Written By Em

Em Morley

What is Bedroom Tax?

Published On: May 10, 2013 at 10:35 am

Tags: housing association spare rooms,what is bedroom tax?

In April, the Government introduced their controversial plans to bring into force a tax on spare bedrooms for people living in housing association properties. The tax has been dubbed Bedroom Tax.

Bedroom Tax

Bedroom Tax, also known as the Spare Room Subsidy or under occupancy charge, is a change made by the Government to housing Benefit entitlement. The change will see claimants receiving less in benefit if it is deemed that their property has one or more unoccupied spare bedrooms.

If it is deemed that a tenant has one spare bedroom, they will lose 14% of their housing benefit entitlement. For two or more unoccupied rooms, tenants will lose 25%. [1]

The new regulations came into force on April 6^th 2013.

Who is affected?

Tenants in receipt of housing benefit and that are over the age of 16 are affected by the new changes. The tax does not affect people with a state pension or renting shared ownership accommodation.

Exemptions

As with all changes in legislation, there are exemptions. For example, tenants with a severely disabled child that requires their own room may not be affected by the new rules. Similarly, approved foster carers that have either fostered a child or been approved within the last 12 months will possibly not be affected.

A tenant with an adult child currently living away from home serving with the armed forces may also be exempt. Classed as still living at home while away with the forces, their room will not class as being spare and will therefore not occur charges.

Tenants who have been continuously claiming housing benefit at the same address since January 1996 may also not be affected.

What is Bedroom Tax?

People who believe that they could be exempt from additional charges should contact their local councils.

Rules

There are a variety of different rules regarding what councils class a taxable spare room. A few are outlined below:

Male and female children under the age of ten are expected to share the same bedroom. If they are found to each have their own room in a property, then spare room charges will be applied.
Same-gender children under the age of 16 are expected to share a room.
Rooms kept free for a non-residing child for visiting purposes will be charged as a spare room.
Additional bedrooms left empty for medical reasons, e.g. a couple using two bedrooms because one of them is recovering from surgery is not permitted and will still incur a charge.

[1] http://www.bromford.co.uk/customer/changes-to-benefits/bedroom-tax/

Government Should Not Intervene in Lettings Market

Published On: May 9, 2013 at 5:04 pm

Author: Em Morley

Categories: Property News

Tags: government rent policy,rent policy

The Government’s build to rent policy has been criticised by letting agents, who have called it a “ludicrous” intervention in the industry.¹

A study of more than 250 letting agents, by Leeds firm Morgans and software supplier LetMC, has revealed disapproval in the Government’s plans.

Government Should Not Intervene in Lettings Market

The Government are encouraging institutions such as insurers, and pension funds to invest in whole developments, and large parts of schemes of house building, which would be established as private letting units, and would not be put on the sales market.

Build to rent is being supported by a £1 billion fund that was announced in the Budget. Already, there are a number of backers who have confirmed their plans to enter the industry, including social landlords, Berkeley Homes, and Prudential.1

Housing minister Mark Prisk has claimed that the Government have to get involved because the housing market is dysfunctional. He also says that more large-scale and experienced institutional investors are essential in order for the market to mature, and compared the necessity to Europe.

Morgans’ Jonathan Morgan says that this tactic is heavy handed and is not what the letting industry needs.1

Morgan says: “We have reached out to letting agents across the country with our survey, and 98% of the respondents felt that the Government has not consulted effectively with them about proposed changes to the industry.

“It’s ludicrous to suggest that the housing market is different from any other market; it comes down to supply and demand, so is the Government now going to intervene in every industry where there is a short-term imbalance?”

He says that build to rent is a flawed plan because “fundamentally, people in the UK want to buy, not rent long-term.”

He continues: “All the research and evidence points to the fact that UK renters still ultimately want to buy, and so comparisons with Europe are facile.

“Swiss and Germans grow up expecting to rent as their parents did before them. However, with most lenders in those countries always having required around a 40% deposit, the option to buy has always been a distant dream for most.

“British people on the other hand, have owned property for generations and it will take a lot more than institutional investment in built to rent to turn Britain into a nation of renters.

“Mortgage availability is improving and it will continue to do so, giving more renters the ability to buy their first home. The notion that people in the UK want to rent permanently is just wrong.

“We are already witnessing an increase in sales transactions; the market will adjust.”1

¹http://old.lettingagenttoday.co.uk/news_features/Government-should-not-intervene-in-lettings-market-warning

Landlords Asked to Help with Illegal Immigration

Published On: May 9, 2013 at 4:58 pm

Author: Em Morley

Categories: Landlord News

Tags: illegal immigrants

During the Queen’s speech this week, she stated that more action needs to be taken against illegal immigrants in the UK, especially since the number of new arrivals to the UK has hit a three-year high recently.

Landlords Asked to Help with Illegal Immigration

The housing industry has been hit by the rise in the UK’s population, which has fuelled the current housing crisis, and a high demand for affordable housing, with a lack of supply.

It has consequently led to landlords being told they need to do more to ensure that their tenants are living in the country legally. Under new regulations, if landlords do not vet their tenants properly, they could be fined thousands of pounds. Many landlords have voiced their concerns this this is unfair on them, and will add strain to the already struggling sector.

David Cameron and Nick Clegg said, of the Immigration Bill, that they have already had a tough time in Government, “but three years on, our resolve to turn our country around has never been stronger.”

They continued: “We know that Britain can be great again because we’ve got the people to do it. Today’s Queen’s Speech shows that we will back them every step of the way. It is all about backing people who work hard and want to get on in life.”¹

Currently, landlords have not been told how they should check their tenant’s rights to live in the country, and many are concerned over tenants providing false documentation. Additionally, landlord policies may change due to the legislation coming into force.

