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Landlords and Letting Agents Not Up to Speed with the Law, Warns AIIC

Published On: October 11, 2016 at 10:52 am

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Landlords and letting agents are not up to speed with the law in the lettings sector, warns an industry trade body.

The Association of Independent Inventory Clerks (AIIC) reports that its members frequently receive queries about new industry regulations from landlords and letting agents, particularly laws regarding carbon monoxide and smoke alarms, and window blinds.

Landlords and Letting Agents Not Up to Speed with the Law, Warns AIIC

Landlords and Letting Agents Not Up to Speed with the Law, Warns AIIC

Since October 2015, it has been compulsory for landlords and letting agents to install smoke alarms on each floor of every rental property where someone is living, partially living or is deemed a habitable area. Bathrooms, for example, are considered habitable areas.

Landlords or their agents must also fit carbon monoxide alarms in rooms with a solid fuel-burning appliance, including wood burners and open fires.

The AIIC says that the most common queries from landlords and letting agents regarding these laws are the required location and type of alarms, as well as when they need to be tested.

This guide to fire safety will ensure that you stick to these important regulations: /guide-fire-safety-rental-property/

Additionally, the AIIC claims that its members have also received queries from landlords and letting agents relating to safety requirements for blinds and curtains.

In 2014, the British Standards Institution introduced a new set of safety requirements, aiming to address the child safety risks posed by blinds and curtains.

The rules mean that any blind installed with cords and chains must have breakaway connectors, and cord and chain safety retainers. The cords and chains must also be maintained at a minimum of 1.5 metres from floor level.

All new blinds and curtain tracks fitted by a professional must pass the new standard, meeting the necessary safety requirements and test methods.

If an accident involving a non-compliant blind or curtain track takes place in a rental property, the landlord could face prosecution from Trading Standards.

The Chair of the AIIC, Patricia Barber, is concerned: “A worryingly large number of letting agents and landlords are still completely unaware of some important new regulations according to our members, who are being asked to explain health and safety rules.

“There is no excuse for anyone in our industry to ignore regulations – this could be dangerous and very costly in the long-run.”

Barber insists that all landlords and letting agents must strive to ensure that they are clear on all their legal obligations, and has urged other trade bodies to publish as much helpful information as possible.

She adds that in the rapidly developing lettings sector, there is likely to be much more new legislation in the future, so it is important for landlords and letting agents to keep an eye on the ball.

Remember that Landlord News provides the latest information and updates for landlords, including any changes to the law.

Buy-to-let tax alterations could lead to ‘price correction’

Published On: October 11, 2016 at 10:13 am

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UK residential property prices could be set to fall sharply as a result of the Government’s buy-to-let tax changes, according to the head of Landlord Mortgages.

Alterations to stamp duty, mortgage interest tax relief and mortgage application rules could make it trickier to make a profit from property investment. This in turn could put off landlords from choosing to purchase property and drive prices down as a result.

Bubble burst

Landlords are facing changes in how much they can claim in mortgage interest tax relief from early next year. This figure will be limited to 20%, eating into many landlords’ rental yields. Higher and additional rate taxpayers could well be deterred, making buy-to-let a less attractive proposition.

Lee Grandin of Landlord Mortgages believes that no one is able to foresee when the buy-to-let bubble will burst. However, he feels that the buy-to-let changes could well be a catalyst for, ‘major price correction.’

Buy-to-let tax alterations could lead to 'price correction'

Buy-to-let tax alterations could lead to ‘price correction’

Addressing the press, Grandin said: ‘If commentators are stating the property market is overvalued then the sudden supply of property post buy-to-let tax changes could well be the catalyst for a major price correction’[1]

‘It was never going to be politically acceptable or sustainable to have Tom, Dick and Harry own a buy-to-let portfolio. Take note: A price correction where the losers are Tom, Dick and Harry with a buy-to-let portfolio and the banks who supported them is a vote winner,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/buy-to-let-tax-changes-could-be-catalyst-for-a-major-price-correction

 

Average House Price is Eight Times the Typical Wage in the UK

Published On: October 11, 2016 at 9:22 am

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The average house price in the UK is eight times the typical wage, according to online estate agent eMoov.co.uk.

The agent has found the most unaffordable parts of the UK where house price to wage ratio is concerned. It has compiled data for all London boroughs, and each area across England, Scotland and Wales, calculating the most expensive and cheapest areas for buying property when compared to income.

Unsurprisingly, the majority of the most expensive areas are in London, where the average house price climbs to 14 times the typical wage.

Average House Price is Eight Times the Typical Wage in the UK

Average House Price is Eight Times the Typical Wage in the UK

The Royal Borough of Kensington and Chelsea tops the list, with an average house price of £1,212,375, despite suffering the greatest decline in property values in the capital over the past year, of 6%. The cost of buying a home in the borough is now 46 times the average wage, of £26,624, and the nation’s greatest gap in property prices to wages by far.

