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Em Morley

SDLT changes causing ‘confusion and uncertainty’

Published On: February 18, 2016 at 2:14 pm

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Categories: Landlord News

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The stamp duty surcharge of 3% is just a matter of weeks from coming into force. However, a leading lettings expert has stated that the forthcoming changes are causing, ‘confusion and uncertainty,’ in the private rental sector.

Ben Evans, MD of Fleet Milne Property, a lettings consultancy based in central Birmingham, believes building barriers to investment will deter thousands of potential tenants searching for rental accommodation in his area.

Lack of stock

Mr Evans said, ‘for years now, central Birmingham has been characterised by a lack of rental stock and the city desperately needs new apartments to meet demand. At present, it is no exaggeration to say we could potentially let every property to four or five different parties.’[1]

‘If investors are deterred from purchasing new properties because of onerous SDLT payments making their investment unviable, new rental stock simply will not become available to the extent that it needs to in order to meet ongoing demand and rents will continue to rise as a result,’ he continued.[1]

SDLT changes causing 'confusion and uncertainty'

SDLT changes causing ‘confusion and uncertainty’

Confusion

Evans went on to say that, ‘even though we are just weeks away from the changes to SDLT being implemented, there is still confusion and uncertainty within the sector and the imminent increase continues to create more questions than answers.’[1]

There has been a flurry of investors looking to beat the April 1st deadline across the country. However, a report from rplan.co.uk suggests that nearly a quarter of would-be buy-to-let landlords have been put off by the changes.

‘Overnight, the SDLT on a £250,000 property purchased for buy-to-let will increase from £2,500 to a massive £10,000,’ Evans suggests.

In Birmingham though, activity remains high, with prices of apartments in central Birmingham still relatively low-cost.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/stamp-duty-change-causing-confusion-and-uncertainty-in-rental-sector

 

The Court Case That Could Weaken Right To Rent

Published On: February 18, 2016 at 11:30 am

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A recent court case ruling could affect the way that landlords and letting agents are penalised under the Right to Rent scheme.

Since 1st February, landlords or their letting agents have been obliged to conduct immigration checks on all prospective tenants.

However, the court case in question did not involve landlords or letting agents – it regarded the budget airline Ryanair. The outcome of the case suggests that the Government may be open to legal challenges from landlords or agents under the private rental sector Right to Rent scheme.

The Home Office has claimed that it will not penalise a landlord or agent that has been caught out by well-forged documents.

In the case, Ryanair was appealing against Home Office fines imposed for carrying two illegal immigrants into the UK.

Judge Damien Lochrane noted that even trained immigration officers find it difficult to spot forgeries.

He ruled that Ryanair should not have been fined for flying the Albanian couple from Majorca to Edinburgh in May 2015.

The pair had already passed through checks by Spanish border police and Ryanair, before UK border control officers at Edinburgh airport picked up their false documents.

The judge insisted that the way the regime for airlines to check passports is operated by the Home Office “offends the basic concepts of justice and indeed rule of law”1.

The Court Case That Could Weaken Right To Rent

The Court Case That Could Weaken Right To Rent

He added that airline staff could not be expected to spot well-forged documents that even trained immigration officers could not detect.

The Policy Director at the Residential Landlords Association (RLA), David Smith, points out the ruling is not binding on other courts.

However, he says the case does raise the prospect that under Right to Rent, a landlord or agent that has been tricked by a well-forged document could be successful in an appeal against any action taken against them by the Home Office.

The Government has previously stated that it will not go after landlords and agents that have been duped by false documentation, but it has not been clear on the details.

It has emphasised that it will target landlords and letting agents that fail to conduct checks and who are persistent offenders.

The Ryanair ruling arrives as the new Immigration Bill makes its way through Parliament. If passed, it will introduce criminal penalties for landlords and agents that do not carry out Right to Rent checks.

Smith states: “This court ruling vindicates what we have been saying all along, that landlords cannot and should not be expected to act as border police or to detect forgeries that trained and experienced airline staff and immigration officers might miss.

“In light of this case, and to save the Government money from losing similar actions brought by landlords, we call on the Government to provide better information to landlords about document forgeries and to offer more clarity as to the legal responsibility of landlords and agents duped by forged identity documents.”1

1 https://www.lettingagenttoday.co.uk/breaking-news/2016/2/industry-body-says-court-case-may-weaken-right-to-rent-enforcement

Where are Buyers and Tenants Moving to? (So Where Should You Invest?)

Published On: February 18, 2016 at 11:27 am

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reform of leasehold

New research from Urban.co.uk has revealed the top places that people in different age groups are moving to in the UK. By analysing the data, landlords may be able to work out where they can buy a profitable investment.

