Written By Em

Em

Em Morley

Lenders may have to Legally take Tenants’ Rent Payment History into Account

Published On: October 29, 2018 at 9:52 am

Author:

Categories: Tenant News

Tags: ,

Lenders may have to legally take tenants’ rent payment history into account when they apply for mortgages, after the matter was raised in Parliament last week.

During Prime Minister’s Questions, Justine Greening, a former cabinet minister, raised the Creditworthiness Assessment Bill, which was read in the House of Commons on Friday.

Greening pointed out that MPs across all parties want to see tenants’ rent payment history contribute towards their credit scores, just as prompt mortgage payments do.

Experian, which issues credit reports, claims that it is now taking into account the rent payment history of over 1.2m private tenants.

It also says that rental data is appearing on tenants’ statutory credit reports, with 79% of tenants who report their rental payments to Experian seeing a noticeable improvement in their credit score.

CreditLadder works with over 2,500 letting agent branches to report verified rent payments to Experian.

The firm’s CEO, Sheraz Dar, says: “As the first and largest of the players offering rent recognition to people who rent, we are proud to play our part in helping responsible tenants gain equal access to affordable credit, both now and increasingly so in the future.”

Lord Bird’s Creditworthiness Assessment Bill was read in the Commons, after it passed through the House of Lords with no amendments.

The bill aims to make it a legal requirement for credit providers to take into account both tenants’ Council Tax and rent payment history.

Rent payment history being included in tenants’ credit scores has long been called for in the lettings industry, with one proptech firm insisting that the change can’t come soon enough.

Do you believe that a tenant’s rent payment history should be included in their credit score, in order to hopefully make it easier for them to obtain mortgage finance?

We will continue to keep you updated with developments to the bill.

Rate of Rent Increases Continues to Rise, Reports ARLA

Published On: October 29, 2018 at 8:59 am

Author:

Categories: Lettings News

Tags:

The rate of rent increases continues to rise year-on-year, according to the latest Private Rented Sector Report from ARLA Propertymark (the Association of Residential Letting Agents), which covers September.

Rent increases

Annually, the number of tenants experiencing rent increases continued to rise in September. Almost a third (31%) of renters saw their rent prices increase last month, compared to 27% in September 2017 and 24% in the same month of 2016.

Looking at shorter-term trends, however, this figure is down. In August this year, ARLA Propertymark letting agents reported a record high for the number of tenants seeing rent increases (40%).

Tenant demand 

Demand for rental properties from prospective tenants fell marginally in September, with the number of home hunters registered per ARLA Propertymark member branch falling to an average of 63, compared to 64 in August.

Year-on-year, a 20% decline was recorded in tenant demand, as 79 prospective tenants were registered per letting agent branch in September last year.

Property stock 

As landlords continue to leave the buy-to-let market, the supply of properties that letting agents managed in September fell to 194 on average, from 197 in the previous month.

David Cox, the Chief Executive of ARLA Propertymark, comments on the report: “Although the number of landlords increasing rents for tenants dropped in September, this figure is still alarmingly high, and it continues to rise year-on-year.

“Increasing costs and continued regulatory change is pushing buy-to-let investors out of the market, and deterring new ones from entering. An average of four landlords took their properties off the market per branch in September – up from three this time last year – and, as supply falls, competition among tenants increases, which is driving up rent costs.”

He adds: “With the Autumn Budget approaching [today], we hope the Government recognises the importance of increasing supply for tenants and uses it as an opportunity to make the market more attractive for buy-to-let investors.”

5 Things I’d do on Monday if I were the Chancellor

Published On: October 26, 2018 at 9:59 am

Author:

Categories: Finance News

Tags: ,,

As the Chancellor, Philip Hammond, prepares to deliver his Autumn Budget on Monday (29th October 2018), Rob Clifford, the SDL Group Commercial Director and Chief Executive of SDL Mortgage Services, looks at what he’d do to get the housing market moving.

After last year’s announcement on first time buyer Stamp Duty, housing may take a backseat in Monday’s Budget. Yet it remains one of the biggest challenges facing the economy and, a year on, the market is still struggling.

Figures from the Royal Institution of Chartered Surveyors’ (RICS’s) Residential Market Survey show that new buyer demand dropped in August and September, while the sales and lettings markets have seen a decline in the number of new listings.

Even without the uncertainty of Brexit, and a possible housing slump, a mix of tax incentives and planning reforms are urgently needed to support the market and to help homebuyers.

Clifford gives us the five things that he’d announce in Monday’s Budget, if he were the Chancellor:

Low costs for downsizers 

5 Things I'd do on Monday if I were the Chancellor

5 Things I’d do on Monday if I were the Chancellor

“Along with many industry professionals who answered the latest RICS survey, I support tax incentives as a way of encouraging downsizing – something that could be done by abolishing Stamp Duty on certain sales and plugging the revenue shortfall by adjusting Council Tax rates.

