Short term letting to business travellers?

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Hello, does anyone have any experience of letting their property for short-term lets (3 months – 12 months) to business travellers? I have a property which has been refurbed and is empty right now, but at some point in the future

View Full Article: Short term letting to business travellers?

Landlords renting to illegal migrants face huge new fines

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Landlords face being put out of business with the government trebling the fines for those who rent a home to an illegal migrant.

The government says this will be the biggest shake up of civil penalties since 2014.

View Full Article: Landlords renting to illegal migrants face huge new fines

Sadiq Khan slammed over ‘well worn’ rent control calls

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Like a jack-in-the-box that keeps reappearing with an unwanted message, Assembly Members on the London Assembly are fed up with Mayor Sadiq Khan’s calls to bring in rent controls for the capital’s private rented sector.

They say he is distracting attention away from his own poor performance in the capital and he doesn’t have a plan for what to do with rent controls should he get them.

View Full Article: Sadiq Khan slammed over ‘well worn’ rent control calls

COMMENT: Government has got itself in a muddle over the rental market

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“Bidding wars, tenant CVs, queues outside properties – these phenomena have become common in the rental market across Britain.” So runs the editorial in this week’s Sunday Times.

According to Propertymark, the professional body representing estate and letting agents, there was a 49 per cent reduction in properties available to rent in March 2022, compared to March 2019. The UK average number of properties available to rent decreased from 30.4 to just 15.6 during the period, a clear indication of the loss of available rental space for people to live in.

During this same four-year period, 94 per cent of landlords removing their property from estate agents listings did so to sell. Only four per cent told Propertymark that it was to move to landlord self-management, while others said it was to move to short-term lets. Over half of rental properties sold in March this year alone did not return to the private rented market.

A Government that’s lost its way…

It’s a strong indication that the Government has lost its way, lost control of the property market to the detriment of tenants and buyers – it surely must be a major impediment to the conservatives in the run-up to a general election. The unpopularity with the public on this one issue is on a scale without precedent, and in my view was totally avoidable.

Tory policies have inflicted a great deal of pain on renters: rent rises have averaged just over 5 per cent in the 12 months to June this year, according to the Office for National Statis­tics (ONS). All indications are that rents in some parts of London could have increased into double figures over the same period. All this at a time when inflation is at its highest level for a generation, dramatically increasing the cost of living for renters and pushing up mortgage costs for landlords.

Rent squeeze

This “rent squeeze”, as the Times puts it, is the result of recent interest rate hikes by the bank of England and thereby higher mortgage costs, which landlords will do their best to pass on to tenants when their profits dwindle to zero or even into losses.

Interest rates are not the only cause of this rent squeeze: the dysfunction in the buy-to-let rental market started when George Osborne, the then outgoing Chancellor of Exchequer, introduced a fiscal policy in 2015, in conjunction with the Bank of England, aimed at cooling the buy-to-let market, which had seen phenomenal growth.

Financial crisis fears

This rapid growth of buy-to-let not only worried the Bank, fearing over-extended borrowers causing another 2008 style property and financial crash, it also resulted in a public perception of a growing cohort of multi-millionaire buy-to-let landlords becoming rich at the tenant’s expense. They were said to be buying up houses, preventing first time buyers entering the market. The media kicked up a storm and the Government gave in to this media pressure.

The Government relented with a 3 per cent stamp duty surcharge on second homes and buy-to-lets. It removed the 10 per cent depreciation allowance, and phased-in a reduction of mortgage interest relief over 4 years, to be replaced with a tax credit, increasing the exposure of rental income to taxation. All this achieved its aim – it did cool the buy-to let market.

Buy the old aphorism, “be careful what you wish for”, or the “law of unintended consequences” very much applies here: yes it may have punished those millionaire landlords, stopped them in their tracks. It may have cooled lending, especially when coupled with much stricter lending criteria, but the consequences – as warned incessantly by landlords – is an even greater punishment inflicted on tenants, many of them struggling working families and young people.

The current shortage of rental property is down to, in my view, these policies and the Government’s failure to encourage and assist the building of sufficient new housing in a country with net migration running into the hundreds of thousands.

