Tougher BTL lending criteria begins to bite

admin    Uncategorized     agents

Landlords are being urged to re-mortgage before tougher buy-to-let lending criteria, due to be introduced in September, make it more difficult to obtain finance.

The call comes as the proportion of buy-to-let re-mortgage transactions, as a share of the total lending market, has risen over the last few months*, and as a diminishing demand for new buy to let loans has driven many lenders to slash mortgage rates. The National Landlords Association (NLA) says the rise in re-mortgages is down to  landlords looking to limit their exposure to the new buy to let tax regime.

The forthcoming tightening of lending criteria is the latest in a series of attempts by the Bank of England’s Prudential Regulation Authority (PRA) to cool the buy-to-let market, following measures introduced earlier this year.

The NLA’s most recent Quarterly Landlord Panel** shows that landlords are already finding it harder to arrange mortgages, with forty three per cent saying the process of obtaining finance has become more difficult since the beginning of the year.

Furthermore, more than half (53 per cent) of landlords report that they have had to provide additional evidence to support recent mortgage applications, including tax returns, cash flow forecasts, and business plans.

With just over a month before the second phase of the PRA’s underwriting standards are due to be implemented (30th September 2017), the NLA is urging any landlords thinking about re-mortgaging not to wait any longer.

Commenting on the findings, Chris Norris, Head of Policy at the National Landlords (NLA), said:

“Since the PRA regulations were introduced in January, the marketplace is looking considerably more complex. It was always likely that lenders would start to demand more evidence from applicants, and landlords are already feeling they have to go further to prove that they can afford finance.

“Changes to buy-to-let taxation will eat away at many landlords’ profits and make it more challenging for them to manage their businesses. As a result, many are looking to limit their exposure to the changes, which is why we’ve seen a rise in re-mortgaging.

“However, the situation is due to worsen from September and while it may not be financially advantageous for everyone, if you’re considering re-mortgaging or expanding your portfolio then do so now to avoid any further difficulties”.

Case Study

Jeff, who has been a landlord for fourteen years and has seven properties in Lincolnshire, says it’s becoming harder to get finance because lenders view him as high risk.

“After the 2008 economic crash, my outstanding debt changed the way lenders viewed me, and now I’m regularly either refused or charged higher rates if I want to take out finance.

“Lending regulations and policy need to be changed in order to incentivise investment in rented housing and return the market to a healthy level. The PRA’s new standards will only make things worse and make it harder for small scale landlords like me who are in a position to provide a valuable source of housing”.

*CML/ UK Finance

**NLA Quarterly Landlord Panel – Q2 2017 (780 respondents)

If you need assistance with any type of property finance please complete the contact form below and we will be pleased to help.

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How to Make Your Home Desirable to Tenants

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Tenancies in Britain are reported to last an average of 18 months. This means that landlords must keep on top of the ever-moving cycle to avoid any loss of income. Ensuring that your property is constantly in prime condition to attract new tenants is crucial.

Read on for advice on how to make the best of your property when it comes to re-advertising for tenants:

Keep it Clean

• Keep the garden area free of any debris with any rubbish bins tucked away.
• Make sure you touch up any scuffs on the indoor walls with fresh paint.
• The kitchen should be gleaming, with all worktops and appliances sparkling.
• Don’t forget about the floors! Even if you have numerous viewings arranged with people leaving on their shoes, try to hoover carpets and mop floors as much as possible in between.
• Keep the bathroom free of toiletries, appliances and towels which cause clutter and create an off-putting ‘lived-in’ feel.
• Ensure that all beds have freshly-washed linen on them as much as possible – not only will they look cleaner but the smell alone will be appealing!
• Don’t forget about regularly cleaning the stairs – they can accumulate a lot of dirt more than anywhere else in the house, as viewers are more likely to leave shoes on as they look around all floors.

Design by Numbers

• Neutral colour schemes give a blank canvas for tenants and avoid putting anyone off with anything too bold or not to their taste.
• For properties with a plainer front, a door canopy will enhance the appearance of the façade in addition to giving extra shelter as people come and go.
• To give modern appeal to rooms such as bedrooms or living rooms, an accent wall can be easily completed with contrasting wallpaper.
• Mirrors on the walls in living rooms, bedrooms and bathrooms will make the space look much bigger.

