Written By Em

Em Morley

How Rents have Fared since Crossrail 2 was Announced, as TfL Hints at Decade-Long Delay

Published On: October 9, 2017 at 8:22 am

Since the Crossrail 2 route was announced in 2013, rents have been pushed up in 13 of the 15 affected local authority areas, according to the latest Rental Index from Landbay, powered by MIAC. However, as Transport for London (TfL) hints at a decade-long delay, how will the property market be affected?

How Rents have Fared since Crossrail 2 was Announced, as TfL Hints at Decade-Long Delay

Last week, a leaked business case from TfL to the Government revealed that Crossrail 2 could be delayed by a decade, as a funding shortfall jeopardises the final go-ahead from ministers.

As the future of the line is called into question, Landbay’s latest Rental Index reveals that a significant uplift in tenant demand in the four-and-a-half years since the route was announced has pushed up rents in 13 of the 15 affected local authorities, and by 21.5% around the north terminus of Broxbourne.

When the route for Crossrail 2 was first revealed in February 2013, rents were falling in seven of the 15 local authority areas set to house the new line. In the year that followed, a dramatic uplift in tenant demand saw rents grow in all but one, Epsom.

Overall, in the four-and-a-half years since the announcement was made, 13 of the 15 local authorities have seen notable rent price rises – most significantly in the north and west extremities of the line, namely Broxbourne (21.5%), Enfield (13.8%), Haringey (11.4%) and Spelthorne (10.5%).

However, while tenant demand indeed grew quickly until 2016, the Government has begun to drag its feet on the final approval of the new infrastructure project, and rents have once again begun to drop – almost across the board. Only Enfield saw rents grow in the past year (by 0.4%), although, by September, rents had fallen here too, by 0.2%. Meanwhile, Broxbourne (-1.75%), Richmond (-1.13%) and Spelthorne (-2.16%) are all showing signs of dwindling tenant demand.

As London rents return to growth in September – after falling for 15 consecutive months – there are signs that demand for rental housing could again be on the rise in the capital, putting further pressure on the Government to follow through on its pledge to release an extra £2 billion of Government cash for local authorities across the UK to build more affordable homes.

The CEO and Founder of Landbay, John Goodall, comments: “The idea of a north/south London railway dates back to the 70s, but it was only in 2013 that we found out where Crossrail 2 would actually run. Planned infrastructure is a key driver of tenant demand, so rents and property prices along the planned line quickly followed suit. But news that the line may now be delayed by a decade is nothing short of a hammer blow to all those that have had the foresight to plan that far ahead.

“What’s needed by tenants, landlords, buyers, business and builders is a clear commitment from the Government that the project will be delivered in 2033 as expected. Not only to help people and businesses plan their lives ahead, but also to allow adequate time for local authorities to plug housing shortfalls before demand spirals out of control.”

He adds: “For example, the latest £2 billion social housing pledge is an encouraging sign that the Government is taking seriously the UK’s housing shortage, but this could and should be linked to the UK’s infrastructure plan, to spare any nasty surprises down the track.”

Why First-Year Students are Shunning University Halls

Published On: October 6, 2017 at 3:13 pm

Author: Em Morley

Categories: Tenant News

A growing number of first-year students are opting for private, more luxurious student accommodation, rather than the traditional halls of residence, according to accommodation provider Collegiate AC.

The firm’s figures show that first-year students are increasingly shunning university halls in favour of more luxurious private student accommodation.

The CEO of Collegiate AC, Heriberto Cuanalo, says: “Today’s freshers have more choice than ever before when it comes to student pads. They are making the most of that choice by opting for alternatives to university halls. The image of the university lifestyle has changed dramatically over the past decade or so, and university halls are no longer in line with what students demand as part of their experience, so they’re voting with their feet.”

Collegiate AC’s data shows that first-year students accounted for 20.19% of its residents back in 2015/16. That figure rose to 21.66% in 2016/17 and to 22.06% in 2017/18. The proportion of freshers opting for private pads is rising slowly but steadily, year-on-year.

So why is this happening? First-year students are increasingly expecting a wide range of features from their accommodation. Not only do students now want en-suites in their rooms, but private fitness centres, club lounges, concierge services and dedicated study zones are also in high demand.

