Heat pumps – a load of hot air?

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We’ve all been hearing about the government’s green plan for the private rented sector. But are the plans actually as ‘green’ as they make out to be?

The government believe heat pumps could be the answer to help tackle the energy-efficiency problem in PRS homes.

View Full Article: Heat pumps – a load of hot air?

‘Base rate rise will put landlords and tenants under even more financial strain’

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Landlords have warned the Bank of England that its decision to raise the base rate by a quarter of a percent to 5.25% will only put more pressure on to renters and buy-to-let investors.

Ben Beadle, the chief executive of the National Residential Landlords Association, says: “The Bank of England has warned that the average increase in monthly repayments on buy-to-let mortgages by the end of 2025 will be around £275.

“This comes as some landlords have already seen their mortgage payments increase by almost 240% since December 2021.

“With landlord profits at their lowest level for 16 years, the vast majority are doing all they can to protect tenants from the impact of growing mortgage rates.

“However, without government action, renters face a bleak future as growing costs lead to a loss of more rental homes from the market. 

Properties lost

“Analysis for the NRLA has found that 735,000 rental properties could be lost across the UK if interest rates peaked at 5%. With an average of 20 requests to view each available home to rent already, today’s announcement will only worsen matters.

“The Government must urgently scrap tax changes which have dampened the supply of much-needed private rented accommodation.

“Likewise, it is also crucial that housing benefit rates are unfrozen so that vulnerable tenants receive assistance during this challenging period for the market.”

Beadle’s warning follows data from property firm CBRE today that claims that one in ten rental properties could be lost from the PRS by the end of the year as Government and economic headwinds continue to reduce landlord confidence.

View Full Article: ‘Base rate rise will put landlords and tenants under even more financial strain’

Interest rates highest since April 2008 – property sector reacts

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The Bank of England has implemented its 14th consecutive interest rate hike to address surging prices.

The UK’s interest rate now stands at 5.25%, up by 0.25% from the previous 5%.

The move marks the first time since April 2008 that the base rate has reached this level.

View Full Article: Interest rates highest since April 2008 – property sector reacts

More landlords selling up gives HMRC bumper CGT tax revenue, reveals expert

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Official figures out today revealing a huge increase in capital gains tax paid on residential property sales can be explained by more landlords than usual selling rental homes, it has been claimed.

Wealth management company Quilter says the HMRC figures, which reveal a 15% jump in both capital gains tax paid on property value gains and a 20% increase in the number of taxpayers becoming liable for the tax.

Some 139,000 taxpayers reporting 151,000 disposals of residential property in the 2022/23 tax year amassing a total liability of £1.8 billion, which is much larger than in the 2020/21 tax year.

Quilter says this this data strongly suggests that there is an ongoing exodus of landlords from the property market as the tightening of tax laws on buy-to-lets make them a less attractive investment.

“Coupled with this the continuing high property values but simultaneous threat of a property price crash is seemingly making more landlords opt to sell up,” says Rachael Griffin (main picture), tax and financial planning expert at Quilter.

“How this ultimately impacts the market for all prospective buyers and renters is yet to be seen.

“Currently house prices are slipping slowly but rent remains sky high as renters compete for a dwindling stock of rental properties.”

capital gains

Quilter’s interpretation of the figures is likely to be right – CGT is only payable on second/holiday homes and BTL properties and not paid on ‘primary home’ capital gains..

Griffins says the tax take from CGT is likely to increase given the changes to the Annual Exemption Allowance (AEA) for capital gains tax.

“From £12,300 in the 2022/23 tax year, the AEA reduced dramatically to £6,000 in April 2023 and will further drop to £3,000 from April 2024,” she adds.

“This reduction could significantly boost the CGT take in future years, as taxpayers will have a lower threshold before becoming liable for CGT.”

Read the official stats in full.

View Full Article: More landlords selling up gives HMRC bumper CGT tax revenue, reveals expert

Letting and estate agent complaints ‘remain high’

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The Property Ombudsman (TPO) dealt with 14,000 complaints from landlords and tenants last year about letting agents, it has been revealed.

There were also 1,500 complaints from tenants about a landlord with no agent involved.

And the TPO dealt with more than 3,000 complaints from leaseholders about their managing agent.

View Full Article: Letting and estate agent complaints ‘remain high’

Tenants report surge in landlords increasing rents to pay for higher mortgage costs

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The proportion of renters facing rent hikes to pay for their landlord’s higher mortgage premiums has tripled over the past eight months, it has been claimed.

Generation Rent polled some 1,000 of its supporters to ask if their landlord had passed on their higher mortgage interest payments and 12% said they had, up from 4% in November.

During this period the Bank of England’s base rate has increased from 3% to 5%, with another rise due today.

“A cost of renting crisis is forcing tenants to bear the worst of the economic turmoil right now,” says Ben Twomey, Chief Executive of Generation Rent (pictured).

“While many mortgage holders have yet to see their monthly payments increase, most private renters have already faced a rent hike this past year.

“So far only a minority of landlords have been affected so badly by rising rates that they are passing them on to tenants.

“But the rising cost of rent is a much wider problem caused by the failure to build enough homes where people want to live, and the ability of landlords to raise rents regardless of what their tenant can afford.”

