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Em Morley

New study reveals number of landlords looking to use limited companies

Published On: August 20, 2019 at 8:34 am

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Categories: Landlord News

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A third of buy-to-let landlords are planning to remortgage in the next year, according to new research from Foundation Home Loans. Landlords looking to add to their portfolio are also more likely to do so via a limited company.

Independent market research group BDRC undertook this research on behalf of Foundation Home Loans, finding that 53% of landlords intend to remortgage as an individual. 19% of those surveyed said that they plan to use a limited company. 17% responded that it would depend on their circumstances at the time.

The survey revealed that landlords with 11 or more properties were more likely to remortgage with a limited company – 26% said that they would do so within the next year.

Only 14% of landlords are currently planning to take on new properties over the next 12 months, with 55% of this number planning to do so via a limited company.

Jeff Knight, director of marketing for Foundation Home Loans, commented: “Understandably when it comes to remortgaging there is a continued shift towards the use of limited company vehicles particularly as we see the growth in portfolio and professional landlords who understand the advantages of holding their properties within such corporate structures.

“The ability to secure full mortgage interest tax relief, which is not available when holding properties as an individual, is a clear incentive for the move towards limited company borrowing.

“As a lender we’ve certainly seen a shift towards limited company business and our aim is to offer a competitive product offering, clear criteria and a smooth service for those landlords seeking to remortgage.

“It’s also clear that remortgaging remains the bedrock of the buy-to-let market and, because of that, advisers should be making regular contact with their existing clients in order to ensure they secure that repeat business, and they take advantage of the highly-competitive market that exists.”

Responsible Scottish landlords praised for deposit scheme compliance

Published On: August 19, 2019 at 9:23 am

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Scottish buy-to-let landlords have been praised for responsibly letting their properties this week after SafeDeposits Scotland conducted research into the rates of landlords failing to protect tenants’ deposits.

Landlords in Aberdeen City and Aberdeenshire were found to have the most positive rates, with just 17 cases from the area being taken to the First-Tier Tribunal in regards to failing to protect tenant’s deposits.

SafeDeposits Scotland has studied decisions made by the Tribunal since the end of 2017. It found that £13,169 had been paid out to tenants in Aberdeen City and Aberdeenshire, which averages out to around £770 per case.

The largest payout was to tenants renting in the village of Monymusk, where the landlord was ordered to pay out £1,725. The lowest award was £100 for a property near the University of Aberdeen.

Ian Potter, chair of SafeDeposits Scotland, commented: “While there were 17 instances of North East landlords being taken to the Tribunal by their tenants, to put that into context; SafeDeposits Scotland protects the deposits of almost 15,000 tenants in the area.

“It’s great to see the overwhelming majority of landlords taking their legal responsibilities seriously and looking after their tenants’ deposits.

“Deposit protection legislation is designed to protect all parties involved in the private rented sector and costs landlords nothing to comply with. The schemes also offer free and impartial adjudication services to ensure that any deductions from deposits are fair and can be scrutinised.

“We believe that the overwhelming majority of landlords operate within the rules, but the findings from our research into the first 18 months of the First-tier Tribunal demonstrates that there are still some out there who don’t.

“In most of the cases we’ve looked at, the landlord has not acted out of malice, but was either simply unaware of the legislation or forgot, however, that does not reassure tenants or save landlords from fines.”

Average cost of evicting a rogue tenant revealed by London property agency

Published On: August 19, 2019 at 8:33 am

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Landlords face bills averaging over £30,000 for evicting rogue tenants, according to new research from Benham and Reeves.

The London property agency used Government and industry data to determine this average, and also found that landlords typically lose nine months’ worth of rent during the eviction process. This amounts to an average of £6,111. 

On top of this, they then have to fund repairs to any damage caused by the rogue tenants. The agency’s research highlights the following average costs for property repairs:

  • New kitchen: £8,000
  • Refitting a bathroom: £4,875
  • Redecorating: £2,900
  • New windows: £7,000

When it comes to legal fees, these average £3,000. This can total an overall bill of £31,886, during a worst-case scenario.

However, things are more dire in London. Property costs are higher, which leads to an increased average of £41,318. In prime central London, thought to be the capital’s biggest hotspot for rogue tenants, costs can reach to more than £50,000.

