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Em Morley

Will change to electrical safety regulations leave tenants at risk?

Published On: February 25, 2020 at 9:08 am

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Categories: Law News

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electrical safety regulations

The introduction of new electrical safety regulations raises the prospect of high-risk rental properties not being covered by a legally binding requirement for landlords to carry out regular checks.

The Residential Landlords Association (RLA) is concerned that the changes due to come into force on 1st June 2020 will affect the standards of some rental properties. They will immediately remove the obligation for landlords to carry out electrical safety checks in Houses of Multiple Occupation (HMOs). This obligation will only apply to a renewed tenancy, to begin with, and then for all others as of April 2021.

 This will leave some rental properties under no legally binding electrical safety regime for the interim period, leaving tenants without the assurance that properties are safe.

The new plans have been presented to Parliament for agreement. They contain weaker penalties for landlords failing to keep the properties they rent safe. They could also complicate the process by which local authorities can issue penalties, making them more difficult to enforce.

The RLA has now written to the Ministry of Housing to express its concerns about the loophole being created for irresponsible landlords who otherwise would not carry out these checks. The association is calling on the Government to delay the implementation of the new framework to provide time to address the problems being called.

David Smith, Policy Director for the Residential Landlords Association, said: “Good landlords don’t need to be told to carry out safety checks but these changes to regulations leave tenants vulnerable to those landlords who are not so responsible. It is essential for the safety of tenants that the loophole being created is closed and we urge the Government to delay implementation until that happens.”

Short-term lets market growth is hurting renters looking for homes

Published On: February 24, 2020 at 9:22 am

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Categories: Lettings News

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Short-term lets market growth

Finding access to long-term homes to rent is becoming more difficult for tenants, including many with children. The Residential Landlords Association (RLA) says this is due to Government policy driving landlords to move into the holiday lettings market.

This warning comes as new figures show that Airbnb accommodation now accounts for one in four property listings in some parts of the country. It was also recently that ARLA Propertymark published a study that found nearly half a million properties could be left unavailable for longer-term rent, as more landlords exit the market in favour of short-term lettings.

The RLA has been campaigning on this issue since 2016. The association believes that the main reason why it has escalated is the change in taxation for landlords, which is driving many out of the long-term sector.

The full impact of the restriction of mortgage interest relief to the basic rate of income tax applies from April, making many landlords significantly worse off or even unable to make a profit on their lettings. The RLA points out that this change does not apply to landlords with short-term lets, encouraging long-term landlords to move into that market.

Along with the 3% Stamp Duty levy on the purchase of extra housing and other measures affecting landlords’ confidence in the market, there is mounting evidence that this issue is causing a drop in supply, despite demand continuing to increase.

David Smith, Policy Director for the RLA, said: “Government policy is actively encouraging the growth of holiday homes at the expense of long-term homes to rent which many families need. This is completely counterproductive, making renting more expensive and undermining efforts to help tenants save for a house of their own.

“The Chancellor must use his Budget to give tenants a better deal by supporting good landlords to provide the homes to rent that they want to live in.”

£730m Lost Through Avoidable Void Periods in 2019

Published On: February 21, 2020 at 10:49 am

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Categories: Landlord News

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£730m Lost Through Avoidable Void Periods in 2019

In London alone, £730m was lost due to avoidable void periods, lasting 24 days on average last year. 

Void periods are one of the worst challenges faced by landlords as they can have serious financial consequences, but many landlords feel totally unable to avoid them. The onus falls on letting agents to do more to minimise the risk of their clients getting stuck in extended periods without tenants.

Prop-tech letting firm, Home Made says that many of these void periods in London were very much avoidable, and places the blame squarely at the feet of inefficient letting agencies. They point out that there is a serious lag time between tenants handing in their notice and traditional letting agents finding new tenants.

In a study recently conducted by the firm, they found that there is a three week gap on average between letting agents first beginning their efforts and actually finding a new tenant. On top of this, they have also found that it takes an average of SIX DAYS before a letting agent even advertises a property after the previous tenant served notice. 

Asaf Navot, founder and chief executive at Home Made, commented: “Empty rental properties are hurting everyone. Landlords are needlessly losing value on their investments and tenants are missing out on the home of their dreams.

“Our research shows that inefficient agency models are one of the driving factors keeping London homes unoccupied.

“Landlords are paying agencies for a service and if they are not delivering, they need to hold them to account.

“We’d urge landlords to ask their letting agent for transparency at every stage, from the date their property will be available online, through viewing volumes and feedback, all the way to move-in date.

“At Home Made we make this information readily available for landlords to track so they can ensure that every detail from appealing imagery to negotiating contracts is handled efficiently and as if the property were our own.”

Home Made also released the following figures from their study:

London boroughs with the shortest void periods in 2019

Hounslow15 days
Camden17 days
Islington18 days
Lambeth19 days
Richmond Upon Thames19 days

London boroughs with the longest void periods in 2019

Havering37 days
Bexley33 days
Barnet32 days
Brent32 days
Barking & Dagenham31 days

Latest ONS Index reports year-on-year rent price growth for UK

Published On: February 21, 2020 at 9:33 am

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UK house prices see ‘marginal decline’ in October 2021

The January 2020 Office for National Statistics (ONS) Index of Private Housing Rental Prices, UK has now been published, showing only a slight increase. 