The Government have claimed that they will continue aiding those seeking asylum in the UK, but will ensure “the right to stay in the country because of family connections”1 is not mistreated by some people.

¹http://www.justlandlords.co.uk/news/Queen-calls-upon-landlords-to-help-with-illegal-immigration-1711.html

Landlords fined if tenants are illegal immigrants

Published On: May 9, 2013 at 10:41 am

Author: Em Morley

Categories: Landlord News

Tags: illegal immigrants

New government legislation is to be introduced which will have costly consequences for landlords who do not sufficiently check the immigration status of their tenants. A landlord who fails to conduct necessary checks could be fined up to £3,000.

What will the landlord have to check?

The Government is under pressure to tackle illegal migrants seeking refuge in the UK. Under their new plans, landlords will be responsible for checking and validating their tenants’ passports and visas to ascertain their right to live in the U.K. This documentation will have to be checked for all occupants living within the same property. Guidelines on how to check these documents and how to identify if they are genuine will be released in due course. However, the legislation is sure to put extra strain on landlords who already have a number of responsibilities. The question therefore is, are the new changes fair?

For and against

Landlords will argue that additional workload, especially one of this importance and potential financial loss, should be left to other agencies. Their argument will be that they are busy enough running a commercial business and that long-term illegal migrants shouldn’t have had access to apply for accommodation.

However, the Government could counter that argument by saying that this initiative will help to remove more illegal migrants from the country. In addition, the new legislation will exploit some landlords knowingly offering sub-standard accommodation to migrants.

Landlords fined if tenants are illegal immigrants

Changes in law

These upcoming changes in legislation are part of a larger immigration law, in which a number of changes will be implemented. The changes will include limiting benefits for European immigrants and charging temporary migrants who wish to use the NHS. Furthermore, migrants will have to have lived in one area for a minimum of two years before they are considered for social housing.

There will also be more of a crackdown on convicted criminals claiming the right to stay in the U.K on the basis of their family residing here. Instead, their appeal will be measured against the severity of the crime committed.

Cynics have argued that the new crackdowns on immigration are a response to the rise in support of the UKIP party. What is for sure is that the immigration bill is likely to split opinion and it remains to be seen whether it is ultimately a success.

BTL Investors Look at Essex as their Next Asset

Published On: May 8, 2013 at 5:00 pm

Author: Em Morley

Categories: Landlord News

Tags: Essex

BTL Investors Look at Essex as their Next Asset

It has been revealed that buy-to-let investors are looking to Essex as the home of their next asset.

With the Crossrail train service, and the DP World London Gateway development, the county should see an increase in investment, jobs, and new residents.

Beresfords, estate and letting agency in Essex, claims that applications by buy-to-let investors have risen 40% in the past year.¹

Managing Director of Beresfords, Paul Beresford, says: “Essex towns are attracting a large pool of professional tenants and many local investors have identified this and are keen to get the best return on their savings, and at the same time augment their pension.”1

The amount of recorded first time buyers has also grown by 13%, as annual sales agreed have risen by 21%, says Beresfords.1

¹http://choicestoday.choices.co.uk/news_features/buy-to-let-investors-think-the-only-way-is-essex

Seaside Towns Offer Highest Yields for Landlords

Published On: May 7, 2013 at 3:42 pm

Author: Em Morley

Categories: Finance News

Tags: highest rental yields,seaside town rents

Landlords who own properties in coastal towns and cities achieve the best rental yields, according to a new report.

Research from HSBC Bank suggests that buy-to-let properties in Southampton, Kingston-Upon-Hull, and Blackpool are proving lucrative, with returns of almost 8%. Non-coastal cities, such as Manchester and Nottingham are not far behind.

Seaside Towns Offer Highest Yields for Landlords

Head of Mortgages at HSBC, Peter Dockar, said that irrespective of location, “buy-to-let remains a good investment for those looking for above-average returns.”[1] Mr Dockar continued: “23 of the top 50 areas offer yields above 5%,” buy-to-let returns can be “significantly more than is available from more traditional saving options.”[1]

Desirable Area

Despite advocating buy-to-let in general, Dockar believes that the findings suggest “it is clear there is a fine line between a property in a desirable area, the rents that can be achieved and the returns that can be yielded.”[1] Taking London as an example, it appears that Dockar is speaking sense, with the capital not even in the top ten best places for rental yields.

London

High property prices have led HSBC to describe London’s rental yields as “relatively modest.” The best returns came in the borough of Southwark, where the average property price is £401,405. Average rents in the borough are £2,058, leading to a yield of around 6%. This already good rental return looks even better in comparison to areas such as Kensington, where property prices in excess of £1m lead to rental yields of just 3%, the lowest in the capital.[1]

With landlords searching for maximum returns on their investment, tenants are having to pay record high rental costs. Increased demand for rental properties have seen rents soar to an average £1,106 per month in London, according to figure from LSL Property Services. Properties are on average £81 more expensive than they were 12 months ago. [2]

David Newnes, director of LSL, said: “Rents in London are red-hot.”

He continued: “In spite of the unseasonal weather the rental market has gained some ground.’ Newnes then said: “Over the next few months, it looks likely the spring bounce will continue.”[2]

[1] http://www.theguardian.com/money/2013/apr/19/buy-to-let-seaside-towns-best-returns

[2] http://www.landlordexpert.co.uk/2013/05/07/seaside-towns-heads-chart-for-highest-rental-yields-for-landlords/