The City of Westminster is second on the list for the most expensive property price to income, where the typical property costs £1,028,617, up by 11% annually. With an average wage of £33,020, house prices in the borough are 31 times higher than earnings.

Richmond upon Thames, also in London, placed fourth on the list, with the average house price (£659,636) a huge 26 times the typical wage (£25,636).

Looking at England as a whole, the average house price is nine times the typical wage on offer. The most expensive city outside of London and third place overall is St Albans in Hertfordshire, where the average house price (£522,716) is 28 times higher than typical earnings (£18,928).

The second most expensive location outside the capital is South Bucks in Buckinghamshire, where the house price to wage ratio is 25. Workers on an average income of £23,192 are faced with the challenge of buying a property costing £587,645 in the area.

Chiltern, close behind South Bucks, has a wage to house price ratio of 24, with a typical property value of £512,910.

In Wales, the lower average property value means that the gap between prices and wages is just six times. Monmouthshire is home to the highest average house price to wage ratio in Wales (12), but is only ranked 153rd overall in the UK, with a typical property price of £221,345.

With house prices also lower in Scotland, the price to wage ratio is just five. The most expensive Scottish region is East Renfrewshire, despite placing 113th in the whole of the UK. The average wage in the area is 13 times lower than the typical house price.

The City of Edinburgh placed second in a three-way tie (along with East Dunbartonshire and East Lothian) for unaffordability in Scotland, but is ranked just 210th throughout the UK. It would take ten times the average wage in the Scottish capital to buy a home there.

In contrast, Copeland in western Cumbria is the most affordable part of the UK, with a property price to wage ratio of just three. Blaenau Gwent in Wales follows closely behind, at four times, with Burnley in Lancashire also at four.

The Founder and CEO of eMoov, Russell Quirk, comments on the findings: “Property values in England are significantly higher than the rest of the UK, which is reflected in the wages offered. However, the wages are not always consistent with property prices, and have failed to increase at the same pace.

“It highlights the unaffordability of the market in England when you consider the difference in Wales, where the highest annual average wage is under £21,000 in Cardiff, yet the city’s property value is merely third in the country, behind regions with lower averages in annual incomes. Additionally, the average wage in Kensington and Chelsea would take almost a lifetime working to be able to afford a home, which is unrealistic for most, let alone the average buyer.”

He adds: “It is important to consider the wage you can earn when buying property, to understand the longevity of the investment, as a lower property price doesn’t always mean a better quality of living, as the wage will also reflect the local market and economy.”

Another call for Government to abolish Stamp Duty

Published On: October 11, 2016 at 9:10 am

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There has been yet another call for the Government to cut stamp duty, in order to stimulate the property market.

The latest plea comes from independent estate agent Haart, as part of their latest market monitor.

Price falls

According to the figures, house prices fell slightly in September (1.1%) to drop down annual house value growth to 2.7%. As such, the average UK price growth now stands at £226,229.

Demand for homes from new buyers has increased by 1.5% since August, but is still down year-on-year by as much as 22.4% across the UK. What’s more, the number of properties coming onto the market has dropped by 2.8% month-on-month and by 2.3% over the year.

Due to this decrease in stock, the number of purchasers chasing instructions has upped slightly. There are now 10 buyers for every new property that comes onto the market in Britain.

Efficiency

The property market has also become less efficient over the month, with the number of transactions decreasing but the number of viewings going up. This indicates that buyers are choosing to look at more properties before they eventually buy.

Average purchase prices for first-time buyers rose during September by 1.7% but are still down year-on-year, currently sitting at £165,092. The number of first-time buyers entering the market is also down, by 12.6% month-on-month and 32.1% year-on-year.

Capital Pains

In London, the average property price has slipped marginally, by 0.7% over the month. However, it is up by 2.4% in the year. This said, it is less than the annual growth seen across the UK.

Demand in the capital rose by 3.8% in September, but is still down by a substantial 38.5% at the same stage in 2015. Additionally, the number of properties for sale fell by 4.8% monthly and by 8.9% over 12 months. Sales are also down, by 1.9% monthly and 24.4% annually.

Average rents in London fell by 1.8% in September to sit at £1,895.

Another call for Government to abolish Stamp Duty

Another call for Government to abolish Stamp Duty

Returns

However, landlords are slowly returning to the market, after initially retreating due to the Stamp Duty rise introduced in April. During September, landlords registering an interest in buy-to-let increased by 9.2% across Britain.

Despite this, the number of overall sales transactions in the UK was down by 13.7% this month. London however saw a monthly increase of 20.8%.