Finishing Touches

• Trim back bushes and trees to allow more sunlight into the house.
• Mow any lawns regularly for an easy way to create a well-maintained image.
• Flowers around the front will add extra appeal for a great first impression.
• Small but effective additions to the living room give an extra homely feel, such as candles, cushions, rugs and lamps.
• A garden’s potential should be maximised as they are often a deal-breaker for tenants; even if the weather isn’t always reliable a garden canopy is a great way to enjoy the outdoor area.
• Make sure the heating is on in winter to demonstrate the insulation; equally, opening a window on warm summer days will keep the place feeling fresh.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – How to Make Your Home Desirable to Tenants | LandlordZONE.

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Half of landlords in Newham failing to declare rental income?

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Tax Returns:

As tax return time approaches, Newham mayor Sir Robin Wales is claiming that almost half of Newham landlords are failing to declare their rental income to HM Revenue & Customs (HMRC).

As reported by the Newham Recorder, the warning is highlighted in a letter from Newham mayor Sir Robin Wales to Chancellor Philip Hammond. The letter claims that 13,000 out of 26,254 landlords had not registered for self-assessment after signing up for the private rented sector (PRS) licensing scheme.

The borough-wide licensing scheme was first introduced in 2013 and requires all landlords in Newham to licence any property they offer for private rent. The scheme will end in December and the Council says its renewal is under threat due to stricter restrictions being imposed by the government.

Sir Robin wrote:

“It is our understanding that, to date, up to 13,000 Newham landlords are of interest to HMRC, where there are discrepancies between declared income and our records, with potentially significant financial implication for the exchequer.”

Mr Wales’ letter also highlights data obtained by Institute for Public Policy Research (IPPR) in 2014 which estimates that the amount of undeclared tax in London totals more than £183 million.

Sir Robin went on to write:

“Tax evasion at every level takes money from vital services, including from health, education and local government.

“This is money out of the pockets of our poorest residents who rely on our services the most.

“Our core grant funding has halved since 2010-11, that’s less money for our schools, less money for social care, and less money for housing. I urge you to assess the additional benefits of Newham’s licensing scheme in assisting the exchequer to address tax evasion by landlords.”

The Newham PRS licensing scheme has enabled the Council to bring 1,135 prosecutions for housing crimes totalling 70 per cent of the overall figure in London, claims the Council.

The Council claims that the programme receives huge support from Newham residents, while three other London boroughs have followed Newham’s lead.

However, HMRC said it did not recognise the figure of 13,000 landlords put to it by the council.

An HMRC spokesman said:

“We are working with the London Borough of Newham as part of the Let Property Campaign [HMRC tax disclosure scheme].

“This work has generated £115m in additional and previously unpaid tax and interest.”

According the Newham Recorder, the Treasury said it was a matter for HMRC only.

Paying Income Tax when renting out property

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Half of landlords in Newham failing to declare rental income? | LandlordZONE.

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Accelerated possession procedure

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Landlords who need to evict tenants will need to serve notice correctly and then obtain a possession order from the court before they can proceed.

In this article we look at the pros and cons of choosing the accelerated possession procedure, which can be a faster option. However, it may not be used in all circumstances.

When you can use the accelerated possession procedure

To use the accelerated possession procedure, the following must apply:

– The tenant is on an assured shorthold tenancy in England or Wales
– The tenant moved into the property after 15th January 1989
– You must have given the tenants at least 2 months’ notice under section 21 of the Housing Act and they have not left by the date specified
– If you took a money deposit, you must have put it in a deposit protection scheme
– You are not claiming rent arrears
– When you apply to court for accelerated possession, your tenants will be sent a copy of the application by the court and they will have 14 days from the date of receipt to challenge it.

The application will be reviewed by a judge, who can then decide whether to award the possession order without the need for a hearing. If the tenant has serious grounds for defence, the judge is likely to set a court hearing, after which he will decide on whether to award the possession order.

If the possession order is awarded, the judge will normally give the tenants 14 to 28 days to leave the property.

The pros

The main advantage is that the accelerated possession procedure can be a faster way of recovering your property to re-let it, providing all the conditions are met.

The court fee is the same for both the accelerated and standard possession procedure. At the time of writing the court fee is £355.

Possession Claim Online, POCL, does not apply, as it can only be used for possessions where there are rent or mortgage arrears.

The cons

You cannot claim for rent arrears. If you do have arrears to recover, you will need to either use the standard possession procedure or make a separate court claim for the arrears. It is worth bearing in mind, though, that it can be challenging to recover rent arrears from tenants in financial difficulties.

If your tenant is on a fixed-term tenancy, you cannot evict them until the fixed term has ended. If it is a periodic tenancy, the procedure can only be used after the first six months have passed. This can make the notice period significantly longer than two months.

