Should landlords hold onto their properties for as long as possible following the BOE’s announcement that inflation fell to 8.7% in April?

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Despite the fall in inflation, The Guardian is reporting the financial markets are betting on an interest rate rises to 4.75% in June and 5.4% by the end of the year , the Office for Budget Responsibility (OBR) is still predicting that house prices will fall 10% over the next two years and David Miles, a senior economist at the OBR recently expressed the opinion “Those forces driving them up are going to be much weaker, I suspect, in the next 40 years than they have been in the past 40 years.” 

As a result of higher running costs, restrictive legislations, the prospect of slow growth in value plus significant risk of prices continuing to fall further until 2025 and the prospect of expensive improvements to time raise the EPC grades; many people recognise the time has come, especially for landlords whose real incentive in buy-to-lets has been the capital growth, to reinvest or retire now as traditionally, buyers pay more for properties during May, June, July and April (in that order).

While Rightmove report more seller confidence in the market (reflected by higher asking prices) both Rightmove and Zoopla warn sellers of the need to price their properties ‘sensibly’ and urge them to make sure pricing aligns with buyers’ expectations if they are serious about selling. Zoopla also reported that house buyers are seeking out better value-for-money areas and smaller homes with lower running costs.

Comparing sales in April 2023 to April 2022, they are reporting higher demands for properties in the lower priced 40% of the market and lowered demand for properties in the higher-priced top 40%, potentially making the sale price of bigger properties have to ‘work harder’ to attract interest which could be great news for landlords wanting to rethink their strategies and replace lower yield single occupancy houses with higher yield, upmarket HMOs with suitable EPC grades already in place.

How should landlords react to these market indicators and when?

There is no definitive answer that is correct for all landlords because the best course of action depends on individual circumstance and factors such as motivation, yield and equity but in the last year, over 200 landlords have reached out to specialist estate agency Landlord Sales Agency to cash-in their earnings and protect their equity.

David Coughlin, CEO Landlord Sales Agency said “Landlords choose us because we are specialist and we take on the whole challenge from listing to completion with everything in between. We find solutions for every stakeholder including tenants. Many of our sellers have come to us after years of trying to sell their properties through other estate agencies. They return to us time after time because we deliver on what we promise: speed, price and minimum disruption to their business.”

• We sell all types of property with all types of tenancies from ASTs to HMOs
• Sellers do not have to wait for tenants to leave or pay for empty properties while the property is sold
• We sell properties individually or as small, medium and large portfolios
• Landlords can release large amounts of equity fast and we can provide cash advances on agreed sales
• We have teams across the country and we pay for essential repairs to ensure properties sell quickly and for the best price 
• We have built up a database of over 30,000 private buyers and investors who compete to offer sellers their best prices
• We arrange vacant possession where necessary by helping tenants to relocate using practical, financial and specialist help from organisation s including local councils
• We sell properties to investors without disturbing tenants by collecting references and payment histories as ready-made business opportunities 
• We help landlords avoid legal disputes with problem tenants through mediation to save time, money and stress to all parties
• We use non-refundable deposits to protect sales from collapse or market changes
• More than 95% of agreed sales complete within 56 days

Get in touch today to find out what Landlord Sales Agency can do for you to help you decide your best option.

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View Full Article: Should landlords hold onto their properties for as long as possible following the BOE’s announcement that inflation fell to 8.7% in April?

Commercial property industry supports a record number of UK jobs

admin    Uncategorized     agents

Commercial property is an important part of the UK economy, but the retail and office sectors as still suffering and rising interest rates present a real threat.

A recent report carried out by property consultancy, Lichfield, commissioned by the British Property Federation (BPF), finds that the sector recovered strongly in 2022. Coming out of the Covid pandemic the sector has faired perhaps better than expected, supporting a record number of UK jobs.

The BPF carries out an annual assessment of the commercial property market in the UK. This takes in the sector’s economic economic performance: it looks at the involved jobs, the labour market, the sector’s output and turnover, the tax revenues generated for the government and capital investment across the sector.

According to the report, the UK commercial real estate sector, either directly or indirectly, supported more than 2.6 million jobs in 2022. That represents, throughout the supply chain, a 10% increase on 2019, the equivalent says the report of one in every 12 jobs.

The BPF identified an annual economic output of £137.5 billion generated by the UK commercial real estate market (a 28% increase on the year and 18% higher than pre-pandemic) with a contribution to the Exchequer through employment, transaction taxes and business rates amounting to over £42 billion in 2022.

Despite the difficulties following Brexit, Covid and the war in Europe, businesses in the sector have continued to invest heavily, with total capital investment reaching nearly £73 billion and supporting over 450,000 jobs.

