Written By Em

Em

Em Morley

Buy-to-let investors not put off by stamp duty rise

Published On: March 14, 2016 at 12:31 pm

Author:

Categories: Landlord News

Tags: ,,,,,

Another new piece of analysis has found that the upcoming changes in stamp duty will fail to deter buy-to-let investors as initially planned.

Analysis from Jackson-Stops & Staff suggests that after the buy-to-let rush to beat the surcharge passes, investors will be assisted by property price inflation. The firm suggests that house price rises over the next year will more or less compensate for the increased stamp duty bill.

Losers

Worryingly, the research predicts that the largest losers as a result of the changes will be tenants, as landlords put rents up to deal with increases in tax.

For example, should property prices carry on growing at their present rate in the South East, the capital gain on an average property will be £28,412 per year. Total stamp duty on purchases of an average home will be £11,328.

Separate data from the Association of Residential Letting Agents (ARLA) shows that the majority of landlords keep hold of their investment property for more than one year. Data from the ARLA report shows that 33% of landlords keep their property for 11-20 years and for an average of 20.3 years. This suggests that the majority of landlords will benefit from the positive impact of house price growth in the long term.

Positive outlook

Nick Leeming, Chairman at Jack-Stops & Staff, noted, ‘the Government, through its new stamp duty surcharge, is trying to make the playing field more even between property investors and first-time buyers by eating into landlords’ profits.’ Leeming said that his advice for landlords was, ‘when you do the sums and look at the direction of house prices, placing money in bricks and mortar is still by far the best investment vehicle.’[1]

‘If property prices continue on their current trajectory, within a year or less of buying their investment property the vast majority of landlords would have earned back all the money given through stamp duty, even with the new 3% surcharge, by doing nothing at all. Therefore, the idea that the stamp duty tax will act as a deterrent is a fiction, as for most landlords, it won’t amount to a significant figure,’ Leeming continued.[1]

Leeming feels that, ‘the only losers will be tenants as landlords as likely to pass on any additional costs they might not want to shoulder to their tenants by increasing rents.’ He fears, ‘this could mean that those currently in rented accommodation who are saving for a deposit to buy a home, take even longer to pull this money together.’[1]

Buy-to-let investors not put off by stamp duty rise

Buy-to-let investors not put off by stamp duty rise

Regional concern

It is estimated that in eight out of ten regions, buy-to-let investors will find capital gain will negate all stamp duty costs. However, this is not the case in the North East and North West of Britain.

Leeming noted, ‘the North East and North West regions of the UK, where house price growth is more restrained at present, are the only regions where landlords will find capital growth in the first year does not eclipse the new stamp duty they would have to pay. These two regions are also the only two where home owners currently pay no stamp duty on the average home as the average property price still remains under £125,000, the price level where stamp duty first bites.’[1]

Concluding, Mr Leeming said, ‘tenants here are more likely to see landlords in future pass on this additional cost via rent and we also anticipate investors to be more assertive when they negotiate on buying a home, which will be reflected in lower offers.’[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-investors-undeterred-by-stamp-duty-changes-claims-new-analysis.html

Universal Credit Rollout Continues

Published On: March 14, 2016 at 12:14 pm

Author:

Categories: Landlord News

Tags: ,,,

If you have tenants on housing benefit, it is vital that you keep up-to-date with their financial circumstances and the changes to the welfare system.

As of today, many more places will be subject to Universal Credit, the Government’s new benefits scheme, which sees six payments rolled into one monthly payout.

Universal Credit Rollout Continues

Universal Credit Rollout Continues

Those in receipt of housing benefit will now receive the allowance directly, rather than having the payment sent to their landlord.

If your tenants claim housing benefit, be aware that if they live in the areas below – or any of the previous areas where the system has rolled out to – you will no longer be paid their rent directly.

Instead, the tenants will be responsible for paying their rent each week or month.

It is important to understand that their finances will be changing and there have been reports of long waiting times between payouts as the system changes over, pushing some tenants into long-term debt.