If you make any mistakes or omissions in either the service of the section 21 notice or the application to court, the judge is likely to dismiss the application, which may mean that you have to ask for a hearing or start the process again.

If the tenants claim exceptionally difficult circumstances, the judge is permitted to give them up to 6 weeks to leave the property, instead of 14 to 28 days..

Enforcement

If tenants do not leave after the date provided on the possession order, you will then need to decide whether to action to evict the tenants. You can either use the County Court bailiffs or request leave to use a High Court Enforcement Officer (HCEO).

You can apply under section 42 of the County Courts Act 1984 for permission to transfer the possession order to the High Court for enforcement by an HCEO. The best time to apply for permission is when making the initial application for the possession order.

The decision is likely to be influenced by the need for speed. County Court bailiffs will be cheaper, but in many courts, especially the busier ones, it may mean a wait of several weeks for an appointment for the eviction.

On the other hand, HCEOs will normally obtain the writ within days and enforce as soon as possible thereafter.

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Guardian Money Editor Roasted On Twitter

admin    Uncategorized     agents

Feathers have certainly been flying on Twitter following our article yesterday featuring an Appalled Landlords rebuttal of claims of 1,400% BTL returns suggested by Patrick Collinson “Guardian of Housing Ignorance“, who has since copped for a roasting on Twitter from angered landlords.

If you use Twitter you can re-tweet or join the discussion via the interactive embedded Twitter links below.

Exaggerating the success of businesses is done to whip up jealousy against ‘capitalists.’ It’s very destructive. @pcollinson

— Rosalind Beck (@RosalindBeck) August 21, 2017

Collinson is well known in the property community as a half wit peddling a political agenda without ever resorting to any actual facts.

— TheLandlordWhisperer (@landlordwhisprr) August 21, 2017

He also wants landlords out of the market but complains bitterly when the homeless figures go up as a result! And then blames landlords!

— TheLandlordWhisperer (@landlordwhisprr) August 21, 2017

Really, you couldn’t make up his idiocy or hypocrisy. Where does he think the evicted tenants will go when LLs have to sell? He doesn’t say.

— TheLandlordWhisperer (@landlordwhisprr) August 21, 2017

He also wants landlords out of the market but complains bitterly when the homeless figures go up as a result! And then blames landlords!

— TheLandlordWhisperer (@landlordwhisprr) August 21, 2017

Maybe he thinks homeless tenants will miraculously find deposits and qualify for mortgages to buy?

— The Landlords Union (@Property118) August 21, 2017

Probably can’t reconcile the idea of properties being boarded up and laying empty whilst development stops in it’s tracks without landlords

— The Landlords Union (@Property118) August 21, 2017

Does he not realise that new blocks don’t get built in the first place without investor money? You’d think someone like him would know that.

— TheLandlordWhisperer (@landlordwhisprr) August 21, 2017

The thought of properties laying empty and less development might be too much for his tiny brain to comprehend whilst homelessness rises

— Mark Alexander (@iAmALandlord) August 21, 2017

That’s right, because being made homeless automatically qualifies you for a mortgage under these new, stricter lending rules.

— TheLandlordWhisperer (@landlordwhisprr) August 21, 2017

And you never ever get CCJs as a result of being evicted. Never. It's an automatic win for every tenant. Sec 24 helps with this no end!

“Those drawing on wealth or income from additional properties are disproportionately rich and wealthy”

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The Resolution Foundation, a Tory think tank with former cabinet minister and Conservative lord David Willetts as executive chair, has published an article concluding that “those drawing on wealth or income from additional properties are disproportionately rich and wealthy.”

Click here to read the full article.

The article states there is a case for further action beyond Stamp Duty surcharges for second homes and Section 24 mortgage interest relief reductions, because “the younger generations are failing to accumulate wealth at anything like the rate of their predecessors.”

They advocate:

• Greater regulation of the PRS
• Increased security of tenure for tenants
• Further taxation on very affluent people
• Implementing the White Paper commitment to tackle empty homes

“These are options and challenges our Intergenerational Commission will continue to explore, because from the perspective of many of Britain’s real ordinary folk who still desire to own their home but find doing so increasingly out of reach, one house would be enough.”

Their policies are based on the rise of second and multiple property owners against the decline of main residence home owners in the last 15 years.

The figures cited are that the share of British adults in families with any property wealth fell 8%, whilst the share with multiple property wealth increased by 30%.

However, they admit that when looking at property wealth trends they have not even taken into account the net wealth after finance!

