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Em Morley

Buy-to-let tax changes criticised by Savills

Published On: March 1, 2016 at 10:28 am

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Savills has become the latest high-profile organisation to slam the upcoming buy-to-let tax changes. The firm believe that not a single alteration in legislation will assist first-time buyers get on to the ladder, as desired by Chancellor George Osborne.

Wrong tactics

Lucian Cooks, Savills’ director of residential research, noted that, ‘none of the measures aimed at buy-to-let investors will directly help the prospective first-time buyer overcome the underlying deposit hurdle. Neither will Government schemes eliminate this issue for the bulk of younger households. Therefore, the underlying demand for private rented accommodation is likely to continue to rise.’[1]

Undoubtedly, the changes to the private rental sector will cause a comprehensive shift in investment patterns.

‘For those (investors) requiring debt, we believe these measures will mean that future investment will be more targeted at lower-value higher-yielding stock, albeit avoiding markets heavily reliant on welfare payments, given the Government’s ongoing austerity agenda,’ Cooks continued.[1]

Buy-to-let tax changes criticised by Savills

Buy-to-let tax changes criticised by Savills

Mortgages

Utilising data from the Council of Mortgage Lenders, Cooks suggests that just 31% of available stock in the private rented sector comes with a mortgage. This indicates that the mortgage interest problem could be lesser than some analysts believe.

With this said, the proposal is sure to affect cash surpluses landlords are able to achieve. Cooks observed, ‘our calculations indicate the net cash surplus on the average buy-to-let property will fall from £2,900 to £1,100 over this period.’[1]

‘This assumes a property worth £227,400 with a mortgage of £119,700 and generating a gross income yield of 5%. Those with greater levels of debt or invested in lower yielding markets will be more affected, he concluded.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/current-buy-to-let-changes-wont-directly-help-first-time-buyers-savills-warns

 

ARLA Works with Home Office to Overcome Right to Rent Issues

Published On: March 1, 2016 at 9:26 am

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The Association of Residential Letting Agents (ARLA) has been working alongside the Home Office to overcome issues experienced by landlords and letting agents in East Anglia in regard to Right to Rent checks.

In Suffolk, Norfolk and Cambridgeshire, many letting agents and landlords deal with requests from US Air Force personnel for private rental accommodation.

ARLA Works with Home Office to Overcome Right to Rent Issues

ARLA Works with Home Office to Overcome Right to Rent Issues

However, the US Air Force staff have been informed that for security reasons, they cannot allow anyone to photocopy their identification documents, as is required under the Right to Rent scheme.

ARLA has teamed up with the Home Office to resolve this problem.

The US Air Force has now agreed to create letters specifically for the purpose of providing evidence of staff’s migration status to prospective landlords and letting agents.

The Home Office has told ARLA:

  • This letter will be used for this purpose only and therefore can be kept or photocopied by a landlord or agent.
  • The US military is happy for landlords or agents to see, but not copy, a military ID card, which will allow the landlord or agent to check the person’s identity more thoroughly and guard against abuse.
  • This process will cover family members or dependents, but details are yet to be agreed. However, the Home Office claims that it is most likely that family will be named in the letter.
  • The process will be outlined in forthcoming guidance.
  • Military personnel will be made aware of these letters and the process.

As of 1st February, landlords or their letting agents have been required to conduct immigration status checks on all prospective adult tenants before the start of a tenancy through the Right to Rent scheme.

However, it has recently emerged that many landlords are already unaware of their legal obligations, and this issue looks set to confuse those renting out private property even further.

We continue to bring you the latest in lettings law and advice for landlords.

New Welfare System Introduced for More Housing Benefit Tenants

Published On: February 29, 2016 at 3:00 pm

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Every Monday, the Universal Credit scheme is rolled out further across the UK. And today – leap year day – is no different.

If you are not familiar with Universal Credit, it is the Government’s new benefits system that rolls six payments into one monthly payout. This includes housing benefit.

