Written By Em

Em

Em Morley

Planning on Turning Your Rental Property into a Holiday Let?

Published On: August 30, 2018 at 8:33 am

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Categories: Landlord News

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From the tax changes to mortgage interest relief to the current proposals to introduce a minimum three-year contract for rental tenancies, landlords have been receiving a lot of stick recently.

It’s no surprise, that due to this, landlords are contemplating alternative options concerning the generation incomes from their properties.

For some, the best option has been to turn to commercial building, such as offices and shops. However, for others, it is the letting terms, rather than the properties, that they are choosing to change.

Research undertaken by the RLA last year discovered that there had been a 75% rise in the number of London landlords listing more than one property on Airbnb between February 2016 and March 2017.

Meanwhile, recent figures from the Office for National Statistics revealed the total number of holiday lets increased by 5.5% in 2016-17. This occurred at around the same time when landlords were being hit with harsh Government measures.

 

Lisa Evans, Commercial Property Solicitor at Kirwans law firm, commented: ““Landlords are undoubtedly going through a really tricky time right now.

“Punitive tax changes and the introduction of endless red tape has hit landlords hard, and many are doing all they can to find their way to retain their income without having to go through the process of offloading their properties.

“For some, turning rental homes into holiday lets where appropriate can seem like the answer to their prayers, offering higher yields than traditional buy-to-lets and retaining the right to claim mortgage interest tax relief.

“However, as with any investment, there are always important points to consider.”

Lisa then sets out some key points to consider prior to turning your rental properties into holiday homes:

1) Check that your mortgage lender allows you to do so

Your first port of call should be your mortgage lender to enquire as to whether you need to change your mortgage to allow you to do so; otherwise you could face a higher mortgage rate, fine, or even demands of immediate repayment or threats of repossession.

2) Prepare for higher mortgage repayments

If you do need to change to a holiday let mortgage, you could face an early payment penalty fee, as well as higher rates from the limited number of lenders who offer such mortgages.

3) Don’t forget to change your insurance

Changing your property to a holiday let could make your buildings and contents insurance invalid, so contact your insurance company to find out what you need to do to ensure your property continues to be protected.

4) Check whether the property is leasehold

If so, go through the lease with a fine toothcomb and check that you’re permitted to use the property as a holiday let, or you may fall foul of the law.

5) Be strict about the number of guests

If there’s a possibility that you might let the property to more than four people, then you may need to obtain an HMO licence. Overlooking this important fact could result in prosecution and a huge fine.

6) Do your sums

As with buy-to-lets, there’s a good chance that there’ll be a period of the year when your holiday let is unoccupied, so you need to make sure that it makes enough income the rest of the year to cover these quiet times. Do your sums and make sure that the rent can cover any shortfall.

And if you’re thinking of selling up and buying a holiday let instead . . .

Choose your location carefully

The pretty, chocolate box cottage may look beautiful, but if it’s miles away from the nearest shop you may find that tourist interest is low. Conversely, the property you’re interested in may be in a holiday hotspot, but if it is ugly or visually unappealing, there may be surprisingly few enquiries. Think about the elements you’d look for if you were the customer, and try and choose a property that’s both in a busy tourist area and looks pretty too.

Increasing Numbers of Londoners Now Fleeing the Capital for More Affordable Property

Published On: August 29, 2018 at 9:58 am

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Data from Hamptons International, based on activity across Countrywide branches, has observed a 16% increase in homes purchased by Londoners outside the capital during the first half of this year, with a record 30,280 buying properties outside the capital through Countrywide brands.

This increased by 16% on the same period last year and 61% more than a decade ago.

Most London leavers remain in the south of England at 38% according to the research presented. Moreover, the east of England followed suit and was the most popular destination during the first half of 2018 among 30% of London leavers.

The proportion of Londoners leaving for northern England or the midlands has also more than tripled since 2008 to 21%, the first figures claim.

 

Year                             Number of homes bought by London leavers
2006 29,830
2007 49,780
2008 18,840
2009 10,170
2010 15,410
2011 15,320
2012 15,150
2013 14,800
2014 37,720
2015 25,760
2016 32,360
2017 26,180
2018 30,280

 

However, it is not just home owners fleeing the capital. An increased number of first time buyers are now buying beyond London.

Furthermore, a third of first time buyers living in London ended up buying their first home outside the capital in the first half of 2018 – almost double the proportion in 2013.

Though, this is a 2% fall in comparison to 2017, which the agent attributes to Stamp Duty relief and Help to Buy assisting more first time buyers on to the property ladder.

In the first half of 2018, 85% of first time buyers leaving London moved to the east or south-east, while 12% of first time buyers leaving the capital are moving to the north or the midlands, 4 times the proportion in 2010, according to the figures.

Research Analyst at Hamptons International, Aneisha Beveridge, commented:

“With affordability stretched, more Londoners are moving out of the capital to find their new home.

“The proportion of London leavers heading north has tripled in the last ten years. More people are making a bigger move and buying a larger home sooner to avoid having to pay stamp duty on additional moves as they trade up. But for many, this means heading further north.