If you are worried about your tenants missing rent payments, protect your income with rent guarantee insurance – the best way to ensure you still get paid.

From today, Universal Credit will be implemented in the following postcode areas:

  • CB6 1 and CB6 2 of Cambridge.
  • EC1M 3, EC1N, EC1R 4 and EC1R 5 in Eastern Central London.
  • IP26 and IP27 9 of Ipswich.
  • N1C, N1 0, N1 9, N2 0, N2 9, N6, N7 0, N7 9, N8, N10, N11 2, N13 6, N15 3, N15 4, N15 5, N17, N19 5 and N22 in North London.
  • NR21 9, NR22 and NR23 of Norwich.
  • NW1, NW2 2, NW2 3, NW3, NW5, NW6 1, NW6 2, NW6 3, NW6 4, NW6 5, NW8 0, NW8 6 and NW8 7 in northwest London.
  • PE7 1, PE7 2, PE12 0, PE13, PE14, PE15, PE16, PE26 2, PE28 3, PE30, PE31, PE32, PE33, PE34, PE35, PE36 and PE38 in Peterborough.
  • TS6, TS7 0, TS7 9, TS9 6, TS10, TS11, TS12, TS13, TS15 and TS29 in Cleveland.
  • W1T 1, W1T 2, W1T 4, W1T 5, W1T 6, W1T 7, W9 1 and W9 3 of west London.
  • WC1A, WC1B, WC1E, WC1H, WC1N, WC1R, WC1V, WC1X, WC2A, WC2B, WC2H 0, WC2H 8 and WC2H 9 in central London.

We will continue keeping you informed of the latest areas to move onto Universal Credit with landlord updates at LandlordNews.co.uk.

Could tenants be priced out of market?

Published On: March 14, 2016 at 11:15 am

Author:

Categories: Landlord News

Tags: ,,,,

A new investigation has predicted that private rental tenants could soon face similar financial challenges to those buying a new home.

Research on behalf of financial comparison website money.co.uk by the Centre for Economics and Business Research suggests that the cost of an average rental deposit will grow by 40% by 2026 to £1,111. The average monthly rent is predicted to rise by 28% over the same period of time.

Increases

If these predictions are true, the average monthly rental deposit will be 70% of the typical monthly salary. However, strong regional variations must be taken into account.

For example, in London, the average rental deposit is expected to rise to £2,733 by 2026. This would amount to 120% of the average monthly salary, a rise from 99% in 2015.

Across the South, deposits are expected to rise sharply. In the South East, the average deposit is predicted to hit £1,469 in 2026. This represents 83% of the average monthly salary at £1,761, a rise from the 72% recorded in 2015. In the South West, the typical deposit is thought to hit 80% of average monthly earnings at £1,437.

Rental rises

Average monthly rents are due to increase by 28% by 2026, 8% greater than average salaries over the same timeframe, which are set to grow by 20%.

The greatest increase in in rents during the next ten years is expected to occur in the capital, with growth expected to hit 39%. Other regions expected to perform well are the South West and South East, where rents are expected to grow by 32% and 34% respectively.

On the other hand, the lowest increases in rent are likely to be Yorkshire and the Humber, with a 17% increase expected. Overall monthly salary is not expected to keep up with the pace of the rental market.

Between 2015 and 2026, the typical monthly salary is expected to increase by an average of 20% to £1,576. This is lower than the projected increase in both monthly rental costs and deposits, which in turn could see many finding the cost of renting just as unaffordable as buying.

Could tenants be priced out of market?

Could tenants be priced out of market?

