hotspots such as Clovelly (pictured) has seen a staggering 70% drop in private rented properties over the last two years as landlords have swapped to short-term holiday rentals. 

Illegal activities

The council believes that by addressing the main issues that affect neighbours such as poor waste management, excessive noise, and reduced sense of community from a high turnover of guests, the charter will encourage positive contributions to the economies and communities of the district and help prevent any anti-social or illegal activities associated with holiday lets.

STAA chair Merilee Karr (pictured) says: “It shows that the vast majority of our industry that we represent is continually improving how we work in partnership with local councils and communities while creating long-term value for local restaurants and shops and providing much-needed jobs in local areas and extra income to property owners during the cost-of-living crisis.

“We would love to talk to other councils about replicating this charter across the UK.”

The government is currently consulting on how short-term holiday lets impact housing supply across cities and coastal resorts across England.

View Full Article: New short-lets charter to tackle noise and litter created by holiday makers

Green upgrades for rented homes ‘becoming too expensive’ for landlords

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Green upgrades for private rented homes are rapidly becoming prohibitively expensive for landlords, according to one UK bank.

They are already under pressure to raise properties’ energy efficiency standards – with expectations that rented homes could have to gain an EPC grade C for new tenancies by 2025 and for all tenancies by 2028 – but while they wait to decide whether to fund improvements, the cost of upgrading becomes more expensive by the day.

The BCIS Material Cost Index is forecast to reach 17.5% by the end of 2022 with a high degree of volatility across all material categories, says Mike Feasey, relationship director at Secure Trust Bank.

Private landlords also need to factor in the increase in labour costs for tradesmen to complete any retrofit work.

Landlord feedback

“We’re getting a lot of feedback from private landlords that high costs are proving a barrier when considering the benefits of upgrading their property’s energy efficiency credentials,” says Feasey.

“The cost of retrofitting existing buildings with green and sustainable measures will, in all likelihood, continue to rise and make it more difficult to recoup the cost of that investment throughout the remaining life of a property.”

With more than half of homes in England rated D or below for energy efficiency, he believes private landlords and investors still have options.

“Residential investment loans for investors to acquire or maintain an existing stock or release equity to fund further energy efficient residential projects are worth considering,” adds Feasey (pictured).

“Doing nothing is not an option because the danger is that landlords and investors will be left with properties that cannot be let and may prove difficult to sell.”

Earlier this year, research carried out on behalf of Paragon Bank revealed that one-third of landlords plan to quit the sector or do nothing to address energy efficiency failings if and when new EPC regulations kick in.

Read the ultimate guide to having a ecofriendly property.

View Full Article: Green upgrades for rented homes ‘becoming too expensive’ for landlords

LATEST: Chancellor cuts stamp duty but no direct tax relief for landlords

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Kwasi Kwarteng failed to deliver the hoped-for repeal of Section 24 in his mini-Budget but confirmed a permanent cut in stamp duty.

The chancellor raised the threshold before stamp duty is paid to £250,000 and for first-time buyers, to £425,000 – cuts universally panned by mortgage brokers who’ve labelled them a catalyst for stimulating an overheated property market.

As expected, next year’s planned corporation tax increase was ditched and will remain at 19%, the basic rate of income tax will be cut to 19p in April 2023 – one year early – the 45% top rate of tax for higher earners was abolished and Kwarteng also confirmed a reverse in the increase in National Insurance.

“We want this country to be an entrepreneurial economy,” he told the Commons. “The tax system needs to be much simpler – people should keep more of the money they earn. We are determined to break the cycle of higher taxes hampering growth – we need a new approach for a new era.”

Kwarteng also announced the creation of new investment zones, where the government will liberalise planning rules, release land and accelerate development. To increase housing supply and enable forthcoming planning reforms, it will also increase the disposal of surplus government land to build new homes.

Labour’s shadow chancellor Rachel Reeves (pictured) said stamp duty cuts had been tried before. “The last time the government did it, a third of people who benefited were buying a second or third home or buy-to-let property – is that really best use of taxpayers’ money when debt is already so high?”

