Less that 20% of PRS homes within LHA rates reveals shocking research

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Fewer than one in five private rental properties in England were within the Local Housing Allowance (LHA) rates last year, according to new joint research by the Chartered Institute of Housing and Shelter.

The groups say the average renter now faces a £151 monthly shortfall because the allowance fails to cover their costs – with the figure set to rise even further.

The LHA, which is set by the Valuation Office Agency, determines how much housing benefit some tenants receive towards paying their rent, but it has been frozen since 2019.

In every local area, LHA fails to cover the cost of the cheapest 30% of two-bedroom family homes, according to the research, and in some parts of the South West one in 10 or fewer two-bedroom rents are affordable.

The issue is not confined to the south however, as there are low numbers of affordable two-bedroom rents in the north too; just 9% in Leeds, 10% in Bolton and 5% in Tameside.

Huge shortfalls

Charlie Berry (pictured), policy officer at Shelter, says these huge shortfalls leave private renters at high risk of going into rent arrears and push families towards homelessness.

“With fewer and fewer affordable private rentals for people on housing benefit and a severe shortage of social housing, we are sadly left with a homelessness crisis,” she adds.

“The evidence is clear: the government must end the damaging freeze to local housing allowance which is leaving low-income families with nowhere they can afford to call home.”

Earlier this year, the NRLA criticised the government for its complacent attitude to the LHA freeze and its effect on both tenants and landlords, following an admission by Work and Pensions Minister Mims Davies MP that he had made no estimate of the number of people unable to meet their housing costs due to the freeze.

View Full Article: Less that 20% of PRS homes within LHA rates reveals shocking research

Leading property figure calls for ‘tenancy register’ in England and Wales

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The government has missed a trick by not introducing a tenancy register instead of an ‘anti-landlord’ landlord register, one property consultant has claimed.

Blackbird Real Estate founder Richard Berridge says the proposed register fails to see the bigger picture and suggests it should be replaced with something similar to that introduced by the Irish government’s Residential Tenancies (Amendment) Act 2019 which makes registering every private tenancy mandatory.

Updated yearly

As well as recording landlords’ details, this captures essential data about who is renting, how many people, their age, rent paid, tenancy start date, type of home, how many bedrooms and the size. Data must be updated yearly or when there’s a change in the tenancy and is uploaded to a portal.

“Such a register would also level the build-to-rent playing field,” explains Berridge. “It removes the thorny subject of IP, secretive behaviour or commercially sensitive data, and lays bare the performance of each building.

“It could also go some way towards creating a dynamic pricing model.”

The annual cost of registering a tenancy in Ireland is €40 and those landlords who have more than one property can take advantage of a ‘composite registration fee’ of €170 for up to a maximum of ten properties, he says.

Pay to register

“Landlords are going to have to pay to register under the current Renters Reform Bill proposals anyway.” 

Why doesn’t the UK government follow the lead of the Irish? asks Berridge, who insists there is still time to amend proposals.

“Perhaps government’s rather dismal record with anything to do with technology has something to do with it, or perhaps it’s a reluctance to do anything akin to what an EU country does. But unfortunately, I think it’s more to do with their somewhat blinkered view and a landlord hard-line approach.”

Berridge's comment have been made within BTR News.

View Full Article: Leading property figure calls for ‘tenancy register’ in England and Wales

Increased demand has resulted in much improve choice of Ltd co Buy to Let options

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As often discussed on Property118, owning rental properties through a limited company offers full tax relief on finance costs such as mortgage interest and mortgage arrangement fees, access to potentially lower tax rates and flexibility for planning, including inheritance tax.

View Full Article: Increased demand has resulted in much improve choice of Ltd co Buy to Let options

Increased demand has resulted in much improved choice of Ltd co Buy to Let options

admin    Uncategorized     agents

As often discussed on Property118, owning rental properties through a limited company offers full tax relief on finance costs such as mortgage interest and mortgage arrangement fees, access to potentially lower tax rates and flexibility for planning, including inheritance tax.

View Full Article: Increased demand has resulted in much improved choice of Ltd co Buy to Let options

EXCLUSIVE: Conveyancer reports big drop in landlords buying BTL properties

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The number of BTL investors buying properties has plummeted in the last six months while long-term landlords are selling up, according to one large conveyancing firm.

Basildon-based PCS Legal reports that before Kwasi Kwarteng’s ‘fiscal event’ last September when the then Chancellor announced a cut in stamp duty, landlords’ property deals made up 20% of its workload – but this has dropped to 5%.

“Both BTL investors and homeowners were impacted, and we saw a big downturn between September and January,” says partner Stuart Forsdike. “For homeowners that has come back – but that’s not the case for investors.”

Uncertainty

He blames uncertainty in the market as well as a reduced volume of available deals, changes in lending criteria, inflation and rising interest rates, which has particularly hit those would-be investors who were previously lured in with promises of a passive income.