Net migration

In 2022, according to ONS figures, net migration added over 600,000 more people to the UK population, that’s more people arriving long-term than leaving, and it’s equivalent to two towns the size of Newcastle. This represents an increase of just short of 120,000 more that the 2021 figure (488,000) and nearly double that of pre-pandemic levels, with the then net migration figure much lower at 333,000. The 2023 figure is likely to continue to be just as high again as in 2022.

A shift in strategy

One consequence of the Government’s squeeze on buy-to-let landlords has been the shift from long-term to short-term Airbnb style letting. The tech platform and others like it has transformed the way landlords can market and manage lettings on a short-term basis which, and under current tax rules, this is more profitable and attracts far less regulatory control.

However, continuing the “law of unintended consequences” theme, it has led to some locations, mainly seaside towns and large city centres, where fully one quarter of rentals are listed on Airbnb as short-tem lets, depleating the supply of long-term rentals for locals folks and transient workers.

The result is a back-lash now against short-term lets. Councils – and in particular the governments in Scotland and Wales – are now questioning why landlords should be given tax advantages by simply switching from conventional lets, which are classed as investments for tax purposes, to short-tern Airbnb holiday style lets, which are classed as businesses with more favourable tax treatment.

Build to rent to the rescue?

So the Conservatives, whose stated aim is to encourage more home ownership, have got themselves into a right royal muddle with property. Their idea that build-to-rent (BTR) by large institutions with professional management would come to the rescue of the declining buy-to-let provision, mostly provided by small-scale landlords, is unlikely to be sufficient to solve the problem. Institutional investors, certainly in the short-term, can build only a fraction of the housing required. In any event they only supply a particular segment of the rental market. To make sure these are profitable they go for premium housing aimed at young professionals and stable families.

According to the latest data from Savills, the last quarter of 2022 data shows the UK’s Build to Rent (BTR) stock now stands at nearly 80,000 completed homes, with a further 50,500 under construction. There’s a future pipeline of around 113,000 new homes, including those in the pre-application stage, which brings the total BTR stock at around a quarter million homes, still a drop in the ocean when compared to the just under 5 million privately rented dwellings in England alone.

Also, it would seem BTR is currently afflicted by the same problems as the rent of the house building market. In the current severe slow-down, where annualised building starts fell by around a quarter during the year to Q4, 2022, some house builders are struggling to survive.

In the US and in Europe, institutional landlords are much more common than in the UK. Here, the private rented sector has traditionally been pro­vided by small scale individual investor landlords. These are the people Osborne went after. Instead of encouraging a controlled expansion, he removed the attraction of buy-to-let, namely a safe investment with a steady yield and good capital growth. He dashed a 20-year growth record that had successfully taken up the slack when council housing was on a rapid decline.

Private money was being attracted to housing provision, but the Government, instead of encouraging the trend, wanted to reverse it, partly on the basis that with some tax incentives, institutional investors would create a more professional renting market, similar to those in Europe and the USA. But instead the market began to shrink, as these anti-landlord measures were introduced from 2017 onwards.

The UK’s rental stock as a consequences has failed to grow and keep pace with demand. The situation is now being exacerbated by first time buyers’ inability to get on the housing ladder because of the high interest rates now prevailing. Some people will be renting well into middle age the way things are at the moment.

The shortage of rentals and the hike in landlords’ mortgage costs are pushing up rents levels inexorably, adding to the pain of new and existing tenants. According to estate agent Hamptons, a typical buy-to-let investor, refinancing an interest-only 2.2 per cent two-year fixed mortgage at the present market rate of 6.9 per cent would need to raise the rent 45 per cent to cover the extra cost.

On top of this landlords are looking at the serious extra investment some of them will need to make to bring their properties up to the standard required to achieve an energy perform­ance certificate (EPC) grade “C” or above by 2028.

Rent controls

The left and the housing charities got their way: they wished to bash the “evil” buy-to-let landlords but what they got was a steeper housing crisis seriously affecting tenants. Scotland’s tenancy law reforms went a lot further that those in England with predictable results. First they tried to freeze rent levels and had to soften the policy to local area rent caps.

None of it has worked out well: tenants complain bitterly that land­lords are hiking rents aggressively when they take on new tenants, and landlords complain that the severe restrictions under Scottish renting laws are not worth the candle and threaten to sell or not to invest in any more properties. In England rent controls proposals constantly call for by London mayor Sadiq Khan have been rejected by both the Government and Labour.

