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Em Morley

20% of Landlords Plan on Selling Up, NLA Reports

Published On: January 11, 2018 at 10:27 am

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Categories: Landlord News

20% of National Landlords Association (NLA) members plan to reduce the number of properties in their portfolios over the next year – the highest level of intended sales in ten years.

The NLA believes that this is due to recent tax changes. To assess and explain the impact of these changes on landlords and their tenants, the organisation has created a series of videos.

The four videos contain research, conducted by Capital Economics for the NLA, which shows that landlords and tenants will pay more than their fare share in tax as a result of changes made by the Government to curb buy-to-let activity in the private rental sector. These include:

The first video, Taxing Homes, provides an overview of how the sector is likely to look as the policies come into effect.

The second, Hitting Landlords Hardest, compares the tax bills of four different people all earning £50,000 through various means. It shows that landlords are paying far more tax than those earning only a wage or salary.

What does this mean for Landlords? looks at the private rental sector from a landlord’s perspective and how landlords could respond to the changes.

The final video, What does this mean for Households?, shows how tenants may end up paying higher rents and have fewer rental properties to choose from.

Richard Lambert, the CEO of the NLA, says: “The videos were created to explain simply some quite complex policies, for both landlords and their tenants. They, along with our own research, show that the Government needs to look at the impact these policies will have on the private rental sector.

“More and more people are relying on this sector for a home, so it is vital that landlords not only provide a high standard of accommodation, but are incentivised to do so by the prospects of a reasonable return on investment.”

He adds: “It is our view that these policies are undermining the viability of many landlords’ businesses and removing the incentives to invest in residential property for business purposes.”

You can view the videos online here.

Simon Heawood, the CEO and Founder of Brecklane.com, comments on the announcement: “We will see steadily increasing outflows from the buy-to-let market, in favour of a continual consolidation of portfolios around professionalised, large-scale landlords, who in turn benefit from scale advantages, tax efficiencies, and professionalised approaches to investing and driving up tenant service provision.

“A perfect storm is brewing for landlords looking to property simply as a financial asset. Policymakers across the political spectrum are acknowledging that homeownership is valuable because it affords permanence and security, and not just for the financial returns which placated constituents of yesteryear.”

Letting Agent Fee Ban will not be in Place Before Spring 2019

Published On: January 11, 2018 at 9:42 am

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Categories: Law News,Tenant Fees Ban

The Government has confirmed that the letting agent fee ban on tenants will not be in place before spring 2019 at the earliest.

Isobel Thomson, the CEO of the National Approved Lettings Scheme (NALS), welcomes greater clarity on the timetable for the introduction of the letting agent fee ban, insisting: “It’s much needed for our industry and something NALS has long called for.”

The Government is currently conducting pre-legislative scrutiny of the proposed bill ahead of presenting it to Parliament. The draft Tenants’ Fees Bill was published in November last year.

But, while the bill aims to create a fairer and safer private rental sector for all, the NALS is concerned that it may not deliver what the Government aspires to and risks doing real damage to landlords and their tenants.

Thomson explains: “NALS urges Government to use this time to fully assess the impact of the bill. It is crucial that Government looks again at the proposals and considers tenant fees in a broader, coherent framework of regulation for the private rental sector.”

There are also concerns among industry professionals that letting agents – many of which are keen to maintain their revenues – will attempt to simply claw back lost earnings when the letting agent fee ban is implemented, by passing extra costs onto landlords. But, given that landlords already pay generously for letting and management fees, and the fact that landlords do not profit from tenant fees, any attempts to pass costs onto landlords would undoubtedly lead to higher rent prices for their tenants.

James Davis, the Founder of online letting agent Upad, says: “Landlords simply can’t afford to not be prepared for what lies ahead. In my experience, there’s a certain amount of head-in-the-sand mentality around the impact that this ban could have, both amongst letting agents and landlords.

