Welsh minister backs review of existing higher stamp duty rates for landlords

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Welsh Minister for Climate Change Julie James has backed the NRLA’s call for a review of property taxation in the PRS.

Speaking at the launch of the group’s State of the Welsh Private Rented Sector report, the Minister said she was “very interested” in looking at how to ensure a level playing field around Land Transaction Tax and would welcome ideas about supporting the provision of long-term rental homes.

NRLA research found that 76% of Welsh landlords say demand for rental properties has increased in the first quarter of 2023, however, despite this, 48% planned to cut the number of properties they let.

It has urged the government to exempt the purchase of additional homes for long term rent from the 4% Land Transaction Tax levy. It says this would encourage landlords to bring properties into the sector, potentially where they were previously vacant or in a state of disrepair.

Better information

James also accepted the NRLA’s calls for better information about the sector in Wales after the report warned that the availability of comprehensive, up-to-date, and official data on who lives in the sector, its exact size, and the type of properties remained limited.

The Minister agreed the government needed to improve this to make decisions affecting the rental market and also backed a potential Welsh Housing Survey.

Hampered

Chief executive Ben Beadle says it’s a welcome move. “Too often good decisions have been hampered by a lack of robust data on the state of the rental market,” he adds. “We will continue to work with the government to ensure policy is rooted in evidence and what works for responsible landlords and tenants.”

Earlier this month, the Welsh government launched a consultation on fair rents and adequate housing in which James revealed she was considering rent controls.

View Full Article: Welsh minister backs review of existing higher stamp duty rates for landlords

Landlords sell their high-yield properties amid surging mortgage rates

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Landlords are now scrambling to sell their high-yielding rental properties as rocketing mortgage rates hit profit margins on even the most lucrative investments, the Daily Telegraph reports.

In data provided by Hamptons estate agents, the report reveals that 25% of buy to let properties sold this year have boasted yields of 7% or higher.

View Full Article: Landlords sell their high-yield properties amid surging mortgage rates

MORTGAGES: Worried landlord tells BBC how his payments have tripled

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Paul Bradley, a landlord with a single rental property in North London, has told the BBC how the ongoing mortgage crisis has seen his monthly interest-only loan payments triple over the past 12 months.

His case illustrates vividly the significant challenges that the approximately 500,000 landlords who own BTL properties via mortgages in the UK now face as their costs ramp up, and the Government’s removal of Section 24 mortgage relief come home to roost.

Bradley, who is 74 years old, told the World at One programme how he became an accidental landlord after moving from London to the West Midlands some years ago.

He told presenter Sarah Montague (main picture) that his usual mortgage payments have been £304 a month, which he paid via the £1,000 per month rent he charged his long-standing tenant.

Payments tripled

But the recent interest rises have seen his payments, which are for an interest-only mortgage rather than repayment, triple to £923 a month.

“If you take away the tax that I pay on that revenue then in effect I am now subsidising him to live in the property,” he said.

Bradley said he therefore has no choice but to sell the property and has served notice on the tenant, who has refused to move out and an attempt to seek possession of the property has now begun as his mortgage arrears build up.

“I work part time so there isn’t much spare money so until this is resolved there won’t be any holidays or going out for evening meals – that’s all gone.”

Listen to the programme.

View Full Article: MORTGAGES: Worried landlord tells BBC how his payments have tripled

EXCLUSIVE: More tenants failing reference checks as cost-of-living bites

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The number of tenants passing referencing checks has dropped off drastically as the cost-of-living crisis bites.

Rent guarantee firm Housing Hand reports that about 35% previously passed checks, but that the number is dropping and could now be as low as 25%. Another 40% will get accepted using a guarantor, but that means up to 35% will fail to achieve either.

“Referencing has become more stringent and it’s partly about ID checks, which shouldn’t be a problem for legitimate renters, but it’s also about their financial capability,” COO Graham Haywood (pictured) tells LandlordZONE.

David Coughlin, director of the Landlord Sales Agency, says he knows of one instance where a landlord has sold a property and the letting agent is trying to find his tenant a new home – however, this tenant has failed to pass current credit checks which are now more stringent than when he moved in years ago. Despite having paid his rent on time, the task is proving impossible.

Salary test

“We’ve heard of similar cases,” says Haywood. “Paying your rent on time doesn’t necessarily give you a financial qualification.

“Referencing firms would typically base their test on three and a half times a would-be tenant’s salary but as rents have gone up, that can be four or even four and a half times their salary.”

He adds that in the last six months, Housing Hand has seen a 50% rise in applications for guarantees and that it’s not just young people who need to use its services, but older – even elderly – renters as well, particularly if they’re not in full-time employment.

“People are being challenged in terms of their income not going up,” says Haywood.

“There are also pressures on landlords paying higher mortgage rates, and the next few months aren’t likely to get any easier.”