Blow

Hannah Maundrell, editor in chief of money.co.uk, said, ‘the rapid rise in deposits as well as rents is a double blow for everyone on the rental ladder. With the forthcoming changes to tax legislation and crackdown on buy to let mortgages likely to erode landlords’ profits, there’s little doubt these costs will be passed onto tenants. The current booming property market means deposits are likely to continue shooting upwards in the future and we could well see six weeks’ worth of rent extended to eight. Many not only face being priced off the property ladder but also the rental ladder too.’[1]

‘The Government needs to take action, without intervention the spiralling cost of deposits and rent could have a huge economic impact on the UK. Giving renters a lifeline is equally as pressing as helping people buy a house. Taking steps to address this now could be a far easier solution than dealing with the prospect of pricing home hunters off the private rental ladder,’ she added.[1]

[1] http://www.propertywire.com/news/europe/uk-buy-rent-costs-2016031411664.html

Most Rental Properties Going for the Full Asking Price

Published On: March 14, 2016 at 9:38 am

Author:

Categories: Property News

Tags: ,,,,

Most rental properties in the UK are going for the full asking price, according to the latest data from Countrywide.

The property firm found that the average rental property achieves 99.9% of its asking price – the highest since 2007, and evidence that tenants are losing their bargaining power.

In London, the average agreed rent is just over the asking price, at 100.9%. In Wales, the price achieved is lower, at 98.7%, but is still extremely close to the advertised rent.

Most Rental Properties Going for the Full Asking Price

Most Rental Properties Going for the Full Asking Price

Countrywide discovered that in the last year, 12% of lets were agreed at more than the initial asking price.

This figure is higher in London, where one in five tenants pay more than the advertised rent. On average, they pay an extra £94 per month, which equates to an additional £1,578 over the course of the average 17-month tenancy.

In the UK as a whole, tenants who pay over the asking price hand over an average of £44 a month. In Wales, this figure drops to £24 per month.

Countrywide has found that London has had the largest rate of growth in rent prices of anywhere in the UK since 2007, with rents up by 34% over their pre-recession peak. In the UK as a whole, rents have risen by 12% over the same period.

Despite these increases, the proportion of lets agreed at more than the asking price has risen in each year since 2008, indicating the power that landlords have over those stuck in the private rental sector.

In 2008, just 3.5% of lets were agreed at over the asking price, while 23.5% of tenants were able to negotiate a lower rent price.

This year, the amount of tenants able to negotiate price reductions has tumbled to 8%.

The Research Director at Countrywide, Johnny Morris, comments: “The combined effect of growing numbers of people renting and a lack of supply has seen tenants’ ability to negotiate diminish.

“Tenants are having to compete more often and with more people in order to rent the home they want, meaning they need to offer more to stay ahead of the crowd.”1

A month ago, Countrywide reported that average rents are now the highest on record, at £906 per month.

1 http://www.propertyindustryeye.com/tenants-lose-bargaining-power-and-face-paying-over-he-odds/

 

 

Tenants in East Midlands most satisfied with landlord

Published On: March 13, 2016 at 10:16 am

Author:

Categories: Landlord News

Tags: ,,,,

New research has indicated that tenants in the East Midlands are most satisfied with their landlord, compared to all other regions of the country.

A survey from the National Landlords Association found that 83% of renters in the region are satisfied with their current landlord. Renters in the North West and South West were almost as content, with 82% in these areas stating that they were satisfied.

Regional reflections

Data from the report shows that there are sharp regional differences in terms of tenant satisfaction. Only 67% of renters in the North East said that they were content, which represented the lowest rate in the whole of England.

In total, an average of 79% of tenants who replied to the poll said that they were satisfied with their landlord. The South East recorded a satisfaction rate of 80%, followed by the West Midlands with 79%, Yorkshire and Humber with 73%, London 72% and the East with 71%.