“However, more first-time buyers are staying in the capital to purchase their first home than last year.

“The savings from Stamp Duty relief and the availability of Help to Buy has meant that more first-time buyers are able to remain in London than before. But raising a deposit remains a hurdle for many, which helps explain why increasing numbers of first-time buyers who leave London are heading north.”

 

Longer Tenancy Plans Appear to be a ‘Political Move’ Aimed at the Renter Vote

Published On: August 29, 2018 at 9:31 am

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The National Landlords Association (NLA) has voiced its opposition to intentions to introduce mandatory three-year tenancies.

Responding to the overcoming barriers to longer tenancies consultation, which seeks views on a proposed three-year tenancy model, the NLA has strongly objected the proposals.

The NLA’s response outlines:

• The increased risk associated with longer term tenancies for landlords, particularly with regard to removing tenants who breach the terms of their tenancy
• The urgency of reforming court processes so that tenants can be removed where there is a breach of tenancy without undue delay or cost before any longer tenancies can be introduced
• The importance of maintaining Section 21
• The importance of flexibility in lengths of tenure, to account for the needs of different tenants and landlords
• The risk that break clauses and regulated annual increases in rent will lead to landlords changing behaviour to end tenancies before they enter into the longer fixed period and enforce rent increases more regularly than under the current system
• The value of using incentives to encourage behaviour change, rather than enforcing a mandatory approach, which  will not be suitable for either landlords or tenants
• The danger that, should a mandatory approach be enforced, landlords will choose to leave the market rather than take on additional risk.

NLA’s Chief Executive Officer, Richard Lambert, commented: “In his speech to the Conservative Party conference last October, Sajid Javid announced plans for a consultation on how to encourage longer tenancies. That’s been the tone of the discussion ever since – consultation and encouragement. Frankly, right now, I feel we’ve been misled.

“This is supposed to be about meeting the needs of the consumer. NLA research with tenants finds consistently that around 40% of tenants want longer tenancies, but 40% do not. More than 50% consistently say that they are happy with the tenancy length they were offered, and 20% tell us that when they asked for a longer tenancy, they got it.

“We would accept that the flexibility of the current Assured Shorthold Tenancy isn’t used as effectively as it could be, and that we should be looking to find ways to ensure that tenants are offered the kind of tenancies they need at the time they need them. That means thinking about how to modernise a model devised 30 years ago, to take account of the changes in the people who are renting and the way they live their lives. How will that be achieved by moving to a more rigid system, more reminiscent of the regulated model the current system replaced?

“It’s like urging someone to update their 1980s brick-style mobile phone, but instead of giving them a smartphone, offering them a Bakelite dial phone plugged into the wall.

“This is a policy which the Conservatives derided when it was put forward by their opponents in the past two general election campaigns. It’s hard not to see this as more of a political move aimed at the renter vote than a genuine effort to improve how the rented market works for all those involved.”

Tenants Who Complain Almost Twice as Likely to Face Eviction, Citizens Advice Reports

Published On: August 29, 2018 at 8:57 am

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According to a recent report provided by Citizen Advice, those privately renting who complain to their landlords about issues at their rental property, including issues such as damp and mould, are almost twice as likely to be evicted within a six-month period, in comparison to those that refrain from complaining.

The charity predicts that around 141,000 tenants have been impacted since laws attempting to ban revenge evictions were introduced in 2015.

Chief Executive of the charity, Gillian Guy, believes that the “well-intentioned laws” created to abolish revenge evictions have failed and that a new method is required.

A new study by Citizen Advice discovered that tenants who had received a Section 21, also referred to as the “no fault eviction” were 5 times more likely to have reported to their local authority and 8 times more likely to have made a complaint to a redress scheme.

A Government consultation on proposals to introduce minimum three-year tenancies in the private rental sector closes at the end of the month, and Citizen Advice advocates the idea.

It desires three-year tenancies to include limits on rent rises to prevent landlords from evicting tenants through pricing them out, no break clause at six months, and allowing tenants to leave contracts early if the landlord does not uphold legal responsibilities.

Guy remarked: “The chance of a family being evicted from their home for complaining about a problem shouldn’t carry the same odds as the toss of a coin.”

“Those living in substandard properties must have greater protection against eviction when they complain.

“Our report shows that well-intentioned laws created to put an end to revenge evictions have not worked, and a new fix is needed.

“There are serious question marks over the existence of a power that allows landlords to unilaterally evict tenants without reason – known as section 21.

“While Government plans for minimum three-year tenancies is a step in the right direction, these changes must be strong enough to genuinely prevent revenge evictions once and for all.”

However, the Residential Landlords Association (RLA) rejected claims that landlords were conducting revenge evictions and said the main issue was Section 8 not working when a tenant was committing anti-social behaviour or failing to pay rent, leaving many with no choice but to issue a Section 21 notice.

The RLA said only 11% of tenancies are ended by the landlord and, of these, almost two-thirds regained their property because they wanted to sell it or use it.