“Unfortunately, many headlines focus on how rents will increase once this legislation is implemented, but the reality for landlords is that this needn’t be the case.”

He adds: “Most private landlords don’t, in fact, charge excessive upfront costs and, by simply taking the time now to consider how else they can manage their costs, they’ll be assured of being prepared for the fees ban, whether that happens this year, next year or, indeed, at all.”

We will keep you updated of all developments to the letting agent fee ban at Landlord News.

Total Loss CMP Insurance Brought to Letting Agents

Published On: January 11, 2018 at 9:03 am

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Categories: Lettings News

Let Alliance and the UK Association of Letting Agents (UKALA) have announced a strategic partnership that will bring total loss Client Money Protection (CMP) insurance to UKALA members.

The announcement means that consumers will be able to access total loss CMP cover through their letting agent for the first time, with existing policies available in the sector only providing cover up to a set limit of losses.

This improved benefit for UKALA members and their clients comes in advance of a raft of changes for the private rental sector in 2018, including the Government’s intention to introduce compulsory CMP insurance.

The CMP available exclusively through Let Alliance for UKALA members is not available to anyone else in the market. With loss limits at individual landlord and tenant levels removed, the cover is comprehensive.

Tim Clark, the Chairman of the UKALA, says: “We have worked with Let Alliance to deliver a distinctive CMP proposition ahead of the Government’s decision to make it compulsory in England, and it provides all of our members with a market differentiator and unique selling point.

“It also means that only UKALA agents will be able provide landlords and tenants with the assurance that their money is completely protected. We have started contacting UKALA members about the announcement with more detail about what it will mean for them”.

The Founder and CEO of Let Alliance, Andy Halstead, also comments: “Our strategic relationship with UKALA provides their members with access to CMP that isn’t available to anyone else in the market. It also means that Let Alliance’s customers can start to benefit from UKALA’s unique relationship with the National Landlords Association (NLA), which offers unrivalled networking opportunities and access to a network of around half a million properties”.

We will continue to keep you updated of any development to compulsory CMP for letting agents.

Landlords will still Benefit from over £16bn in Tax Relief

Published On: January 10, 2018 at 10:13 am

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Categories: Landlord News

Buy-to-let landlords in the UK will still benefit from around £16.7 billion in tax relief following the Government’s ongoing restriction to the system, which will be fully implemented by 2020, according to analysis by ludlowthompson, a London estate agent.

The tax relief allows buy-to-let landlords to offset expenses such as mortgage interest and other finance costs against their rental income.

However, the amount that landlords can offset is being restricted gradually to the basic rate of Income Tax over a four-year period. We have a handy guide to help you understand the changes: https://landlordnews.co.uk/government-guide-tax-relief-changes-residential-landlords/

The Treasury expects the amount of taxes collected from landlords to increase by £840m a year by 2020-21, when the changes will be in place.

Data provided by the Government to ludlowthompson shows that landlords claimed £17.5 billion in property expenses over the past year. They claimed more than £7 billion on mortgage interest and other finance costs, while £3.7 billion was claimed for property repairs and maintenance.

After the planned changes to tax relief are fully implemented, landlords will still be able to claim around £6.4 billion on interest costs alone.

Stephen Ludlow, the Chairman of ludlowthompson, comments: “Despite tightening, buy-to-let tax breaks are still very valuable, highlighting that rental property remains a highly attractive investment vehicle.

“Those tax breaks are essential to ensure that landlords continue to invest in maintaining their properties. If the tax breaks are reduced further, then landlords will cut their investment in the properties they own – reducing the standard of UK rental accommodation.”

The agent says that ensuring landlords continue to invest in providing good quality accommodation should continue to be the main priority for policymakers. This is especially important in locations such as London, where demand continues to outstrip supply.

Ludlow concludes: “Labour mobility continues to be central to economic strength. However, if cities like London are to remain a magnet for homegrown and international talent, sustaining a vibrant, high quality rental market is essential. To do that, the system has to work well for both tenants and landlords.”

