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Em Morley

Londoners Need 266% Pay Rise to Get on Property Ladder, Warns NHF

Published On: February 26, 2016 at 4:07 pm

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Londoners will need a 266% pay rise if they have any hope of getting onto the property ladder in the capital, warns the National Housing Federation (NHF).

The average price of a London property is now a huge £526,085 – more than 16 times the typical salary of £32,838 that the average London worker receives annually, according to data from the NHF, which represents affordable housing providers.

Buying a home in over half of London boroughs would require an income of more than £100,000 per year.

Londoners Need 266% Pay Rise to Get on Property Ladder, Warns NHF

Londoners Need 266% Pay Rise to Get on Property Ladder, Warns NHF

In more affordable parts of the capital, such as Barking and Dagenham, the average income is still half of what is needed to get a mortgage, the report by the NHF found.

Despite typical earnings of £59,000 in the Royal Borough of Kensington and Chelsea, it is the least affordable area, with the average house price of £1.94m costing 33 times the average income.

The Chief Executive of the NHF, David Orr, insists that a secure and affordable home should be available to everyone.

“Living in London doesn’t have to mean living in cramped, overpriced, insecure accommodation; the housing crisis is not inevitable,” he believes.

The report marks the launch of the NHF’s 100,000 Affordable Homes for London campaign, which urges the next London mayor to give the affordable housing sector access to public land.

In return, the NHF has pledged to help the mayor tackle the current housing shortage, which is estimated to be around 151,000 homes.

“Both Sadiq Khan and Zac Goldsmith have correctly identified housing as one of the biggest challenges facing London,” says Orr. “We’re here to say that we know how to help.”1 

Last week, the House of Lords’ National Policy for the Built Environment committee warned that housing associations should be able to play a bigger part in the crisis, as the Government will not reach its 240,000 house-building target by relying on the private sector alone.

Over the last mayoralty, housing associations have built 40,000 homes for rent and sale in London.

Earlier this week, the Council of Mortgage Lenders (CML) warned that first time buyers and home movers are already stretching their mortgages in order to get onto or move up the property ladder, as house prices spiral.

The latest property market news can be found at LandlordNews.co.uk.

1 http://www.housing.org.uk/press/press-releases/266-pay-rise-what-the-average-londoner-needs-to-buy-a-home/

 

EU Referendum Uncertainty Could Slow Housing Market, Believes Hometrack

Published On: February 26, 2016 at 1:05 pm

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Uncertainty over the outcome of the EU referendum is expected to slow the UK housing market in the next few months, according to property firm Hometrack.

The company, which supplies data to mortgage lenders and property developers, reports that the amount of home sales in the country’s 20 biggest cities already dropped by 2% last year and activity is likely to fall further in the run up to the 23rd June vote.

The Director of Research at Hometrack, Richard Donnell, comments: “After a three-year upturn in housing market activity and house prices, the outlook for the market appears increasingly tied up with policy impacts and the potential outcome of the referendum, rather than the operation of market forces.

EU Referendum Uncertainty Could Slow Housing Market, Believes Hometrack

EU Referendum Uncertainty Could Slow Housing Market, Believes Hometrack

“Businesses operating in housing face risk and uncertainty, which will have to be managed and monitored carefully.”1

Yesterday, CBRE said that property investors and owner-occupiers are likely to behave in the same way as they did in Scotland ahead of its 2014 independence referendum, by delaying decisions until after the vote.

It stated: “After the Scotland referendum, there was a catch up effect and CBRE expects the same for the UK, assuming that it decides to remain in the EU.”1 

A survey of its investor clients found that almost three-quarters felt that the UK would be a worse place to invest in if it leaves the EU.

Activity in the housing market slowed ahead of last year’s general election, especially in London’s prime property market, where buyers were worried about the possibility of a mansion tax.

Donnell reports that there is evidence of a 10% decline in sales in Scotland during the 18 months before its independence referendum in 2014. Buyers were concerned about the threat of businesses relocating if voters chose Scottish independence.

He believes that a vote to remain in the EU would trigger a return to housing market activity in the second half of 2016, while a vote to leave would raise uncertainty and dampen activity over a longer period.

The latest UK cities house price index from Hometrack shows that property values continued to increase in 2015, recording an average rise of 10.2% over the year.

Double-digit price growth was recorded in London, Cambridge, Oxford and Bristol. The average house price in the capital rose by 13.4%, to £455,100.

As buy-to-let landlords are currently rushing into the housing market ahead of the 1st April Stamp Duty deadline, it is also likely that activity will dampen after this date.

1 http://www.theguardian.com/business/2016/feb/26/eu-referendum-uk-housing-market-hometrack

Bolton landlord fined after fatal fire

Published On: February 26, 2016 at 12:56 pm

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A landlord from Bolton has been fined £1,500 after a fatal fire in one of his rental properties.