Read more: ultimate guide to referencing.

View Full Article: EXCLUSIVE: More tenants failing reference checks as cost-of-living bites

UPDATE: Councils to give landlords more time to find out about licencing launches

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Councils have been given three months longer to launch selective licencing schemes, new Government guidance has revealed.

An update to the Department of Levelling Up, Housing and Communities’ advice to local authorities considering or planning a selective licencing scheme has been updated to say that the “introduction of [a] scheme may be delayed up to an additional three months [on top of the existing three-month limit], if need be, to prepare for the scheme’s implementation”.

The updated rules apply to schemes which cover less than 20% of a council’s housing stock, and which therefore can be self-approved by councils.

“If a further delay is required for schemes approved by the Secretary of State [i.e. those over 20%] then this must be discussed with the department in the early stages of the application process and good cause must be provided,” the guidance adds.

Extra time

It clarifies that the extra time is partly to ensure that people – i.e. landlords or agents – who are likely to be affected by the designation have been consulted.

LandlordZONE understands the changes are to help councils deflect criticism that they don’t give landlords enough time to find out about licencing launches. This follows complaints by many that they were unaware that selective licencing schemes were about to start, particularly if they lived outside an authority’s borders.

One celebrated case of this was landlord group iHowz’s criticisms of Ealing’s implementation, with many landlords complaining about ‘being kept in the dark’ about the councils plans.

While agents have platforms like Kamma and London Property Licencing to help them keep abreast of local licencing requirements, private self-managing landlords are more exposed and, as our many stories about Property Tribunal decisions reveal, are often caught out.

DHLUC has been approached for comment.

Read the guidance.

View Full Article: UPDATE: Councils to give landlords more time to find out about licencing launches

VIDEO: ‘Best landlord in UK’ gives unusual advice to other investors about profits

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Treat tenants like customers and stop thinking about profit if you want to make a success of property investing – that’s the advice of lettings and landlord professional Tom Soane, who boasts that it’s made him the ‘best landlord in the UK’.

“Your property is a product, tenants are your customers, and property management is customer service,” he explains in his latest YouTube video.

“Any business tries to keep customers happy, so think ‘what can I do to make them comfortable and happy and with the best quality product?’ This makes them a better, long-term tenant and keeps your asset valuable as they look after it.”

Soane believes that if landlords stop focusing on profit, they will ultimately make more money because they can then charge the top end of the ‘fair market value’.

He also advises investors not to challenge every expense in order to create a more stress-free life for both themselves and tenants.

“What’s the point? If a boiler needs repairing, I could argue with the lettings team and get comparison quotes, but there’s a cost to time as well as the trust and confidence of the lettings team. You start getting contractors to do comparison quotes, you’ll lose working with them.”

Every decision

He also reckons that delegating jobs to agents is more sensible than getting involved in every decision. “If it’s something that needs to be done and it can be covered by the rent, just get it done,” suggests Soane.

Appreciating that earnings will fluctuate each month means he focuses on the long term. “Investing in property isn’t a guarantee and there are risks,” he adds. “You didn’t invest in property for the short term, you’re building financial security, not so you could just sell it at the end of the year.”

Watch the video in full.

Pic: YouTube

View Full Article: VIDEO: ‘Best landlord in UK’ gives unusual advice to other investors about profits

Welsh Minister supports tax review proposal for the PRS

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The Welsh Minister for Climate Change, Julie James MS, has expressed her support for the National Residential Landlords’ Association (NRLA) proposal to conduct a comprehensive review of taxation in the private rental sector (PRS).

The endorsement came during the launch event of NRLA’s State of the Welsh Private Rented Sector report

View Full Article: Welsh Minister supports tax review proposal for the PRS

Landlords encouraged to sell this month as property prices rise by 0.2%

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In a market where interest rates are sky high, tax bills are extortionate and mortgage payments are higher than rents, coupled with a backlog of refurb costs and difficult tenant situations, landlords are rushing to cash in and sell their property portfolios.

If you were a landlord on the fence about whether or not it’s a good time to sell, this month’s stats are the window we all needed to take action.

The market has been falling. Figures show that the current property market is 4% below what it was last year. Put simply, we cannot afford to let it drop further. Landlords need to sell, and fast, to get as much money back as possible whilst they still can. It couldn’t have come at a better time, therefore, that this month’s blip might be the window we all needed to cash in.

This week, property expert Kate Faulkner reported that we’re currently experiencing a 0.2% market rise this month. If we needed a sign, this is it. But how do we take advantage of this window to get the highest price for our portfolios? And who’s the best company to sell now, and fast, for the best possible price?