In imbalanced market

Sky high rents indicate a market that lacks supply and competition. When prices are high in any market it sends out a signal to suppliers to enter, but when there is regulatory risk, when profits are so restricted that money can make a better and easier return elsewhere, landlords won’t invest.

In my view the Government needs to think seriously about providing a better incentive for landlords to invest in rental property, to ease their path so that private money can flow into the housing stock and relief the pressure on rents and the pain for tenants.

Re-thinking buy-to-let taxes

The only way to do that is to change the way rental income is taxed, and possibly remove the stamp duty surcharge. Demonising landlords has been a politically popular strategy, suiting the left leaning think tanks, housing charities and the popular media, but the results have been catastrophic for tenants.

The perfect storm of higher inflation, interest rates and mortgage repayments has resulted in a severe slowdown in house building, a shortage of housing of all kinds, and sky high rents. The Conservatives need to think deeply about this situation and do something about it quickly.

As the Sunday Times says:

“Being able to rent a home at a reasona­ble price, and have a realistic prospect of owning one, gives people a stake in soci­ety. The housing crisis poses immediate problems for the government, but it is ulti­mately a cross-party issue. Ignoring it is not an option if Britain is to have any kind of successful future.”

View Full Article: COMMENT: Government has got itself in a muddle over the rental market

BREAKING: Fines for Right to Rent breaches to rise from £80 to £5,000 per tenant

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The Home Office has revealed plans to hugely increase the level of fines that landlords can face if they are found to have not checked tenants properly to see if they have the right to rent in a property or deliberately been involved in evading the rules.

Immigration minister Robert Jenrick, who is also a former housing secretary, announced the massive ramping up of the fines, which will apply to businesses who employ people not entitled to work in the UK and are part of a wider attempt to reduce the number of migrants crossing the channel.

For landlords the fines will increase from £80 per lodger and £1,000 per occupier for a first breach to up to £5,000 per lodger and £10,000 per occupier.

Repeat breaches will be up to £10,000 per lodger and £20,000 per occupier, up from £500 and £3,000 respectively. The higher penalties will come in at the start of 2024.

320 penalties

At the same time Jenrick has also revealed that landlords have been hit with over 320 civil penalties worth a total of £215,500 since the start of 2018 when the Government’s Right to Rent rules were first introduced.

Jenrick says: “Making it harder for illegal migrants to work and operate in the UK is vital to deterring dangerous, unnecessary small boat crossings.

“Unscrupulous landlords and employers who allow illegal working and renting enable the business model of the evil people smugglers to continue.

“There is no excuse for not conducting the appropriate checks and those in breach will now face significantly tougher penalties.”

Landlords should already be checking the eligibility of anyone they employ or let a property to and there are a number of ways to do this, which are not changing, including via a manual check of original documentation and a Home Office online checking system.

Read the full details.

View Full Article: BREAKING: Fines for Right to Rent breaches to rise from £80 to £5,000 per tenant

Long term tenancy agreement – thoughts?

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Hi, According to my agent, my tenants have said they would like to re-carpet throughout at their expense which they say would cost them about £2,500.

In view of the expense, they have asked for a guarantee of a long term agreement

View Full Article: Long term tenancy agreement – thoughts?

High interest rates and reform worries hitting landlords, warns Halifax

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The Halifax has issued an unusual warning over the private rental sector within its regular housing market update, saying it is “under some pressure”.

Its monthly index says that elevated interest rates are just one factor impacting landlords’ business models, together with considerations of future rental market reforms.

“It remains to be seen how many may choose to exit and what that could mean for the supply of properties available to buy,” says Kim Kinnaird, Director of Halifax Mortgages (main image).

She also reports that house prices are also being impacted by higher interest rates and a mortgage market in turmoil, revealing that average UK house prices edged down slightly in July, with the monthly fall of -0.3% equivalent to a drop of around £1,000 in cash terms.

“While this was the fourth consecutive monthly decrease, all have been smaller than -0.5%,” says Kinnaird.

“In reality, prices are little changed over the last six months, with the typical property now costing £285,044, compared to £285,660 in February.

“The pace of annual decline also slowed to -2.4% in July, versus -2.6% in June.

“These figures add to the sense of a housing market which continues to display a degree of resilience in the face of tough economic headwinds.”

