Written By Em

Em

Em Morley

Tourist Surge Boosts Demand for Holiday Lets in the UK

Published On: August 24, 2018 at 8:00 am

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The tourism sector in the UK is advancing, with visits by foreigners in the country increasing revenues and bringing positive news, not solely for the economy, but also for property investors with holiday lets.

Last year, 29.2 million overseas visitors came to the UK, up to 4% on the previous year, adding £24.5bn to the UK economy.

But tourism chiefs expect 2018 to be an even bigger year for UK tourism, with overseas visitors topping 40 million for the first time on record, thanks in part to the continued sterling weakness giving foreign holiday makers more money.

According to research from specialist mortgage lender Together, this tourism boom represents a major opportunity for UK property investors that specialise in short-term holiday lets, who can expect to make enviable yields of over 12% in some of the UK’s most popular tourism destinations.

Research reveals that in York, investors could achieve potential yields of 12.2% if they let their property, making the historic city one of the best places for a potential investment opportunity.

Head of Field Sales at Together, commented: “Tourists from across Europe, the US, Japan, China and Canada have a long-held fascination with Britain, our Royal family and cultural heritage, so it’s not surprising that they’re still flocking here en masse, despite continued uncertainty around Brexit.

“These tourists are looking for good quality accommodation, both in hotels and B&Bs but also in short-term lettings such as flats in central locations or holiday cottages by the coast, which are easier than ever to find and rent thanks to the growth of websites like Airbnb.

“With the number of overseas visitors to the UK increasing every year since 2010, demand for holiday lets has grown and grown, representing an extremely lucrative opportunity for savvy investors in the market for holiday properties to rent out on a short-term basis.

“Holiday lets are widely regarded as attractive investments as they generally achieve higher yields than longer-term buy-to-let properties and in most cases are exempt from the tax hikes which hit buy-to-let investors last April.”

While buy-to-let investors are seeing the phasing out of mortgage interest relief, owners of holiday lets can still deduct mortgage interest payments from the rent prior to calculating their tax liability, provided they can satisfy certain tests.

Holiday let owners also have the added benefit of being able to claim the full cost of furnishing the property, whereas buy-to-let investors are only able to claim for repairs.

Longer Tenancies – Agents’ Consultation Responses Could be Vital

Published On: August 23, 2018 at 9:59 am

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PropTech provider PayProp is encouraging letting agents and property professionals to reciprocate to the Government’s consultation on longer tenancies.The automated rental payment platform claimed that agents’ input could be integral in shaping the future policy framework as the industry experiences ongoing change, placing pressure on existing rental tenures.

There’s not much time left to contribute

In July, the Government launched an eight-week consultation on the subject of longer tenancies.

The Ministry of Housing, Communities and Local Government claimed that a rise in families and older people choosing to rent, rendered it necessary for longer and more secure tenancies than the minimum six months offered by the assured shorthold tenancy regime.

The consultation explores the advantages and disadvantages of introducing a three-year tenancy with a six-month break clause. It also outlines a number of questions for respondents to answer.

Chief Operating Officer of PayProp UK, Neil Cobbold, commented: “Letting agents who want to have their say on the government’s plans to introduce longer tenancies don’t have long to respond to the consultation, as it closes on August 26,”

“Consultations are designed to give important stakeholders a voice in shaping future legislation. For something as significant as overhauling the current structure of tenancies, the more agent and landlord feedback received by the government, the better,” Cobbold commented.

Agents’ experience is valuable

Letting agents’ diverse industry experience – working with different landlords and tenants at a range of properties over a period of time – could be very valuable to politicians shaping the proposed framework around longer tenancies.

“Dealing with new tenancies and renewals on a regular basis means letting agents are well placed to provide feedback on typical tenancy lengths and any potential issues or unintended consequences with longer minimum tenancy agreements,” Cobbold explained.

“Agents also speak daily to landlords and tenants so they will be able to provide useful insight into the consumer reaction to these proposals and whether longer tenancies are something landlords and tenants are keen to see introduced.”

The Average Age of Buy-to-Let Investors Drops Ten Years Since 2014

Published On: August 23, 2018 at 9:32 am

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Yieldit has discovered that subsequent to analysing the demographics of its buyers over the last four years, the total average age of purchasers had dropped from 52.3 to 42, indicating a shift in the sector.

Traditionally, property investment has been deemed as a business for older generations who benefit from already having a foothold in the market, this recent data reveals that this could be changing as younger people recognise the strength in rewards of the UK buy-to-let market.

Furthermore, other analysis presents that a drop in age is present across both residential and student buy-to-let, but is more pronounced in residential sales where the average age dropped from 57.5 to 40.9 in comparison to 52.3 to 44.2 in the student market over the same period.

Head of Sales at yeildit, Ryan Hughes, said: “Contrary to the many headlines that paint buy-to-let as being a business reserved for older people, it would seem that there is a wind of change blowing through the market which is resulting in a growing number of younger investors entering the market.”

“Investing in bricks and mortar is as popular as ever and although a small number of our buyers are owner-occupiers, the majority are property investors looking for tenanted buy-to-let.

Rising tenant demand and record house prices continue to attract a broadening number of people to the market, including a burgeoning number of first time investors. The figures just go to show that the classic portrait of a landlord is changing, something that we believe can only strengthen and revitalise the market.”

