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Scrapping Stamp Duty for landlords could bring £10 billion boost

Published On: March 15, 2022 at 1:00 pm

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Categories: Landlord News,Property News

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‘Biggest package of tax cuts in generations’ includes Stamp Duty cut

Scrapping the Stamp Duty levy on the purchase of homes to rent out could lead to a £10 billion boost for the Government, according to a new analysis.

The analysis by economic consultancy Capital Economics finds that removing the 3% levy would see almost 900,000 new private rented homes made available across the UK over the next ten years.

Due to increases in income and corporation tax receipts, the modelling suggests this would lead to a £10 billion boost to Treasury revenue over the same period. Capital Economics also notes that these revenue streams would continue over the decades that follow if the landlords do not later sell the properties.

The National Residential Landlords Association (NRLA), which commissioned the research, calls on the Chancellor to adopt this proposal amidst a chronic shortage of homes to rent.

Capital Economics warns if owner occupation and social housing continue at their ten-year average rate of growth, this would require a significant increase in the supply of private rented homes. Almost 230,000 new homes would be needed in the sector each year if government ambitions for housing over the next decade are to be met.

It argues that even if other housing tenures double their rate of growth, over 100,000 new private rental homes a year will still be needed over the same period.

Capital Economics says given that renting privately is the first housing tenure most young people enter when they leave home or university, demand will only increase as the 15-24 cohort in the population is forecast to grow between now and 2030 by 866,000 (11%).

It suggests that without changes in tax or other policies, the private rented sector stock will decrease further by over half a million properties over the next ten years.

Ben Beadle, Chief Executive of the NRLA, comments: “The Government needs to wake up to a crisis of its own making. Taxing landlords out of the market serves only to cut supply, increase rents and make home ownership more difficult to afford.

“The evidence clearly shows that the supply of rented housing is declining as demand increases and will continue to do so. The Government is taking a blinkered approach to the issue, which is not helped by its reluctance to admit mistakes it has made in the past. “It makes no sense to tax the supply of new homes supplied by landlords investing in new build or bringing empty homes back into use. As this study indicates, removing the tax will actually generate more revenue, not less.”

Majority of tenants satisfied with renting, new research shows

Published On: March 14, 2022 at 11:31 am

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Categories: Tenant News

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One in ten landlords plan to exit the sector following spring statement

The majority of people who rent from a private landlord are content with what they get for their money, the Social Market Foundation (SMF) has found.

In an SMF survey of renters, which was sponsored by Paragon Bank, 81% said they are happy with their current property. 85% said they are satisfied with their landlord.

The SMF says despite renters’ current views of renting, major trends in housing over the coming years mean that several policy changes are needed to ensure the private rented sector (PRS) continues to work well for tenants.

Only half of renters expect to leave the PRS in the next 15 years, suggesting that significant numbers will remain renters for long periods. Among them, the SMF finds that 13% would be satisfied with long-term renting.

By 2035, more than half of private renting households are likely to include someone aged 45 or older, the SMF forecast. It also says couples and families will make up a rising proportion of renters.

The PRS has been under political scrutiny, with the Government’s Levelling Up White Paper promising ‘a secure path to ownership’ and a crackdown on ‘non-decent rented homes’. Labour, meanwhile, has promised to be the ‘party of tenants’ and raised concern about quality, affordability, and security in private rentals.

The SMF’s research challenges some of the narratives around this policy agenda, and in particular, the assumption that private renting is unsatisfactory and exploitative for the typical renter.

At the same time, it acknowledges that a minority of renters have particularly negative experiences and so endorses measures expected to be in the rental reform white paper (due in spring), such as abolition of ‘no-fault’ evictions and introduction of a Decent Homes standard for rental properties.

The SMF’s key recommendation is to enable renters to build wealth while remaining in the PRS, addressing their number one concern: the financial opportunity cost of renting, which have prevented savings, for a deposit or later life needs. Several innovative schemes could be implemented, including ‘deposit builder ISAs’ that offer a financial return on deposits, or ‘rentership’ models that offer tenants stakes in their building.

Other SMF recommendations to the Government include:

  • Increase the stability of tenancy agreements – A large majority of renters support a fixed minimum contract length: 69% would be in favour of setting this at 24 months.
  • Giving renters more control over their homes – making it easier to keep pets or make reasonable alterations, such as to décor or energy efficiency.
  • Increase the accountability of landlords – Through a ‘Good Home, Good Landlord’ kitemark scheme, developed in consultation with renters to recognise landlords that offer good, and not just decent, accommodation.
  • Improve the standards of private rented properties – Offer tax incentives for landlords to invest in improvements that align with Good Home Good Landlord kitemark standards, including green investments.

Aveek Bhattacharya, SMF Economist and one of the report authors, comments: “Dominant cultural narratives about the private rented sector paint a misleading picture. In contrast to the horror stories that get wide circulation, the majority of renters are satisfied with their living conditions and have decent relationships with their landlords.

