Written By Em

Em Morley

Buy-to-let landlords contribute £15.9bn per year to British economy

Published On: May 15, 2017 at 3:55 pm

Tags: Buy-to-Let,landlords,rents,UK economy

A revealing new report has shown that buy-to-let landlords presently contribute £15.9bn per year to the UK economy through pre-tax spending on running their portfolios.

This is more than double the forecasted £7.1bn in 2007 and is a direct result of the significant growth of the private rental sector and the cost of acquiring property.

Tax

Further analysis of the report from Kent Reliance shows that 36% of landlords questioned are looking to cut-back on their yearly spending. It is feared that this could reduce overall spending by over £500m- a real blow to tradesman and professionals that support the industry.

17% of landlords said that they would cut down on property upkeep in order to cut costs, followed by 10% who said they would cut letting agent fees and mortgage costs.

These landlords feel they will cut spending on letting agent fees by 28%, servicing by 21% and mortgage costs by 15%.

Fees

The cost of property upkeep, maintenance and servicing was found to be the largest outlay for landlords at a combined total of £5.5bn.

Landlords commutatively spend £2bn on service charges and ground rent, £963 on insurance, £904 on utilities and £1.1bn on associated costs.

Letting agents’ fees came to £4.7bn each year, with £644m spent on legal and accountancy fees.

Buy-to-let landlords contribute £15.9bn per year to British economy

Vital

John Eastgate, sales and marketing director of OneSavings Bank, noted: ‘Landlords may seem like an easy target for political point scoring, but they play a vital role in the economy. Not only do they house a huge proportion of the country’s workforce, bridging the housing demand and supply gap, their spending supports thousands of jobs – whether builders, cleaners, lawyers and accountants or letting agents.’[1]

‘Trying to tackle the housing crisis by targeting landlords with punitive taxes is very simple and politically highly palatable, but has unintended consequences. Either it means less work for all those who support the property industry, or it means tenants will have to foot the bill for the government’s tax raid, or both,’ he continued.[1]

Concluding, Mr Eastgate said: ‘One side effect of the recent changes, and rising running costs, will be the professionalisation of the sector as amateur and accidental landlords leave the market. There is nothing wrong with having fewer, bigger landlords, but that alone will not help more young people get homes.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/buy-to-let-landlords-contribute-15-9bn-a-year-to-uk-economy-study-finds

UK House Price Growth Remains Stagnant

Published On: May 15, 2017 at 2:57 pm

Author: Em Morley

Categories: Property News

Tags: election,house price growth,landlords,price growth,property

New research has revealed that property prices in England and Wales rose by just 0.1% during April.

In addition, data from the report by YourMove shows that prices have increased by only 0.5% in the last three months. Annually however, price growth remained fairly steady- rising to 3.5%.

Transaction levels of 63,500, down 7% on March, remain constant with those levels reached in 2015.

Growth

The West Midlands underlined its position as the fastest growing region in the UK, with price rises of 0.5% month-on-month and 6.2% year-on-year.

In London, growth remains subdued, with a month-on-month decrease in prices of 0.1%. Annually, the capital was the slowest region for price growth outside the North East, with a rise of just 1.4%.

UK House Price Growth Remains Stagnant

Oliver Blake, Managing Director of Your Move and Reeds Rains estate agents observed: ‘Real transformation is needed to address the housing supply shortage. Recent reports from House of Commons committees have made a strong case for the government to do more.’[1]

‘As manifestos are published ahead of the upcoming election, we hope there is commitment to bridging the gap between supply and demand which will stimulate more market activity, stability and enable more people to secure their dream home,’ he added.[1]

[1] http://www.propertyreporter.co.uk/property/house-prices-remain-muted-for-second-consecutive-month.html

Landlords in London being more strategic

Published On: May 15, 2017 at 9:09 am

Author: Em Morley

Categories: Landlord News

Tags: buy to let investment,landlords,London,rents in London

The raft of recent tax changes is making it harder than ever for landlords to make substantial returns from their buy-to-let investment.

