Does your Buy to Let beat inflation?

admin    Uncategorized     agents

As inflation continues to rise at the fastest rate in over 40 years, it’s becoming increasingly difficult to find business and investment opportunities that can withstand the difficult economic landscape.

In property, there have certainly been many positives coming out of the last 12 months for landlords

View Full Article: Does your Buy to Let beat inflation?

Agents report ‘desperate’ conditions as consequences of Scots rent freeze kick in

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Leading UK-wide estate agency the Belvoir Group has reported ‘desperate’ conditions within the Scottish private rented sector following the country’s decision to implement a rent freeze and evictions moratorium.

The company says the situation is rapidly worsening leaving thousands of tenants in a perilous situation as accommodation becomes more and more difficult to secure.

Reports from its Edinburgh and Dundee operations reveal extraordinary scenes of 1,000 people bidding for properties as demand outstrips supply but more and more landlords remove properties from the market.

Scotland has taken the most radical approach to managing its housing market since Labour and the Greens went into coalition, with Patrick Harvie, a Green MSP, being named as ‘minister for tenants’ rights’.

The consequences of this, including the recently announced rent freeze and evictions moratorium into next year, are now being felt.

“The current situation is incredibly difficult for tenants, and many of those looking to secure a rental property are feeling extremely frustrated and often left disappointed,” says Andrew Jack from Belvoir Edinburgh (pictured, below).

Unprecedented

“As an example, we have received over 9000 tenant enquiries in the past four weeks, which is unprecedented.

“We recently released two flats to the market, and within 48 hours had received over 1,000 enquiries for each of them from potential tenants. “Not only is it logistically difficult to process 2000 enquiries, but clearly, we were only able to offer these flats to two tenants, leaving 1998 perfectly good potential tenants still looking to find somewhere to live.

Ron Campbell, the Dundee boss of its Northwood chain, says: “The challenges facing tenants have never been as bad as they are at present.

“Demand is completely outstripping supply, and it is emotionally draining for my team members to continually deliver bad news to those people who come into our offices day in and day out looking for somewhere to live.”

Campbell says that at his office,  for every property that comes onto his books his branch has “probably lost four properties from existing stock, as landlords who have been with us for many years are now feeling pushed into exiting the market”,” he adds.

“Although we are doing our best to encourage sales to new and existing landlords, many investors who are worried by rental controls, including the moratorium on evictions that was recently announced, are feeling nervous.

Read more: What is a rent repayment plan?

View Full Article: Agents report ‘desperate’ conditions as consequences of Scots rent freeze kick in

Chancellor Kwarteng hints at Stamp Duty cut in radical bid to boost growth

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Speaking in New York, Liz Truss says she’s willing to take radical and unpopular decisions to boost the UK economy in an attempt to head off an impending recession.

The prime minister confirmed the reversal of the national insurance tax hike to be officially announced by the Chancellor in Friday’s mini budget. In addition, Mr Kwarteng plans to cancel a planned corporation tax rise and has hinted at a stamp duty cut.

Former Chancellor Rishi Sunak planned to increase corporation tax, from 19 per cent to 25 per cent, from April 2023. Truss and her chancellor argue that cancelling the planned rise will boost business investment in the UK and help drive economic growth towards their target increase of 2.5 per cent of GDP each year.

It was reported by The Times newspaper that Chancellor Kwarteng is also planning a cut in stamp duty. In what would be a surprise move to boost the property industry and with it the economy as a whole, confirmation is awaited on Friday. Downing Street refused to comment said the newspaper.

Speaking from the Empire State Building, with a large vista of the famous city in the background, Ms Truss confirmed that she is willing to make some radical and unpopular decisions if they are likely to result in a boost to the UK economy. At this time of rising energy costs and huge government subsidies being applied to protect homes and businesses these measures are a brave move.

The reversal of the 1.25 per cent National Insurance Contribution (NICS) rise in April, originally targetted to fund the NHS and adult social care, will immediately put money back into the pockets of wage earners.

