Written By Em

Em

Em Morley

Rent a Room rules change tomorrow

Published On: April 5, 2016 at 9:05 am

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Categories: Property News

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New figures show that nearly a quarter of a million homeowners have advertised for lodgers since the threshold for the Rent a Room scheme was upped in July 2015.

From tomorrow, homeowners can earn anywhere up to £7,500 per year tax-free by letting out rooms. This is a rise from the previous limit of £4,250.

Rises

Data released by spareroom.co.uk shows that since the announcement of the increases, 233,697 homeowners have actively advertised for a lodger. This represents an increase of over 5.2% on the same period twelve months ago.

In addition, the figures indicate that August 2015, a month after the announcement, was the busiest since records began in 2007. During the month 31,109 homeowners advertised for a lodger for their property.

Rent a Room rules changes tomorrow

Rent a Room rules changes tomorrow

Crisis

Matt Hutchinson, director of SpareRoom.co.uk, noted, ‘across the UK, room rents are rising by 5.5% a year. The abolition of tax relief on mortgage interest could force rents up even further as landlords look to cover costs, so this change to the Rent a Room scheme can’t come soon enough.’[1]

‘The UK is in the grip of a housing crisis nobody can see an end to. We’re not building anywhere near enough new homes so we have to make sure we’re using the ones we already have as effectively as possible. Incentivising even a small percentage of homeowners sitting on the 19 million empty bedroom in owner-occupied properties to let them out would do just that. That’s why we campaigned for this change for six years and are delighted to finally see it come into effect,’ Hutchinson added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/4/rent-a-room-boosts-rental-supply

 

 

 

More residential landlords considering limited companies

Published On: April 4, 2016 at 2:51 pm

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An interesting survey of almost 1,400 private rental sector landlords has revealed that more numbers are looking into shifting their property investments into limited companies.

The research was conducted by BDRC on behalf of Paragon Mortgages and was conducted to gauge reaction on how increased stamp duty and cuts to tax relief has changed the buy-to-let market.

Moves

Of the respondents, 41% said that they are thinking of moving their portfolio into a limited company as a direct result of the changes. 5% said that they have already founded limited companies.

For landlords with 20 or more properties, 14% are already operating as limited companies, with a huge 63% saying they are considering this move.

43% of landlords questioned said that stamp duty rises will affect their investment plans in the next two years.

More residential landlords considering limited companies

More residential landlords considering limited companies

Demand

Despite rising uncertainty about the impact of tax relief changes and increased stamp duty, tenant demand is still extremely high.

In the final quarter of 2015, demand for rented accommodation was highest in the South West, with 40% of landlords reporting an increase. However in the North West, just 24% of landlords said they experienced more demand in the same period.

Competition

John Heron, director of mortgages at Paragon, noted, ‘recent Government interventions into the buy-to-let market are now beginning to impact landlord sentiment and plans. The fundamental drivers of the market however-tenant demand and yields-remain strong so there are competing dynamics in play.’[1]

‘It is interesting to see that concern about the impact of changes to stamp-duty and tax relief is greatest among larger landlords,’ Heron continued. ‘This concern is likely to grow now that the Government have confirmed that landlords with larger portfolios will have to pay the increased rate of stamp-duty on buy-to-let purchases.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/4/landlords-move-towards-limited-companies

How will Stamp Duty affect build-to-rent?

Published On: April 4, 2016 at 11:31 am

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Following Friday’s implementation of the additional 3% stamp duty land tax charge on buy-to-let properties, the housing industry has expressed its concerns.

The industry is worried about the impact the additional tax will have on the build-to-rent sector, which at present has 40,000 new units in development.

Losses

Based on average rental yields for a 10-15 investment in build-to-rent, the British Property Federation (BPF) predicts the tax will amount to the equivalent of losing a year’s income. As a result, the BPF believes investors will be re-evaluating potential investments into the sector.

The build-to-rent sector has already gained £4bn in investment since the start of 2016, providing quality privately rented properties with affordable value. Despite hopes to the contrary, the Government imposed the additional 3% surcharge to institutional purchases in last month’s budget.

How will Stamp Duty affect build-to-rent?

How will Stamp Duty affect build-to-rent?

‘Difficult to fathom’

Ian Fletcher, director of policy (real estate) at the British Property Federation, observed, ‘many institutional investors will find it difficult to fathom why something so good-adding to housing supply-is taxed so highly. Given that in many cases the tax will equate to a loss of a year’s worth on income, it is unsurprising that many investors are thinking twice about entering the sector.’[1]

‘As well as the direct financial impact, what we cannot also afford is for this to knock the sector’s confidence when there are so many units coming out of the ground and the potential for many more,’ Fletcher added.[1]

[1] http://www.propertyreporter.co.uk/property/will-stamp-duty-on-residential-property-slow-new-housing-delivery.html

Deposit disputes reach highest ever level

Published On: April 4, 2016 at 9:24 am

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Concerning new figures released from the Tenancy Deposit Scheme reveals that deposit disputes are at their biggest level since records began.

