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Em

Em Morley

Landlords Warned over Energy Efficiency Measures

Published On: March 5, 2013 at 5:09 pm

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Categories: Landlord News

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Landlords in the Midlands have been issued a warning that they must adhere to new laws or face not being able to rent out their property.

Under the new regulations, landlords will be encouraged to go green and improve their property’s energy efficiency rating. Energy expert Ron Fox warns that if landlords do not heed the warning, one in ten buy-to-let properties could be unavailable to let in just five years time.

Landlords Warned over Energy Efficiency Measures

Landlords Warned over Energy Efficiency Measures

 

New measures

The new legislation will see all properties with either an F or G energy rating being unable to be rented out from April 2018. In addition, landlords will be unavailable to refuse reasonable requests for energy efficiency improvements to their property from April 2016. These measures could include providing loft insulation.[1]

It remains unclear whether the ban on F and G energy rated properties will come into effect by a certain date, or whether these properties will continue to be let out to the end of existing tenancy agreements.

Survey

A recent questionnaire from the English Housing Survey stated that just over 11% of homes in the private rented sector were rated as either an F or G. This figure was in comparison to just 2% of local authority properties, 1.6% of housing association properties and 8.2% of owner-occupied homes.[1]

Mr Fox believes that landlords should look to the future in order to save valuable money: “Landlords should plan ahead now to turn their properties green and to save more money.”

He continued by saying: “The Government has made it clear that there will be consequences for those who do not improve the energy efficiency of their properties voluntarily.”[1]

Growth

Latest figures indicate that the buy-to-let market has continued to grow. Buy-to-let investors borrowed £16.4 billion last year, an increase of 19% on the last 12 months. The total number of buy-to-let mortgages left outstanding at the end of last year totalled 1.45 million.[1]

The National Landlords Association (NLA) has also introduced a scheme to ensure energy improvements are carried out. Similar to the Government’s Green Deal, the NLA scheme will see all energy improvements paid for by a loan, supplemented by the property’s energy bill.

Mr Fox stated: “Up to 60% of heat lost in a home is through the roof and the walls.” As a result, he believes that “landlords should start by spray-foaming the attic with the environmentally friendly Icynene Insulation System which reduces heating bills by up to 50% and saves up to £600 a year.”[1]

[1] http://www.staffordshirenewsletter.co.uk/Landlords-green/story-20164505-detail/story.html

 

 

 

Landlords Outsource Direct Debit Payments

Published On: February 28, 2013 at 2:40 pm

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Categories: Finance News

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Ahead of the introduction of Universal Credit this forthcoming October, five social landlords based in the UK have decided to outsource their direct debits.

Universal Credit will see six benefits and tax credits, including housing benefit, paid directly to claimants.

Payment

At present, the Department of Work and Pensions (DWP) plan to issue Universal Credit one month from the date the claim was lodged. Claimants will have a fixed pay date of no longer than seven days from the conclusion of their assessment.

These proposals have led the five UK-based social landlords to outsource their direct debits to ensure that they can promise their tenants rent collection on any day of the month. The social landlords have chosen to do this to offer support to tenants claiming housing benefit, giving them a collection date soon after they are in receipt of their monthly payment.

All five landlords, each outsourcing their direct debit payments to allpay, said that a flexible collection date was a main reason for their decision.

allpay

allpay are payment collection specialists and work with over 70% of the top 400 UK social landlords. In addition, the company is responsible for collecting debits for a number of the UK’s largest housing associations. Enquiries to allpay have risen substantially since the announcement of Universal Credit.

One particular organisation using allpay is Your Homes Newcastle. The organisation offered only two monthly collection dates previous to joining allpay. Income Team Manager at Your Homes Newcastle, Maureen Grainger, is delighted with the service received to date. She said: “We can now offer more payment dates and customers can choose how often the payments are taken; weekly, fortnightly, monthly etc. This allows our customers much more flexibility to tie in their payments with when they receive their wages or benefits.”[1]

Emerging reforms

Thames Valley Housing Association also utilise allpay’s services. Revenues Manager Indy Gill, said that their “decision to move to allpay was a combination of the emerging welfare reforms, particularly Universal Credit, and the complexities around upgrading our current system.”[1]

Landlords Outsource Direct Debit Payments

Landlords Outsource Direct Debit Payments

 

Gill went on to say that their previous system “had only three collection dates and with Universal Credit on the horizon, we thought the best way forward was with allpay. We know Universal Credit is going to be paid monthly to each individual and there’s no set date when it will be paid, it just depends on when the resident puts their claim in. Therefore, having a direct debit facility with allpay that collects on every date of the month helps with that.”[1]

More recognizable names that have chosen allpay to manage their direct debits are Paragon and Freebridge Community Housing.

