Written By Em

Em

Em Morley

Landlords Advised not to Ignore Tenant Fees Bill Financial Changes

Published On: June 4, 2018 at 9:32 am

Author:

Categories: Landlord News,Tenant Fees Ban

Tags: ,

The Tenant Fees Bill was introduced into Parliament on 2nd May, and has since had its second reading. For those who are unaware, this new bill proposes to put a cap on tenancy deposits to six weeks’ rent, along with a ban on letting agents charging fees to tenants.

Following these movements, Government has warned of an estimated £240m loss a year for the landlords and letting agents of England and Wales in administration fees due to this ban.

Scottish property management company DJ Alexander is warning that landlords and letting agents should not ignore these changes and the potential oncoming financial changes.

David Alexander, managing director of DJ Alexander, has commented: “This bill has been introduced to regulate what was a largely unregulated and potentially problematic area of letting.

“Some landlords and agents have been charging substantial fees to tenants with little explanation why these charges applied other than for ‘administration’.

“This has been an area of complaint for tenants who believe that unscrupulous landlords and agencies were using these fees as a means of increasing their income rather than improving service for the tenants.

“The loss of these fees may prove problematic for some but should be looked upon as an opportunity to ensure that tenants have a transparent, honest, and understandable agreement with their landlord or agent.

“Landlords and agents cannot ignore this change which is inevitably coming so must put in place appropriate measures to deal with any loss of income and ensure their business is operating in a legally appropriate way.

“Similar changes were implemented in Scotland in 2012 which ended agency fees and cleared up deposit holding by landlords and agents and generally most have coped well with this.

“The bulk of the fee loss is likely to be absorbed by landlords, but they will be creating a more trusting and attractive environment for their tenants which generally results in greater demand and consequently increased rental returns.

“Setting the highest standards for letting is something that everyone in the sector should aspire to and achieve.”

The Tenant Fees Ban is expected to become law next year.

Landlords Urged to Prepare for Changes in Licensing of Houses in Multiple Occupation (HMO)

Published On: June 4, 2018 at 8:54 am

Author:

Categories: Landlord News

Tags:

New HMO regulations come into effect on 1st October, meaning houses with less than three storeys and more than five occupants will need a license

From the 1st October 2018, any landlord who lets a House in Multiple Occupation (HMO) to more than five people must be licensed to do so by their local authority. As it currently stands, landlords only have to be licensed if the house is three storeys or higher, and has five or more tenants.

As an example, one county is writing to more than 70 landlords in the area to advise them of the new HMO regulations. West Suffolk  councils of St Edmundsbury and Forest Heath are hoping to make more people aware of the changes.

Sara Mildmay-White, Cabinet Member for Housing for West Suffolk councils, said: “We want to work with our local landlords for the good of their tenants. That is one of the reasons that we set up the West Suffolk Landlords Forum earlier this year, as a way of making landlords across West Suffolk, aware of the changes that affect them and their tenants and the support and advice that we, and our partner agencies, can provide.

“These changes by the Government are welcome. They give greater authority to the council to ensure that tenants in HMOs are not being made to live in crammed, unfit or unsafe conditions.

“We expect standards to improve under these regulations and we are working with partners, including the Fire Service, and other local councils to ensure that this builds on the work that we are already doing particularly around fire safety.”

New HMO regulations come into effect on 1st October, meaning houses with less than three storeys and more than five occupants will need a license

New HMO regulations come into effect on 1st October, meaning houses with less than three storeys and more than five occupants will now need a license

What happens if a landlord doesn’t comply with the new HMO regulations?

Failure to comply with the new HMO regulations could mean hefty fines for landlords. Not having a HMO license when necessary is deemed an offence under the Housing Act 2004, and could result in a fine of up to £20,000 in the Magistrates’ Court.

Councils such as that of West Suffolk could also impose their own penalties on breaches of the new regulations. This could mean a penalty of up to £30,000 per breach.

Councillor Mildmay-White added: “Ultimately, although we have these powers, we want landlords to work with us which is why we will be sending out letters to more than 70 landlords of unlicensed HMOs that we know have five or more tenants. We are also updating our website with a new HMO application form as well as a document that will give helpful information and guidance.”