Melanie Leech, Chief Executive, the British Property Federation, has said:

“The commercial real estate sector has demonstrated its resilience and despite a challenging economic outlook during 2022 is now supporting an even greater share of jobs across the country and contributing billions of pounds to the national economy.

“Businesses operating in the sector are continuing to navigate a combination of external pressures including build cost inflation, interest rates and skills shortages in key areas. At the same time they are fully committed to tackling the urgent need to reduce embodied and operational carbon emissions.

“This report shows what a significant economic partner the sector is to government and the importance of ensuring that it works effectively in partnership with the public sector not only to stimulate growth and increased productivity, but to create healthy sustainable communities across the whole country.”

Crisis on the high street

Britain’s high streets however are still in crisis, with approaching 3,000 shop closures last year, and with major retailing chains and independents struggling to maintain sales revenuse.

The cost of living crisis and inflation don’t help, but the root cause goes much deeper. Out of town and edge of town retail parks, parking costs in-town, online retailing and deliveries all have their parts to play.

There is no easy solution despite Government efforts to revive town centres with its levelling up agenda. There are other steps that can be taken according to Sirius Property Finance.

One such measure could be adjusting business rates by introducing new rateable values based on figures taken on April 1, 2021, thereby allowing for the Covid pandemic’s severe impact on rental values. But, as the company points out, it may be too little too late as this measure fails to take into account the drop in retail rents over the same period, significantly diminishing its effectiveness.

Smaller businesses and independent shops based outside of London are particularly affected. The evidence is readily apparent: just over 500 stores and over 5,600 jobs have been lost already in 2023. Although some of these may be transferred or replaced, some will be lost for good.

It’s a major issue for landlords. When a property becomes vacant all the costs fall back on the landlord, and if there is often a long void period. It takes deep pockets to see the crisis through. When a commercial tenant leaves the liability for business rates falls directly onto the landlord. There is a three-month exemption period for empty shops, but after that the landlord pays full business rates.

That’s not all, insurance also falls back on the landlord too and when a unit is empty the premium can easily double because of the higher risk. Therefore security measures may be needed and utilities bills also become payable.

During the current economic climate, when good tenants are hard to find, and re-letting can be a length process, the rating grace period of three months is far too short. Lengthening this could make a big difference.

The government’s Levelling-Up and Regeneration Bill is currently progressing through Parliament, but its promises as a solution, granting local authorities more powers to take over any high street property that has been vacant for over one year, is not popular among landlord. This would auction vacant properties off for rental to the highest bidder, to the benefit of the local economy, but not necessarily in the landlord’s interests.

Not an ideal solution to the high street crisis think many industry experts. Most see reforming of the business rates system as the most urgent action and key to saving Britain’s high streets.

The logical solution, according to Sirius, is to provide rates relief, with an overhaul of the business rates system long overdue it says. With retail property currently accounting for around 25% of all business rates paid by UK companies, despite their adding less than 10% to GDP, it all seems out of proportion.

Meanwhile, internationally

Rising interest rates as posing higher risks to US banks. Commercial loans look like destabilising some US banks as interest rates there threaten to rise to around 7%. JPMorgan CEO Jamie Dimon has warned that commercial-real estate loans could cause problems for US banks.

The US banking sector is still recovering from its worst crisis since the 2008 financial crisis, but these difficulties may have further to run, with the JPMorgan & Chase CEO Dimon warning that the next issue to hit the US banking system could come from commercial real-estate loans.

Higher interest rates, tighter credit conditions, and the trend to working-from-home, are causing vacancies in the office sector. All that’s causing concerns about potential loan defaults by property borrowers in the US, and what happens there is often followed up here, where interest rates are also set to continue to rise.

View Full Article: Commercial property industry supports a record number of UK jobs

Rental homes must be ‘reserved for locals’ in Airbnb hotspots, says Tory MP

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A Conservative MP has called for tenants to be offered affordable homes in tourist hot spots if they can prove they’re local.

During a Commons debate on short-term holiday lets, East Devon MP Simon Jupp (pictured) suggested that councils could be allowed to reserve a percentage of new builds for people with a local family or economic connection to an area.

The tenant or buyer would have to prove one of the following conditions: that they currently live or work within 25 miles of the property, they were born within 25 miles of the property, or could demonstrate a care network within 25 miles of the property.

A covenant would permanently protect a percentage of any new housing stock from short-term let or second home ownership.

Local first

“We undoubtedly need to build new homes in East Devon, but we should aim to look after locals first,” said Jupp. “The government can be creative and proactive in looking at all possible options – only then will there be a better balance.”

Fellow Tory MP Kevin Foster, who brought the debate, said the government should create a planning system that let local communities strike the right balance between providing accommodation options for tourists and ensuring a supply of housing for locals, which was vital in providing the staff and services to support tourism.

An amendment to the Levelling-up and Regeneration Bill would introduce a registration scheme for short-term lets and a consultation into how this would work closes on 7^th June.