“It is absolutely right that the Government should seek to help the minority with poor standard accommodation and unprofessional landlords. At the same time, it needs to think harder about what it can offer the typical renter – who is largely happy with their circumstances today, but has doubts about whether they want to keep renting long-term.

“Giving renters more control over their homes – allowing them to keep pets or decorate would help. So would incentivizing landlords to make improvements to properties to make them good, and not just decent. But perhaps the biggest challenge is developing policies that can persuade renters that they are not missing out financial security and stability if they don’t own their home.”

Richard Rowntree, Paragon Bank Managing Director of Mortgages, comments: “The outdated and tired cliches around privately renting need to be challenged and I welcome the findings from SMF’s report.

“In our experience, the vast majority of landlords seek to provide a good quality home and enjoy a healthy relationship with their tenants; the significant investment in private rented property by landlords has helped drive up standards over the past 15 years and today homes in the sector are generally newer, larger and more energy efficient than ever before.

“We always seek ways to improve the experience of renting further and welcome the recommendations contained in the report. People from all walks of life now call the private rented sector home and we must strive to create a sector that meets everybody’s needs.”

Government wrong to make landlords pay to replace unsafe cladding

Published On: March 11, 2022 at 9:10 am

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Government wrong to make landlords pay to replace unsafe cladding

A cross party group of MPs has opposed the Government’s plans to make many buy-to-let landlords pay for the replacement of unsafe cladding.

Ministers have proposed that landlords renting out more than one leasehold property will be excluded from its commitment that no leaseholder should have to pay for the removal of unsafe cladding following the Grenfell tragedy.

Following evidence provided by the National Residential Landlords Association (NRLA), the Levelling Up, Housing and Communities Select Committee has said in its report on building safety published today that: “Buy-to-let landlords are no more to blame than other leaseholders for historic building safety defects and landing them with potentially unaffordable bills will only slow down or prevent works to make buildings safe.”

In its evidence to the Committee the NRLA argued that it was completely unfair that individual landlords should be the only leaseholders not to be covered by the Government’s plans to finance the removal of dangerous cladding.

The Committee noted that it had heard from landlords “who find themselves outside of the scope of the protections, who invested in properties to support their children, to provide income after being made redundant, to help pay for the costs of caring for relatives, or to provide for their retirement”. All of these, it said, are “now facing bills they cannot afford.”

This is supported by a reference in the report to the story of one landlord who had used compensation from the Criminal Injuries Compensation Authority to invest in flats after the murder of their husband in the 7/7 atrocity. They told the Committee that they now face “vast bills”.

Ben Beadle, Chief Executive of the NRLA, comments: “We are delighted that the Committee agrees with us. The Government’s decision to exclude buy-to-let landlords renting more than one property from its scheme is unfair and unacceptable. As the Committee rightly notes landlords are no more to blame than other leaseholders for historic building safety defects.

“Ministers now need to stop dragging their feet on this issue, accept the Committee’s conclusions and end its unjust and inexcusable policy.”

Mental health in the property industry and why a lot more needs to be done  

Published On: March 10, 2022 at 10:28 am

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Mental health in the property industry and why a lot more needs to be done  

The property industry needs to do more to recognise and support those with mental health issues, says the Association of Independent Inventory Clerks (AIIC).

Industry factors impacting mental health 

Daniel Evans, chair of the AIIC and managing director of Home Inventories, explains: “The property industry does more hours than most and this can have a damaging impact on many people’s work and life balance. Better support systems in place can help avoid a mental health crisis, something which has been worsened during the pandemic with such a hugely busy market.

“By implementing training in specific areas such as time management, we can help people better manage these obstacles. This will allow people in the industry to learn how to prioritise their workload in a way that does not seep into their personal lives or make their job stressful.

“On the other end of the spectrum, landlords and agents are not the only ones prone to experiencing mental health issues, tenants are too.

“In the property industry, large sums of money that take years to accumulate are dealt with and people’s homes are on the line. As a result, strong emotional responses from customers should be expected. These can sometimes be dangerous with aggressive tenants. Therefore, proper structures within individual businesses should be put in place, and companies that endorse high levels of professionalism should only be used.”

Speaking to people regularly and asking if they need support is necessary to prevent these issues from causing mental health problems, Evans adds.  

“Finding time to see the team in person and arranging social events are ways of combatting this,” he said.

Ongoing impact due to the pandemic 

In 2017, mental health charity Mind reported that one in six people in England experiences a mental health problem (such as anxiety and depression) during a typical week. Since then, the pandemic has occurred and sparked an increase in people dealing with these issues. 

The AIIC points out that inventory clerks commonly work alone. Sometimes they have to work in uncomfortable conditions, such as carrying out work in a property that is dark or in a desolate place. The pandemic has heightened this as inventory clerks have been working through lockdown and beyond, with their work deemed to be essential to the continued running of the lettings sector. 

For female inventory clerks, there is a heightened level of fear because of horrific cases of women in the property industry going missing while simply doing their job, such as Suzy Lamplugh.