Online estate agent Urban.co.uk has evaluated Office for National Statistics (ONS) internal migration statistics to find out which cities in England and Wales are the most popular to move to.

Birmingham was the only area included in the top ten destinations for all age groups – 18-21, 22-29, 30-64 and over-65s.

Alongside Birmingham, Manchester, Nottingham and Leeds are all becoming increasingly attractive locations compared to London for those aged 18-21.

The 22-29 age group is also heading north, with many favouring Birmingham, Manchester and Leeds over the more traditionally popular London boroughs of Islington and Hackney.

Birmingham was the most popular area to move to for those aged 30-64, while the over-65s prefer greener regions, such as Wiltshire and Cornwall.

The main finding from the study is that young people are increasingly leaving the capital.

The figures found that Birmingham is London’s biggest rival for all of those aged under 65. In the over-30 category, 12,500 home movers relocated to Birmingham during the past year.

For 22-29-year olds, Birmingham was the third most popular city to move to, coming in ahead of previously popular London boroughs such as Tower Hamlets and Southwark.

Birmingham was also in the top five cities for 18-21s, with Leeds, Nottingham and Manchester making up the top three. Over 45,000 youngsters moved to these areas in the last 12 months, indicating affordability pressures and a definite trend of migration towards the north. This may be due to the quality of educational facilities and the student populations of these cities.

The co-founder of Urban.co.uk, Adam Male, says: “The range and quality of educational institutions north of London, in places such as Leeds, Nottingham and Birmingham, have undoubtedly played a large part in attracting more and more young people away from London and its surrounding regions.

Where are buyers and tenants moving to?

Where are buyers and tenants moving to? (So where should you invest?)

“The interesting trend here is that young people appear to be staying in these regions after university and this is something we can expect to see more of in the coming years, due to their lively culture, increasing job opportunities and a competitive property market.”1 

Older generations are choosing more peaceful and greener spots, such as Wiltshire, Cornwall and the East Riding of Yorkshire over London. Birmingham was also included in the top ten for over-65s.

Visit Birmingham’s Emma Gray believes: “People are increasingly seeing our region as an obvious choice to build a career and raise a family, thanks to excellent schools, outstanding connectivity and affordable homes and amenities.”1 

Indeed, compared with London, Birmingham offers a competitive property market.

As first time buyers continue to struggle getting onto the property ladder, house hunters in Birmingham will find that the average house price is a huge £300,000 cheaper than in the capital.

The Birmingham suburb of Moseley Village was even named the best place to live in the UK by the Sunday Times, beating Mayfair in London.

Investment in the city, including HS2 and the Curzon Street regeneration, has also boosted Birmingham’s reputation as a business centre, making it a hotspot for start-ups and small businesses, in turn creating more job opportunities and investment potential. The city has been named, for the second time, the most investable city, above prime spots like Madrid, London and Paris, in an annual survey by the Urban Land Institute and PwC.

If you are seeking to invest in buy-to-let and beat the 1st April deadline for an added 3% Stamp Duty, could Birmingham be the best place to do it?

1 http://www.propertyreporter.co.uk/property/where-is-currently-the-most-popular-place-to-move-to-in-the-uk.html

£1m Homes To Triple by 2030, says Santander

Published On: February 18, 2016 at 9:46 am

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The amount of properties in the UK that cost £1m or more is expected to more than triple by 2030, according to research by Santander Mortgages.

At present, less than half a million homes in the UK are valued at £1m or more, but this is set to increase to over 1.6m properties in the next 15 years.

Santander, alongside economist and the London School of Economics’ Paul Cheshire, studied the future of the UK property market, focusing on £1m-plus homes and what fuels house price growth.

The Property Millionaires: The Growing Housing Divide report found that by 2030, 25% of housing stock in London will be valued at £1m or more, reaching 70% of all homes in two London boroughs.

While 7% of properties in the South East are set to cost £1m or more by 2030, less than 1% of homes in the North East, Yorkshire and the Humber, the North West, Scotland and the East Midlands will hit the same value, highlighting a clear geographical divide.

Around the UK, the average property price – currently £283,565 – is expected to rise by 23% by 2020, to £349,300.

£1m Homes To Triple by 2030, says Santander

£1m Homes To Triple by 2030, says Santander

In 15 years’ time, the average UK house price will have almost doubled and surpassed the half a million pound mark, at £557,444.

While house prices are expected to spiral, forecasts suggest that incomes will not keep pace, causing an overall decline in affordability.

Currently, the average UK property price is 7.9 times the average wage. However, by 2030, it is expected to reach 9.7. Again, this trend will be more prominent in the capital, where prices are currently 11.5 times incomes and are predicted to increase to a huge 16.5 by 2030.