[1] http://www.allpay.net/news/social-landlords-outsource-direct-debits-ahead-universal-credit

Letting agents encouraged to solve housing crisis

Published On: February 28, 2013 at 12:27 pm

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Categories: Property News

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Shortly, George Osborne will be announcing the Budget for 2013. Landlords, tenants and agents alike will be taking a keen interest in the Chancellor’s plans to solve the problems of the housing crisis. On the eve of the announcement, a member of a large letting agency has called for the Chancellor to allow landlords to be given the chance to solve the problem, citing that their experience could prove vital.

New Buy scheme

Ajay Jagota of KIS Lettings made the call in the wake of revelations that the recently introduced NewBuy scheme is falling a long way short of its target. The scheme, designed to help 100,000 families into the property market has benefited just 1,500 families to date.[1]

Mr Jogota believes that the Government should use the upcoming budget as a springboard to propose measures in order to assist landlords to fill some of the 710,000 empty homes within the U.K. He thinks that local authorities could be encouraged to sell uninhabited properties to investors for smaller fees. In addition, he believes that the Government should introduce grants or financial incentives in order to assist landlords to bring empty properties back up to living standards.

Letting agents encouraged to solve housing crisis

Letting agents encouraged to solve housing crisis 

Inadequate

Mr Jogota describes the NewBuy scheme as, ‘perfectly noble,’ but, ‘clearly inadequate in solving Britain’s housing shortages.’ He goes on to say, ‘at the same time, landlords and letting agents are all too often being treated as part of that problem, when we could be part of the solution. Statistics show there are 50,000 homes standing empty in the North-East alone.  With a little creative thinking and for a modest investment the government could rapidly bring hundreds of thousands of properties to the market with minimal effort, just by giving landlords the power to turn boarded up buildings into family homes.’[1]

Cost

The cost of renovating a property can be astronomical for some landlords. Labour costs and unoccupied property insurance are just two features that, when mixed with the current economic conditions, can price landlords out of making changes to a property. Mr Jagota suggests that the Government should be doing more to assist landlords who find themselves in this situation. He says that Osborne should, ‘look at the successes of the so-called 50p homes in the East End of Newcastle-where once abandoned council properties are now much-loved homes valued of at least £150, 000.’[1]

Jagota goes on to say that schemes such as this would give economies a welcome shot in the arm. He expresses that, ‘Not only would projects like this allow the government to regenerate rundown communities cheaply, as this money would mostly be spent on giving work to local tradespeople and buying materials from local businesses they would boost the economy too.  At the end of the day, both the economy and the housing market will only really start to improve when the banks start lending again, and that must be the government’s priority.  On the other hand, it doesn’t mean that it isn’t possible to have at least 50,000 North East homes ready to go within months with just a little imagination.’[1]

[1] http://www.justlandlords.co.uk/news/Letting-agent-wants-Landlords-to-solve-housing-crisis-1654.html

 

 

One in Ten BTL Homes may be Unlettable in Five Years

Published On: February 28, 2013 at 10:59 am

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Categories: Landlord News

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Landlords must make improvements to their properties’ energy efficiency to avoid one in ten buy-to-let houses being unlettable in five years’ time.

New legislation will make it a crime to rent out properties with the two lowest energy efficiency ratings, F and G, from April 2018. Homes with these ratings are most common in the private rental sector.

Tenants will hold the power in demanding developments to insulation from 2016, with landlords unable to refuse reasonable appeals for better energy efficiency.

The English Housing Survey revealed that 11.4% of houses in the private rented sector had the F or G rating in 2011. In a dramatic contrast, just 2% of local authority properties, and 1.6% of housing association homes had these ratings. The number of owner-occupied houses was higher, at 8.2%.