Evans says: “Being open about mental health and understanding how to deal with issues surrounding this is necessary to move the whole industry forward. Charities like Agents Together have done an excellent job of highlighting the issues and offering support, but we still need to go further.

 “When you work in the property industry you not only represent the business, but you represent the industry. With this on the line, the service these workers provide is often scrutinised, since first impressions are everything.

“At the AIIC we understand the issues that could happen, so through our continuous development and member support, we aim to make the experience better for workers as well as tenants.”

Almost 85,000 new homes a year needed for London private rented sector

Published On: March 9, 2022 at 9:15 am

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73% of surveyed estate agents back mandatory licensing

London needs almost 85,000 new private rented homes a year to meet its housing needs, a new report has found.

The report has been authored by economics consultancy Capital Economics and commissioned by the National Residential Landlords Association (NRLA). It reveals the stark shortage in the supply of rented homes across London. These conclusions are based on government targets which state that 340,000 homes a year must be built across the UK by the middle of this decade to meet future demand.

Capital Economics reports if owner-occupied and social rented homes in the UK continue at their ten-year average rate of growth, private rented sector supply would have to increase by 227,000 properties per year to meet government targets.

It says growth on this level is also needed if supply is to meet the needs of an anticipated 1.8 million new households over the next ten years. In the case of London, the capital would require approximately 83,000 new rental properties a year over the next decade.

The projections come as government figures show that the supply of private rented housing in London has fallen by 85,000 over the past five years.

Given that renting privately is often the first step young people take when they need to leave home or university, demand will only increase.  The 15-24 cohort in London is forecast to grow between now and 2030 by over 120,000 (almost 12%).

Additional survey data by the research consultancy BVA-BDRC suggests that in Central London 74% of private landlords saw an increase in the demand for rental homes in Q4 2021. This was up from the 54% figure revealed by BVA/BDRC’s Q3 2021 research.

Capital Economics says the Treasury needs to encourage investment in the sector to meet housing targets. It argues greater investment would support the provision of new housing, increasing the rate of new builds and switching commercial property to residential use. The report also points to the contribution the sector can make in moving stock from short term to long term lets and bringing empty homes back into use.

Ben Beadle, Chief Executive of the NRLA, comments: “As the demand for private rental properties picks up following the pandemic, renters across the capital will struggle to find the homes they need and want. For all the efforts to support homeownership, the private rented sector has a vital role to play in housing so many Londoners.

“Today’s analysis demonstrates the folly of the mayor’s calls for rent controls in the capital, a policy which would serve only to freeze investment in the very homes renters need.”

Property industry reacts to latest Nationwide House Price Index

Published On: March 8, 2022 at 9:31 am

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Nationwide records slight increase in house prices during November

The latest House Price Index from Nationwide reports an annual increase of 12.6% in February. This is up from 11.2% in January.

Month-on-month, prices are up 1.7%, with the average house price exceeding £260,000.

Michael Bruce, CEO and Founder of Boomin, comments: “We’re riding a wave of house price growth at present, driven by a market that is experiencing very high demand for homes that just simply aren’t available. It’s only natural that this wave will start to lose ferocity at some point, but there’s certainly no signs of that happening just yet, despite a squeeze on the cost of living and a double-digit increase in interest rates.”

Jonathan Samuels, CEO of Octane Capital, comments: “Although two consecutive increases in interest rates is always going to be food for thought for the nation’s home buyers, what we’re currently seeing is consideration, not concern.

“While some may have marginally adjusted the sums they are committing to borrowing, the sheer volume of new buyers entering the market remains very high and this is enough to keep house prices buoyant for some time to come.”

Marc von Grundherr, Director of Benham and Reeves, comments: “There’s arguably never been a better time to be a homeowner as, despite all that’s been thrown at it, the UK property market continues to go from strength to strength. This performance really is quite alarming when you consider the wider economic turmoil that we’ve faced for some years now and it proves that there really is no safer investment than bricks and mortar.

“Even across London where market conditions have remained far more muted, values have continued to climb and the capital’s property market is now poised to enjoy an accelerated rate of growth over the coming year.”

Chris Hodgkinson, Managing Director of HBB Solutions, comments: “Although top line market statistics paint a very positive picture, it’s important to remember that the UK property market is extremely fragmented in its nature. The key to a successful sale is understanding your own local market landscape, the demand for homes and pricing in accordance with these factors. 

“Failure to do so and pricing too high will only see your home suffer from a severe lack of interest, a protracted period of time spent on the market and a higher chance of turbulence further down the transaction timeline.” 

James Forrester, Managing Director of Barrows and Forrester, comments: “Yet another increase in property values demonstrates the current strength of the UK property market and the deafening silence coming from the usual band of property market naysayers is no better testament to this overall health. 

“Despite many prophesying the end of the market due to Brexit, the pandemic and the end of the stamp duty holiday, amongst other things, we’re yet to see a chink appear in the armour of what is perhaps the most defiant and dependable property market in the world.”