The report said: “Disregarding mortgage debt (because of difficulties in identifying which properties mortgages are secured against), the assets held in second or additional properties had a gross value of £760 billion in 2012-14 (adjusted to 2017 prices) – that’s 15% of the £5.2 trillion held in gross property wealth overall. This equates to an average of £150,000 per adult with multiple sources of property wealth, a 20% increase since 2000-02. With average net total wealth just over £200,000 in 2012-14, and typical (median) wealth just £84,000, owning multiple properties clearly represents a huge wealth boost.”

This report is looking at the symptoms of the disease and not the disease which is quite simply a failure of supply to keep up with demand increasing prices beyond wage inflation. Economics 101 surely?

There has been a total failure by government in the last 20 years to build or help create the environment to build, enough properties year on year to the point where we are now.

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Tenant threatening to sue!! Help!

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In 2015 I rented my property to a family friend who came to me this year explaining about damp and mould. I went to check and my Tenant was telling the truth it was had. It was a reoccurring issue in the property.

Due to personal financial problems I was unable to have all the work done at one time, but did begin to have the issues dealt with.

After some time I realised that realistically the property was going to be a constant financial drain and that selling it may be a better idea.

August 12 of this year I wrote a note to my Tenant asking her and her family to leave the property in 4 weeks so I could commence the repairs that needed doing. As her father (the joint Tenant) is a family friend I handed it to her get it signed and dated and explained that I wished to sell the property after repairing it.

Anyway yesterday the Tenant came to my property posting a letter, upon reading it I found out that she planned to sue me for an illegal eviction notice.

Apparently it has to be done on a section 21 form or section 8, that she planned to sue me for planning to illegally evict her. For breach of contract (the tenancy agreement) which states I must repair all damages to the structure if not caused by the Tenant, for renting a property that I knew had previous Damp problems, for the damages caused to her property as a direct result of the damp within the property, for stress and worry caused as a direct result of me asking them to move in 4 weeks.

She actually put at the bottom of the note that trying to illegally evict someone can actually carry a prison sentence of up to two years.

My Tenant must be kidding right?

Surely she has no case for any of this?

I agree there was a damp and black mould issue, but she repainted with an anti mould additive.

And she was a family friend!

Thank

Neel

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House prices climbing “out of reach”…

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House Price Index:

The average house has increased in price in the UK by £10,000 over the past year, that’s according to official figures just released, and estate agents are warning that the affordability of houses in the UK is putting home purchases beyond reach for many people.

In June this year the average property price was £223,257, compared with £214,000 in June a year earlier, that according to the latest figures just released by the Office for National Statistics.

Taken on a month-by-month basis, house prices were up nearly £2000 on average, though the speed of growth has marginally slowed. Prices increased by 4.9pc in the year to June 2017, compared to 5pc in the year to May, and the ONS figures show growth had stayed flat in 2017 at around 5pc.

Chief executive of London-based estate agent Haart Paul Smith told the Daily Telegraph, that these price rises have caused a 20pc dip in first-time buyer registrations in its branches in the past year:

“Along with consumer price hikes and falling wage growth, unaffordability is reaching crisis point,” he said.

The East of England showed the biggest increase where average prices climbed 7.2pc to £286,623 and there was almost the same growth, of 7.1pc, in the East Midlands.

North East prices saw the smallest annual growth at 2.5pc, while prices in London were up 2.9pc over the year. On a monthly basis, the average London house price fell by 0.7pc in June, to £481,556.

The UK recently published House Price Index shows house price changes for England, Scotland, Wales and Northern Ireland.

The latest available June data shows:

• an annual price increase of 4.9% which takes the average property value in the UK to £223,257
• house prices have risen by 0.8% since May 2017
• the monthly index figure for the UK was 117.1
• in England, an annual price increase of 5.2% which takes the average property value to £240,325. Monthly house prices have risen by 0.8% since May 2017
• in Wales, an annual price increase of 3.6% which takes the average property value to £151,672. Monthly house prices have risen by 2.9% since May 2017
• in London shows an annual price increase of 2.9% which takes the average property value to £481,556. Monthly house prices have fallen by 0.7% since May 2017

The regional data indicates that:

• the East of England experienced the greatest increase in average property price over the last 12 months, with a movement of 7.2%
• Yorkshire and the Humber experienced the greatest monthly price growth with an increase of 2.2%
• the North East saw the lowest annual price growth with an increase of 2.5%
• London saw the most significant monthly price fall of 0.7%

The UK Property Transaction statistics showed that in June 2017 the number of seasonally adjusted property transactions completed in the UK with a value of £40,000 or above increased by 1% compared with June 2016. Comparing June 2017 with May 2017, property transactions fell by 3.3%. See the economic statement.