New Welfare System Introduced for More Housing Benefit Tenants

New Welfare System Introduced for More Housing Benefit Tenants

Last week, we reported on some controversy surrounding housing benefit and private tenants; in the London Borough of Hackney, tenant group Digs found just one rental property available to those in receipt of housing benefit. On Saturday, tenants campaigned against No DSS policies that many letting agents and landlords adopt.

If you are a landlord with tenants on housing benefit, be aware that their financial circumstances may have changed recently, or will be subject to change in the near future.

It is vital that you communicate with your tenants on any changes to their finances, to avoid rent arrears. If your tenants do default on the rent, remember that rent guarantee insurance is the best way to ensure you still get paid.

For the areas that have become subject to Universal Credit since the start of the year, see last week’s article: /yet-more-tenants-move-onto-universal-credit/

If you have rental properties in the following areas and rent to housing benefit claimants, they will be moved onto Universal Credit as of today:

  • CB1, CB2, CB3, CB4, CB5, CB6 3, CB7, CB8 0, CB8 7, CB8 8, CB8 9, CB10, CB21, CB22, CB23, CB24 and CB25 in Cambridge.
  • GU3 3, GU4 7, GU12 5, GU15, GU16, GU17, GU18, GU19, GU20, GU21, GU22, GU23, GU24, GU25, GU46, GU47 7 and GU47 8 of Guildford.
  • HU1, HU2, HU3, HU4, HU5, HU6, HU7, HU8, HU9, HU11, HU12, HU13 9, HU16, HU19 and HU20 in Hull.
  • IP28 8 of Ipswich.
  • KT6 4, KT6 5, KT6 6, KT7, KT8, KT9 1, KT10, KT11, KT12, KT13, KT14, KT15, KT16 and KT22 0 in Kingston upon Thames.
  • MK44 2 of Milton Keynes.
  • PE2 6, PE7 3, PE8 6, PE19, PE26 1, PE27, PE28 0, PE28 2, PE28 4, PE28 5, PE28 9 and PE29 in Peterborough.
  • SG7, SG8 0, SG8 5, SG8 6, SG8 7, SG8 8, SG8 9, SG19 2 and SG19 3 of Stevenage.
  • SL4 2, SL5 0, SL5 7 and SL5 9 in Slough.
  • TW12 2, TW15, TW16, TW17, TW18, TW19 and TW20 of Twickenham.

We will keep you updated of the next rollout areas at LandlordNews.co.uk.

Loophole Means Buy-to-Let Landlords Could Rent Out Starter Homes

Published On: February 29, 2016 at 12:44 pm

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A loophole in the Government’s Starter Homes scheme means that buy-to-let landlords could rent out discounted homes intended for first time buyers, according to the Liberal Democrat leader, Tim Farron.

The Starter Homes initiative, announced last year, offers new build homes to first time buyers under 40 at a 20% discount. The Government hopes to build 200,000 of these properties by 2020.

However, Farron warns that there is currently no requirement under the legislation for the person that buys the home to live in the property.

The Liberal Democrats claimed that the loophole could mean that wealthy parents give their children lump sums to buy the homes, which could then be

Loophole Means Buy-to-Let Landlords Could Rent Out Starter Homes

Loophole Means Buy-to-Let Landlords Could Rent Out Starter Homes

rented out.

Additionally, there is nothing to stop a property investor making a deal with a first time buyer who bought a starter home at a discounted price to share the profits of selling the property on or letting it.

However, the Department for Communities and Local Government (DCLG) insists that ministers are “clear that Starter Homes will not be buy-to-let properties”.

The Government will soon begin consulting on rules as part of the Housing and Planning Bill to include letting restrictions on Starter Homes.

The Lib Dems have also raised concerns that homes bought through the scheme can be sold on at market rates, meaning that just one generation of first time buyers will benefit.

Farron believes: “The Government’s plans for Starter Homes are very badly designed and will fail to help the right people. They will be snapped up by the sons of millionaires and make them a huge profit.

“Those who can’t turn to the bank of mum and dad should not lose out. It is vital the Government makes changes to its housing policy.”1

A spokesperson for the DCLG responds: “We want to ensure that anyone who works hard and aspires to own their own home has the opportunity to do so… We are clear Starter Homes will not be buy-to-let properties and will be consulting shortly on rules to include letting restrictions.”1 

The Chief Executive of housing charity Shelter, Campbell Robb, comments: “Whilst the Government is offering these discounted homes to a select few, for those who aren’t so lucky, all they’re offering is more time spent in expensive and unstable private renting, or living with mum and dad well into their 30s.