We encourage all landlords to seek financial advice if they believe they’ll be affected by the Government’s tax relief changes.

Government Appoints Fourth Housing Minister in Three Years

Published On: January 10, 2018 at 9:46 am

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Categories: Law News

As part of Theresa May’s latest cabinet reshuffle, Dominic Raab has been appointed as Housing Minister.

Raab, the MP for Esher and Walton in Surrey, replaces Alok Sharma, who was just seven months in the post. He is the Government’s fourth housing minister in three years.

Raab moves from the Ministry of Justice, joining the rebranded Department for Housing, Communities and Local Government (DHCLG) as Minister of State for Housing. “Planning” appears to have been removed from his title.

While the industry does not question Raab’s ability to undertake the job, experts are growing increasing frustrated with the changeover of housing ministers, with Raab becoming the 15th MP to hold this role in 17 years.

Raab’s predecessor, Sharma, held the position for just over six months – clearly not enough time to fix the broken housing market, especially as the Prime Minister has identified it as a key priority of her Government.

To put the turnover of housing ministers into property perspective, the rate of change far outstrips the rate at which the average tenant moves home.

David Cox, the Chief Executive of ARLA Propertymark (the Association of Residential Letting Agents), and Mark Hayward, the Chief Executive of NAEA Propertymark (the National Association of Estate Agents), are trying to remain positive. They both responded to the news: “We would like to congratulate Dominic Raab on his appointment to Minister of State for Housing. We have been working closely with Alok Sharma in this role previously, alongside Sajid Javid as Communities Secretary, to make suggestions on plans to ultimately regulate the sector and make the process of buying, selling, renting or leasing a property better for consumers.

“If housing is genuinely a priority for the Government, then continuity and consistency with the new Housing Minister and Sajid Javid is absolutely key, and we look forward to working with them both over the coming months.”

West One Loans Moves into Second Charge Buy-to-Let Lending

Published On: January 10, 2018 at 9:08 am

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Categories: Finance News

West One Loans, a leading specialist lender, is launching a range of second charge buy-to-let loans today.

The move is part of West One’s expansion of its lending range into longer-term second charge mortgages, and is a continuation of the lender’s broadening of its overall specialist offering.

The second charge buy-to-let products are available from today (Wednesday 10th January 2018).

Key features include:

  • Rates starting from 6.99%
  • Range includes consumer buy-to-let products
  • Variable rate products, including No ERC options, alongside two, three and five-year fixed rate deals
  • Loan-to-value ratios (LTVs) available up to 75%
  • Loan amounts ranging from £10,000-£250,000
  • No restrictions placed on the number of buy-to-let properties within a landlord’s portfolio
  • Interest-only option available to borrowers who can evidence a credible repayment strategy

The products will be available through selected firms that specialise in advising and arranging second charge mortgages.

The announcement comes after West One recently revealed ambitious growth plans, following record levels of lending last year. The company rolled out its second charge lending proposition with selected brokers in September, after a successful pilot launch, which began 12 months ago.

This is in addition to its core suite of market-leading short-term bridging finance products.

Marie Grundy, the Sales Director of West One Loans, comments: “Second charge buy-to-let plans are a valuable option to landlords who may have experienced greater difficulty in remortgaging recently, or may not wish to disturb their existing buy-to-let mortgage deal. Where there is a genuine need to raise capital, such as for the refurbishment of an existing rental property to increase yield, or to carry out essential repairs, a second charge could be the most appropriate financial solution for buy-to-let borrowers. We are therefore hugely excited about extending our product reach to include second charge buy-to-let products.

“Our proposition will deliver an extensive range of second charge mortgage solutions, built on West One’s solid reputation for taking time to understand individual borrower needs, combined with our in-depth understanding of the second charge market. This means we can cater for borrowers who require a bespoke approach to lending, such as property professionals and landlords.”