Andrew Turnstall was given the hefty fine following the blaze which tragically killed a 49 year-old father of two.

Breaches

Following the fire, inspectors and the local council went to the property and found there had been a number of fire safety breaches.

The smoke alarm had been switched off by a previous tenant, in order for them to be able to smoke in the property without incident. During the investigation, the court heard that there was no suggestion that Turnstall had turned the alarm off himself.

Mr Turnstall did however admit to not servicing a fire extinguisher and having no fire blanket in the property.

Bolton landlord fined after fatal fire

Bolton landlord fined after fatal fire

Contraventions

Catherine Waudby, prosecuting for Bolton Council, said, ‘during the inspection a number of contravention of the regulations were noted in both the common parts and the flats.’[1]

‘Whilst it is appreciated that some of these will have been caused by tenants or visitors, the number of issues identified at the property, particularly those relating to fire safety, clearly suggests that the level of management was not to a satisfactory standard and had resulted in a number of contraventions,’ Waudby added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/2/lancashire-landlord-fined-after-fatal-blaze

 

Concerns aired over buy-to-let competition

Published On: February 26, 2016 at 12:06 pm

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With buy-to-let investors rushing to purchase property ahead of the stamp duty changes a little more than a month away, fresh concerns have been aired about the future of the market.

Mortgage approvals hit their highest ever level during January. The British Bankers’ Association revealed that its members approved 27% more loans last month than at the same period last year.

However, additional data from HM Revenue and Customs suggests the number of property sales didn’t keep pace, with a slide in transactions over the previous month.

Stamp Duty Changes

Following Chancellor George Osborne’s announcement of a 3% rise in Stamp Duty Land Tax for buy-to-let investors in the Autumn Statement, buyers have been flocking into the sector.

Ajay Jagota, founder and MD of sales and lettings firm KIS, noted, ‘the start of 2016 has seen a significant rise in mortgage borrowing and it seems perfectly reasonable to attribute that to property investors trying to get in ahead of April’s tax changes.’[1]

‘These changes are not insignificant and will undeniably drive up purchase costs and are also being introduced at the same time as the scrapping of the wear and tear allowance which allows landlords to claim tax relief for keeping their properties in good condition,’ he continued.[1]

Concerns aired over buy-to-let competition

Concerns aired over buy-to-let competition

Bottleneck

Mr Jagota observed that, ‘anecdotally the industry is full of stories of a substantial number of homes stalled in the pre-completion stage and even a shortage of solicitors available to carrying out conveyancing.’ He went on to say that, ‘it’s clear we’re seeing something of a competition bottleneck. The real questions are whether or not buyers will persevere with the sales if their transactions are not completed when the tax changes come in. Will they take the hit, or will we see a spate of sales simply abandoned?’[1]

‘It’s more than likely that we will see demand from investors drop off after April, but this is unlikely to have a significant impact on the wider property market as residential buyers, particularly if first time buyers return to centre stage,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-investors-warned-of-completion-bottleneck.html

 

Most common struggles faced by landlords revealed

Published On: February 26, 2016 at 10:44 am

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A new investigation has looked at the struggles landlords face and the most common demands put on them by their tenants.

According to the survey conducted by property management specialists London Shared, one-third of buy-to-let landlords said that the full-on nature of the role made it more stressful than they first imagined.

Responsibilities

The research quizzed 500 UK landlords, who noted that the job of being a landlord is far from straightforward. Worryingly, 76% of landlords said that their tenants do not understand their responsibilities as renters. 10% of landlords said they had experienced anxiety problems due to the behaviour of their tenants.

Many landlords said that they are call for 24 hours, with 34% saying that they had received calls in the middle of the night from renters.

Of the landlords questioned, the top five minor issues that they said they have been called out for were:

  • Unblocking the drain (23%)
  • Lost Keys (19%)
  • Turning the heating back on (14%)
  • Changing a light bulb or fuse (13%)
  • Mowing the lawn (7%)

Repairs

Another worrying stat was that 43% of respondents to the survey said they were unsure of their responsibilities when repairing a property.

Just 24% of landlords said they were clear on their legal obligations for adequate HMO licensing and just 18% said they knew they had to apply for a HMO licence.

Additionally, the survey found that landlords spend an average of 11 hours per month managing their rental property. 83% said they spent up to £5,000 per year on property repairs from their rental accommodation.

Most common struggles faced by landlords revealed

Most common struggles faced by landlords revealed

Arrears

A major source of landlords’ stress was underlined by 40% of those questioned saying that they had received their rental payments late. Of those that said that they had received late payments, 18% said they had defaulted on their bills.

When looking further at those that have either had late or missed payments from their tenants, 11% said they were unable to pay off their existing debt. 22% said they had to go to court to reclaim money owed to them by their tenants.

Many landlords were found to be dependent on their rental income to pay off their mortgage, with over half stating this was the case. 23% said they used rental incomes to renovate their homes, while 13% said it paid for their children’s rental fees.

