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Buy-to-let mortgage products rise in Q1

Published On: April 15, 2016 at 8:51 am

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The total number of buy-to-let mortgage products available in Britain rose substantially in the first three months of 2016.

Data from the latest Mortgage for Business index reveals that residential landlords with a limited company were particularly spoilt for choice.

Increases

An increase in product numbers aimed at limited company mortgage seekers saw the total of buy-to-let mortgages rise from 963 in Q4 of 2015 to 1,105 in the opening quarter of this year.

In addition, figures from the report show that remortgages outstripped purchases for all property types, except HMO’s, where purchase numbers were marginally higher.

Unsurprising

David Whittaker, managing director of Mortgages for Business, noted, ‘with tenants looking for less expensive accommodation and landlords looking for higher yields it is no surprise that the number of HMO purchases has risen in the last quarter.’[1]

‘Even though remortgage transactions were higher this is not to say purchase numbers were down,’ Whittaker continued. ‘All types of residential investment showed a marked increase in the number of purchase transactions as investors rushed to beat the 3% stamp duty surcharge deadline.’[1]

Buy-to-let mortgage products rise in Q1

Buy-to-let mortgage products rise in Q1

The Index also shows that rental yields for semi commercial property also increased in the opening quarter of 2016. This made it the second biggest yielding property category.

Mr Whittaker forecasts that the number of buy-to-let landlords buying semi-commercial property will rise in the upcoming months. He believes this is due to the fact mixed-use properties are classed as commercial premises and will not be subject to the increases in Stamp Duty surcharges.

[1] http://www.propertywire.com/news/europe/uk-buy-let-mortgages-2016041411796.html

Most Private Landlords Set to Increase Rents

Published On: April 15, 2016 at 8:31 am

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The majority of private landlords are considering increasing rent prices to accommodate the higher taxes they now face, according to the Residential Landlords Association (RLA).

In a survey, the RLA found that 84% of landlords in the private rental sector are likely to increase rents following recent changes in the buy-to-let sector, introduced by Chancellor George Osborne.

Most Private Landlords Set to Increase Rents

Most Private Landlords Set to Increase Rents

The organisation also says that 78% of landlords feel the changes will deter them from further investing in rental properties, with half of all landlords thinking of getting rid of their investment properties.

This news arrives as estate agent Savills reports record demand for rental properties, predicting that one million new homes to rent will be needed by 2021.

The RLA believes that while less investment in buy-to-let properties may meet the Chancellor’s desire to free up homes for homeowners, these tax changes will make it increasingly difficult and more expensive for the large amount of people who cannot afford to buy, or who prefer not to, to access affordable housing.

In pushing up rents, the Government is in fact hitting those it is eager to support into homeownership, by making it more difficult for them to save for the high deposits they need.

The RLA is now calling on the Government to exempt all rental property making a net increase in the supply of new housing – new builds – from the 3% Stamp Duty surcharge that was introduced at the start of the month.

Some 39% of landlords said that they would be more likely to invest in new build rental properties if they were exempt from the higher tax rate.

The Chairman of the RLA, Alan Ward, says: “The Chancellor’s tax policies are impacting on tenants’ lives – not only are more than four in five facing rent increases, but half of landlords may be selling rented properties, which might result in tenants being given notice to leave their properties.

“Ministers need to end the myth that landlords are to blame for the country’s housing crisis and base policy on fact, not political expendiency.”1

If you are worried about how current and forthcoming tax changes will affect your lettings business, we have financial advice for landlords: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/ 

1 http://news.rla.org.uk/landlords-set-tover-higher-taxes/

 

Landlord fined for gas safety negligence

Published On: April 14, 2016 at 11:38 am

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Categories: Landlord News

A landlord from Plymouth has been fined £11,000 following an investigation into a dangerous gas boiler that was installed in his investment property.

Abdul Manik was prosecuted at Plymouth Magistrates Court by the Health and Safety Executive after it also transpired that he owned a number of flats in the property, all of which had no gas safety certificates.