Scrapping the bankers’ bonus cap, designed to attract more talent into the City of London, is an unpopular decision in some quarters, but aimed at boosting the City, one of the biggest revenue earners for the country, and seen as a priority for growth – one worth taking flak for?

Truss has said:

“If we put up taxes, if we have arbitrary taxes on energy companies, if we have high corporation tax, we’re not going to get that investment and growth.

“In order to get that economic growth, Britain has to be competitive. If we put up taxes, if we have arbitrary taxes on energy companies, if we have high corporation tax, we’re not going to get that investment and growth.

“What we know is people on higher incomes generally pay more tax so when you reduce taxes there is often a disproportionate benefit because those people are paying more taxes in the first place.

“We should be setting our tax policy on the basis of what is going to help our country become successful. What is going to deliver that economy that benefits everybody in our country. What I don’t accept is the idea that tax cuts for business don’t help people in general,” she said.

Stamp duty land tax is a tax you pay on all property purchases.

In July 2020, the Government cut stamp duty to boost the property industry and help buyers during Covid. Until 31 March 2021 home purchases didn’t attract stamp duty on the first £500,000 of a purchase price. This was a big saving of up to £15,000 for those who were buying at the time. The stamp duty holiday was later extended until 30 June, and finally again until 30 September.

During Covid in this later period home buyers didn’t have to pay stamp duty on the first £250,000.

From 1 October 2021, rates return to pre-Covid levels. That means the point you start paying stamp duty will be £125,001:

– £0-£125,000 = 0%

– £125,001-£250,000 = 2%

– £250,001-£925,000 = 5%

– £925,001-£1,500,000 = 10%

– £1,500,001+ = 12%

There is a higher rate surcharge of 3 per cent for the purchase of any property which is addition to your main home. You’ll usually have to pay 3% on top of these stamp duty rates if you are buying a second home or buy-to-let.

The government’s Stamp Duty Land Tax (SDLT) calculator will tell you how much tax you pay on a property purchase.

View Full Article: Chancellor Kwarteng hints at Stamp Duty cut in radical bid to boost growth

A landlords welcome guide for new tenants

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Giving your tenants a welcome pack will set expectations & ground rules early and could save you a lot of time and money during the tenancy period. You can guarantee that not every tenant is going to understand what their responsibilities are straight off the bat.

View Full Article: A landlords welcome guide for new tenants

What are fair cancellation terms in Letting Agency contract?

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Dear All, I currently have 3 HMO’s managed by a letting agent who I have been with for nearly 11 years. The owner of the business has sold the company to another local agent. I was notified in writing this past Saturday (The current owner did call me the week before).

View Full Article: What are fair cancellation terms in Letting Agency contract?

Transferring property back to myself?

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Hello, Can you please advise the best way to transfer my flat back to me now?

In 2005 I bought my first one-bedroom flat for £265,00.00 getting a mortgage of £238,075.00

2007 I got married and bought a new 2-bedroom apartment with my husband for £440,000.00.

View Full Article: Transferring property back to myself?

Private rents are ‘stubbornly high’ as homes get smaller

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Rents as a share of income have remained stubbornly high while the average floor space per private renter in England has fallen by 16% over the past 20 years, research reveals.

According to Resolution Foundation research, the lost floor space equates to a city the size of Nottingham.

View Full Article: Private rents are ‘stubbornly high’ as homes get smaller

London renters pay the price for going all-inclusive

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Average rents with bills included have jumped by a staggering £1,022 a month in London since April, according to new research. 

Renters are paying an average of £3,045 per month, a 51% increase on the £2,023 paid in April, while those paying their rent and bills separately are still only forking out £2,781 per month – up from £1,964 – that’s £265 less a month than the average rent for a property with bills included, says lettings agent Benham and Reeves.

In the Spring, the difference between the cost of paying bills and rent in one payment compared to paying rent and bills separately was just £59 a month.