“It become quite fashionable to buy buy-to-lets a few years ago, and for people to split properties into HMOs, and the market was saturated with property educators, but since then, margins have got tighter, people are looking at deals with more scrutiny and some of them have got panicked,” he tells LandlordZONE.

Disposals

PCS Legal has also seen plenty of landlord clients disposing of their portfolios. “I can’t recall seeing this in the 25 years I’ve been a conveyancer,” adds Forsdike.

“These are people whom we’ve dealt with for maybe 10 or 20 years. Some of them bought 20 or 25 years ago and are now looking at retirement and want to monetise their assets – often at the lower end of the market or leasehold properties – as they’re probably also worried about the upcoming renters’ reforms.”

View Full Article: EXCLUSIVE: Conveyancer reports big drop in landlords buying BTL properties

Property Investors Awards – Co-Living Deal of the Year winner

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Scott Baker Properties was founded in 2017 by Niall Scott and Matt Baker, who, as working professionals spotted a need in the community for quality shared accommodation for like-minded people.

In recognition for being community driven and achieving first-class results with their development in Portsmouth

View Full Article: Property Investors Awards – Co-Living Deal of the Year winner

Investors rush to convert office space as homeworking re-shapes the marketplace

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According to the Financial Times (FT), property investors have pumped around £2bn into converting under-used and unwanted London office space as the trend to Working from Home (WfH) continues, and as it looks like becoming an embedded employment practice in many inner city offices.

Property agents CBRE say that around £1.3bn of London office space has been bought up at bargain basement prices over the last 12 to 18 months, with plans to convert the vacant space to alternative uses. Other deals now in progress amount to a further £700mn, say the agents.

Ed Bradley, head of London office investment for CBRE told the FT that around 10 per cent of all new investments in the sector now represent a significant proportion of all new investment generated, as companies adapt their businesses to new patterns of hybrid working.

Mr Bradley said the trend is on an unprecedented scale for these conversions of mainly secondary office space, to be converted for new uses outside the traditional city office market.

Market slowdown

The UK commercial property market has slowed considerably since last year as higher interest rates have begun to bite. Tightening monetary policy was a significantly factor over the second half of last year, resulting in a decline in buyer activity, with sizeable adjustments downward in valuations.

According to CBRE, the figures for all commercial property values dropped by around 20 per cent year to date as a result of many institutional investors changing their asset allocations, with the sharp rise in government bond yields.

With major structural change, such as WfH and online retail affecting office and retail commercial property, a trend accelerated through Covid, better returns on other financial assets are leading traditional investors to see commercial property in a different light, value wise.

Positive industrial and logistics

Contrary to office and retail, the industrial and logistics sector has seen an outstanding almost 60 per cent rise in values, but now it appears the sector has become overheated given the tougher environment where money has become much more expensive.

Otherwise, all the main UK commercial property sectors – particularly secondary – have experienced substantial declines in value since late last year following what looked like a fairly positive turnaround and correction immediately after the abatement of Covid.

Slower decline

Although values have continued to fall in 2023, there are signs that the rate of decline is slowing. Experts in the industry feel that the speed and depth of the price correction experienced in the latter half of 2022 could now have worked its way through the system. The conclusion is that there are definite signs of new interest by investors.

This has been particularly the case as said with the trend for re-purposing from office and some retail space to student accommodation, hotels, laboratories and leisure. CBRE’s Ed Bradley told the FT that:

“We have seen several examples of alternative use investors outbidding traditional office investors by 10 to 20 per cent.”

Examples cited are the conversion of the former Ted Baker headquarters near St Pancras station into lab space, given its convenient location near hospitals and universities. This development is being financed by the Singaporean sovereign wealth fund. The Millbank located Nobel House is being converted to hotels and serviced flats which will be conveniently located near the Houses of Parliament.

Demand for high-end office space

Demand for high-end office space has held up well but less desirable properties and locations means that leases are not being renewed for that use. This trend however coincides with increasing demand for research facilities, and international student and tourist accommodation following the worst excesses of the pandemic.

Not all office buildings however will lend themselves to be easily converted due to their physical construction, planning restrictions and the investment that would be needed to make a viable alternative use. Here values will suffer most.

The forecasts

Overall, average capital values for commercial property are forecast to end 2023 below where they started the year. Given the outlook for more interest rate rises until inflation is brought under control, back down towards the Bank of England’s sustainable 2 per cent target, nothing much will change – property values are set to remain under pressure.

Outside of the office and retail sectors, rental growth expectations are positive for industrial and logistics according to the latest RICS UK Commercial Property Market Survey. Both prime and secondary industrial space, according to the survey, are edging higher, which indicates that the recent downturn in industrial values is due to higher interest rates and not a shift in occupier demand or requirements.

No let-up for inflation

There’s no letup yet in the inflation outlook with the Office for Budget Responsibility predicting it will remain above 6 per cent for the rest of this year, though stronger than expected data coming from the Purchasing Manager Index is signalling an up-tick in industrial activity, after the major contraction during Covid.