Sales during April 2017, the most up-to-date HM Land Registry figures available, show that:

• the number of completed house sales in England rose by 1.6% to 53,410 compared with 52,590 in April 2016
• the number of completed house sales in Wales rose by 9.9% to 3,101 compared with 2,822 in April 2016
• the number of completed house sales in London rose by 1.3% to 5,823 compared with 5,746 in April 2016
• there were 510 repossession sales in England in April 2017
• there were 52 repossession sales in Wales in April 2017
• the lowest number of repossession sales in England and Wales in April 2017 was in the East of England

To get the full report click here

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Six ways to use property data to earn more from property

admin    Uncategorized     agents

I have been asked by the founder of PropertyData.co.uk to review his latest online software for property people.

I think he deserves more than just my opinion though, so I have promised him that I will ask thousands of landlords to review it – you are one of them, I hope you will help.

Please take a look via the link below …

https://propertydata.co.uk

My first impression was that the software must have cost a fortune to develop and had institutional backing. Apparently not though. Its designer, a chap called Michael Dent, is a life-long software developer and created this software in his own spare time – IMPRESSIVE!

This is what he says about it …….

For years, institutional landlords have used data analysis of the property market to fine-tune their property investment decision-making to maximise profit.

There are now tools available for smaller landlords to make property investment decisions backed by real-time market data, boosting your property returns for a fraction of the money that the big landlords spend.

Here are six ways you can use PropertyData throughout the property investing lifecycle:

1. Pinpoint rental yield hotspots

Rental yield is a key metric for an investment property, and good yield data has historically been hard to come by. PropertyData tracks the top rental yield hotspots in the UK in real-time, with several local areas currently capable of achieving rental yields of over 10%.

2. Analyse the local market

It’s surely true that there’s no replacement for property local knowledge, but PropertyData can help you understand any urban area in the UK from a quantitative perspective. You can define a custom area and then see real-time house prices and rental yields, along with historical capital growth, market composition and local demographic information.

3. Comparables analysis

Many landlords will recognise the experience of sifting through Rightmove or Zoopla to identify comparable properties for valuations. PropertyData makes this easier and faster – jump from local area analytics into individual property fact sheets to fgure out whether a property is fairly priced.

4. Compare areas side-by-side

You can save mulitple areas side-by-side in PropertyData to compare key property market statistics, such as rental yields, average prices and 3-year historical capital growth. As well as reviewing possible investment areas, this tool is great for monitoring how your existing investments are faring.

5. Find investment properties fast

PropertyData’s property finder is the easiest and faster way to find investment property, returning instantly available investment properties that match your budget, location and size criteria, looking only in the areas offering the strongest rental yields.

6. Rent benchmarking

For your current properties, maximising your return-of-investment means ensuring you are charging and appropriate and competitive rent to minimise void periods and make the best monthly return. PropertyData analyses the local rental market dynamics, benchmarking your property against similar properties locally.

PropertyData subscriptions start at £6/month with a 14-day free trial.

Find out more at https://propertydata.co.uk

REVIEWS

Please, please, PLEASE post your review of this software in the comments below and share this article if you think this software could prove useful for other property people.

Michael will be signed up to receive comment notifications so he will be reading what you have to say and available to answer any questions you may have. Please feel free to add constructive suggestions too, I’d really like to help this guy out. This is NOT a sponsored article, Michael is just a regular business member.

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HMRC refunds £127m on Stamp Duty surcharge

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HMRC has refunded £127m in Stamp Duty for second home owners since the 3% surcharge was introduced in April last year.

The average refund over 10,700 property purchases was roughly £11,869.

Currently if you purchase your new main residence, but have not yet sold your old one you will have to pay the 3% surcharge on Stamp Duty for second homes. However, if you then sell your old main residence property within 3 years the surcharge will be refunded regardless of how many other properties you may own.

Where it is complicated to understand is in the event of one partner in a joint purchase already owning a property and the other party being a first time buyer, or if you already own a BTL and not a main residence and then buy one. The rule of thumb is that if the purchasers together end up with more than one property then the additional surcharge will be payable. Please see diagram below, but ignore the 18month refund term as it is now 3 years.

£80m of the refunds were paid back in the 2016/17 tax year and so far a further £47m this year. In total HMRC received £8.6 billion in Stamp Duty Revenue last year of which £1.7 billion was from the surcharge for second homes.

The original Government consultation document on the Stamp Duty surcharge is a great resource to use with many different examples of when the charge will apply and we have used it many times to help answer readers questions so please do check out it out by clicking on >> Higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties

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