Despite this, a new report has revealed that investment in the private rental sector continues to increase in London.

Purchasing

Following a slight lull in activity following the introduction of the 3% stamp duty surcharge on additional properties, an investigation from Benham & Reeves Residential Lettings suggests that landlords are now looking to add to their portfolios.

In addition, the findings suggest that the majority of landlords are undeterred from the phasing out of mortgage interest relief.

Marc von Grundherr, lettings director at Benham & Reeves, observed: ‘Predictions that a flood of landlords will abandon their buy to let portfolios have been greatly exaggerated. In fact, we have seen very few clients exit the rental market this year – in fact most are actively looking to invest further.’[1]

Landlords in London being more strategic

Costs

The Government’s alteration to mortgage interest tax relief is expected to result in rent increases for tenants, with landlords left with little option but to pass on some of these increased costs.

However, Mr von Grundherr notes that strong demand for rental property is putting pressure on rents. Benham & Reeves saw a rise of 12.7% in lettings transactions during the first quarter of the year, in comparison to the same period in 2016.

Continuing, he said: ‘Property continues to remain a very stable investment in light of stock market volatility and historically low interest rates. The fundamentals continue to remain strong and that is why our outlook on London property continues to be bullish.’[1]

‘Professional investors have been able to navigate these legislation changes and capitalise on these localised rental hotspots,’ he concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/landlords-adopting-a-more-strategic-approach-to-investing-in-londons-btl-market

Rugby Borough Council bans landlord

Published On: May 12, 2017 at 2:57 pm

Author: Em Morley

Categories: Landlord News

Tags: landlord,landlords,Rugby Council,tenants

A rogue landlord from Rugby who rented out rooms above a bar in the town centre has been banned from being a landlord, after he put the lives of his tenants at risk.

Mr Dean Dunkley was additionally handed a £41,000 legal bill from magistrates after being found guilty of a number of offences. These included obstructing the investigation carried out by the Ruby Borough Council’s housing enforcement team.

Bars

Mr Dunkley was responsible for running AJ’s bar, a four-storey building located in Dunchurch Road.

He was fined almost £5,000 in April 2016, after pleading guilty to 25 offences under the Housing Act 200. This prosecution was brought about by the council after an inspection of the property uncovered numerous safety breaches.

Following this prosecution, Rugby Council’s housing enforcement team was given a warrant to carry out a further inspection of the property in August.

Upon inspection, a housing enforcement officer discovered a range of issues, including:

faulty fire doors
broken electrical sockets
holes in windows
fridges obstructing emergency exits
broken emergency lighting

Rents

At the time of the inspection, Dunkley was raking in around £820 per week in rents.

In all, he was found guilty of 19 charges and fined £39,000, including 8,000 for operating a HMO without a licence. What’s more, he was ordered to pay £2,264 in costs and a victim surcharge of £170.

Rugby Borough Council bans landlord

Mr Dunkley was subsequently issued with a Criminal Behaviour Order, banning him from being involved in letting or managing a residential property for rent in the borough until May 2019.

Standards

After the hearing, Sean Lawson, Ruby Borough Council’s head of environment and public realm, observed: ‘We’re happy to work with landlords to explain the legislation surrounding HMOs and offer advice on work which needs to be carried out in order for a property to meet safety standards.’[1]

‘But our priority has to be the safety of tenants and, when a landlord shows complete contempt for the law, we have no hesitation in taking the case to court.’ (1)

‘The severity of the fines imposed by magistrates in this case, together with the issuing of a Criminal Behaviour Order, shows no landlord can afford to cut corners when it comes to ensuring the safety of tenants.’ (1)

[1] Mike Green, Rugby Borough Council: Rugby man handed landlord ban after putting lives of tenants at risk, Press Release, 12.05.17

Rents in Tyne and Wear are rising

Published On: May 12, 2017 at 11:54 am

Author: Em Morley

Categories: Landlord News

Tags: landlords,North East,renting,renting in the North East

Recent data released by North-East based property firm KIS reveals that the average monthly cost of renting a property on the Metro Map in the region is £596.