These ratings expose a lack of basic insulation. Over half (57%) of owner-occupied properties have cavity wall insulation where a cavity existed, with 38% of privately rented houses having the insulation. Within social housing, the number is 63%.

Over 12% of house in the private rental sector do not have double-glazing, whereas 5.3% owner-occupied homes do not.

The Government is yet to decide whether the prohibition of letting out badly insulated properties will come into force on a set date, or whether they can be rented until the end of an existing tenancy agreement.

The National Landlords Association (NLA) has introduced a scheme to aid landlords in making the energy efficient changes to their rental properties. It reflects the Government’s Green Deal, in which energy efficiency improvements are paid for by a loan that is then repaid through an electricity bill add-on. The impression is given that a reduction in energy bills will cancel out the loan.

The NLA says: “The Government has made it clear that there will be consequences for those who do not voluntarily improve the energy efficiency of their properties by a specific time, so there is no excuse not to comply with the cost-neutral scheme.”1

Buy-to-let investors, however, could be caught by surprise by the laws. A growing number in the market borrowed a total of £16.4bn last year, a 19% rise on the previous year, and the highest level in four years.

Investors find buy-to-let appealing for the good rental incomes that surpass the poor returns from cash deposits. Rental yields average 6%, say Savills estate agent.

One in Ten BTL Homes may be Unlettable in Five Years

One in Ten BTL Homes may be Unlettable in Five Years

If this is an industry you’re looking into, there are certain things to reflect on. By considering all of your investments, you must ensure you have enough money to avoid borrowing excessive amounts, or place too much into property assets.

Stephen Rees, Head of Real Estate Advisory at Coutts, a private bank, says: “I wouldn’t advise putting more than 10%-15% of your assets in an investment property. It is an illiquid and specialist market. So if you have only £100,000 to invest, I would think very hard about it. If, on the other hand, you have £1m in assets, buy-to-let is worthy of serious consideration for a part of that money.

“Equally, be sure that you don’t over-borrow. If you put up 20% of the purchase price and borrow the rest, events beyond your control could get you into trouble. Instead, we would recommend at least 50% equity, and even then you should have a plan for cutting the debt if your lender gets cold feet.”

Rees also says that those with less to invest could have 30%-40% of their gross incomes consumed by costs. He says: “You are completely exposed to one tenant, so if he leaves, refuses to pay, or vandalises your property, your income disappears. You also have no economies of scale when it comes to maintenance and little bargaining power with tradesmen and estate agents. Successful investors have usually built up a portfolio of a few properties over time.”1

When choosing the perfect property, the area and home needs to appeal to tenants. Researching the market is vital in determining what they’re looking for.

Jeremy Leaf, a north London estate agent and spokesman for the Royal Institution of Chartered Surveyors (RICS) advises: “Imagine that you are moving to Tokyo or Adelaide and looking for a place to rent. What would you look for? That’s what tenants here will want too.

“Do a huge amount of research, make a nuisance of yourself. Call up estate agents posing as both buyer and tenant to get a feel for levels of supply and demand. Walk the streets at different times of the day to get to know an area. Find out about flood risks and crime levels, and if any new facilities are planned.”1

New build houses can provide low maintenance costs, and potentially guarantee rental income. However, they will also face competition from other investors for tenants, which could force rents down in the future.

A Director at Anderson Harris, mortgage brokers, Adrian Anderson, says: “Commuter towns to London are always good.”1

Another broker, of SPF Private Clients, Mark Harris comments: “The outlook for buy-to-let is bright. As first time buyers struggle to get on the housing ladder, rental demand continues to climb. Yields are improving while the rates on buy-to-let mortgages are looking increasingly attractive.”1

Borrowers are also advised to consider private banks, by Rob Currie, of Nedbank Private Wealth, who could offer better interest rates, equal to those on ordinary residential mortgages.

1 http://www.landlordexpert.co.uk/2013/02/27/energy-efficiency-one-in-10-buy-to-let-homes-will-be-unlettable-in-five-years/

 

 

 

Lettings portal helps housing benefit recipients

Published On: February 26, 2013 at 2:31 pm

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There is an assumption that landlords are becoming increasingly wary of letting out their properties to tenants in receipt of housing benefit. It is feared that this number will rise with the introduction of the Universal Credit scheme in April.