Ignorance

The council asked Mr Manik to provide gas safety certificates for the property on seven different occasions. Manik ignored each of these requests.

As such, the Health and Safety Executive served an improvement notice on Mr Manik. This required him to undertake gas safety checks and complete relevant maintenance, but this was not done before the stated expiry date.

In December 2014, a gas engineer called out by one of tenants in the property unveiled major issues with the gas boiler and notified the Health and Safety Executive.

The Gas Safe registered engineer classified the boiler as, ‘immediately dangerous.’ This meant that if it was operated or left connected to the gas supply, the boiler would cause serious danger to the property and the life of the inhabitants.

Landlord fined for gas safety negligence

Landlord fined for gas safety negligence

Guilty

Eventually, the boiler was replaced by Plymouth City Council.

Mr Manik pleaded guilty to breaches of Regulation 36 (2) and 36 (3) of the Gas Safety (Installation and Use) Regulations 1998, and Section 33 (g) of the Health and Safety at Work etc Atc 1974. Alongside the fine of £11,000, Maik was told to pay costs of £800.

Speaking after the judgment, health and safety inspector Simon Jones said, ‘landlords have a legal duty to carry out gas safety checks and maintenance which are there to protect their tenants from death or injury.’[1]

‘In this case, Mr Manik ignored repeated requests to carry out the checks and as a result, a serious fault with the gas boiler at one of the flats undetected until discovered by an engineer,’ Jones added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/4/plymouth-landlord-fined-11-000-for-endangering-tenants

 

First Time Buyers Will Need to Earn £64,000 to Afford a Home by 2020

Published On: April 14, 2016 at 11:21 am

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Prospective first time buyers will need to earn £64,000 a year to be able to afford a home by 2020, according to housing charity Shelter.

The organisation believes that generation rent will be stuck in a life of expensive renting, as the average house price grows far beyond the average salary.

The £64,000 annual salary needed to buy a house is an increase of almost a fifth on the £52,000 needed for a typical first time buyer mortgage in 2015, the research found.

On top of the £64,000 salary to cover monthly mortgage payments, a first time buyer will also need a deposit of £46,000 to purchase a home, with the average house price expected to rise to £270,000 over the next four years.

First Time Buyers Will Need to Earn £64,000 to Afford a Home by 2020

First Time Buyers Will Need to Earn £64,000 to Afford a Home by 2020

These figures are based on forecasts by Paul Cheshire, a professor of economic geography at the London School of Economics. He believes that UK house prices will increase by 23% by 2020.

The Chief Executive of Shelter, Campbell Robb, says the research comes as no surprise, given that over the past five years, the country’s housing crisis has seen house prices rise six times faster than the average salary.

“It’s no wonder people on ordinary incomes are being locked out of a home of their own,” he states. “With the situation only set to get worse, generation rent will be forced to resign themselves to a life of unstable private renting, and wave goodbye to their dreams of a home to put down roots in.”1 

In March, thousands of people marched through London to protest against the Government’s proposed Housing and Planning Bill.

The Government insists that the plans will turn generation rent into generation buy, but campaigners believe that it will make it more difficult for people to access genuinely affordable housing.

Lobby group Generation Rent believes that the legislation will only help landlords.

A spokesperson for the Department for Communities and Local Government says: “The housing bill makes sure we make the best use of social housing based on need and income, while reinvesting in building new homes.

“Furthermore, we have set out the biggest, boldest and most ambitious plan for housing in a generation, including £8 billion to deliver over 400,000 affordable homes.”1

Separate research highlights the struggle that first time buyers in London are set to face.

The average London house price is currently ten times the average salary. By 2025, just 26% of people aged 20-39 expect to own their own home in London – the opposite of what was seen in 2000, when 60% of people owned their own homes.

What do you think needs to be done to resolve the housing crisis and help young people get onto the property ladder?