Increase in Landlords Leaving the Private Rented Sector

Published On: June 4, 2018 at 8:09 am

Author:

Categories: Landlord News

Tags:

The figure for private landlords deciding to sell their buy-to-let properties has reached a significant high in April, due to the recent tax and legislation changes, according to letting agents.

Such changes to the taxes involved with being a buy-to-let investor are reducing landlords’ margins, leaving many feeling as though they have little alternative but to leave the sector.

As conveyed by the Association of Residential Letting Agents (ARLA) Propertymark in their most recent Private Rented Sector (PRS) report, the number of landlords exiting the market has increased from 4 per branch in March, to 5 per branch in April. This is the highest level seen since records started in 2015.

With a progressive number of landlords leaving the market, the collapse of the supply of rental properties is likely to fall, at this time when demand from prospective renters has increased and more tenants are witnessing a rent climb.

Further revealed in ARLA Propertymark’s results, a gap between supply and demand is reflected. On average, letting agents registered 72 prospective tenants per branch in April, in comparison to 66 in March.

The number of tenants experiencing rent hikes increased to 26% in April. This is the highest level since September 2017, at which point 27% of landlords decided to increase their rents.

David Cox, ARLA Propertymark’s chief executive, has commented: “The barrage of legislative changes landlords have faced over the past few years, combined with political uncertainty has meant the BTL 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. This in turn is hitting renters most, at a time when a huge number of people rely on the rented sector, and leaves us with the question of where will these people find alternative homes?

“As demand for private rented homes massively continues to outstrip supply, the government can no longer divert its attention from the broken housing market.

“The recent news that the government is regulating the industry is a step in the right direction, but ultimately we just need more homes.”

A recent survey by Rathbone Investment Management also shows a similar result, with data revealing that 38% of participants no longer view property as a strong investment.

North East of England Welcomes New Group for Landlords

Published On: June 1, 2018 at 10:05 am

Author:

Categories: Landlord News

Tags:

North East of England Welcomes New Group for Landlords

A new regional landlords association has been formed in the North East. Several companies have formed the group, and its aim is to work closely with local councils on behalf of landlords.

The group will be called the North East Landlords Group, and is affiliated with the Residential Landlords Association (RLA).

The new group has been set-up by Martin Wardle, a property tax director at Robson Laidler Accountants, Paul Hampton of Approved Mortgage Solutions, Janet Fay of Coversure Insurance, and Surbhi Vedhara, a property partner at Sweeny Miller Solicitors.

The formation of the North East Landlords Group has been welcomed by Andrew Goodacre of the RLA: “We are delighted to hear about local businesses joining forces to represent the private rented sector at a local level. Whilst we focus on national campaigns, there is also a role for local groups to make a difference in their area.

North East of England Welcomes New Group for Landlords

North East of England Welcomes New Group for Landlords

“The RLA has a track record of supporting local landlord groups and hope to do so in the North East going forward.”

Bruce Haagensen, formerly of the National Landlords Association North East, commented: “The private-rented sector accounts for about 16% of households in the North East region and as such we feel the launch of the North East Landlords Group is a critical development for this increasingly complex audience and its stakeholders.

“It is important for the private rented sector to have a voice with the aim of balancing safeguards for tenants’ interests and setting the right conditions to enable the sector to contribute fully to the provision of good quality, well managed housing.

“We have pulled together the cream of the crop of housing professionals from around the region who together will provide landlords with a truly member-centric service and ensure a professional but most importantly a local personal service, which is what landlords have indicated they value most.

“We will be offering numerous services to our landlord and property investor members including specific advice, policy support and information.”

Latest FACT Index Shows Surge in Buy-to-Let Remortgaging Activity

Published On: June 1, 2018 at 9:17 am

Author:

Categories: Finance News

Tags: ,

Lower interest rates available to buy-to-let landlords have resulted in a significant increase in remortgaging activity during the last three months. The latest Financial Adviser Confidence Tracking (FACT) Index, released by Paragon Banking Group, reveals that the amount of landlords remortgaging is approaching record levels.