That’s where Landlord Sales Agency come in. We’re proven experts at selling landlord portfolios, fast and higher than the current market rate. In the last year alone, over 200 LandlordZONE landlords reached out to us at Landlord Sales Agency to sell their buy-to-lets. Of those landlords, the average time it took for Landlord Sales Agency to sell was below 28 days. Twice as fast as the current market, and for higher prices.

We do exactly what we say we’ll do, and with a huge database of over 30,000 private buyers who get notified of our deals via text message as soon as you get in touch with us to sell, we’re selling properties faster than anyone else.

But what about tenanted properties? Many landlords are worried about tenants holding them back, you don’t need to. That’s where we excel the most. Because our company is owned by a landlord, myself, David Coughlin, I’ve gathered the best team in the country to help solve all my tenant issues, and I personally use that same team for you.

In fact, we go above and beyond to sell tenanted properties. We’re so confident we’ll get you a high price for all of your properties, fast, we have no problem helping tenants pay their current rents, pay off arrears, pay for them to relocate and in some cases, even pay their rent in advance for the next landlord who takes your property on. For very difficult cases, we’ve got the best relationships with local councils across the UK allowing us to get councils to pay rent for tenants, clear any outstanding funds they owe you and even have the councils pay off all their legal costs.

For houses with stubborn survey issues, we bring on board our entire building team and housing networks to resolve every single problem, ensuring that sales don’t fall out of bed, and that landlords like you don’t have to take a big drop in price.

It’s as straightforward as that. No hassle, no nonsense. We get landlord properties sold.

Get in touch and let us do it for you.

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View Full Article: Landlords encouraged to sell this month as property prices rise by 0.2%

UPDATED: consider these things before you increase your tenant’s rent

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With interest rates rising and this reflected in mortgage rates, landlords are being forced to contemplate rent increases. If you go down this road you need to be aware and follow the rules.

As landlord you can’t legally increase your rent whenever you like, or by any amount you see fit. You need to follow certain rules if you decide that the rent is inadequate and you need your tenant to pay more. Keeping your rent reasonably in-line with local market rents is sensible because if you allow the rent amount to fall too far behind you will find it difficult if not impossible to catch it up.

If you can agree a new rent which is acceptable to both you and your tenant, all well and good. If not you have to follow the correct legal procedure using Section 13 of the Housing Act 1988. This is subject to change with the introduction of the Renters (Reform) Bill 2013, currently passing through Parliament.

The economic environment has changed considerably within the last 12 months making it more likely that you will need to consider a rent increase, even if you have not done this before with your long-term tenants. With inflation hovering around 10 per cent in the UK and mortgage rates approaching 6 per cent many landlords will have no choice but to increase if they are to avoid running at a loss.

Before embarking on the process of increasing your rent, consider these points:

1  – It could force good tenants to leave.

It might not be a large amount you’ve increased the rent by, but don’t underestimate how this could offend a good tenant who pays rent on time and looks after the property. If you reward good tenants who want to stay and make your property their home for a long period of time, does it really make a difference to get a bit extra each month? Consider carefully if you’re prepared to put your property back on the market if the tenant doesn’t accept the increase…

2 – Can the rental market sustain an increase?

Should your tenant decide not to accept the increase they may give you notice to leave. During a periodic term, this will be 1 month. This will mean you will need to prepare your property for market, take photos, book in any repairs and try to arrange viewings with a potentially disgruntled tenant in place. Along with this, you’ll have your fees for advertising and management percentages to fork out, unless you self-manage.

The agent’s fees can be reduced if you go it alone or use an online letting agent. Once on the market, you don’t know if it will let for the increased amount. You also need to consider seasonal variations; such as the decline over the Christmas period, and general market conditions i.e. is supply exceeding demand?

Currently the market is strong in most areas, so bringing the rent to a market level, or ideally just below that, should not trigger a move, but until you try you will never know. Speak you your tenant and explain the situation you are in, with your increased costs and what the market rent should be.

3 – Can the tenant afford a rent increase?

Let’s say your tenant accepts the rent increase, can they even afford it? Affordability checks at the initial referencing stage were based on the rent price then and their salary at that point in time. As we know from being a landlord – things change. There is a chance they may not be able to afford the increased amount. Also consider that they may be earning less than before if they changed jobs. Plus, it’s well documented that wages aren’t increasing at the same rate as rents, particularly in the South East and London.

4 – An increase could lead to your tenant falling into arrears.

If your tenant accepts the increase, not wanting to leave the property but also not seriously considering the implications on their finances, it may lead them to fall into arrears. Even a difference of £50 a month could trigger this, particularly if a tenant’s wages aren’t increasing but their monthly outgoings are. It could end up costing you a significant amount if you need to issue court proceedings for possession based on rent arrears. There are currently more landlords dealing with tenant arrears and this is only set to worsen with the cost of living crisis, tax changes  and rents predicted to rise even faster than wages due.

5 – Will you be left with a void period?