While employment levels remains rock solid across the UK, which is helping sustain tenant demand for commercial property, regardless of the state of investor demand, there are signs this could change. Interest rate hikes have a delayed reaction as mortgage holders and borrowers are often on legacy fixed rates until renewal dates arrive. There are serious and credible concerns that there could yet be a further downturn in the economy, though a full blown recession is thought unlikely.

Property agents unaffected – flight to quality

Meanwhile among all these commercial property difficulties, there’s a failure to dent the prospects for the major property agents. Market movement, sales and conversions, it all seems like “grist to the mill” for the likes of Knight Frank, a company that hit record revenues in 2022. The agent whose stock in trade is the sale and leasing of commercial properties, as well as residential accommodation, internationally, says it is benefiting from a “flight to quality”.

What is meant by that is businesses are opting for “greener” and more modern buildings in an attempt both to reduce their carbon footprint and to adapt their space requirements their for staff in a post-pandemic era.

Chairman of Knight Frank, William Bearmore-Gray, has said about last year:

“…for our London leasing agents it was probably one of their busiest years. The majority of the interest we are seeing is from companies which realise very clearly now that the office is a strategic tool to attract the best talent and increase productivity.”

A similar story emanates from agents Cushman and Wakefield who report a record number of office moves in 2022. This reflects the move to hybrid working (WfH), with most companies wanting less space in modern and better located buildings.

View Full Article: Investors rush to convert office space as homeworking re-shapes the marketplace

Report reveals unstoppable march of BTR into private rented sector

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A new report has revealed that London now contains 38,600 build-to-rent (BTR) properties with a further 34,100 in the pipeline with the boroughs of Newham, Tower Hamlets and Brent leading the field.

The report, pulled together by Cortland Consulting, reviews platform HomeViews and trade association the UKAA, reveals the accelerating growth of this new sector of the private rented sector particularly in the capital, which is easily the UK’s largest BTR market.

Their report claims that BTR can provide the rental homes that London’s rapidly growing population needs – which has increased by some 622,000 over the past ten years.

Brent and Newham in particular have seen huge growth in the number of BTR units, which over the past decade have seen a third of new homes within their boundaries provided by this kind of private rented property.

Some 13% of all new homes in the capital on average were supplied by BTR over this period.

Sheer scale

What the report also highlights, and which may soon begin to impact private landlords with lower-quality properties, is the sheer scale of activity within London.

For example, in the boroughs of Woolwich and Ilford in North East London there are 40 operational BTR developments with a further ten under construction, eight granted planning and several more going through planning.

Read more: What does BTR mean for BTL landlords?

“Almost ten years since BTR arrived in the UK, the sector has delivered almost 85,000 homes nationwide, 46% of which – or 38,620 – were delivered in London,” says Iain Murray, Senior Director BTR Consultancy (Europe), Cortland Consult (pictured).

“BTR has proven itself as a highly effective mobiliser for the delivery of new homes, underpinning many of the capital’s most successful and flourishing regeneration projects: such as Wembley Park, Nine Elms & Battersea, Elephant & Castle, and Stratford’s Olympic Legacy transformation.”

Read the report in full.

View Full Article: Report reveals unstoppable march of BTR into private rented sector

FINES: Repeat offender to pay £49,000 over HMO safety failures

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A management company has been ordered to pay out more than £49,000 for fire safety failures at an HMO.

Monsoon Properties Ltd admitted breaches relating to a range of issues at the flat in London’s Tavistock Place, including inadequate fire detection system, obstructions to the means of escape, defective fire doors, defective oven and hob and smashed wall tiles.

Highbury Corner Magistrates Court fined the firm £10,000 for each breach of regulations, as well as costs of £7,020 and a £12,000 surcharge.

Camden Councillor Meric Apak (pictured), the borough’s cabinet member for better homes, says it isn’t the first time Monsoon Properties has been prosecuted.

He adds: “They should know – as should all landlords and management companies in Camden – that we will not hesitate to take landlords who we suspect are breaking the law to court. We will also seek to ban bad landlords. Our record of securing seven banning orders against rogue landlords is more than any other council in England.”

Penalties

The council’s recent cases include financial penalty notices issued against additional HMO licence holder Roukshana Begum and letting agents Snayders Limited.

Begum failed to comply with several licence conditions including the schedule of works required to ensure the property complies with Camden’s minimum HMO standards.

An undersized room was allowed to be re-occupied and a copy of the licence was not displayed in the property, which wasn’t kept in reasonable repair; it had a blocked wash hand basin and leak under the bath. There was also a failure to carry out fire safety works, to install wash hand basins and additional sockets in bedrooms.

The property has now been re-inspected by the council and most of the issues have been resolved.

View Full Article: FINES: Repeat offender to pay £49,000 over HMO safety failures

BOE beyond reproach?

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Dear P118, I don’t want these words to come across as a rant. I just want some peace of mind that the BOE is right in their approach to the current financial situation and that they’re not profiteering like everyone else (banks not passing rates to savers to name but one).

View Full Article: BOE beyond reproach?