1 http://www.independent.co.uk/news/business/news/housing-crisis-first-time-buyers-will-need-64000-salary-to-afford-an-average-home-by-2020-shelter-a6982386.html

Green Deal scheme cost taxpayer £17,000 per property

Published On: April 14, 2016 at 10:40 am

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Analysis into the now defunct Green Deal scheme-which served as the Government’s prime energy-saving programme-has revealed the cost of the initiative to the taxpayer.

The National Audit Office has concluded that each home that was improved under the scheme cost £17,000. As such, it has been concluded that the Green Deal did not offer value for money.

Failed expectations

As part of the scheme, householders were advised to take out loans to pay for energy-saving measures, such as loft and cavity wall insulation, or double-glazing. Many residential landlords were encouraged to take advantage of this scheme for their investment properties.

However, just 14,000 households took up the offer, which was well below expectations.

The Department of Energy and Climate Change spent £240m on the scheme, which ran between 2013-2015. The National Audit Office highlighted that a major flaw in the programme was that it was not tested with potential consumers before launching.

Green Deal scheme cost taxpayer £17,000 per property

Green Deal scheme cost taxpayer £17,000 per property

Increased bills

In addition, the National Audit Office noted that the Energy Company Obligation scheme running alongside the Green Deal has increased costs for energy providers, thus pushing up bills.

Amyas Morse, head of the National Audit Office, observed, ‘the Department of Energy and Climate Change’s ambitious aim to encourage households to pay for measures looked good on paper, as it would have reduced the financial burden of improvements on all energy consumers.’[1]

‘But in practice, it’s Green Deal design not only failed to deliver any meaningful benefit, it increased suppliers’ costs-and therefore energy bills-in meeting their obligations through the ECO scheme,’ Morse added.[1]

Campaigners are pleading with the Government to replace the Green Deal with another scheme as soon as possible. From this month, landlords have been unable to refuse reasonable requests from their tenants for energy efficiency improvements to be made on their rental home.

[1] http://www.bbc.co.uk/news/business-36043125

 

Government Plans to Update Right to Rent Guidelines

Published On: April 14, 2016 at 9:47 am

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Categories: Landlord News

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The Government is reviewing its guidelines on the Right to Rent scheme, after confusion was raised in the House of Lords.

The Right to Rent scheme requires landlords or their letting agents to conduct immigration status checks on all prospective tenants, ensuring that the renter has the right to live in the UK. Research from the Residential Landlords Association has found that a huge 72% of landlords do not understand their legal obligations under the scheme.

Government Plans to Update Right to Rent Guidelines

Government Plans to Update Right to Rent Guidelines

However, the complexities of the law, part of the Immigration Act 2014, have now been brought up in the House of Lords, as the Immigration Bill works its way through Parliament.

During the discussion, it was revealed that migrants who should not be in the UK may be given permission to rent, despite being prohibited from living here.

Labour peer Baroness Lister of Burtersett asked whether the Home Office would provide guidance to migrants who did not know whether they have a right to rent.

The spokesperson for the Home Office, Lord Keen of Elie, responded: “Under the Right to Rent scheme, landlords must check the immigration status of those renting to ensure they are here legally. Where a migrant’s documents are with the Home Office, landlords can confirm the right to rent through the Landlords Checking Service using the migrant’s case reference number.

“In some limited circumstances, such as where there are genuine obstacles to them leaving, migrants here without leave may be afforded permission to rent, although disqualified from renting.”

He added: “Where a migrant is unsure as to whether they qualify for permission to rent, they may contact the case owner, or team that is dealing with their case, or ask when they attend the Home Office in compliance with reporting conditions.”1

He also explained that the current guidance will be updated to help migrants make inquiries into their right to rent.

There has already been much confusion over the scheme, notably one case that could weaken Right to Rent legislation: /court-case-weaken-right-rent/

However, the Government has confirmed that changes will be introduced in the Immigration Bill to protect good landlords from penalties.

We will continue to provide you with updates on changes to landlord law.

1 http://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Lords/2016-03-23/HL7365/