Rental stock

Although only 5% of available rental stock covers the cost of bills within the monthly rent, with rising energy bills, demand is growing and 34% of these have already had a let agreed, up from 26% in April. Availability is at its highest in Brent, where 12% of all listed rental properties include the cost of bills, followed by Hounslow and Barking and Dagenham (10%). 

Out of pocket

Director Marc von Grundherr says the increase in rent isn’t down to savvy landlords trying to offset their own high energy costs, but the reality of the current situation. “However, it’s important for landlords to consider just how much they may be in line to pay should they find themselves with a tenant who plans to work from home this winter, as it could leave them out of pocket even when charging a rental premium to cover the increase in running costs,” he advises.

“At the same time, any landlord who does opt to keep the bills in their name may also find themselves liable should their tenant fail to cover these costs.”

View Full Article: London renters pay the price for going all-inclusive

Council backtracks on plans to clamp down on short-term lets

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Brighton & Hove has failed in its attempt to restrict second homes and holiday lets in the city.

The council had hoped to clamp down on landlords profiting from the staycation boom amid fears that the sector had impacted on the availability of long-term rentals and forced up rental prices. However, Labour councillors were unable to win the support of other political parties for plans to set up an online registration scheme.

Tourist industry

Labour Councillor Amanda Evans asked the council’s tourism, equalities, communities and culture committee to support a proposal, reports The Argus. She told the meeting: “It’s not just individuals letting out a room a couple of times a year. There are a lot of professionals involved with this now who are making a lot of money, not paying tax on it and harming our tourist industry as well. It causes misery and has a knock-on effect on our already crisis-hit housing market.”

Committee co-chair councillor Martin Osborne said while he supported the idea of a registration scheme it should be a government-regulated national scheme. The committee agreed to support sending a response to the government’s ongoing consultation into the sector, providing evidence about the problem and detailing how housing demand and rising private sector rents have an adverse effect on the affordability of housing.

Party houses

A Brighton and Hove City Council report says that more than 3,000 properties could currently be in use as short-term holiday lets – some of them as party houses.

Earlier this year, the DLUHC was reportedly drawing up plans to ban second homeowners from renting out their properties on websites such as Airbnb by giving powers to regional mayors to restrict people renting out second properties for fewer than 90 days. Instead, landlords would have to apply for planning permission for a change of use.

View Full Article: Council backtracks on plans to clamp down on short-term lets

Government gives Midlands’ mammoth selective licensing scheme the go-ahead

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The UK’s biggest selective licensing scheme has been given the green light in Birmingham covering between 40,000 and 50,000 properties.

The city council had approved the scheme in March, covering 25 wards including North Edgbaston, South Yardley and Sparkhill where there are high levels of deprivation and/or crime, but needed permission from the government because of its size. Landlords will now have to pay £700 for a licence from 5th June, generating an income of £28 million for the authority.

Poorest wards

Councillor Sharon Thompson, cabinet member for housing and homelessness, says it will create 130 new jobs to deliver the scheme. “We want to ensure that private properties in our poorest wards are providing fit and proper accommodation and that landlords are adhering to their legal responsibilities,” she adds. “While many already do, the introduction of licence conditions that cover a range of issues including waste bins, references and tackling anti-social behaviour will ensure the council is in a position to engage and regulate this sector appropriately.”
 
Through the scheme, Birmingham aims to join up with other services such as the police to tackle high levels of crime in the 25 wards.

Flyer drop

The council carried out a large consultation before making the decision, including a flyer drop in all 125,000 properties in the 25 wards. It gathered 800 responses, with “significant support” from residents and businesses however, 77% of landlords and managing agents disagreed with the proposals.

Birmingham Council has recently finished consulting on an additional licensing scheme across the city that would include 12,000 properties in all 69 wards, which if approved, would launch on 1st April.

View Full Article: Government gives Midlands’ mammoth selective licensing scheme the go-ahead