The main points of the report highlight that:

  • UK rent prices grew by 1.5% year-on-year
  • This 1.5% increase is up from 1.4% in December 2019
  • Private rental prices grew by 1.5% specifically in England. In Wales, they grew by 1.3% and in Scotland by 0.6% in the 12 months to January 2020
  • Landlords in London saw private rental prices grow by 1.3% in the same time period
  • The largest annual growth in England was in the South West (2.3%), followed by the East Midlands (2.2%) The lowest was in the North East (0.6%), followed by the North West (1.1%)
  • There has been a long-term UK increase of 8.6% between January 2015 and December 2019

The Residential Landlords Association (RLA) has pointed out that these increases are less than inflation.

Hedi Zidan, Founder and CEO of Nestify, a proptech lettings agent in the UK, comments: “Today’s figures demonstrate that the UK rental market is resilient and that demand remains strong. 

“Our landlords are increasingly meeting tenants who are seeking a range of different accommodation solutions, durations and tenancy options. This means that in order to maximise the current UK housing stock, it’s vital landlords have access to a range of short, medium and long-term rental options. 

“These figures demonstrate how integral professional landlords are to UK housing and it is our belief that they should be supported to provide the range of tenancies that the UK rental population so clearly crave.

Property Investors to be Hit By Changes to Capital Gains Tax

Published On: February 20, 2020 at 10:18 am

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Categories: Finance News

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Landlords want government to reverse capital gains tax changes

Homeowners, second home owners and property investors face tough new rules around Capital Gains Tax beginning in April 2020, leaving them with a dramatically reduced time to settle any tax due.

From 6th April 2020, anybody selling a property will have just 30 days to settle any tax due after completion, rather than the wide ranging period of 10-22 months seen under the current regime.

Experts are warning that homeowners and investors don’t properly understand the new rules, and could face high penalties if they don’t follow them.

James Cook, Partner at law firm, Collyer Bristow said: “Under the current rules, anyone selling a property has until 31 January in the following tax year to file and settle any CGT liability, giving them potentially up to 22 months.

“From 6 April 2020, all CGT liabilities will need to be settled in just 30 days of completion of a sale. That leaves very little time to calculate the tax to be paid, report the gain, and pay tax. It is likely to catch out many second homeowners and investors who have either failed to plan for the tax charge or do not have the available cash.”

For higher rate income tax payers, the rates for CGT are currently 28% on gains from residential property and 20% on gains from all other chargeable assets. Conversely, the CGT rates for basic rate income tax payers are 18% and 10% respectively. The annual capital gains tax allowance is set to increase on 6 April 2020 to £12,500 from £12,000 in the current tax year (2019/20).

Late filing of CGT returns will leave individuals facing an immediate £100 fine with an additional penalty of the higher of £300 or 5% of the tax due if more than 6 months late. A further penalty of the higher of £300 or 5% of the tax due is payable if more than 12 months late. HMRC also reserves the right to charge £10 a day up to £900 for the period between 3 to 6 months of failing to file a return.  

James adds: “The changes were first announced in 2015 but have been pushed back as HMRC was concerned that second homeowners and investors were not aware of the changes. From conversations with our clients, it appears that they are still not fully aware of the implications of the change.

“Our advice to second homeowners and investors is to calculate liabilities before any sale so as to avoid any unnecessary penalties.”

Budget supermarkets bigger draw for homemovers than school catchment areas

Published On: February 20, 2020 at 9:09 am

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Categories: Tenant News

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Budget supermarkets

Budget supermarkets are now a bigger draw for Brits looking for a new home, the latest research from Good Move reveals.

The data gathered by regulated property buyer Good Move reveals that 39% of UK adults said that it is desirable to live near a discounter, such as Lidl or Aldi. School catchment areas seem to be less of a priority than supermarkets, with 29% selecting this as a reason to choose a new location.

This desire for deals appears to be strongest amongst the younger generations, as 54% of 18 to 24-year-olds say they’d want to live closer to a budget supermarket. 

Top of the overall list of priorities, however, was a scenic view, with 44% of UK adults saying that they’d prefer a property with attractive surroundings.

These are the top 10 most desirable amenities to have nearby, according to those who participated in the survey:

  1. Scenic views – 44%
  2. Budget supermarkets, such as Aldi, Lidl, and Iceland – 39%
  3. Local restaurants/bars – 37%
  4. Traditional pubs – 36%
  5. Independent shops – 34%
  6. Walking trails – 33%
  7. High-end supermarkets, such as Waitrose and Marks and Spencer – 32%
  8. A certain school catchment area – 29%
  9. Coffee shops – 28%
  10. Local library – 25%

When asked specifically which stores they would like to have nearby, it was actually Tesco that received the most votes, followed by Asda and then Aldi.

The study also revealed what Brits first research when they move to a new area. When asked what details they seek out about a location before anything else, 21% said public transport connections, showing the nation’s desire for reliable and easy travel.

Overall, the top five details that Brits first research when moving house are:

  1. Public transport links – 21% 
  2. Schools – 20%
  3. Crime rates – 17%
  4. Amenities – 17%
  5. Broadband speeds – 11% 

Ross Counsell, Director at Good Move, said: “Everyone has their own priorities when moving house, but it’s interesting to see how the overall patterns are changing. 

“Budget supermarkets are definitely growing in popularity, especially among the younger generations, and their presence in a region is now making a place more desirable to live.”