Written By Em

Em

Em Morley

Serious rental arrears up by 13.8%

Published On: January 8, 2016 at 10:12 am

Author:

Categories: Finance News

Tags: ,,,

A concerning new report has indicated that the numbers of tenants in significant rental arrears has risen significantly during the third quarter of the year.

The latest Tenant Arrears Tracker from estate agency pairing Your Move and Reeds Rains indicates that the number of tenants behind on rent has increased by 13.8% in the three-month period.

Behind

According to the report, there are now 84,200 tenants in excess of two months behind with rental payments, in comparison to 74,000 in the second quarter. Annually, this represents a rise of 13,2000 households, or 18.6% from the same period in 2014.

Historically however, the latest drop in arrears remains fairly mild and a long way below the 116,600 recorded in the second quarter of 2012. Worryingly, the figures for quarter three of 2015 represent the highest levels in more than two years.

Adrian Gill, director of estate agents Your Move and Reeds Rains, notes, ‘the chance of an individual tenant falling into serious arrears remains very low.’ He believes that, ‘in general, renting works for most people. Over the last decade the private rented sector has expanded at an unprecedented pace, providing homes for millions of households at the same time as absorbing the worst financial crisis in living memory.’[1]

‘In the current climate, optimism feels increasingly reasonable. Most households are beginning to earn more, the cost of living is stable and the chance of falling into unemployment is diminishing. For the majority of tenants, paying the rent is becoming easier rather than harder. But beneath this rising tide there are inevitably some households and individuals who are not yet feeling any new economic buoyancy. As others bid rents higher there will be a minority who are still struggling to keep up. Landlords and tenants have a mutual responsibility to be aware of this small but significant risk,’ Gill continued.[1]

Serious rental arrears up by 13.8%

Serious rental arrears up by 13.8%

Evictions

Higher levels of serious rent arrears are yet to be mirrored by rates of eviction. The Tenant Arrears Tracker shows that in the third quarter of 2015, there were 26,712 court order regarding the eviction of tenants. This was 4.3% less than in the second quarter of the year, where eviction orders totalled 27,909.

In addition, there were 7.8% fewer evictions than at the same time in 2014, where the total stood at 28,959.

Gill continued by saying, ‘landlords and buy-to-let lending have been targeted from a variety of angles in 2015-under a harsh political spotlight, subject to new taxes and freshly scrutinised by regulators. There could be a real debate about the role of landlords and indeed the urgent need for more investment to keep up for demand for homes to rent. However this should be done constructively-and any worriers about the financial health of landlords should consider the reality of buy-to-let mortgage arrears at record lows.’[1]

‘In the context of resurgent tenant arrears, landlords are the buffer delaying a parallel peak in evictions. And healthy landlord finances make that tolerant approach more likely. So while penalising landlords may win easy political points, making investment in new homes to let harder could be counterproductive-especially in the face of new challenges,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/serious-rent-arrears-up-138.html

 

Only Prime Central London Landlords Can Absorb Extra 3% Stamp Duty

Published On: January 8, 2016 at 9:27 am

Author:

Categories: Landlord News

Tags: ,,,,

Only Prime Central London Landlords Can Absorb Extra 3% Stamp Duty

Only Prime Central London Landlords Can Absorb Extra 3% Stamp Duty

Only landlords buying properties in the prime central London market will be able to absorb the extra 3% Stamp Duty charge, which will come into effect on 1st April, according to investment advice firm, London Central Portfolio (LCP).

Investors buying rental properties in other parts of the UK will be hit much harder by the additional tax, claims LCP.

A statement from the firm reads: “For UK investors buying outside prime central London, for affordability reasons and who have benefitted from very low levels of Stamp Duty, the new additional rate sees the tax jump by almost 2.5 times.

“In prime central London, on the other hand, Stamp Duty will rise less than 50% on average. This is likely to be absorbed very quickly, due to the strong, long-term price growth in prime central London of 10.1% per annum, which would equate to 61% over the next five years.”

This fairly modest effect on landlords in London contrasts to the much stronger impact on Manchester, where long-term growth has only averaged 4% per year.