She asked if the chancellor could confirm how much of the stamp duty cut would go to those buying multiple properties. “Instead of stamp duty going up like a yo-yo we need to get building, target support at first-time buyers and tackle the issue of homes being sold to overseas investors.”

Commentary

Rightmove’s housing expert Tim Bannister

“Demand has been softening over the last few months but today’s announcement is likely to stimulate some more demand.

“If it does lead to a big jump in prospective buyers competing for the constrained number of properties for sale then it could lead to some unseasonal price rises over the next few months.

“But because the change is permanent, and because of gathering headwinds such as rising mortgage rates, we expect to see a more gradual increase in demand compared with the surge when the temporary stamp duty holiday was announced in 2020.

“Plus, buyers could save up to £15,000 during the temporary stamp duty holiday, while the savings are lower with this change.

“The first-time buyer threshold change means we could see more first-time buyers who can afford it making a jump to a bigger home as their first move. With more buyer demand we would also expect that the current trend of more properties coming to market will continue, offering more choice for buyers.”

Read more about the stamp duty cut.

View Full Article: LATEST: Chancellor cuts stamp duty but no direct tax relief for landlords

How the Government’s mini-budget affects landlords

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The much anticipated mini-budget from the new Chancellor Kwasi Kwarteng delivered a few surprises for landlords.

Income tax rates have been changed and there is a cut to stamp duty.

However, one critic says the government has missed an opportunity to help renters deal with the cost-of-living crisis.

View Full Article: How the Government’s mini-budget affects landlords

Shelter calls for the unfreezing of housing benefit

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Nearly 1.1 million private renters in England – that’s one in seven – had their rent increased in the last month, a report from Shelter reveals.

The charity’s research shows millions of private tenants are ‘stretched to breaking point’ and that one in three (2.6 million adults) are spending at least half of their household income on rent.

View Full Article: Shelter calls for the unfreezing of housing benefit

Shelter claims 1.1 million tenants were asked to pay more rent last month

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Shelter is back on the campaigning trail with a new report that says one in seven or 1.1 million renters in England faced rent increase requests last month.

Its poll, conducted by YouGov among 2,031 renters and funded by Nationwide, also reveals that one in three are now spending half their household income on rent and that a similar percentage are struggling to pay their rent.

Shelter also says the poll reveals that private renters are paying higher housing costs than their social housing counterparts or those with mortgages.

The thrust of the organisation’s interpretation of the poll data is that unless the government helps those struggling to pay their rent, “a huge surge in homelessness is inevitable”.

It is urging the government to stop “this ticking timebomb by unfreezing housing benefit, which is lagging way behind rents, having been frozen at 2020 levels”.

The poll also reveals that of the 3.5 million private tenants who had their rent increased, more than 800,000 saw it put up by more than £100 a month, and nearly 200,000 were hit with rises of more than £300 a month.  

But the NRLA has contested the figures, pointing out that latest official data shows that average private rents across the UK have gone up by 3.4 per cent over the last twelve months.

Bear the brunt

“This shows that most landlords are prepared to bear the brunt of rising costs to keep tenants in their homes when they can,” says its Policy Director Chris Norris (pictured).

“There will be cases where landlords are simply unable to shoulder all the increased costs and need to increase rents accordingly. Where this causes difficulties, particularly for tenants on low incomes, the Government should end the freeze on housing benefits.

“Even before the sharp rise in inflation, the level of benefits was failing to reflect the cost of rents as they are today.

“Further increases in rents will also be driven by a chronic shortage of homes for private rent. This is a direct consequence of government action to discourage investment in the sector. Ministers need urgently to develop pro-growth policies to ensure supply meets demand in the rental market.”

Polly Neate, Chief Executive of Shelter (main picture) says: “With more than a million private tenants hit with a rent hike in just the last month, time is running out.  

“The already high cost of renting meant tenants were on the ropes trying to keep up with rising food and energy prices. Now runaway rents will deal many renters a knock-out blow.” 

View Full Article: Shelter claims 1.1 million tenants were asked to pay more rent last month