Richard Lambert, chief executive officer of the NLA, said, ‘good landlords make up the majority of the market so it’s not surprising that the majority of tenants are satisfied.’[1]

Tenants in England most satisfied with landlord

Tenants in England most satisfied with landlord

Far from insecure

‘Private renting is far from the insecure, uncertain and unhappy picture that it is often made out to be and these findings will help to reassure existing renters and those looking to make their home in the private sector. However, it doesn’t help the minority of tenants who are dissatisfied,’ Lambert continued.[1]

Concluding, Mr Lambert said, ‘the NLA provides a range of training and accreditation opportunities for landlords in order to help them develop and improve standards so they can provide a better service but this is only part of the solution. Both central and local Government must also commit more resources to tackling poor standards and weeding out bad landlords.’[1]

[1] http://www.propertywire.com/news/europe/rental-tenants-satisfaction-survey-2016030311628.html

 

How Futuristic Technology Will Change Property Viewings

Published On: March 13, 2016 at 8:00 am

Author:

Categories: Property News

Tags: ,,,

The Sims was a popular game for a generation obsessed with building lavish homes, becoming their very own interior designer and living life out online. But a new report indicates that buying a home in real life may not be too different in the future.

The report suggests that by 2025, property viewings will be technologically advanced, with virtual tours and augmented reality that allows buyers to virtually redecorate a room while standing in it.

The study, commissioned by easyProperty and The Future Laboratory, explores the transformation that the property market will undergo in the next few years.

It predicts that by 2025, the process of buying a property will be much more like playing a game than it is today.

For instance, location is often the number one priority for homebuyers. In the future, drone technology is expected to enable buyers to scout out their potential neighbourhoods before committing to a property purchase.

The report explains: “As drone technology becomes more affordable, we imagine potential house hunters will cotton on to its use for conducting those vital pre-purchase searches – to find out whether the neighbours throw loud parties every weekend, how noisy the traffic is at key points throughout the day, and other information not easily available from an inspection of the house, but vital to long-term happiness.”

How Futuristic Technology Will Change Property Viewings

How Futuristic Technology Will Change Property Viewings

House hunters will also be able to explore their prospective neighbourhoods using augmented reality technology, by linking their mobile devices to beacon technology.

This will make the process of wandering around a neighbourhood more informative and will include hovering your mouse on buildings to find out what they are.

The report continues: “By linking a buyer’s mobile device to digital beacons that will, by then, be embedded in practically every building and business, property service brands will be able to create neighbourhood cyber-safaris that lead buyers to sites of personal interest in an unfamiliar area.”

The head of technology research firm Enders Analysis, Douglas McCabe, explains: “Beacons will allow estate agencies in the future to turn exploring a strange new area into an entertaining game, a bit like an online game, translated into the real world.

“Deciding to move to a new neighbourhood often relied on a leap of the imagination by buyers. They need to understand that this is a place full of possibilities that will appeal to them on a very personal level. Gamified tours will help them do that.”1 

Once a buyer has found the perfect property in the perfect neighbourhood, how do they ensure the interior design and layout of the home is perfect?

At present, house hunters rely on their imagination to determine what each room would look like with their decoration and belongings.

But in the future, this process will be much easier with technology that allows buyers to virtually redecorate the rooms they are in using smartphones and tablets.

The report says: “Buyers will use a new generation of heads-up display (HUD) glasses – more advanced and user friendly future versions of Google Glass – to carry out virtual refits as they stage physical viewings of the two or three homes on their final shortlist.”1

Technology could also allow buyers to have a complete virtual tour of a property without having to travel.

But while all of this might sound like the stuff of science fiction, it is not far away.

Matt Ratcliffe, the co-founder of creative studio Masters of Pie, explains: “We’ve been working on showrooms that have virtual reality headsets that enable buyers in China to virtually and realistically sit in the rooms of the beautiful penthouses in London they are about to spend millions on.

“But by 2025, the experience offered by this technology will have become so convincing that it will be difficult to tell the difference between reality and virtual reality – and it will have moved from the luxury sector into the mass market.”1

If you’re already looking for ways to enhance your property search with technology, why not try this app?

Can you imagine buying a home or buy-to-let property using virtual reality? It may be just around the corner!

1 http://www.dailymail.co.uk/sciencetech/article-3476453/Is-technology-turning-SIMS-Cyber-safaris-virtual-decorators-make-buying-house-future-like-playing-popular-game.html