“Part of what makes the appeal of accommodation like this so strong is the blend of private space and outstanding social spaces,” explains Cuanalo. “Tuition fees nowadays mean that students have to pay a great deal of money in order to attend university, so it’s not surprising that they want to make the most out of every minute of that experience.”

Many purpose-built accommodation providers are also using the location of their sites to tempt first-year students away from university halls. Sites are not only well located for the university, but also for pedestrian access to the city centre – something that many university halls lack.

Cuanalo comments: “With location as well, it’s about going over and above that which is offered by traditional university accommodation. Most first-years are excited to experience all that their new town or city has to offer, and that means shopping, eating and socialising in the city centre. The more conveniently a property is located for this, the better.”

With demand for luxury student accommodation continuing to grow, there’s an opportunity for landlords to cater to the needs of first-year students with each new academic year – perhaps a new investment option is on the horizon!

Government Issues Guidance for Landlords on New MEES

Published On: October 6, 2017 at 3:12 pm

Author: Em Morley

Categories: Law News

The Government has issued guidance for landlords on how to comply with the new Minimum Energy Efficiency Standards (MEES), with just under six months to go until the rules come into force.

We’ve worked with London estate agent Portico to explain how the new MEES will work in regards to EPC ratings, the impact the rules will have on landlords and the steps that you should take now to avoid hefty fines.

An Energy Performance Certificate (EPC) is a guide that potential homebuyers or tenants receive when they look into a property. Every property that’s put up for sale or to let is legally required to have an EPC, which usually costs between £60-£120.

It uses a ratings system from A to G to show how efficiently a home uses energy, as well as including details of the cost of running the property and recommendations on how to improve its energy efficiency.

The A rating indicates that the home is most energy efficient, while G is the lowest (worst) rating.

From April 2018, it will be illegal to grant a new lease (even to existing tenants) on a domestic or commercial property with an EPC rating below E – in other words, any homes rated F or G must be improved or immediately taken off the rental market (unless the landlord registers an exemption).

It is believed that one in ten residential properties currently have an EPC rating of F or G, so would not meet the new standards.

A civil penalty of up to £4,000 will be imposed for breaches of the new MEES, so it’s imperative that you make sure your rental property meets the higher standards.

The Government has recently announced that it will be opening an exemptions register from next month. However, we already know that the new MEES will not apply to:

Buildings that are not required to have an EPC, such as certain listed buildings

Temporary properties and holiday lets
Buildings where the EPC is over ten years old or where there is no EPC
Buildings let on tenancies of over 99 years or less than six month (where such tenancy does not contain a right of renewal)
Where an independent surveyor determines that the relevant energy efficiency improvements would reduce the value of the property by more than 5%
The improvements are deemed financially unviable, as they do not pay for themselves through energy cost savings within a seven-year timeframe
If the landlord is unable to get consent from a third party to carry out the energy improvements, for example, from the local authority of an incumbent tenant
A detached building with a total floor space under 538 square foot
A building that is due to be demolished by the seller or landlord, and has all of the relevant planning and conservation consent

With the new MEES just around the corner, now’s the time to make sure that your rental property meets the new requirements.

If your current EPC rating is below E, you must make a plan to improve the energy efficiency of the property. These works must be implemented before April 2018 in order for you to grant a new lease on the property. You must also be aware that the new MEES will apply to all tenancies (even those with existing tenants) from April 2020.

To help landlords, the Department for Business Energy and Industrial Strategy has issued guidance documents on compliance with the MEES, in accordance with the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015.

The documents provide guidance and advice on the following:

The scope of the regulations – the steps a landlord should take to determine whether their property is covered by the regulations, and the steps they should take to ensure that their property complies with the minimum level of energy efficiency
Relevant improvements – how a landlord can identify appropriate energy efficiency improvements for their property
No upfront cost funding (domestic only) – how a landlord can investigate availability of no-cost funding to cover the cost of improving a domestic property
Cost effectiveness (non-domestic only) – how a landlord can determine whether particular improvements would be cost effective to install in a non-domestic property
Exemptions and exclusions – the exemptions framework and the steps a landlord should take to register a valid exemption
Enforcement – the enforcement framework and the options open to enforcement authorities when policing compliance with the MEES, including information on fines and other penalty options
The appeals framework – landlord appeals will be heard by the First-tier Tribunal, part of the court system administered by Her Majesty’s Courts and Tribunal Service; the guidance discusses the steps a landlord will need to take to lodge an appeal and how that process will be managed

You can read the guidance by clicking here.