Propertymark Launches new CMP Scheme: No Trade Body Required for Agents

Published On: August 23, 2018 at 9:02 am

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Previously known as ARLA Lite, the new Client Money Protection scheme has launched. Jointly owned by trade body Propertymark and The Dispute Service, in association with The Property Ombudsman, this allows agents to have insurance without being a member of a trade body.

Called Money Shield, Propertymark is the scheme administrator.

This is available to all agents, and describes itself as a “straightforward and cost-effective solution, allowing agents to obtain robust protection for their clients without membership of a professional body”.

It is said to cost £400 per firm.

The unusual press release announcing its launch said: “Spokespeople from Money Shield, Propertymark, TDS and TPO said: ‘Before the Government’s announcement on compulsory CMP last year, many consumers didn’t consider the financial risks of using an agent who didn’t offer protection.

‘Consumer awareness has now grown, and landlords and tenants are now far more aware of the dangers and associated risks.

‘We urge all letting agents and estate agents across the country to get ahead of the curve and enrol now before the legislation comes into effect, to gain ground on your competitors and avoid falling foul of the law.’”

Compulsory CMP is due to be implemented early next year, shortly before the ban on tenancy fees comes into effect.

David Cox, Chief Executive, ARLA Propertymark comments on the story from Shelter and National Housing Federation about discrimination in the rental sector: “This is a systemic problem with how housing benefit works. Rents are paid in advance, whereas housing benefit is paid in arrears, and therefore with such a shortage of rental accommodation, landlords and agents will naturally choose a tenant who can pay the rent when it is due, rather than a tenant who is always a month in arrears.

“We have called on Government time and time again to resolve this problem. But our calls have fallen on deaf ears. To make the situation worse, many lenders also have a clause in their buy-to-let mortgage agreements which prevent landlords from letting to housing benefit tenants. This situation does not exist because of landlords or letting agents, it is a systemic problem caused by Government and the banks.”

Landlord Fined £5k for Safety Failings

Published On: August 23, 2018 at 8:02 am

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Inventories key to fire safety, says the AIIC

A landlord has been ordered to pay over £5,000 subsequent to admitting safety failings at a fire-hit house in Letchworth, Hertfordshire.

Lawrence Connors accepted that he had failed to comply with fire safety regulations when he appeared before Stevenage Magistrates.

Several tenants caused major damage to the property when it caught on fire on 6th November 2017, but luckily no one was injured.

When North Herts District Council’s environmental health team, working with firefighters, discovered that no fire safety measures had been implemented at the property, the council decided to take legal action against the landlord.

What were the consequences?

An emergency prohibition order was served to stop the building from being reoccupied due to the safety risk.

Magistrates chaired by David McDonald fined the 36-year-old landlord £3,500 and ordered him to make a payment of £1,407.29. He must also pay £120 surcharge, making a total bill of £5,027.29.

Councillor Bernard Lovewell, who is responsible for housing and environmental health at the district council, said: “It is vital that landlords make sure that all fire safety measures are put in place when renting out a property.

“It is extremely fortunate that no-one was hurt as a result of the fire at the property.

“Neglecting to do this not only puts tenants at serious risk but also breaks the law, and I hope this prosecution sends out a message to all landlords that they must take their responsibilities seriously.”

All landlords that intend to cover the cost of damage to their property and protect their investment from a host of perils should consider taking out Landlord Insurance.

Just Landlords, the specialist landlord insurance provider, offers the widest cover as standard.

For advice on how to ensure you’re compliant with safety standards, in addition to how you should carry out safety checks in your property, please visit our website and have a read of our informative guides for landlords.

Landlords Pick up Property in the Midlands as London Market Cools

Published On: August 22, 2018 at 9:58 am

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Landlords are still picking up property in the East and West Midlands despite a significant drop in purchase activity in Central London and more modest rest of the country, according to a recent survey of over 680 landlords carried out by BDRC on behalf of Paragon.

Figures provided by UK Finance reveal that buy-to-let mortgages for property purchases have dropped by around 40% overall since 2015, subsequent to the announcement of tax regulatory changes for the sector.

Landlords in the Midlands however seem to be challenging the trend, enhanced by strong economic development in the region, a prosperous higher education sector and continued, successful regeneration of Britain’s second city, Birmingham.

Relocation of head office and operational functions outside of London to Birmingham by some of the UK’s biggest financial services firms, including HSBC and Deutsche Bank, together with increased activity ahead of the Birmingham 2022 Commonwealth Games, have provided an added boost.

More than four out of ten landlords in the East Midlands (42%) and one third of landlords in the West Midlands (33%) said tenant demand was growing, compared with just under a quarter of all landlords (24%) who indicated rising demand.

Rental yields for landlords operating in the Midlands were also strong, with landlords in the East Midlands reporting average yields of 6.7% and those in the West Midlands achieving yields of 6.2%. Rental yield measures annual rent as a proportion of a property’s value and provides a valuable way to compare the return on different properties as well as different asset classes.

Landlords operating in Central London were least likely to be buying property, with a net 16% claiming they had sold some property in the last quarter.

John Heron, Managing Director of Mortgages at Paragon commented: “These findings highlight a big regional difference in landlord experience and buying habits. Some Central London landlords appear to be scaling back a little while landlords in the Midlands continue to invest on the back of a positive outlook.”