“We see lots of homeowners who would seriously consider selling the family home, but take a sharp intake of breath when they see the selling and moving costs, including whopping Stamp Duty charges.

“It’s not that they can’t find the perfect two-bedroom new home, because the availability is there – what puts them off is the cost of Stamp Duty and legal fees. If people can downsize from a bigger home to a swish new property in the city or by the coast, as many want to, it’ll free up housing stock elsewhere.”

Support for buy-to-let investors

“While the Government is unlikely, in my opinion, to reverse any of the punitive tax changes facing landlords, I’d like assurances that it is tangibly behind the private rental sector. In fact, I’d like to see it take a scalpel to Stamp Duty for landlords.

“We should remember that, as well as creating more homes for renters, buy-to-let also generates more housing transactions, as landlords put their money where their mouth is, and this creates movements in chains.”

Incentives for developers and planning reforms 

“Developers who extensively and unduly bank land came under fire in last year’s Budget, with the Chancellor saying the Government could use its compulsory purchase powers if needed. But land banking still goes on, and, of course, this limits output and supply. Again, rather than punishing house builders, I’d like to see more incentives to deliver developments and new stock promptly.

“At the same time, many house builders would consider it’s not their fault they can’t deliver more homes – it’s down to the quality of planning departments in local authorities. There are too many bottlenecks in the process that need to be removed.”

More help for first time buyers 

“Last, but not least, the Government could still do more for first time buyers. It would certainly be possible, for example, to reintroduce tax relief on all first time buyer mortgages. There’s also an opportunity to extend the Help to Buy scheme past the current expiry date in 2020, as these buyers are the catalyst to getting the market moving.”

Will the Chancellor have some Pre-Halloween Treats for Landlords in Budget?

Published On: October 26, 2018 at 9:28 am

Author:

Categories: Landlord News

Tags: ,,

There are various tricks that Chancellor Philip Hammond could have for housing in Monday’s Autumn Budget, but will he have some pre-Halloween treats for landlords?

Hammond is set to deliver his Autumn Budget this coming Monday (29th October 2018) – a whole month earlier than usual – with many experts expecting to hear of public spending announcements in relation to Brexit, the roll-out of Universal Credit, and Theresa May’s pledge to end austerity.

Will the Chancellor have some Pre-Halloween Treats for Landlords in Budget?

Will the Chancellor have some Pre-Halloween Treats for Landlords in Budget?

Mike Jakeman, the Senior Economist Advisor at consultancy PwC, says: “This Budget is going to be a very interesting one to watch, because there is so much uncertainty around the UK economy at the moment.”

As far as the property market is concerned, Michelle Niziol, the CEO of Michelle Niziol Bespoke Property Solutions, believes that there will be some “pre-Halloween treats” next week.

She claims: “The Chancellor has a tough task ahead with this month’s Brexit Budget, and pleasing everyone will be harder than in recent years.

“While it is difficult at this point in time to predict exactly what the Budget will contain, there could be some pre-Halloween treats for the housing market. What is clear is that the decisions made by the Government will be the result of a lack of affordable homes and new housing stock for our growing population to live in.”

Buy-to-let landlords have come under attack from the Government in recent years, in a bid to free up housing stock for first time buyers. However, it has been rumoured that the Budget could include tax breaks for landlords who sell their properties to long-term, sitting tenants.

Niziol believes: “The introduction of the new buy-to-let tax relief would benefit both the landlord and tenant, and enable more first time buyers to purchase their first home.

“Our message to landlords is to hold off selling your property. Renting is becoming less of a dirty word in British culture, purely because of the freedoms that renting allows.”

She continues: “The marked increase in the quality of rental accommodation by private landlords, and the likes of new build to rent developments, highlights that the property industry is committed to making tenancy an enjoyable option.

“In the long-term, the shift towards rental culture is only expected to gain strength, placing landlords and property investors in the perfect position to supply what the market desperately needs.”

Niziol concludes: “I look forward to hearing the Chancellor’s plan to make housing, at all levels, more attainable for our citizens.”

We are all hoping for some pre-Halloween treats, not tricks, from Hammond on Monday – stay tuned for the announcements next week.

Chancellor to Deliver “Most Important Budget” of his Career

Published On: October 26, 2018 at 8:59 am

Author:

Categories: Finance News

Tags: ,

Private renters call on MPs to improve the PRS

The Chancellor, Philip Hammond, will deliver the “most keenly watched and important Budget” of his career on Monday (29th October 2018), according to accountants, business and financial adviser Kreston Reeves.