Marc von Grundherr, director of Benham and Reeves, said: “Rogue tenants are a landlord’s absolute worst nightmare, and apart from the stress and time consumed dealing with them, the financial impact can be crippling.

“We’re not talking about a bad apple that doesn’t pay rent for the last two months of a tenancy and leaves a dirty protest on their way out.

“We’re talking about serious criminal organisations that know the letter of the law and every trick in the book to prevent you from getting rid of them, including how to stall the court date for weeks on end and how to deter the bailiff through threats of violence when they finally do call.

“At the very least, you’ll have a dangerously overcrowded sub-let on your hands but more often than not it will be a brothel, workhouse or drug farm.

“We’re not kidding when we talk about the complete renovation and refurbishment of the property afterwards either, as they will take every single thing they can and destroy whatever is left.

“It’s an extremely deep-rooted issue that goes beyond the tenant, even as far as the bribery of the concierge, and so you really are fighting from day one to get them out.”

Claims Section 21 is ‘leading cause of homelessness’ not supported by available evidence

Published On: August 16, 2019 at 9:13 am

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The National Landlords Association (NLA) has rejected claims from the Government that the use of Section 21 eviction notices by landlords has been the leading cause of homelessness in the UK.

This is in regards to government data stating that 11.8% (3,890) households out of 33,020 assessed by local authorities between October and December 2018 faced homelessness as a result of being served Section 21 notices.

These figures also highlighted the top reason for why families lost their last settled home being because family or friends were no longer willing or able to accommodate them. This accounted for over 15,000 households.

The next most common reason was an assured shorthand tenancy (AST) coming to an end. This includes tenancies ended using Section 8, which is a fault-based system, and tenants abandoning the property, as well as Section 21.

Richard Lambert, CEO of the NLA, commented: “Claims by the government and tenant support groups that Section 21 is the leading cause of homelessness are not supported by the available evidence.

“They are factually incorrect, misleading and just plain wrong. No reasonable landlord would seek to evict a tenant without good cause.

“Most evictions are a symptom of wider issues, such as the freeze on local housing allowance, insecure jobs, and the lack of support for vulnerable tenants to sustain private tenancies successfully.

“The increase in the use of no-fault evictions through Section 21 is because landlords simply don’t have faith in the courts being able to deal with eviction cases, however justified their reason.

“That’s why we’re appealing directly to the prime minister to save section 21. Landlords are running businesses and have very few options when it comes to managing the risks they face. The focus should instead be on fixing the issues that contribute to this risk.” 

Property selling process – what can be done to speed up exchange of contracts?

Published On: August 16, 2019 at 8:31 am

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As a landlord, you might be looking to sell on a property for a number of reasons. You may wish to upsize, downsize or move areas. Regardless of this, getting from the beginning of the property selling process to the exchange of contracts can be a frustrating journey. 

Sales progression and communication tool mio points out that all parties involved in property transactions must do their bit to help limit delays, whether they are a consumer or a professional.

It says that more needs to be done to speed up the moving process and improve communication between key stakeholders.

Exchange is the longest part of moving home

Mio highlights that the UK moving process is notorious for being slow, with buyers and sellers often facing long delays before getting their hands on the keys to their new home.

Once you get to the exchange of contracts – the final stage of the property selling process, in which signed contracts are exchanged between both parties – it can be one of the most stressful and frustrating parts of the process. According to recent research, it is also the longest.

It takes on average 166 days to complete an exchange of contracts, according to a survey of 2,000 homeowners conducted by OnePoll on behalf of Matterport. This is the equivalent of 5.3 months

The report for this survey suggests that some were unfortunate enough to be stuck in the chain for up to 25 months before their contracts were exchanged.

John Horton, product director of mio, part of tmgroup, says: “When you consider how long the entire moving process – and particularly the exchange of contracts – is taking, it’s no wonder the government has made a commitment to improve the home buying and selling process.

“While this process is ongoing, it’s up to estate agents, conveyancers and movers themselves to work collaboratively to prevent lengthy delays and keep the housing market ticking over.”

What are the main causes of delays in the moving process?