Next Property Crash Could be Triggered by Great Sell-Off by Landlords

Published On: October 5, 2017 at 9:59 am

Author: Em Morley

Categories: Landlord News

Tags: interest rates,landlord profits,mortgage interest tax relief,rent controls,tax changes

Mortgage interest tax relief changes, coupled with proposed rent controls, could trigger the next property crash, as landlords rush to sell-off their investments, warns a finance expert.

Next Property Crash Could be Triggered by Great Sell-Off by Landlords

Gary Heynes, a partner at tax and business advice firm RSM, believes that landlords could rush to put their properties on the market as the full effects of the reduction in mortgage interest tax relief, alongside Labour’s proposed rent controls, hit their profits.

He says that, as the tax relief changes are increasingly phased in, landlords could find themselves paying more in tax than the net rental income they receive.

If they cannot put rents up to cover the shortfall, Heynes claims that there would be a huge influx of properties put onto the market.

The amount of tax relief that landlords can claim on finance costs is already being cut. From 6^th April 2017, tax relief is being restricted, with the full reduction due to be in place by 2020/21.

This tax year, 25% of landlords’ finance costs will receive tax relief at the basic rate of 20%. In the next tax year, this will rise to 50% and, by 2020/21, all finance costs will only get tax relief at the basic rate.

Heynes explains that someone with a £600,000 property paying an interest-only mortgage could find that, in the future, what is now a 4% annual return on investment would be replaced with a cost of £1,700 to run the property.

“Margins are getting tighter for landlords,” he says. “Add to this a possible increase in interest rates, and the issue is exacerbated.”

He expects many landlords to simply put rents up for their tenants in order to cover the shortfall.

“However, if a Labour government is elected, rent controls are almost certain to follow, so increasing rents might not be possible,” he explains. “Higher interest rates, coupled with rent controls, would not be a great environment for personal landlords and could instigate the great sell-off, as landlords look to reinvest elsewhere.”

Heynes adds: “This response could cause the next property crash, as the property market becomes over-supplied with assets to sell, pulling house prices down, impacting equity levels and mortgage agreements.”

Do you believe that Heynes’ predictions could become a reality?

Outright Ban on Lettings Fees Branded “Dangerous Move”

Published On: October 5, 2017 at 9:36 am

Author: Em Morley

Categories: Landlord News

Tags: letting agent fee ban,letting agents,lettings fees,Wales

Outright Ban on Lettings Fees Branded “Dangerous Move”

An outright ban on lettings fees charged to tenants in Wales has been branded a “dangerous move” by a landlords’ organisation.

The Welsh division of the Residential Landlords Association (RLA) has responded to the Welsh Government’s consultation on an outright ban on lettings fees charged to tenants, which follows similar moves in England.

In its consultation response, the RLA states that an outright ban, as is expected to be introduced in England, would be a dangerous move, with ripple effects throughout the sector.

With a major source of revenue eliminated, letting agents would have no choice but to pass on their overhead costs to landlords, who, in turn, would have no choice but to absorb these higher charges by raising rents for tenants, believes the RLA.

Landlords are already facing huge financial pressure at present, due to new regulatory changes to mortgage interest tax relief, Stamp Duty, mandatory licensing in Wales, and the new Energy Performance Certificate (EPC) standards, which will be introduced next spring.

The Welsh wing of the RLA is arguing that, rather than an outright ban, a capped fee should be introduced, within which a set of services would be required. These could include: referencing, credit checks, and assistance with negotiating the terms of a tenancy with the landlord.

Additionally, the RLA is advocating a set menu of fees for services that might not apply to every tenancy, such as guarantor referencing and surcharges for lost keys.

What is your opinion on an outright ban on letting agents charging fees to tenants and, if you don’t agree with the plans, what are your proposed alternatives?