Chancellor to Deliver "Most Important Budget" of his Career

Chancellor to Deliver “Most Important Budget” of his Career

The Budget will be delivered “through the lens of Brexit”, says the firm, which will set out the Government’s vision for what the UK might look like once we have left the EU.

Laurence Parry, a Tax Partner at Kreston Reeves, explains: “With 29th March drawing closer, we would expect the Chancellor to deliver an upbeat Budget that gives a flavour of how the UK will look post-March 2019, and one that sends a message to the country of the Government’s future intent.”

While big policy announcements may be missing, Parry and fellow Tax Partner Daniel Grainge anticipate the following for buy-to-let and tax:

“A further move to make houses more affordable for owner-occupiers was raised at the Conservative Party Conference earlier this month, with the potential for landlords to be offered Capital Gains Tax reliefs if they sell to tenants. We expect to see more detail in the Budget.

“This is potentially an attractive position for property investors looking to realise the value of their investment. The Chancellor would hope that this measure might increase supply and so reduce prices; however, it is difficult to see how this will significantly ease our housing crisis.”

Grainge also looks at Inheritance Tax changes: “Again, the reform of Inheritance Tax has long been promised by the Conservative Party, but not actioned. It is difficult to see any meaningful change being announced this time around, but we would not be surprised if the rules surrounding gifts were eased.”

Nevertheless, although the industry is hopeful of seeing some positive change in Monday’s Budget, Kreston Reeves is concerned that the Government is too “consumed by Brexit” to make any significant announcements. Do you agree?

Landlords will take Long-Term View of Portfolios, Despite Chancellor’s Announcements

Published On: October 26, 2018 at 8:03 am

Author:

Categories: Landlord News

Tags: ,

Most landlords will continue to take a long-term view of the performance of their property portfolios, despite what the Chancellor announces in Monday’s Autumn Budget, according to a new study by Upad.

Following Government changes to mortgage interest tax relief for buy-to-let and higher rates of Stamp Duty on additional properties, some industry insiders anticipated a mass exodus of landlords from the market, but the online letting agent believes that this was an exaggerated view.

Upad surveyed its database of landlords to expose the issues concerning investors, and how they intend to react to what may (or may not) be announced in the Autumn Budget.

When asked what one wish the Chancellor, Philip Hammond, could grant next week, 40% of landlords chose a review of the changes to mortgage interest tax relief, while just over a quarter (26%) would like to see the 3% Stamp Duty surcharge reversed.

Landlords will take Long-Term View of Portfolios, Despite Chancellor's Announcements

Landlords will take Long-Term View of Portfolios, Despite Chancellor’s Announcements

However, should neither of these come to fruition, landlords do not intend to make any rash decisions regarding their future in the buy-to-let market.

Almost a third (30%) stated that they are committed landlords and take a long-term view on managing their portfolios. A further third (32%) would adopt a wait-and-see approach, to better gauge how they might be affected. Just 7% would take steps to start selling their properties.

The CEO of Upad, James Davis – himself a portfolio landlord – responds to the findings: “The decision to sell up isn’t instantly achievable, and landlords need to factor in serving notice on tenants and possible renovations before tackling all the normal marketing and conveyancing hurdles.

“Realistically, you can be looking at a 12-month timeframe to sell a rental property, so, whatever happens next Monday, we’re unlikely to see that happen quickly. Added to that, however, is that our landlords take a long-term performance view of their portfolios.”

He continues: “Over three-quarters of our respondents have been a landlord for more than five years and, added to this, the clear majority have a very clear strategic reason for being so: for two-thirds, it’s a vital part of their pension planning, whilst, for a fifth, it’s their full-time job. This isn’t something that they’ll simply walk away from.”

Upad also questioned landlords about the Government’s plans to introduce a Capital Gains Tax incentive on the sale of rental properties to sitting tenants of three years or more. 37% said that this is something that they would welcome, but 33% confirmed that they were not looking to sell, so this would not affect them.

Davis adds: “With 71% of our respondents confirming that they’ll maintain the size of their property portfolio in the coming year, and a further 15% stating that they, in fact, plan to increase the number of properties they hold, committed landlords with a long-term, strategic view of their investments are unlikely to be deterred by whatever the Chancellor announces next week.

“They’re keen to maintain a cost-effective approach to managing their portfolios, which is why they chose to work with Upad, but they also resent the burdensome nature of the tax regimes inflicted on them. However, they’re aware of the vital role they play in the provision of homes when supply is so low, and demand is so high, so they remain resolute in their commitment to the buy-to-let market.”

What’s your one wish for the Chancellor in Monday’s Budget?