Based on interviews conducted with 201 mortgage intermediaries, the index has disclosed that 52% of buy-to-let mortgage cases in the first quarter of the year were for landlords intending to remortgage. This is an increase from 29% in the corresponding period for 2015, prior to the wide-ranging tax changes being announced in the Summer Budget.

Intermediaries have reported a decrease in the proportion of mortgage applications from first-time landlords in the same period, down from 19% to 13% of the total.

Moreover, there has been a decrease in the number of landlords remortgaging to raise funds with a plant to acquire new properties. Those opting to remortgage for portfolio expansion has fallen from 39% to 22%.

These interviews have also revealed that 60% of landlords applied for remortgages with the intention of securing better interest rates, reaching a record high in the first quarter of 2018.

When questioned, only 30% had responded that they were remortgaging in order to raise capital.

John Heron, Managing Director of Mortgages at Paragon has commented: “There’s a wide range of factors contributing to the surge in landlords re-mortgaging at the moment. These include the expiry of the initial term on mortgages taken out ahead of the stamp duty changes for second properties, the expectation of rate rises on the horizon and a desire to minimise interest costs in the face of new mortgage affordability rules.

“It will be interesting to see the extent to which mortgage applications for purchases and portfolio extensions increase once these factors have played out.”

Making Sure You’re Successful in the Ever-Changing BTL Property Market

Published On: June 1, 2018 at 8:10 am

Author:

Categories: Landlord News

Tags: ,

A sharp decline in buy-to-let investment causes rents to rise

Although navigation of the buy-to-let property market has become increasingly difficult in recent years, the market still remains an effective place to invest, providing that you acquire the property you are seeking. With a record 2.5 million rise in buy-to-let investors according to research provided by estate agent Ludlow Thompson, the buy-to-let market is still riding on the height of its popularity.

Taking this into consideration, if you’re contemplating taking on your next project in the buy-to-let market or if you’re an existing investor awaiting your next move, have a read of our top tips to ensure that you’ve got the best advice to assist you in the process:

Research is paramount

Taking the time to conduct research into changes regarding the financial aspect of your investment, including tax changes, is a wise decision. You should consider researching how this investment works for you in terms of income or profit. However, be certain to assess the responsibilities and obligations that you will inherit if you should become a new landlord.

Subsequent to conducting this research, you should be far more educated about the current state of the market. In addition, you will possess sufficient knowledge about particular investments, putting you in a better position when deciding whether investment in a buy-to-let property is right for you. To be sure of this, you should consider monitoring new updates and related discussions relating to the buy-to-let market. This will provide you with regularly updated information about how these issues could affect you and your potential investment.

Making Sure You’re Successful in The Ever-Changing BTL Property Market

Ensuring your property is as successful as possible can be a result of forward planning

Is the property you’re investing in right for you?

 The idea of something can be far more desirable than the thing itself. This is why it is imperative to conduct research around the property investment itself, rather than the idea of it. Be sure to research different property types in the area and consider what features these properties have which will definitely attract reliable, long term tenants and be a successful BTL investment. Making a checklist about what tenants prefer in their rental properties. Read more here on the features and facilities that are likely to entice potential tenants.

Only the best

Searching for the best mortgage deal is a very wise decision. One of the biggest mistakes made by investors is simply going to their local bank and asking for a mortgage. Although this may seem like the only method to get a mortgage, there are alternative ways which could save you money. Some banks will sell financial products which will potentially be overpriced or that may not align with your investment plans.

Calculations

Though during this process there are many figures requiring your attention, it is important that the rental yield of your property is your prioritised figure. This is what you should be focusing on when taking into account, how much income you can generate as a percentage of the cost of the property and is used throughout the buy-to-let property market. To put things into perspective, a 10% rental yield on a £100,000 property would be a return of £10,000, whereas a 5% yield on a £250,000 property would be a return of £12,500. While the second property with a yield of 5% returned slightly more income overall, the first property is a much better investment when you include the value of the properties.

By Renee Simone Wells