There are also plans to restrict the ways in which homes can be flipped into short-term lets by bringing in new permitted development rights so that councils could limit their use in geographical areas with the highest number of short-term lets.

Watch his speech.

View Full Article: Rental homes must be ‘reserved for locals’ in Airbnb hotspots, says Tory MP

BLOG: Should landlords switch on to electric vehicle charging points?

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Electric vehicle charging expert Matthew Gibbons (main picture) explores the pros and cons of installing the different equipment at rental properties.

Rented properties with EV charge points are a rare thing, so installing one makes a home more desirable, increases demand and means landlords can charge a premium rent. Research shows that 76% of homes with an EV charger increase in value when compared to the local average.

Demand for EV charging opportunities will only grow over the coming years, so it’s an effective way to futureproof the property.

Capacity

But before deciding to install an EV charge point, landlords must determine whether the electrical capacity of their property can support the additional load of an EV charger, particularly if multiple charge points are being installed.

If the installation requires cabling or other elements to be placed in or on another person’s property, all parties must agree to the work through legally binding arrangements. This is often the case if private parking is in an area away from the property and this land is not owned by the landlord.

On-street parking causes the most concern, as charge points cannot be installed on public land if they are for private use.

A solution to this is installing the charge point on the outside of the property, allowing the tenant to run a covered cable across the pavement to charge their vehicle.

For properties with off-street parking that is not dedicated to private bays, a wall-mounted charge point can be installed.

Costs

There are additional installation costs associated with installing a charge point further from the property’s main energy supply, and without private parking it can be difficult to stop others from parking in front of the charge point and in the spaces around it.

Most blocks of flats have a private car park with dedicated bays for each household, making them the ideal location for EV charge points.

If an entire building is owned by one landlord, some may choose to install one charge point for every individual household or every parking bay, but another option is to install communal charge points to be shared between the tenants.

Once charge points are installed, a landlord should decide how they want to manage them. ​​Most manufacturers offer a smartphone app that connects to the charge point. All power used is added to the property’s electricity bill, leaving the management of the charge point to the tenants.

HMO properties

Another method, which is most beneficial for communal charge points at a block but also for HMOs, is a rental app such as CoCharger.

The landlord creates a ‘host’ account and registers the charge point to the app. Tenants of the property then create a ‘chargee’ account, which can be linked to the host. The landlord sets a price per hour for the use of the charge point and tenants can book the charge point using the app.

Grants

The Office of Zero Emission Vehicles provides a grant for landlords who install EV charge points at their properties. This grant can cover up to 75% of the cost to buy and install a charge point, with a £350 limit.

Landlords can apply for up to 200 grants for their residential properties per financial year, and these installations can be for one property alone, or across several properties.

The grant only applies to properties with clearly defined private parking spaces, and the works must be carried out with an OZEV-approved installer using an OZEV-approved charge point model.

Servicing

Once EV charge points are installed at a rental property, landlords must service a charge point every 12 months to ensure that it works correctly. Landlords should also review their current insurance policies to ensure that charger-related liabilities are covered.

Finally, the rental agreement for the property should be updated to include relevant information, rules and regulations regarding the charge point while tenants should also be made aware of their responsibilities.

Most difficulties around installing an EV charge point can be overcome, and the adoption of greener transportation is vital for the country’s net zero goals.

Matthew Gibbons is MD of Plug&Drive.

View Full Article: BLOG: Should landlords switch on to electric vehicle charging points?

Are there certain areas worth investing in following Government’s Levelling Up plans?

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In the Spring Budget, the Chancellor announced a raft of measures that the Government intends to help ‘level up’ the UK.  Specifically, they’re pledging to prioritise:

• Employment: boosting labour supply
• Education: providing everyone with the skills and support they need
• Enterprise: providing the right conditions for businesses to succeed

When investment is made into the infrastructure and economy of an area, it attracts businesses and creates employment opportunities, which can, but not always, boost the demand for housing. And, if this generates more wealth and the desirability of an area increase, that can drive up prices and rents and create new property investment opportunities. For property owners and landlords, it’s well worth being aware of which areas are being targeted for government and institutional investment. The earlier in the process you can take advantage of property investment opportunities, the better your medium to long-term returns could be – both in terms of equity growth and rental profits.

Investment Zones

The Government has identified eight ‘Investment Zones’ in England:

• The proposed East Midlands Mayoral Combined County Authority
• Greater Manchester Mayoral Combined Authority
• Liverpool City Region Mayoral Combined Authority
• The proposed North East Mayoral Combined Authority
• South Yorkshire Mayoral Combined Authority
• Tees Valley Mayoral Combined Authority
• West Midlands Mayoral Combined Authority
• West Yorkshire Mayoral Combined Authority.

