Written By Em

Em Morley

February saw surge in buying in England and Wales

Published On: March 11, 2016 at 10:26 am

Tags: Buy-to-Let,house buyers,landlords,property purchases,Stamp Duty

Latest data released by Home.co.uk has indicated that there was a surge in buying activity across the country in the last month.

The price of property increased by 0.9% nationally in February, with annual rises currently standing at 7.9%.

Short stock

Rising prices are being driven by a very low property stock, with the number of properties coming on to the market down by 4% in comparison to one year ago. In the West Midlands, 12% less fresh stock made it onto estate agents’ books in the last month, again in comparison to February 2015.

In addition, the South West is also showing shortages in supply, with 8% less stock registered than in January.

February saw surge in buying in England and Wales

Prices were up in the North and in Wales during February, but marketing times continued to be high in both regions. In contrast, strong competition between buyers has pushed the typical time on market in the South East and East of England down to 47and 49 days respectively.

The current 7.9% increase in prices in comparison to March 2015 is expected to grow, with supply of housing worsening in many UK regions.

Snapping up

Further figures from the report shows that the East of England, London and the South East saw massive drops in marketing times, with buy-to-let investors looking to snap up homes before the stamp duty increases come into play.

Typical time of properties on the market dropped to 102 days across England and Wales, 17 days less than March 2015. However, the average annual home price appreciation in the two countries dropped slightly to 7.9%.

Number of Landlords Looking to Sell Quadruples in Six Months

Published On: March 11, 2016 at 9:35 am

Author: Em Morley

Categories: Landlord News

Tags: landlord taxes,London,mortgage interest tax relief,residential landlords

The number of residential landlords in central London who are looking to sell their rental properties has quadrupled since last year’s Budget, according to new data from the National Landlords Association (NLA).

Number of Landlords Looking to Sell Quadruples in Six Months

When surveyed before last year’s Budget, just 4% of private landlords had plans to sell property. However, the proportion has almost quadrupled, rising to 19% when surveyed in January this year.

The 15% growth in intention to sell rental property is the highest seen across the UK in the past six months.

The smallest increase in intention to sell was from residential landlords in the North East, rising from 17% in June last year to 24% in January – up by just 7%.

The reduction in mortgage interest tax relief for individual residential landlords – announced in last year’s Budget – will leave many landlords making losses, forcing some basic rate tax payers into a higher tax bracket, and leaving higher and additional-rate tax payers with significantly higher tax bills.

The NLA has named the change the Turnover Tax, as landlords’ tax will be calculated on the rental income they receive, rather than their profits.

The CEO of the NLA, Richard Lambert, says: “Local property markets vary greatly across the United Kingdom, but we are seeing a loss of confidence across the board as many landlords realise they won’t be able to remain in the market.

“If landlords follow through with their intentions over the coming months, this could lead to a massive sale of property, as we have previously warned. However, this may not be a straightforward process, especially for those with stock in low demand areas.”

He adds: “We urge those considering selling up to think about when they will need to do so, and to plan ahead now in order to minimise the risk of losing money as a result of a failure to sell.”¹

How many landlords plan to sell around the UK?

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Are you planning on leaving the private rental sector or reducing your portfolio due to the tax changes?

For more advice for landlords on how the changes will affect you, this piece by a leading finance expert will help you understand the impact: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

¹http://www.landlords.org.uk/news-campaigns/news/proportion-london-landlords-looking-sell-quadrupled-in-last-six-months

London Council Launches Letting Agency to Protect Private Tenants

Published On: March 10, 2016 at 3:26 pm

Author: Em Morley

Categories: Property News

Tags: Haringey,letting agents,London,online letting agent,tenants

A London council has launched a letting agency for private tenants in a bid to protect renters from extortionate fees and charges.

Haringey Council in north London says its online letting agent, Move 51° North, is the first in the UK to provide private tenants with an alternative to mainstream letting agents.

A study by Citizens Advice last year found that tenants were paying an average of £337 in charges to letting agents, but that fees vary massively from agent to agent.

London Council Launches Letting Agency to Protect Private Tenants

Costs for checking references ranged from £6-£300, while tenants also faced charges of between £15-£300 for simply renewing their tenancies.

Haringey Council’s agency will charge tenants a fee of £180 to cover administration and £72 for credit checks. There are no renewal fees for those tenants that wish to continue their tenancy beyond the original contract term.

Landlords will be offered lettings and management services at the market rate and access to the council’s maintenance services for any repair work.

The council will spend around £500,000 in the first three years to cover costs, but hopes to return this by the fifth year.

Around one third of the borough’s homes are privately rented, with an average rent of about £1,600 per month for a two-bedroom property.

Haringey Council’s Cabinet Member for Housing and Regeneration, Alan Strickland, believes the agency will “help stamp out rip-off fees and charges”.

He says: “Private tenants in London are too often forgotten in the noisy debate about the housing market in our city.

“Haringey is fast becoming one of London’s most popular places to live and work, and we know many people prefer the flexibility of the private rented sector, which is why it’s vital we do more to protect them from rogue landlords and unscrupulous lettings firms.”¹

Dan Wilson Craw, of Generation Rent, comments on the plans: “The average household in London pays more than £400 in agent fees when they move home, so some disruption to the market is welcome.

“We hope the council will use this as an opportunity to lead the way in providing secure tenancies with predictable rents, but for the time being, not all tenants will benefit. We need much wider reform to give renters greater power in the market.”¹

Would you use a letting agency like this one?

¹http://www.theguardian.com/money/2016/mar/10/london-council-launches-letting-agency-for-private-renters

Buy-to-let rush drives house price growth

Published On: March 10, 2016 at 2:06 pm

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,buy-to-let activity,house price growth,property price growth,Stamp Duty

House price growth in England surged during February in comparison to the previous month and was driven by a rush in buy-to-let activity.

These are the key results from the latest Your Move Index, which suggests buy-to-let investors looking to complete deals before the Stamp Duty changes come into force in April 1^st are pushing prices further upwards.

Rises

Average property values increased by 0.8%, or by £2,277 on a monthly basis. Demand from buy-to-let lenders and second home buyers led to a 12% month-on-month increase in sales.

Additionally, data from the report shows average prices were up 6.2% year-on-year. However, if London and the South East are excluded from this, yearly growth dips to 4.6%. The average house price now stands at £289,229.

In the capital, London house prices increased by 6.8%, or £36,903 during the last twelve months. The average price of a property in London is currently £582,783. Hull has also seen a significant rise in property values, rising by 0.9% in one month to hit a new record of £111,409. The city’s recently awarded City of Culture has undoubtedly had an impact on property prices.

Rush to complete

Richard Sexton, director of e.surv chartered surveyors, noted, ‘growth could be as a result of buy-to-let investors rushing to complete quickly to avoid April’s additional 3% Stamp Duty surcharge, which has also seen sales shoot up 11.8% since January.’[1]

Sexton feels that the figures represent brilliant news for existing homeowners, particularly those who are thinking of cashing in on additional demand. ‘Typical property values are now £16,866 higher year-on-year, the fastest annual growth rate seen in eleven months, driven by the gulf in the number of aspiring home buyers, compared to the limited supply of homes for sale,’ he observed.[1]

Buy-to-let rush drives house price growth

Regional records

The Index also reveals that the East of England’s property prices are rising quicker than those in London. In fact, the East of England saw the fastest growing property price increase of all regions of the country with a 7.2% rise in the last 12 months.

‘This pace is being fuelled by commuter towns, as London’s workers search for more affordable housing. The trend towards higher house price growth in cheaper areas can also be seen elsewhere,’ Mr Sexton explained.[1]

‘The upswing in Hull’s home values is due to the increase in new jobs resulting in more demand, with major firms including Samsung lifting employment in the city. Recently winning City of Culture 2017 may have provided an additional boost to demand for property within the city, as the pickup in tourism supports the local economy as a result of the award,’ he continued.[1]

‘Despite the upswing in the capital’s overall property values, sales have slipped 4.6% in the three months from November 2015 to January 2016, compared to the same three months one year earlier. This is largely due to a lack of homes for sale combined with more caution at the top of the market, rather than a general decline in demand, ‘Sexton concluded.[1]

[1] http://www.propertywire.com/news/europe/england-wales-buy-let-2016031011654.html

Will the Private Rental Sector be Out of Reach for Many in the Future?

Published On: March 10, 2016 at 12:23 pm

Author: Em Morley

Categories: Finance News

Tags: average rent,deposits,first time buyers,private rental sector,rent prices,tenancy deposits

Worrying new research suggests that spiralling rent prices and high deposit requirements will put even the private rental sector out of reach for many in the future.

It is well known that young first time buyers are struggling to get onto the property ladder, but now Money.co.uk has estimated that in ten years’ time, the average rent deposit could hit £1,111 – a huge 70% of the average Briton’s monthly income of £1,576.

In London, deposits are expected to rise to £2,733 – a whopping 120% of a Londoner’s average monthly salary of £2,281.

Will the Private Rental Sector be Out of Reach for Many in the Future?

The website believes that private landlords will require a deposit equivalent to six weeks’ rent by 2026, while monthly rent prices will go up by over a quarter (28%) to £1,111 over the same period.

Overall, rent price growth is expected to exceed average monthly salary inflation across the UK, which is estimated to increase by just 20% in the next decade.

Money.co.uk predicts that deposits will increase significantly across the whole of the south of England.

In the South East, the average deposit is expected to reach £1,469 by 2026 – over four-fifths (83%) of the average monthly income of £1,761, and up from 72% in 2015.

Meanwhile, in the South West, the average deposit is set to be equivalent to 80% of the average monthly earnings by 2026, up by 14% from 66% of the average salary in 2015.

The Editor-in-Chief of Money.co.uk, Hannah Maundrell, explains the forecast: “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 on to 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.”

She continues: “Tenants are stuck between a rock and a hard place, and the situation is only likely to get worse. Many not only face being priced off the property ladder, but also the rental ladder too. This could force people to borrow the extra cash they need for a deposit on loans or credit cards, pushing up the cost and creating a perfect storm for a major renting crisis. Maybe the bank of mum and dad should prepare itself for another withdrawal? Or, we could see many left with little choice but to live with their parents well into their 40s.”

Maundrell insists: “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 of the private rental ladder.”¹

How do you see the upcoming changes to landlord finances affecting how you set your rent prices and deposit requirements?

Advice for landlords on setting the perfect rent price can be found here: https://www.justlandlords.co.uk/news/setting-perfect-rent-price-property/

¹https://www.landlordtoday.co.uk/breaking-news/2016/3/are-people-being-forced-off-the-rental-ladder

Legislation could seriously affect accidental landlords

Published On: March 10, 2016 at 11:55 am

Author: Em Morley

Categories: Landlord News

Tags: accidental landlords,landlords,legislation,mortgage tax relief,mortgages,property

So-called accidental landlords are being warned that they could be refused cheaper mortgages, due to a lesser-known piece of legislation.

The EU Mortgage Credit Directive, coming into force at the end of the month, has been designed to stop, ‘risky’ mortgage lending. In addition, the initiative redefines landlord mortgages as ‘consumer lending,’ forcing them to be subject to tighter lending criteria.

Checks

In addition, new mortgage affordability checks will be introduced as part of the scheme. These are being implemented to ensure borrowers can afford their repayments-not only at their initial rate, but also if rates were to spiral by up to 6%.

These rules will also apply to those who are remortgaging. This means homeowners who are changing mortgage deals in order to take advantage of lower rates could be told they are unable to make repayments cheaper than what they are already making.

This move is most likely to impact on so-called accidental landlords-those who did not purchase a home intending to rent it out, but circumstances have forced them to do so.

Unaware

Alarming research from Direct Line indicates that 62% of new buy-to-let mortgage applicants are unaware of the changes. This figure increases to 71% for accidental landlords.

From next year, alterations to mortgage tax relief will see landlords unable to claim tax relief on mortgage repayments. At present, landlords can deduct mortgage interest repayments from their bill. However, the changes will see them instead receive a tax credit equivalent to 20% basic-rate tax on this amount. If interest rates were to rise, some landlords could well finish up paying tax on losses.

Legislation could seriously affect accidental landlords

Ludicrous

Ajay Jagota, founder and MD of sales and lettings firm KIS, noted, ‘it sounds completely ludicrous for lenders to deny people cheaper mortgages because they can’t afford them and there’s good reason for that-it is completely ludicrous!’[1]

‘There is no question that this directive will create mortgage prisoners, people stuck overpaying on loans at a time when mortgage rates could be falling to their lowest ever levels. Literally anyone can end up an accidental landlord-through inheritance, through family breakdown or through having to relocate for work. Most of the time they have no ambition other than to cover their costs until their circumstances change and there’s a real risk that they might have to raise their rents just to cover those costs,’ he continued.[1]

Concluding, Jagota said, ‘lenders should have the right to waive the affordability criteria when they’re remortgaging if there’s no increase in borrowing. If nothing else, this directive seems to fly in the face of EU’s commitment to a free market by denying people access to the full range of financial products available to them.’

[1] http://www.propertyreporter.co.uk/landlords/eu-tells-accidental-landlords-they-cheaper-mortgages.html