Notices

Some tenants are causing such a problem for their landlords that 24% said they had to serve notice on them. Of those that served noticed, the main reasons for doing so were found to be rent arrears (69%), property damages (44%) and inappropriate behavior (24%). Furthermore, 18% said that they served notice as their tenants sublet the property without consent and 11% after finding out their tenants were using the home for illegal purposes.

Despite it being illegal to live in a property once an eviction warrant is given, 44% of tenants who had been served notice refused to leave. As such, 25% of landlords said that this caused them extra financial stress. 13% of landlords admitted that they wished their rental property was managed by somebody else!

 

Attempt to Have Right to Rent Rollout Postponed is Defeated

Published On: February 26, 2016 at 9:52 am

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Earlier this week, we reported that two members of the House of Lords were attempting to have the UK rollout of the Right to Rent scheme postponed, believing that there was not sufficient evidence to prove that the scheme was effective.

It has now emerged, after debate, that their bid was defeated.

The peers expressed many concerns over Right to Rent and the proposed introduction of criminal penalties for those that do not comply with the rules.

Liberal Democrat peer Baroness Hamwee claimed that the Government had pledged to not introduce excessive administration through the scheme.

She said: “I do not think that that would resonate with the letting agent whom I heard interviewed on Radio 4’s You and Your programme. What he said was: ‘I have become an immigration officer’.

“Indeed, he has become an immigration officer who is liable to civil penalties and who, under the current Bill, will face criminal sanctions.”

At present, landlords or their letting agents must conduct immigration status checks on all prospective adult tenants. If they do not comply with the law, they will face civil penalties under the Immigration Act 2014. However, the new Immigration Bill – currently going through Parliament – seeks to impose criminal sanctions.

Attempt to Have Right to Rent Rollout Postponed is Defeated

Attempt to Have Right to Rent Rollout Postponed is Defeated

Baroness Hamwee continued: “Landlords have to make reasonable inquiries as to the immigration status of all the occupants before letting a property. Well, it is not actually that easy.

“I have been through the material on the Home Office website. The user guide is 39 pages long and there are 12 hyperlinks – there may be more, I may have miscounted – plus a code of practice, plus a short guide. There are 25 types of document which may show immigration status, more if there has been a name change.”

She explained: “These have to be examined and copied. And not all of them are invalid if the expiry date has lapsed. A checking agent on the same programme said that there are 400 documents in the EU that would support the right to rent. Leaving aside unfamiliar documents, how easy is it to spot fakes?”

The full debate can be read here: http://www.publications.parliament.uk/pa/ld201516/ldhansrd/text/160224-0002.htm#16022460000396

Meanwhile, Open Democracy has reported that the Right to Rent scheme is causing discrimination against individuals with every right to live in England, including British citizens.

It highlighted two cases:

  • In the first, Tony and Mary are a British couple of Chinese descent, with a close relative and her baby son – also British – staying with them. The landlord informed the couple that he could be fined if they did not provide the passport and immigration status of the baby, despite Right to Rent only concerning adults.
  • In the second case, Sara is an Australian citizen married to a French citizen, working in the UK. She left her husband and searched for rental accommodation. The letting agent told her that they could not go ahead with the tenancy, as they were not satisfied that Sara has the right to rent – as the wife of a French citizen, she does.

The study on the Open Democracy website states that people like Tony, Mary and Sara are the real victims of the scheme, and not those it intends to target.

It also questions whether illegal immigrants discovered through Right to Rent checks will actually leave the country. This has also been highlighted after it emerged that landlords do not need to report illegal immigrants to the Home Office if they discover them through immigration checks.

Open Democracy claims: “It appears more likely that they [illegal immigrants] will resort to unscrupulous landlords, therefore eliminating the underground business of exploitative landlords that the Government purports to want to deter.

“Another category of people who risk resorting to these landlords are those in limbo: those who do not have the right to rent, for example, because they overstayed their visa, but who are not removable, for instance, because they have a pending application to stay in the UK based on human rights grounds.

“If they are not allowed to rent, yet also non-removable, this group risks either resorting to unscrupulous landlords or applying for local authority accommodation. This will be especially true of parents of British children, which the local authorities have an obligation to accommodate.”

The story concludes: “The scheme will, therefore, not only struggle to meet its aims, but also risks increasing the workload of local authorities, and therefore constitutes an additional burden on their limited resources.”

The whole piece is here: https://www.opendemocracy.net/5050/nath-gbikpi/britain-s-disqualified-adults-no-passport-equals-no-home

Controversy surrounding the Right to Rent scheme has been rife recently, with one case regarding Ryanair supposedly weakening the enforcement of the scheme and shocking statistics that reveal that many landlords still don’t understand their obligations under Right to Rent.

We will keep you all informed of any changes to the law and offer advice for landlords on all lettings issues.