Each of these will have access to £80m worth of ‘interventions’ over five years.

The Department for Levelling Up, Housing and Communities is also working with the devolved administrations of Scotland, Wales and Northern Ireland to establish how Investment Zones will be delivered in the rest of the UK.

These plans are to work out how to ‘create’ the Canary Wharf’s of the future, so if they go ahead, they could make a huge difference to the local areas chosen. However, these are very long-term projects.  As such, it could be the investment payback could take a decade or more and indeed, with a general election in 2024, Investment Zones may change or never get off the ground, so it’s important to keep up with local news of what’s happening in these areas.

Levelling Up Regions

Over the next three years, more than £400m will be invested into the 20 regions considered most in need of levelling up.

The 20 areas are: City of Kingston upon Hull, Sandwell, Mansfield, Middlesbrough, Blackburn with Darwen, Hastings, Torbay, Tendring, Stoke-on-Trent, Boston, Redcar and Cleveland, Wakefield, Oldham, Rother, Torridge, Walsall, Doncaster, South Tyneside, Rochdale, and Bassetlaw.

These projects are likely to be much smaller, but if well targeted, they could deliver an extra boost to prices and rents in the immediate vicinity of the places that are being regenerated.

Regeneration projects

More than £400m has been allocated to specific regeneration projects, the majority of which are in the North of England and the Midlands. They include:

• A research campus in the Liverpool City region
• Transforming Bootle town centre
• A new community hub in Stockport
• £20m each for Sandwell, Redcar and Cleveland, Blackburn with Darwen, Wolverhampton, Rotherham and North-East Lincolnshire

 
To find out about specific plans for your area – or an area you might be considering investing in – you can visit the local council planning department, which will have details on infrastructure changes and any new commercial and residential building.

To find out more specifically about how the supply and demand of property is likely to change and which local areas might best suit your own letting plans, contact your nearest Leaders branch and one of our team will be very happy to help.

View Full Article: Are there certain areas worth investing in following Government’s Levelling Up plans?

Tax return information in a matter of seconds

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Preparing your annual tax information for your accountant can be a very time-consuming exercise! Alphaletz has just released a new update to help landlords get the information they need in a matter of seconds.

It’s in a format that makes it extremely easy for accountants

View Full Article: Tax return information in a matter of seconds

Periodic tenancies will ‘decimate’ the student rental sector, warns NRLA

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The NRLA says Government measures to abolish Assured Shorthold Tenancies (ASTs) will ‘decimate’ the student housing sector if they go ahead unchanged.

Featured within the Renters (Reform) Bill, this will see ASTs replaced with more flexible open-ended ‘periodic tenancies’ which in effect will enable tenants to quit their properties at any point after giving two months’ notice.

While this may give renters in the general rental market more flexibility, it is likely to cause chaos in the student housing sector.

It relies on striking a balance between students signing up to live a property for a year and allowing them to move out once their exams are over, an arrangement that’s factored into their rent.

But the Government’s plans for open-ended periodic tenancies with two-month notice periods will have several disruptive effects on the student market including, as LandlordZONE reported back in August last year, that landlords will find it harder to offer students ‘guaranteed’ room in houses for the next academic year until the incumbent tenants give notice.

Uncertainty

Periodic tenancies will also bring more uncertainty for landlords because, if a student decides to quit a property half-way through a semester, finding a replacement will be difficult, it is claimed.

For these reasons landlords have been calling on the government to amend the reform bill to give student landlords ‘special dispensation’ in the same way operators of corporate Purpose Build Student Accommodation have.

“As it stands the Bill will decimate the student housing market,” says Ben Beadle (pictured), Chief Executive of the National Residential Landlords Association.

“Plans for open ended tenancies mean landlords will have no certainty about properties to rent being available at the start of each academic year.

“The Bill will also mean rental periods will only ever be one month at a time. As a result, students will be unable to pay rents to cover a term at a time, in line with their student loan payments.

“Major changes will be needed if the Government wants a viable student housing market.”

Read more: Ultimate guide to student properties.

View Full Article: Periodic tenancies will ‘decimate’ the student rental sector, warns NRLA

Daily Telegraph wants to speak to landlords who are facing problems remortgaging

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Are you a landlord who is facing difficulties remortgaging? Then, Alexa Phillips, the personal finance reporter for the Telegraph would like to speak with you.

Alexa would like to ask Property118 readers about:

• How are banks assessing your affordability?

View Full Article: Daily Telegraph wants to speak to landlords who are facing problems remortgaging

Investor squeeze sees off-plan sales plummet

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Off-plan sales for new homes have continued to plummet as property investors avoid buying, research reveals.

Real estate firm Hamptons says that just 34% of new homes in England and Wales were sold in advance of completion last year.

View Full Article: Investor squeeze sees off-plan sales plummet