The figures indicate that in 2015, year-on-year adjudications rose by 11% to 27,816. This was 2,787 more than in 2014. In the past five years, adjudications have jumped by 36%.

Reasoning

Further data from the TDS indicates that damage, cleaning and redecoration are the biggest reasons given for a deposit dispute. In cases given to the TDS during 2014-15, cleaning was highlighted in 58% of cases, with damage appearing in 52%.

The table below shows how the number of adjudications completed has risen over time:

March 2008 458
March 2009 8,098
March 2010 20,363
March 2011 18,156
March 2012 20,279
March 2013 24,448
March 2014 25,029
March 2015 27,816

[1]

Deposit disputes reach highest ever level

Deposit disputes reach highest ever level

Worrying

Jane Morris, Managing Director of PropertyLetByUs.com notes that, ‘these statistics are worrying and send a clear message to landlords and agents-this problem is not going away until they are better protected at the start, during and at the end of a tenancy agreement.’[1]

‘It is vital that landlords and agents ensure they get all the paperwork right at the start and at the end of a new tenancy agreement. The reality is that some landlords are failing to put a letting contract in place, or they have very unfair clauses in the contract. Other landlords don’t conduct an adequate check-in and check-out, or don’t keep copies of correspondence with the tenant which could provide important evidence in a dispute,’ Morris continued.[1]

Concluding, Morris said, ‘landlords are agents also have a thorough and detailed inventory which will enable both parties to be treated fairly and reasonably. This documentation will help resolve potential disputes and prevent them reaching the courts.’[1]

[1] http://www.propertyreporter.co.uk/landlords/deposit-disputes-at-highest-ever-levels-recorded.html

Energy efficiency improvements can be requested from today

Published On: April 1, 2016 at 1:41 pm

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Landlords are reminded that from today, tenants have the right to request that energy efficiency improvements are made in their property.

As part of the changes, landlords will be unable to refuse reasonable changes without good reason. However, tenants must ensure that the improvements come at no cost to their landlord, unless they have agreed to foot some or all of the bill.

Funding

There are concerns that funding will be difficult for a number of tenants, following the abolition of the Green Deal in July last year. It was originally expected that this scheme would provide the majority of funding for this new initiative.

It must be noted that the initiative is separate to legislation stating landlords must improve their energy efficiency standards of their property to an EPC rating of E or above by 2018.

An energy efficient property is highly beneficial for both landlords and tenants, with costs being reduced. What’s more, a recent survey from the National Landlords Association revealed that 35% of tenants considered the energy efficiency of their property to be an important feature when considering a potential home.

Energy efficiency improvements can be requested from today

Energy efficiency improvements can be requested from today

Benefits

Richard Lambert, Chief Executive Officer at the National Landlords Association said, ‘we encourage all landlords to think about how they may benefit from making energy efficiency improvements, as many can be made with little or no upfront cost and can have a positive impact on the lives of tenants, their lettings businesses and the environment in general.’[1]

‘Lower fuel bills and more comfort mean that tenants may be inclined to stay for longer, thus reducing void periods,’ Lambert added.[1]

[1] http://www.propertyreporter.co.uk/landlords/tenants-right-to-request-energy-improvements-comes-into-force-today.html

Future of buy-to-let positive, landlords suggest

Published On: April 1, 2016 at 11:51 am

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Further defiance from buy-to-let investors in the face of today’s increases in Stamp Duty alterations has been recorded by new research from Aldermore.

A study of nearly 1,000 landlords by YouGov on behalf of Aldermore looked at how the changes have affected existing and would-be investors. Questions asked included if landlords would increase rents, look to sell their property and how they thought the sector would evolve in the future.

Rises

70% of respondents to the survey noted that they expect the number of tenants in the private rented sector to rise in the next five years. 33% feel that the gross value of the buy-to-let market will fall in the next twelve months.

63% of landlords in the UK said they only own one investment property, which they rent out. 95% of respondents said they had five or less properties in their portfolio.

Future of buy-to-let positive, landlords suggest

Future of buy-to-let positive, landlords suggest

Fearless

Charles Haresnape, group managing director for mortgages at Aldermore observed that the figures, ‘show that the majority of landlords believe there is nothing to fear for the future of the buy-to-let market in the UK.’ He feels, ‘it is clear that the vast majority of landlords fall into the accidental category and as such would be unaffected by upcoming changes as they are not actively looking to build a rental portfolio.’[1]

‘With 70% expecting the number of people in the private rented sector to rise over the next five years, it is vital that regulation does not stifle this hugely important segment of the UK housing market, particularly at a time of significant constraints,’ he continued.[1]

Concluding, Haresnape said, ‘the majority of our buy-to-let customers are committed long-term landlords. While they will obviously not welcome an increase in stamp duty, over the course of a 20 year investment the sums remain relatively small and are unlikely to significantly affect the buy-to-let market.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/3/btl-market-has-strong-future-say-landlords