Mortgage rates

But Twomey says rising mortgage interest rates aren’t the biggest driver of rent rises, with rising local rents being a factor for 17% of those polled, along with landlords citing the ‘cost of living’ going up and their need for greater income.

Generation Rent also says the poll suggests 60% of private renters were asked to pay more rent over the past 12 months with some 20% being asked to pay more than £100 extra a month with most accepting the extra payments and 15-20% negotiating the increase down.

Twomey says these figures underline the need for the Government’s Renters (Reform) Bill to be expedited through parliament when MPs return to work in September.

“With many landlords struggling to cover interest rate rises, tenants need protection from unaffordable rent hikes and where landlords need to sell, the government should introduce measures to encourage them to sell with sitting tenants,” he says.

“To make renting more affordable, the government also needs to relink Local Housing Allowance with market rents, and do more to build more homes in the places people want to live.”

View Full Article: Tenants report surge in landlords increasing rents to pay for higher mortgage costs

Electric bikes and scooters in flats?

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Hello, I rent out several 2-bed flats and I’m concerned about the increased fire risk when these devices are recharged in the hallway which is the escape route.

What is the best solution? Should I include a disclaimer in the contract or should I give advice and just say no to recharging in the flat?

View Full Article: Electric bikes and scooters in flats?

Unusual legal win by landlord shows appealing council fines can be worth it

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Landlords operating good-quality and well managed rented properties and who are of good character should fight unfair council fines for failing to licence properties, an unusual case has shown.

A virtual Tribunal hearing of landlord Chris Knight’s appeal against a £7,500 fine for non-compliance with the London Borough of Hackney’s selective licensing scheme saw judges reduce his fine to £2,400 after he argued that it was ‘too high’ at eight times the licencing scheme’s application fee, and that he operated the property at a loss after no increasing the rent since 2017.

Although the judges disagreed with these arguments, and Knight’s further point that he should have been warned that a fine was pending and that he wasn’t’ told Hackney operated a licencing scheme, he won a substantial reduction.

The saga began in March 2022 when council officers discovered during door-to-door enquiries that his two-bedroom apartment in Stoke Newington, North London (pictured), had not been licenced.

Reduced

Knight was told that a £7,500 fine would be payable but after he made representations, this was reduced to £5,000 as long as he applied for a licence within 28 days, which he did.

But the landlord, who represented himself at the Tribunal, held his nerve and appealed the fine, and the Tribunal has now reduced it.

This includes £1,000 in ‘mitigation’, a £2,000 reduction for the good condition of the property and his ‘good character’, a £1,000 reduction for applying for a licence promptly and a further reduction for his cooperation. If he now pays the fine promptly it will be reduced by 20% further, taking it to £2,400.

Read the judgement in full.

Image: Savills.com
   

View Full Article: Unusual legal win by landlord shows appealing council fines can be worth it

Landlord company registrations rise as many seek to avoid higher tax bills

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Higher taxes and the pandemic have significantly increased the number of landlords starting up limited companies rather than owning and operating properties personally, new research shows.

While some 15,800 landlord companies were launched in 2019, last year that figure was 28,130.

The study, which used Companies House listings and was commissioned by Easy Offices, also shows a significant increase in the number of younger landlords entering the fray via limited companies (107 in 2019 versus 1,178 last year) although the largest group are the over 50s who made up some 40% of last year’s total.

Younger landlords also tend to be urban and concentrated in London, Manchester, Birmingham, Leeds and Leicester. Easy Offices says these findings within the property sector are in line with wider research which suggests the pandemic was a catalyst for young people starting their own businesses.

A 2022 study that looked at some 2.3 million UK businesses across many industries showed the percentage of start-up owners aged under 35 had more than doubled since March 2020, rising from 16.4% to 34%. A similar study found that 11% of BTL properties are now owned through a corporate structure.

But unlike other industries, the jump in the number of limited companies has also been driven by HMRC’s changes to landlord tax via the ‘Section 24’ rules that saw tax relief on mortgage interest payments dramatically reduced for those owning properties personally.

The only way to avoid this punitive ‘tax on income rather than profits’ as it is called is to transfer BTL businesses to a limited company or, as these figures show, when starting up using such structures from the outset.

Bold steps

“This spike of new businesses following the pandemic shows how it drove a large number of people to take bold steps,” says John Williams (pictured), Chief Marketing Officer at Easy Offices.

“We have seen the number of sole traders and small businesses looking for office space leap year on year.

“This trend is based on a lot of more experienced workers leaving behind their white collar jobs with blue chip companies and looking to start their own ventures after the pandemic.

“It is the rise of the midlife entrepreneur, similar to that we saw in the aftermath of the Global Financial Crisis in 2008.”

Landlord firms as defined by Companies House are those who owners identify them as ‘letting and operating own or leased real estate’.

View Full Article: Landlord company registrations rise as many seek to avoid higher tax bills

More growth predicted for the UK’s holiday accommodation sector

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The UK’s holiday accommodation sector is poised for continued growth this year and offers savvy property investors an opportunity, one property development firm says.

Research from Stripe Property Group shows that despite experiencing a setback due to the pandemic in 2021 which saw the market decline by 24%

View Full Article: More growth predicted for the UK’s holiday accommodation sector