If your existing tenant leaves because of the rent increase, you could be left with a void period because there is no guarantee you can quickly find a new tenant. Void periods can be very costly, even a 1 month void means you’re not only missing out on a month’s rent, utility bills and council tax, you will also have to pay the mortgage that month. Many investors rushed to complete purchases before April this year when the increased stamp duty tax rate affecting landlords came into play. Although the rental market is strong, not all areas are in high demand, so do your research and determine if there is enough demand before embarking on an increase.

6 – Do you really need to?

If you’re currently achieving a good yield then remember this is a long term investment based also on the capital growth of the property. Of course there are these increased expenses for you as a landlord and particularly with the new tax regime post 2017, your profits will be affected. But on balance it might be better to keep hold of a long-term tenant that looks after your investment and pays the rent in full and on time each month.

7. Consider small incremental increases

If you rent has fallen a long way behind with your long-term tenant don’t thing about going for a large increase in one go. Consider small incremental increases to bring you rent back into line over a period of years. You tenants should appreciate the need if you explain this to them and that you are only increasing by a smaller amount that is really necessary. If you increase annually by a small amount your tenants will usually accept this without question and even come to expect it as they see all their other costs increasing.

8. Using the legal process

If you decide you really must increase the rent but cannot come to an agreement you must you the legal process.

Section 13 of the Housing Act 1988 is a statutory mechanism in the Act that enables the rent to be increased for any type of assured tenancy. There are a number of specific rules to comply with:

1 – The section 13 notice applies only in periodic tenancies, it cannot be used during a fixed term tenancy. If the fixed term is very long, because of this it is important to include some kind of rent increase mechanism in the tenancy agreement, most standard agreements will include one of these. If this is absent, unless the tenant voluntarily agrees to an increase, it will not be possible to increase the rent during the whole fixed term.

2 – A section 13 notice cannot be used where there is a contractual periodic tenancy that contains a rent review clause. However, where a fixed term tenancy becomes a statutory periodic tenancy a rent review clause will no longer apply. To increase the rent the landlord or agent must then use the section 13 procedure or obtain the tenant’s agreement.

3 – A section 13 notice is a prescribed form, that means the wording must comply with the Act as it dictates what wording needs to be on the notice (there is a free Form 4 notice online – see below) and what it must look like. When a section 13 notice is served the notes explain to the tenant how to fill in the form and it also explains to the tenant how to go about appealing the rent increase.

4  – Once served, a section 13 notice cannot be used a second time until after 12 months. The first time can be served immediately after the fixed term. So with a six month tenancy, you can serve a section 13 notice at the start of a statutory periodic tenancy. But if the tenancy is a periodic one from the outset, the 12 month limit applies from the start of the periodic tenancy.

9. The Section 13 notice

The landlord serves a notice of increase of rent in the prescribed form (Form 4). This includes information for the tenant advising them of their right to refer the increase to a https://www.gov.uk/courts-tribunals/first-tier-tribunal-property-chamber.

Once the notice has been served with the proposed increase in rent it cannot take effect earlier than a minimum period set out in the Act: for a year’s fixed term that is six months, less than a month, it is one month and for a tenancy of a month or more (but less than a year), it is one period of the tenancy. The increased rent will apply from the expiry of the notice period, unless either the tenant refers the notice of increase to the tribunal or landlord and tenant agree to a different rent.

The tribunal will determine a market rent for the property, a rent that could reasonably be expected to be obtained in the open market for a similar property let on similar terms.

10. Keep an eye out for the new regulations – Renters (Reform) Bill

The Bill has yet to become law, but there will be changes. The new Act will remove the fixed term tenancy. It will end the use of rent review clauses and only allow rents to increase once per year. Rent increases will be through one mechanism, replacing the existing section 13 process under the Act, and landlords will have to give 2 months’ notice of any rent change. That’s how things stand at this time unless there are changes as the Bill passes thorough Parliament.

The Renters’ (Reform) Bill white paper said it plans to end the use of rent review clauses, “preventing tenants being locked into automatic rent increases that are vague or may not reflect changes in the market price” and it goes on the say that “any attempts to evict tenants through unjustifiable rent increases are unacceptable”.

In cases where increases are disproportionate, the Government says it will “make sure that tenants have the confidence to challenge unjustified rent increases through the First-tier Tribunal” and it will “prevent the Tribunal increasing rent beyond the amount landlords initially asked for when they proposed a rent increase”.

View Full Article: UPDATED: consider these things before you increase your tenant’s rent

Stop, read, contact – if you don’t there is a cost of delay!

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Unless you’ve been travelling around on Jeff or Elon’s space rockets recently, you would not have missed the chaos and turmoil in the mortgage market. In just the last week or so, major lenders pulled all of their products from the market and did not replace them straight away.

View Full Article: Stop, read, contact – if you don’t there is a cost of delay!