First rung

Kundan Bhaduri, director of London-based property developer and portfolio landlord, The Kushman Group: “At long last the ongoing fall in house prices will achieve what many have been waiting for, namely a chance to get onto that first rung of the property ladder.

“This decline is helping improve affordability for first-time buyers, who have been struggling to enter the market due to high deposit requirements and rising costs of living.

“This slowdown in house price growth was a long time coming and is a perfect opportunity to rebalance the market and prevent a potential bubble.”

pic credits: Barts NHS Health Trust and The Kushman Group

Read its index in full.

View Full Article: High interest rates and reform worries hitting landlords, warns Halifax

Landlord told to act as guarantor in bizarre twist

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In a strange situation, a letting agency has asked a landlord to be a guarantor for their own tenants.

This means should the tenants stop paying the rent it will be the landlord who covers their payments.

View Full Article: Landlord told to act as guarantor in bizarre twist

Landlord fined £36,000 by court after fire reveals his property wasn’t licenced

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A landlord in the North West has been handed a £36,000 fine after a fire at his property revealed it had not been licenced.

The local council, Sefton, was alerted to his lack of licence after a fire in December 2022 gutted the  property (pictured).

Council investigators discovered that the house did not feature smoke alarms and that the landlord, who has not been named, had failed repeatedly to obtain a licence between 2018 and the date of the fire.

Sefton has for several years operated both a selective licencing scheme and an additional licencing scheme for HMOs, and a new selective scheme started in March this year – with landlords given until the end of this month to comply or face fines.

During sentencing, the magistrates said a reckless failure to apply for licensing over several years made the landlord ‘highly culpable’.

Smoke detectors

They also said that if the property had been licensed, there was a greater chance that safety issues such as a complete lack of smoke detectors would have been dealt with.

Councillor Trish Hardy (pictured), Sefton Council’s Cabinet Member for Communities and Housing says: “This is a positive result for the council and acts as a reminder to landlords that failing to obtain a licence under our Selective and Additional (HMO) Licensing schemes can be very costly.

“Specific areas of the Borough are covered by our Selective Licensing Scheme and two Additional (HMO) Licensing Schemes, and any landlords affected need to apply for licence by the end of August, or face enforcement by court action or a Civil Penalty fine.

“In most cases, we can work with landlords to resolve the situations informally, but as this recent case has shown, the Licensing schemes do give us additional powers for formal enforcement action, which we are fully prepared to use.” 

Read more about licencing.

View Full Article: Landlord fined £36,000 by court after fire reveals his property wasn’t licenced

Landlords tell court about ‘terrifying’ flame thrower attack by tenant at flat

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A court has heard the terrifying story of a tenant who attacked his landlords with a home-made flame thrower within his shared apartment.

Landlords Waldemar and Justyna Fijakowski were cleaning the common areas of the property in Warrington in March when 31-year-old tenant Piergiuliano Atzori (main picture, inset) started shouting Justyna’s name from his room.

After Mrs Fijakowski then walked to his door to investigate, Atzori fired a makeshift flame thrower at her, with the blaze passing within inches of her face.

She ran out of the house and called the police while her husband, on hearing the commotion, also investigated and was fired upon.

Flames

Mr Fijakowski then hid behind the kitchen door and, when he opened it to see if Atzori had retreated, a plume of flame ripped between the door and the frame.

ITV News reports that Mr Fijakowski then began wrestling with the tenant  punching him several times to the face, taking him to the floor and restraining him with the help of another occupant.

When officers from Cheshire police arrived and Atzori was arrested he was also found to have a Stanley knife in his possession.

The court heard that in previous days Atzori had sent dozens of abusive messages to Mrs Fijakowski.

Weapon

He had previously admitted two counts of making threats with an offensive weapon and harassment, although Mrs

Fijakowski told the court in a prepared statement that she remained fearful of him and that “he knew where they lived”.

Atzori, who was described as having mental health problems and a previous conviction for a public order offence in 2019, was jailed for two years and given a restraining order preventing him from contacting Mr and Mrs Fijakowski for 10 years.

Read more about attacks on landlords. 

Pics credit: Google Streetview/Mersey Police.

View Full Article: Landlords tell court about ‘terrifying’ flame thrower attack by tenant at flat