Mio has highlighted the ten most common reasons for why a property transaction could be delayed:

  • Mortgage offers expiring
  • Complications in other parts of the chain
  • Failure to agree timescale between parties
  • Loss of or defective title deeds
  • Delays caused by surveys and mortgage valuations
  • Not signing/returning documents on time
  • Incorrect or incomplete information on key documents
  • Lack of disclosure around a gifted deposit
  • Delays in searches being returned
  • Slow or lacking service from conveyancers/agents

What can buyers and sellers do to limit delays?

Consumers have an important role to play when it comes to reducing the chances of an elongated exchange process.

Horton explains: “Buyers and sellers can often become frustrated and feel isolated during the exchange, but they must stay engaged with the progress of the transaction,” Horton explains.

“Being easily contactable, prompt in returning documents and flexible with dates can all help to stop transactions from stalling.

“What’s more, having realistic expectations and knowing the right time to chase agents or solicitors can also reduce unnecessary friction in the process.”

What can agents and conveyancers do to speed up the process?

It’s important for agents and conveyancers to be proactive and open to collaboration instead of working in a silo.

Horton adds: “Working together and being transparent can certainly help to reduce delays and keep things moving.

“Good communication is vital for property professionals, both in organising key aspects of the move and managing the expectations of buyers and sellers.”

Horton says that agents and conveyancers who use technology to their advantage and take a more accessible approach towards sales progression can improve customer satisfaction and improve their chances of securing repeat future business.

Landlords needed in Cardiff to help solve housing crisis, says housing association Cadwyn

Published On: August 15, 2019 at 9:42 am

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Cardiff based housing association Cadwyn is calling for more landlords with properties in Cardiff to lease their houses with them and help those at most risk of losing their homes.

There are approximately 8,000 households in Cardiff on the Cardiff Council waiting list for new homes. Around 400 new applications are being added each month.

Currently Cadwyn has just over 400 houses leased with the council, but more are needed to keep up with demand. Cadwyn has launched #The400 campaign, which focuses on encouraging private landlords to lease their properties through one of their schemes. If this is successful, it should reduce the number of families and individuals waiting for safe and secure homes.

There are a range of reasons why families and individuals are at risk of becoming homeless. A breakdown in a relationship, harassment or intimidation illness, difficulty paying a mortgage or rent, or domestic violence can all be key factors.

Naomi Carter and her family now live in a Cadwyn property. However, her situation could have been very different: “Our previous landlord decided to sell the property and I had nowhere to go. The time we had to vacate was getting closer and it worried me a lot because I have four children and becoming homeless was just not an option.

“Cadwyn approached me and looked at what property would be suitable for a large family like ours. It was also important that we stayed in the area as my son has autism, so he doesn’t take to change very well. The effects on him and my other children would have been extremely stressful. 

“Without a Cadwyn home, there was a possibility that we could have been in a hostel. My eldest son is 18, so we would have been split up too. I know Cadwyn need more properties, and bigger properties as well for families like mine to make sure families don’t end up without a safe place to live.”

Ramon Selvakumaran, a landlord who is based in London and leases to Cadwyn, said: “I first came across Cadwyn when researching how to receive secure rent.  I was attracted to Cadwyn for the guaranteed rent, the fact that they take over the running of the property and the social side, helping society.

“I have leased my property to Cadwyn for three and a half years and I fully trust them. It’s a smooth, simple and easy process. The guaranteed rent was the main attraction, the other things were a bonus, and I’m really proud and happy to tell people about the scheme. I know there’s a need for temporary accommodation, so to help at all is a great feeling.”

Helen Armstrong is the Director at Cadwyn responsible for making places and changing lives: “Cadwyn has been leasing properties from private landlords for fourteen years. We are well experienced in looking after your property, guaranteeing your rent and we also give you the chance to help someone who otherwise might be homeless. Lease your property to us and provide a home for one of the 400. You won’t regret it.”

Cabinet Member for Housing and Communities, Cllr Lynda Thorne, said: “We understand the importance of a good quality home for people’s wellbeing and while we are doing everything we can to increase the amount of affordable housing in the city, including building 2,000 new council homes and buying back property from the market, there is still significant pressures on the housing waiting list. That’s why we are happy to support Cadwyn, and back their campaign to encourage more private landlords to work with them, to be able to provide decent homes for people who need them.

“It’s vital that if anyone is worried about losing their home that they act now, don’t wait. In many cases, our Housing Options team are able to provide advice and support that can prevent people becoming homeless, so get in touch on 029 2057 0750 as soon as possible.”