This is £25 more expensive than in December.

Regional Rents

Data from the research shows that Tynemouth is the most expensive place in which to rent in the region, outside of central Newcastle. Rents here total £1,192 per month on average, followed by South Gosforth (£828) and Ilford Road (£762).

On the other hand, Tyne Dock in South Tyneside was the cheapest place to rent, at just £400pcm. This was followed by Hadrian Road and Percy Main, where rents stand at £425pcm and £435pcm respectively.

The full Map reveals the average cost of renting a two-bedroom property within half of mile of each of the region’s 60 Metro stations.

Research from KIS shows that excluding central Newcastle, the top five most expensive regions in which to rent in Tyne and Wear per calendar month are:

Tynemouth -£1192
South Gosforth -£828
Ilford Road-£762
Jesmond – £741
West Jesmond – £737

On the other hand, the five cheapest regions were found to be:

Tyne Dock – £400
Hadrian Road – £425
Percy Main-£ 435
Hebburn – £437
Jarrow – £454

Rents in Tyne and Wear are rising

Strength

Ajay Jagota, founder of sales and lettings firm KIS, observed: ‘It’s always fascinating to see this information laid out like this as it really brings it home to you that, for example, a three minute Metro ride from East Boldon to Brockley Whins saves you almost £1700 a year – the cost of a summer holiday or a significant saving towards a deposit on a house.’[1]

‘Even though these figures are recorded out of curiosity rather than serious analysis, they do showcase the current strength of the North East rental market. Figures this week show that rents in London are falling for the first time since 2009, but on the basis of these figures that is not the case in Tyne and Wear with average rents rising between December and May,’ he continued.[1]

Concluding, Mr Jagota said: ‘As rents rise though, so do tenancy deposits and these figures show indicate that if you want to rent a property on the Metro Map you’ll have to find almost £900 on average for a deposit – and possibly as much as £1800. This money too would surely be better spent on something else.’[1]

[1] http://www.propertyreporter.co.uk/landlords/tyne-and-wear-rents-on-the-rise.html

Mortgage Arrears have Dropped to the Lowest Quarterly Rate on Record

Published On: May 12, 2017 at 9:47 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,homeowners,mortgage arrears,mortgages

The level of mortgage arrears has dropped to the lowest quarterly rate on record, found a new study by the Council of Mortgage Lenders (CML).

Mortgage Arrears have Dropped to the Lowest Quarterly Rate on Record

The research recorded 92,600 mortgages in arrears, representing 0.84% of all mortgages, in the first quarter (Q1) of this year.

This level of mortgage arrears is down by 10% on an annual basis.

However, those borrowers with mortgage arrears of more than 10% did see a slight rise, to 26,500.

In line with the usual trend, the number of buy-to-let mortgage arrears was lower than the owner-occupier rate, at 5,000, although the repossession rate was higher.

This is because of the high level of forbearance that lenders typically seek to extend to homeowners, to try to enable them to resolve their difficulties and keep their homes wherever possible.

The Director General of the CML, Paul Smee, comments on the mortgage arrears figures: “This positive picture of mortgage performance is good news, and reflects a continuing benign interest rate and employment environment.

“However, it is important that borrowers continue to think about the future and how they would cope with less positive conditions, even if that scenario seems distant.

“Lenders will always work with borrowers to try to help them through the inevitable periods of difficulty that life may throw at them, such as periods of unemployment, illness or relationship breakdown.”

Brian Murphy, the Head of Lending at the Mortgage Advice Bureau, also responds to the data: “This is positive news, but we also need to recognise that, what with everything that’s currently occurring in terms of political and economic climate, borrowers do need to factor into their household budgets that interest rates will, at some point in the future, move upwards.”

Landlords, remember that if you have a buy-to-let mortgage, the amount of tax relief that you can claim on interest costs is being cut to the basic rate of Income Tax.

Find out more about the changes here: /government-guide-tax-relief-changes-residential-landlords/