David Smith, policy director of the RLA, said a Housing Court was instead required to settle disputes between landlords and tenants more quickly.

He said: “No good landlord will want to evict a tenant unless there is a major issue around rent arrears or anti-social behaviour. That’s why the average length of a tenancy is now four years.

“But where things do go wrong, landlords need to have confidence that they can regain their property. This is why we believe a new process, a dedicated Housing Court, needs to be established to speed things up and why there needs to be a six-month break clause in the proposed three-year tenancy.”

 

BTL Landlords Offload Almost 4,000 Properties a Month

Published On: August 29, 2018 at 7:57 am

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Landlords are selling in the region of 4,000 buy-to-let properties, monthly, resulting in the first recorded drop in the number of rental properties in 18 years, recent figures show.

Official data from the Ministry of Housing report reveals that around 3,800 buy-to-let properties are being sold by landlords each month, as mortgage interest relief changes continue to have a negative effect on the market.

A number of other tax and regulatory changes have also hit landlords ‘profit over the past couple of years, including the abolishment of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge.

Chief Executive of letting agent trade body, ARLA Propertymark, commented: “The barrage of legislative changes landlords has faced over the past few years has meant the buy-to-let market is becoming increasingly unattractive to investors.
“Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred.”

The “exodus of landlords” is causing a chronic shortage of available properties to rent in some parts of the country, particularly in London.
Jatin Ondhia, CEO of Shojin Property Partners, commented: “As a result of the government’s increase in stamp duty, it is now much costlier to acquire a buy-to-let property. A £250,000 investment property will incur stamp duty of £10,000 compared to £2,500 for an owner occupier.

“Many landlords have seen their profits eroded by the increased burden of taxation and regulation. They are also facing poor buy-to-let yields especially in London for example, where they are between just 2-3%, while nationwide the average yields are between 6-8%.”

Landlords, Start Thinking about Draught-Proofing your Property Now

Published On: August 28, 2018 at 10:00 am

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Winter property maintenance checklist from GetAgent.co.uk

While many of us will still be clutching onto the remnants of summer, landlords should be looking ahead to draught-proofing in the colder months, which can greatly improve the efficiency of your rental properties.

Before the low temperatures of the autumn and winter seasons really set in, landlords should take this opportunity to conduct a periodic inspection of their properties, to highlight any issues that may arise during the cooler months.

During this visit, you should check the insulation of your property and schedule in a time to complete any draught-proofing work that may be required before winter.

MEES

Of course, if there are any major issues, these should have been addressed before the introduction of the Government’s new Minimum Energy Efficiency Standards (MEES) in April. These changes made it illegal for landlords to grant new leases – even to existing tenants – on properties with an Energy Performance Certificate (EPC) rating below an E.

Landlords, Start Thinking about Draught-Proofing your Property Now

Landlords, Start Thinking about Draught-Proofing your Property Now

If you’re yet to look at the overall efficiency of your property in conjunction with the MEES, then boiler expert Help-Link has some advice on getting an EPC and increasing your rating: https://www.help-link.co.uk/advice-centre/minimum-energy-efficiency-standards/

Draught-proofing 

Nevertheless, even if your EPC rating is an E or higher, there are still steps that you can take to ensure that your property is adequately insulted when the cold weather hits. This will help to keep your tenants’ bills down over winter and make your property a cosy home for them to live in, which may even make them more likely to stay for the long-term. It also shows them that you’re a responsible landlord, who cares about their comfort in your property.

Upon visiting the property, if you notice any areas that need draught-proofing, make a note in your inspection report and schedule in a time to put these measures in place before the cooler seasons arrive.

The following, simple steps could make a huge difference:

Exclude draughts – Estimations claim that £30 per year could be saved by draught-proofing windows and doors, so fit draught excluders around all exterior doors and interior doors where necessary. You could also consider installing a brush trim to combat larger gaps and letterboxes. Putty, sealer and sealant strips can be used to block cracks and crevices in window frames.

Invest in soft furnishings and carpet – This may wait until you have a break in tenancies, but investing in easy to install, thermal curtains and blinds will keep in the warm air and reduce draughts. Fitting carpeting with adequate underlay can also help to prevent heat escaping through the floor.

Seal any gaps – Look for gaps between skirting boards, around radiator pipes and between floorboards, before filling them to increase insulation. For this, you can use a silicone sealer.

Insulate the boiler – Ensuring that heat does not escape from the boiler will drastically increase its efficiency; padded jackets can reduce heating loss by up to 75%. Lagging the hot water tank and any visible pipes between the tank and boiler could save around £45 per year.

Help the radiators – You can’t tell your tenants how to live, but you can advise them that removing any surrounding furniture from radiators will allow the hot air to flow around the room. You may also wish to place foil behind the radiators to reflect heat back into the room if your tenants complain about the home being cold in winter.

Although winter may seem like a long way off, arranging a periodic inspection, compiling a report and scheduling in maintenance can be time-consuming. With this in mind, start the process of draught-proofing sooner rather than later, in order to be as prepared as possible for the cold weather.