“This crisis can be turned around, but only if the Government moves beyond schemes that only help the well off, and starts investing in homes that ordinary families can actually afford as well.”1 

We will bring you the latest property news and landlord law at LandlordNews.co.uk.

1 http://www.independent.co.uk/news/uk/politics/loophole-means-buy-to-let-landlords-could-exploit-government-starter-homes-a6899056.html

Available UK housing at 14 year low

Published On: February 29, 2016 at 12:37 pm

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Landlords hurriedly completing deals before the new tax changes take effect in little over one month has contributed to the supply of available UK housing slipping to its lowest level for 14 years.

A report from the National Association of Estate Agents shows investors looking to avoid the extra 3% stamp duty charge on buy-to-let and second homes is seeing already low stock drop still further.

Lows

The January Housing Market report indicates that the number of properties available per member fell to 33 during January. This is the lowest level since December 2002, where only 25 properties were available per branch.

On the other hand, demand for housing increased in January, with an average of 453 house hunters registered per branch. This was the highest recorded since July 2015 and a 21% increase from December, where there was a seasonal lull in activity.

In addition, 72% of estate agents reported an increase in interest from buy-to-let landlords. This was up from 44% in December.

29% of all sales made in January were to first-time buyers, up by 5% from December.

Available UK housing at 14 year low

Available UK housing at 14 year low

Falling supply

Mark Hayward, managing director of the National Association of Estate Agents, said, ‘our findings this month reflect what we are seeing across the market which is that landlords are trying to complete on sales ahead of the changes to stamp duty on additional homes in April. It continues to be a sellers’ market as demand outstrips supply.’[1]

‘The number of sales made to first time buyers has increased this month and we should expect to see their market share rise after April. The fact that housing supply has reached a 14 year low really highlights the need for the Government to push the house building programme to the very top of their agenda and help more first time buyers make their first step onto the housing ladder,’ Hayward concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-property-sales-agents-2016022911613.html

 

Brexit referendum increasing market uncertainty

Published On: February 29, 2016 at 11:38 am

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Categories: Property News

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The upcoming Brexit referendum is fuelling existing housing market uncertainty, according to concerning new research.

Hometrack’s UK Cities House Price Index suggests there has already been a 2% drop in sales in major British cities.

Worrying

Forthcoming changes in stamp duty land tax and alterations to landlords’ tax relief are already contributing to buyer uncertainty. The upcoming vote is likely to drive worries still further.

According to the Index, city level house price values were still up by 10.2% in the year, in comparison to the 8.6% rise recorded one year previously.

On average, UK city house values stand at £231,700. Typical values range from just £109,000 in Glasgow to £455,000 in London.

However, transactions in what were former hotspots dropped significantly, with prices down by 7% in London and by 20% in Cambridge.

Impact

The UK Cities House Price Index suggests that the Brexit vote will further impact on future volumes.

Unfortunately, the referendum falls at the same time when changes in stamp duty are expected to hit investors in the pocket. After making up one in five transactions during 2015, the impact of the alterations is yet to be seen, but the report questioned further house price growth, with volumes invariably slowing.

Annual rate of growth in cities across the South of England is already starting to slow, with sales down and affordability pressures growing.

Brexit referendum increasing market uncertainty

Brexit referendum increasing market uncertainty

Lower turnover

Richard Donnell, insight director at Hometrack, noted, ‘slower growth in sales volumes has been a trend seen over the last three years across high-value, high-growth cities such as Cambridge, Oxford, Aberdeen and London, where house prices have been rising for six consecutive years.’[1]

‘High housing and moving costs are limiting access to the market for a growing number of households which, in our view, will result in lower turnover and slower house price growth. A vote to remain in the EU should see a return to business as usual whereas a vote to leave will create additional uncertainty,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/2/brexit-adds-to-housing-market-uncertainty