The Managing Director of Mortgages at Santander UK, Miguel Sard, comments: “Property price inflation will tip many existing homeowners into the million pound price bracket, but could also price some aspiring buyers out of the market if they don’t have the right support.

“The current property market is buoyant and the deals available to new and existing owners are extremely competitive, so those wishing to buy or move shouldn’t be put off.”1

1 http://www.ft.com/cms/s/0/561a2c28-d588-11e5-8887-98e7feb46f27.html#axzz40Vm1ymxb

Home lending values in UK continue to rise

Published On: February 18, 2016 at 9:33 am

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Categories: Finance News

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Home lending values increased across all residential sectors during the final month of 2015, according to the latest figures released from the Council of Mortgage Lenders (CML).

However, there are differing pictures in terms of growth and decline.

Annually, the value of lending rose across all lending types, with the CML expecting further steady growth in the next couple of years.

Borrowing

First time buyers borrowed £4.5bn for house purchase purposes, up by 18% on December 2014. This amounted to 29,300 loans, up by 6% month on month and by 11% year on year.

Those looking to move home borrowed £6.6bn. This totalled 33,400 loans, up by 3% month on month and by 12% in comparison to December 2014.

Home owner remortgage activity however was down 16% by value in December 2015, in comparison to November. Year-on-year figures show a different story, with remortgage lending up 24% in value.

Gross buy-to-let lending saw month on month declines, but year on year gains.

Home lending value in UK continues to rise

Home lending value in UK continues to rise

Loans

Additionally, the data shows that first time buyers took out 87,100 loans, which totalled £13.3bn to purchase homes. By value, this was up by 8% year on year.

Home movers took out 101,900 loans, amounting to a total of £20.3bn and up by 18% year-on-year.

Gross buy-to-let activity saw considerable annual increases, with values up by 39%. In addition, buy-to-let lending was at its highest level since 2007.

Increases

‘Improving economic conditions, boosted by government schemes like Help To Buy, saw the highest quarterly number of loans to purchase a home for eight years,’ observed Paul Smee, director general of the CML. ‘The market has seen a gradual upward trajectory over the past few years, rather than rapid growth and we’d expect this trend to continue with gross lending steadily increasing over the next two years.’[1]

Kevin Purvey, chairman of Intermediary Mortgage Lenders Association (IMLA), believes the next figures will show a rise in buy-to-let lending ahead of the stamp duty changes in April.

Purvey said, ‘although gross buy-to-let decreased both in volume and numbers of loans month-on-month. IMLA’s latest research shows that the government’s interventions in the private rental sector will not throw continued growth off course and we’d predict gross buy-to-let lending to reach £48bn in 2017.’[1]

[1] http://www.propertywire.com/news/europe/cml-property-lending-data-2016021811573.html

 

Redevelopment of Empty London Buildings Could Provide 420,000 Homes for Rent, Says Think Tank

Published On: February 17, 2016 at 4:01 pm

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Redeveloping unused or empty commercial land and buildings in London could provide up to 420,000 additional homes for rent by 2036, according to a leading think tank.

Research from the Policy Exchange found that there are more than 500 hectares of empty or under utilised industrial land in the capital alone – the equivalent of 750 football pitches – as well as a huge amount of neglected retail space in outer London.

Redevelopment of Empty London Buildings Could Provide 420,000 Homes for Rent, Says Think Tank

Redevelopment of Empty London Buildings Could Provide 420,000 Homes for Rent, Says Think Tank

The think tank’s report states that if the Government were to commit £3.1 billion per year to finance the purchase of this land, alongside a private sector partner, such as an institutional investor, about 21,000 homes could be built every year.

The Policy Exchange suggests that the homes should be designed to accommodate the ever-expanding private rental sector and shared ownership market by using pre-fabricated materials, which will overcome skills shortages in the construction industry and other factors that slowdown house building, such as bad weather conditions.

Rental income from the homes and the sale of equity stakes could recover the Government’s money within 20 years, says the think tank.

If a scheme like this went ahead, it would be the largest Government investment and delivery on housing since the 1970s.

The report adds that the process of buying non-residential land could be sped up by giving extra powers to the Mayor of London to fast track the purchase of commercial land and buildings that have been empty or unused for two years or more.

At present, around 27,000 homes are being built in London each year – significantly less than the estimated 50,000 homes that are needed every year to keep up with demand.

The Head of Housing at the Policy Exchange, Chris Walker, comments: “The Government urgently needs to make bold reforms to the laws surrounding compulsory purchase of empty or under utilised commercial properties to create a significant supply of land for new housing.

“It should seriously consider making the largest investment in housing since the 1970s to pay for land acquisition, land redevelopment and large scale house building.”1

1 http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/12159522/Empty-commercial-buildings-in-London-could-provide-420000-homes-for-rent-think-tank-says.html