As part of this scheme, housing benefit will be paid directly to tenants as opposed to landlords. It is feared that this will lead to an increase in rent arrears.

The difficult economic climate has led to an increased need for landlords to let out their properties to people on housing benefit. With this in mind, one letting agent in particular is trying to make the process simpler.

Lettings portal helps housing benefit recipients

Lettings portal helps housing benefit recipients

DSSmove

DSSmove is a new website that offers a service putting those in receipt of housing benefit in direct contact with prospective landlords and letting agents. More importantly, the site only puts the tenant in contact with those landlords or agents willing to deal with them. To date, over 250 agencies have already signed up.

Aki Ellahi, founder of the site, said the time was right to act. He said, ‘currently there are over five million people claiming Local Housing Allowance and this is set to grow over the next two to three years as we face a tough economic period and continued austerity measures from the Government.’[1]

‘Some landlords and agents are wary of letting to people on housing benefit, but we have been doing it for years through our lettings agency without problems.  In many inner-city areas in the South-West, Wales, Midlands and the North-East and North-West, LHA rates are sometimes higher than the market rent.  For example, a two-bed LHA rate in Wolverhampton is £450 and many properties are on the open market at £350-£400.’[1]

Ellahi claims that some corporate agents have, ‘spotted the gap and are moving more into this market.’[1] He goes on to say, for many landlords and agents across the UK – especially in the North – there will be no choice about accepting LHA tenants in 2013 and beyond.”  Landlords who are concerned about letting to LHA tenants may soon have a change of heart when they realise that the demand is so high and the risks are actually relatively low, especially if they are protected by landlord insurance.’[1]

Pleased

One company that has already signed up to the site is Intercity Accommodation. Its founder John MacAlevey was full of praise for the website, saying, ‘I am pleased with the inquiries so far. The site could not have been launched at a better time. In the Leeds area we have seen a huge increase in the private rented sector and a rise in demand for properties that will house LHA tenants, due to the lack of mortgage funds and tough economic situation.’[1]

[1] http://www.justlandlords.co.uk/news/Lettings-portal-helps-Housing-Benefit-recipients-1649.html

 

 

Rent Demand Falls

Published On: February 25, 2013 at 4:00 pm

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Research has revealed that more than one third of landlords in the buy-to-let market have disclosed that the demand for rentable properties, from tenants, is easing after a long period of high demand.

About 35% of landlords have said that the amount of renters looking for properties is now at its lowest since the second quarter of 2012.

That figure, however, is a national average, with buy-to-let demand still reported as high in London and the East of England.

The area with the lowest level of demand for rentable properties is Yorkshire and Humberside.

Despite the decrease in people looking for properties, landlords have stated to mortgage lender BM Solutions, who conducted the survey, that they believe that prospects in the private rented sector are still good.

Rent Demand Falls

Rent Demand Falls

This view is regardless of other findings in the study, that revealed that yields are falling as property prices increase. Also, rents that tenants are prepared to pay remain static.

The average gross ROI for the third quarter of this year was 6%, a drop of 0.1% from the previous quarter.

This is also a national average, with landlords in the North East reporting gross returns of 6.7% and landlords of Yorkshire and Humberside saying their gross yields are now 5.7%.

BM Solutions’ Head of Sales, Phil Rickards, says that despite these figures, an increasing number of landlords are now investing in buy-to-let properties. He believes that they see them as an excellent long-term investment.

Most landlords admit that they are entering this sector in attempt of boosting their pension funds, and investing in property is safer than putting their money into stocks and shares.

Mr Rickards explains: “There is confidence in the UK property market.”1

More than half of landlords, 53%, are also pushing up rents for new tenants with most claiming that they raise rents in a bid to match local prices, the survey found.

Voids are also a growing problem; after 36% of landlords said that their buy-to-let was empty during the last quarter.

The void rate has seen a slight increase of 3% compared with the second quarter. However, the average length of a void has decreased by five days, to 64 days.

The greatest number of voids has been reported by landlords in the North East, alongside the lowest occurrence stated by landlords in the South East.

There is good news, however, in regard to the number of landlords reporting that their tenants are in arrears, which has now fallen to its lowest in three years. The average amount of rent owed by tenants is now £1,532, down by £358.

1http://www.accommodationforstudents.com/view_landlord_guides.asp?id=1445