We will continue to keep you updated with the development of plans for an outright ban on lettings fees, as well as helping you stick to all of the laws governing the private rental sector with our free guides: https://landlordnews.co.uk/guides/

May Pledges Additional £2bn for Affordable Housing

Published On: October 5, 2017 at 9:04 am

Author: Em Morley

Categories: Property News

Tags: Affordable housing,council homes,government,housing crisis

Theresa May has pledged an additional £2 billion to build affordable housing, in a bid to “get Government back in the business of building houses”.

Speaking at the Conservative Party Conference yesterday, the Prime Minister said that councils and housing associations will be able to bid for the funds, and some homes will be built for social rent below market levels.

She said that the budget for affordable housing is now almost £9 billion, which will help to build a new generation of council houses.

May vowed to take “personal charge” of the issue, and called for housebuilders to do their bit by building on land made available, adding: “It won’t be quick or easy, but I will make it my mission to solve this problem and will take personal charge of the response by reigniting homeownership in Britain once again.”

Commenting on the announcement, the Parliamentary Affairs Manager at the Royal Institution of Chartered Surveyors (RICS), Lewis Johnston, says: “It is over 65 years since a Conservative conference committed the party to delivering 300,000 homes a year. With today’s housing challenge no less urgent, the Prime Minister’s plan to unleash the first major Government housebuilding programme in decades indicates the kind of ambition we need to tackle the housing crisis.

May Pledges Additional £2bn for Affordable Housing

“In 1968, councils accounted for 40% of all housebuilding and today’s plan is an acknowledgement that councils are an important part of the solution to the supply crisis, although it will be interesting to see how this announcement works with the recent expansion of Right to Buy.”

He adds: “The success of the plan depends on the Government’s willingness to tackle the other obstacles to building. Alongside the already announced measures, we need bold reforms of the planning system and a deep-seated resolve to unlock the potential of modern methods of construction.”

The CEO of the National Landlords Association (NLA), Richard Lambert, also comments: “The majority of landlords would agree that more social housing should be built, and it’s about time that the Prime Minister set aside a significant pot of money to do so.

“Government, society and indeed taxpayers will get better long-term value from investing in building than in subsidising rents.”

He continues: “Today’s announcement should not only provide more available housing for those most in need at rents they can afford, it should also relieve the pressure on the private sector, and choke off the breeding-ground for the minority of rogues and criminals who get away with providing substandard housing and neglecting their tenants”.

Meanwhile, Dan Wilson Craw, the Director of tenant lobby group Generation Rent, has also responded: “Under Theresa May, the Conservatives have made a welcome shift towards more state support for affordable housing and private renters, including today’s pledge on social rents. But this trickle of incremental announcements does little to address the urgent need that renters have for lower rents and stronger protections.

“Compared with the £10 billion being ploughed into the wasteful Help to Buy scheme, only £2 billion for social housing suggests the Government is still focusing too much on the symptoms of the housing crisis rather than its causes.

“Investment in social housing would mean permanent homes for the 75,000 families in temporary accommodation and lower market rents, whereas Help to Buy will get a small minority of renters into homeownership, while pushing up prices for the rest of us.”

Lindsay Judge, the Senior Policy Analyst at the Resolution Foundation, offers her thoughts: “The commitment of an extra £2 billion for affordable and social housing is a very welcome first step towards tackling Britain’s housing crisis. With over a million people on local waiting lists for social housing, it is a timely and necessary intervention.

“We are facing a huge social housing shortage. Back in 1981, three out of every ten families rented their home from the council or a housing association. Today, that figure has halved.

“But the size of the challenge is huge. During the Macmillan years, more than 100,000 council homes were built each year. Last year, there were just 1,840 new council homes built by local authorities, with housing associations adding another 25,000 affordable homes. Today’s announcement could mean a further 5,000 homes a year. That is welcome, but it’s equally clear more action will be needed.”

She concludes: “If Theresa May wants to lead the way on facing up to our housing challenge, she will need to ensure building happens on a scale we haven’t seen for a generation, with councils backed all the way to do so. And, in the meantime, families in the private rented sector should get the greater security they deserve.”