LCP warns: “The additional 3% Stamp Duty will significantly eat into profits. As investors weigh their options, it is areas outside prime central London that are likely to suffer the most.”1 

LCP believes the rise in Stamp Duty for landlords is part of a Government attack on the buy-to-let sector, which will institutionalise the market through Build to Rent and institutional investment; large-scale property investors will be unaffected by the extra Stamp Duty, which does not apply to purchasers of 15 properties or more at one time.

Read more on the tax here: /btl-homes-hit-with-increased-stamp-duty/

1 https://www.lettingagenttoday.co.uk/breaking-news/2016/1/prime-london-buyers-can-absorb-extra-3-duty–but-other-cities-cant

Right to Rent Could Mean Over 5m Immigration Checks for Landlords Every Year

Published On: January 7, 2016 at 3:49 pm

Author:

Categories: Landlord News

Tags: ,,,

Private landlords or their letting agents may be required to check the immigration status of at least 2.6m tenants per year, and maybe more than double this figure, when the Right to Rent scheme is enforced in England on 1st February.

The Chartered Institute of Housing (CIH) has released this calculation, after finding that there were 2.6m moves within the private rental sector in the year 2013/14.

Right to Rent Could Mean Over 5m Immigration Checks for Landlords Every Year

Right to Rent Could Mean Over 5m Immigration Checks for Landlords Every Year

However, it warns that the amount of prospective tenants who will be subject to these checks every year could “easily be double that figure, based on a conservative estimate that each letting will involve two households being checked”.

The CIH is calling for the nationwide roll out of Right to Rent to be postponed, believing it should be trialled in a “high pressure area”, such as London.

A pilot scheme has already been trialled in the West Midlands, running for just over 13 months. But the CIH is calling for another trial.

Under the Right to Rent scheme, checks must be conducted on all new tenants, without discrimination. Landlords are able to pass this legal responsibility onto their agent by written agreement.

The requirement to undertake immigration checks was included in the Immigration Act 2014, which imposes civil penalties.

However, the latest Immigration Bill 2015 would enforce criminal penalties, including jail sentences.

The CIH warns that due to the scale of the task and threat of criminal sanctions, landlords may discriminate against any tenants they think aren’t British, even if they have a legal right to live in the UK.

Chief Executive of the CIH, Terrie Alafat, says it is important for landlords to be given proper training on how to perform the immigration checks, in order to “combat the risk of discrimination against people who have every right to be in the UK”.

He continues: “For many people, private renting is the only option, and if this is removed, homelessness and destitution may follow.

“The new Housing and Planning Bill includes measures to tackle rogue landlords, which we have welcomed, but an unintended consequence of the Immigration Bill could be that more tenants are pushed towards the sorts of landlords who ask no questions and will rent poor quality accommodation to anyone who’ll pay the rent.

“Before the checks are extended to all new lettings in England, it is therefore vital that landlords are given training in how to carry them out – but there is very little time in which to do this.”

He adds: “The start should be postponed until this is done, otherwise both tenants and landlords could fall foul of the new requirements.”1

The CIH warns that immigration checks can be very complicated; if the tenant doesn’t have an EU passport, they could have one of three dozen or more types of immigration document, or their paperwork could be with the Home Office.

1 http://www.cih.org/news-article/display/vpathDCR/templatedata/cih/news-article/data/More_than_2.5_million_people_a_year_could_be_subject_to_new_immigration_checks_to_rent_a_home

 

 

New Year’s Property Resolutions

Published On: January 7, 2016 at 2:36 pm

Author:

Categories: Property News

Tags: ,,,,

A run has been put off. A small glass of wine has been poured. A chocolate bar wrapper is all that remains…

2016 is already 7 days old. For many of us, New Year’s resolutions have already been broken. However, there is still time to make amends!

Whether you are a landlord, agent or would-be property investor, using the following checklist can see you set yourself up for a successful New Year-whatever the status of your previous resolutions!

As always, planning is paramount to a successful outcome, whether selling, purchasing or renovation a rental property.

Owning in 2016

For those looking to invest in a property in 2016:

  • