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Em Morley

New Figures Confirm that Buy-to-Let Landlords are Rushing to Beat Stamp Duty Deadline

Published On: March 9, 2016 at 9:30 am

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Yet more evidence has confirmed that buy-to-let landlords are rushing to purchase new investment properties to beat the Stamp Duty deadline.

Connells Survey & Valuation has found that in February, it conducted 34% more buy-to-let valuations than in the same month last year, and 25% more than in January.

New Figures Confirm that Buy-to-Let Landlords are Rushing to Beat Stamp Duty Deadline

New Figures Confirm that Buy-to-Let Landlords are Rushing to Beat Stamp Duty Deadline

Meanwhile, remortgaging valuations – including buy-to-let remortgaging – also surged, up by 41% annually and 6% on a monthly basis.

The extra 3% Stamp Duty charge on buy-to-let properties and second homes will be implemented on transactions completed after 1st April.

The Corporate Services Director of Connells Survey & Valuation, John Bagshaw, comments on the findings: “Buy-to-let investors and those remortgaging with the aim of buying a second home are racing against the clock.

“Expect this activity to reach a crescendo in March before calming in the second quarter of the year. Buy-to-let investors will be calculating the impact the Stamp Duty hike is having on their rental yields, while those thinking of remortgaging to fund a second home will weigh up whether it’s still financially viable for them to do so.”1

Additionally, the home mover and first time buyer sectors have experienced strong monthly growth in valuation activity. The amount of valuations conducted for first time buyers soared by 36% between January and February, and rose by 8% annually.

Valuations carried out for home movers were up by 35% in February and 9% over the past year.

Overall valuation activity performed well. The total number of valuations conducted in February was up by 21% on the same month in last year.

It was recently announced that the forthcoming Stamp Duty hike is also driving the auction market.

However, conveyancers are concerned about the short timeframe between the next Budget (on 16th March) and the Stamp Duty change.

1 http://www.propertyindustryeye.com/rush-buy-let-borrowers-try-close-mortgage-deals/

Second Series of Nightmare Tenants, Slum Landlords to Begin Tomorrow

Published On: March 8, 2016 at 3:41 pm

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Tomorrow night at 9pm, the second series of Nightmare Tenants, Slum Landlords will begin on Channel 5.

The ten-part series explores the dark side the private rental sector and continuing housing crisis. It features leading eviction specialists Landlord Action and the firm’s founder, Paul Shamplina.

Landlord Action believes that the “complexities and sheer amount” of legislation around private rental housing is pushing more and more landlords out of the buy-to-let sector, which is further fuelling the chronic shortage of housing in the UK.

Second Series of Nightmare Tenants, Slum Landlords to Begin Tomorrow

Second Series of Nightmare Tenants, Slum Landlords to Begin Tomorrow

The imbalance between supply and demand is also causing rents to rise, putting a strain on landlord-tenant relationships. Just last month, Countrywide reported that the average rent is now the highest on record.

The second series of the programme will reveal some of the difficulties faced by private landlords and tenants in a market that “needs clear and simplified direction in order to maintain its current level of growth”, according to Landlord Action. It is believed that 30% of all households will live in the private rental sector within 30 years.

The first 60-minute episode of the new series will feature three stories, two of which involve a common landlord issue – rent arrears.

Donovan Nelson, a successful music entrepreneur, has not received rent for seven months from one of his tenants. With costs spiralling out of control, Nelson has called on Landlord Action to help him evict the tenant. However, on the day of the court hearing, Donovan is faced with the news that his tenant is going to fight the eviction, claiming that the hot water is not working.

“This case highlights one of my greatest concerns surrounding last year’s introduction of the retaliation eviction law as part of the Deregulation Act 2015,” says Shamplina. “The new measures protect tenants from being evicted when they raise a complaint about the condition of their home. Unfortunately, some tenants are using this as a loophole to avoid eviction, putting landlords under extreme financial pressure.”

If you are suffering with rent arrears, rent guarantee and legal expenses insurance will ensure that you still get paid and your legal expenses are covered.

Episode one also features a rogue landlord, previously known to the authorities, who is renting a House in Multiple Occupation (HMO) to several tenants in extremely unsanitary conditions, which have caused a rat infestation.

Shamplina comments: “The show is a very real insight into the plights of the buy-to-let world. There are many professional landlords and respectful tenants out there who move from one harmonious tenancy to another, but that is not always the case.

“With increasing amounts of legislation, we’re seeing a rise in the number of landlords and tenants at loggerheads. Designed to offer a balanced view of the market, Landlord Action was thrilled to be invited to take part in the second series and help show landlords and tenants how to protect themselves.”

The first series of Nightmare Tenants, Slum Landlords, which aired in June-July 2015, attracted over 1.5m viewers.

The second series will run for ten weeks, every Wednesday on Channel 5 at 9pm.

Additionally, Shamplina will be co-hosting the new The Property Hour radio show on LBC every Thursday from 9pm-10pm, starting this week.

RLA slams council licensing scheme proposals

Published On: March 8, 2016 at 1:55 pm

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A call to make it simpler for some local councils to bring in licensing schemes governing the private rental sector has been slammed by the Residential Landlords Association (RLA).

The RLA believes that the proposal will do little to remove criminal landlords from the sector. A response was directed towards a new report from the London Housing Commission, which recommended that the Government should be allowed to give borough councils the option to create their own landlord licensing schemes.

Waste

In its response, the RLA said that schemes such as these are a waste of time and money, noting that criminal landlords who show no regard for regulation never make themselves known. In addition, ministers have previously called licensing schemes as a ‘tenants’ tax.’

Offering an alternative, the RLA has called on councils across the capital to utilise powers already accosted to them. These involve having the majority of fit and proper landlords regulated by a single industry-run scheme, which leaves authorities free to target criminals operating behind the scenes.

RLA slams council licensing scheme proposals

RLA slams council licensing scheme proposals

Rooted out

RLA chairman Alan Ward acknowledged that, ‘we all want to see criminal landlords rooted out of the sector but making licensing easier for councils is not the answer.’ He stated that, ‘no criminal landlord ever makes them self known willingly,’ and that, ‘licensing only increases the time councils spend administering the scheme when they could instead be devoting these resources to finding criminal landlords.’[1]

However, the RLA has welcomed calls in the report for more public sector land to be made available for the development of fresh private rental properties.

Ward said, ‘we welcome the focus that the Commission has on boosting the supply of homes to rent. Ultimately, it is only by tackling the housing shortage that high rents can be addressed.’ Concluding, he noted that, ‘it is vital though that any moves to increase the supply of rental housing recognises that the vast majority of landlords are and will continue to be, individuals rather than big corporate bodies.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/3/industry-body-slams-bid-to-make-council-lettings-licensing-easier

Landlords’ Challenge of Tax Relief Reduction to Receive Response from HMRC

Published On: March 8, 2016 at 12:38 pm

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Two landlords’ legal challenge of Clause 24 of the Finance (No. 2) Act 2015 will receive a response from HM Revenue & Customs (HMRC) by 16th March 2016.

Under the clause, landlords will not be able to deduct the cost of their buy-to-let mortgage interest as a business expense from their rental income by 2020. This will mean that their rental income will be added to any other income, potentially pushing them into the next tax band.

Therefore, tax will be paid on turnover, not profit, meaning that tax could be due on non-existent income. For some higher-rate taxpayers, mortgage costs above 75% of their rental income will mean they make a loss on their buy-to-let investment.

Landlords' Challenge of Tax Relief Reduction to Receive Response from HMRC

Landlords’ Challenge of Tax Relief Reduction to Receive Response from HMRC

The clause, announced by Chancellor George Osborne in the 2015 Budget, has received criticism from buy-to-let landlords, who have often invested in property to boost their pension pots.

The measure is part of the Government’s plan to turn generation rent into generation buy. Meanwhile, some believe that the Government is favouring large-scale investors over smaller private landlords.

Landlords Steve Bolton and Chris Cooper are leading a legal challenge in an attempt to bring a judicial review of the reduction in mortgage interest tax relief, which will be gradually imposed starting in 2017.

Cooper is a modest investor and part-time landlord, who is boosting his pension through buy-to-let, while Bolton owns around 20 residential and commercial properties, and is also the founder and owner of Platinum Property Partners, a buy-to-let training franchise.

Cherie Blair’s Omnia Strategy has been appointed to represent the landlords.

The application has been filed and signed off by the firm, which gives HMRC and the Treasury until 16th March to respond with an Acknowledgement of Service. This must detail the grounds on which the departments intend to contest the challenge.

The challenge will argue that the Government’s tax change flouts “a long-established principle of taxation that expenses incurred wholly and exclusively for the purposes of the business are deductible when calculating the taxable profits”.

The landlords have set up a crowdfunding page, which had raised just over £50,000 from 740 supporters in January.

A statement from the landlords says: “We expect the Government to respond aggressively. We are hoping for a positive result, but are mindful both that judicial review proceedings are inherently difficult and also that, even if we win, the Government might introduce changes or new measures that are more defensible legally, but still unattractive and problematic for hard-working private landlords.”1

We will keep you updated on the landlords’ case and continue to provide information for landlords on all issues affecting the buy-to-let sector.

1 https://www.facebook.com/clause24/posts/1107773035932366

New initiative offers advice for landlords and tenants

Published On: March 8, 2016 at 11:51 am

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A new initiative has promised to offer charities and other organisations free training to pass on to both landlords and tenants, advising them ‘how to rent.’

The partnership is between the Residential Landlords Association (RLA) and the Tenancy Deposit Scheme Charitable Foundation. Entitled train2rent, the initiative will see groups such as housing associations, trusts and residents’ groups offered access to features such as training packs and learning material. In turn, this will allow them to pass on information about renting a property.

Details

There is to be a separate information pack offering advice for landlords and tenants. These will include the course presentation and workbook, plus a timetable for training and practical exercises.

Included in the information for landlords resource pack will be details of their legal responsibilities, including:

  • how to conduct Right to Rent checks
  • protecting deposits
  • making gas, fire and electrical safety assessments
  • starting and ending a tenancy
New initiative offers advice for landlords and tenants

New initiative offers advice for landlords and tenants

The tenant resource will cover topics including:

  • their legal rights and responsibilities
  • how to find the correct property
  • different types of tenancy agreements

Positive outcome

Chair of the Tenancy Deposit Scheme Charitable Foundation, Martin Partington, said, ‘it’s been a common theme in the bids we have received that small organisations have wanted funding to produce educational materials or host a workshop. The trustees felt that our money was better spent commissioning a set of materials that these groups could use, free of charge, to deliver the same outcome.’[1]

These courses will apply to properties located in England, with the licence to use the resources lasting for a period of 30 days.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/3/industry-groups-push-training-for-landlords-and-tenants-on-how-to-rent

 

 

Eviction orders for tenants fall in Q4 of 2015

Published On: March 8, 2016 at 10:15 am

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The final quarter of 2016 saw 26,676 court orders issued for the eviction of private rental sector tenants.

According to the survey by Your Move and Reeds Rains, the number of orders was down by 0.4% in comparison to quarter three of 2015. Annually, there were 5.3% fewer evictions than the 28,167 recorded in the same three-month period in 2014.

Falls

Data from the report indicates that 32% of private tenants are in serious rent arrears, of more than two months rent. At present there are 82,900 renting households in the serious arrears bracket.

Cases of landlords falling behind with their own finances have also dropped. In the final three months of 2015, there were 5,500 cases of buy-to-let mortgage arrears, a fall from the 3.5% recorded in the previous quarter.

Annually, the total number of buy-to-let mortgages in arrears has fallen by 54% after totalling 11,900 cases in the last quarter of 2014.

Eviction orders for tenants fall in Q4 of 2015

Eviction orders for tenants fall in Q4 of 2015

Growing

Adrian Gill, director of Your Move and Reeds Rains, noted, ‘landlords and the buy-to-let industry have come in for serious criticism over the last year-but the overwhelming evidence points to a vital, growing and successful industry.’[1]

‘Landlords in the UK are providing more homes to let every month, expanding supply for tenants-who avoid any serious problems paying the rent in more than 98 per cent of cases. When late rent does happen, landlords appear to be extremely flexible in the majority of cases and eviction orders and decreasingly necessary. Buy-to-let mortgages are also increasingly reliable for lenders, as landlords are ever less likely to fall into arrears themselves,’ Mr Gill added.[2]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/3/over-26-000-eviction-orders-served-on-private-tenants-in-one-quarter