Paul Smith, CEO of haart, stated: ‘Although we are seeing more positive consumer confidence materialising post-Brexit, the UK’s housing market is still marked by a number of negatives, as prices and transactions continue to fall on the month. We are however starting to see some improvements, in the form of the number of new buyers that are entering the market and the number of viewings that are taking place.’[1]

Actions

Mr Smith believes that: ‘Action needs to be taken to reverse the sluggish pace of activity, to turn these initial engagements with the property market into transactions. A greater injection of confidence and stability is also important for housebuilders, in order to reassure them they will get good margins on the potential sale price of new homes if they start building again, particularly crucial in order to reach the ambitious housebuilding targets that Sajid Javid has set.’[1]

‘This month’s monitor shows landlords are starting to return to the market despite the extra 3% hike in Stamp Duty imposed by George Osborne. This is a positive that needs to be encouraged, especially considering the Royal Institution of Chartered Surveyors suggests 1.8m more households will be looking to rent by 2025 and yet 85% of landlords have no plans to increase their portfolios,’ he continued.[1]

Concluding, Smith said that, ‘Surely it is time the new Government overturns the negative Stamp Duty hikes both aimed at buy-to-let investors and at the top end of the scale. Measures need eased in order to increase fluidity within the market as these charges are without as these charges are without doubt causing a log-jam-no wonder when buyers have to fork out and extra 3% on top of the 7% they are already paying.’[1]

[1] http://www.propertyreporter.co.uk/property/calls-for-the-government-to-dr0p-stamp-duty.html

Tenant Group Supports New Tax Changes for Landlords

Published On: October 11, 2016 at 8:32 am

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Generation Rent, the tenant lobby group, has spoken out in support of new tax changes for landlords.

The comment arrives following a call from the Royal Institution of Chartered Surveyors (RICS) to scrap the additional Stamp Duty charge on second homes and two landlords’ fight in court to repeal the forthcoming mortgage interest tax relief reduction.

Tenant Group Supports New Tax Changes for Landlords

Tenant Group Supports New Tax Changes for Landlords

Disappointingly for property investors, the landlords lost their challenge on Thursday. This means that if all goes to plan, the amount of tax relief that landlords can claim on mortgage interest will be cut to the basic rate from April 2017. The Government has provided a guide on how the change will affect you: /government-guide-tax-relief-changes-residential-landlords/

However, the Director of Generation Rent, Betsy Dillner, believes that the tax system has favoured landlords for too long, and the new tax changes should help first time buyers get onto the property ladder.

“For too long, the tax system has favoured people who bought homes to make a profit over people who just wanted somewhere to live,” she insists. “The Government’s recent tax changes should help to dampen speculation and give an advantage to people who have to date been shut out of the housing market.”

She continues: “These are long-term measures whose success depends on house prices slowing down. Warnings about the impact on the overall supply of private rented housing are premature, and clouded by the result of the EU referendum.

“Despite the prospect of mortgage interest tax relief being phased out for landlords paying the higher rate of income tax, the number of purchases with a buy-to-let mortgage increased by 14% in the 12 months since George Osborne announced the policy in July 2015.

“And despite the introduction of the surcharge in April, and the subsequent dip in sales to landlords, Stamp Duty receipts increased in the second quarter of the year, from £1.75 billion to £1.98 billion.”

She concludes: “As important as it is to dismantle the damaging culture of property speculation, tax is only one part of the solution to the housing crisis. We need to build more homes for low-income households, and the tax reforms mean there’s a new source of revenue for this. We also need to improve protections for tenants whose lack of rights mean they face a high risk of eviction.”

Despite Generation Rent’s beliefs, industry professionals have supported RICS’s calls, claiming that the new tax changes for landlords will hinder investment in the private rental sector, and thus make rental accommodation more expensive for tenants.

Additionally, the Residential Landlords Association warns that tenants will face rent rises as a result of the new taxes.

August was record month for new tenancies

Published On: October 10, 2016 at 1:39 pm

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The number of new tenancies agreed in August was the highest ever recorded at letting agent Knight Frank.

According to the agent, the number of new tenancies agreed in the three months to August rose by 15.7%. In addition, the number of viewings booked with prospective tenants increased by 21.7% in the same period.

Increases

However, rental growth slipped by 4.7% year-on-year to September.

Tim Hyatt, head of lettings at Knight Frank, noted: ‘Continued uncertainty created predominantly by higher stamp duty rates but exaggerated by Brexit has led to an increase in prospective tenants and landlords.’[1]

‘Although there has been some price adjustment, we are seeing a lot of tenancies being agreed as a result,’ he added.[1]

August was record month for new tenancies

August was record month for new tenancies

Capital results

Knight Frank also revealed its most recent sales figures for Prime Central London locations. Annual price growth in this region was -2.1%.

Properties stayed on the market here for an average of 14% longer between January and August 2016, in comparison to the same period in 2015.

The number of properties under offer were up by 39.3% between January and August year-on-year. The number of new potential buyers interested in properties valued between £2m and £5m rose by 8.7% in the same timeframe.

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2016/10/agency-claims-august-was-record-month-for-new-tenancies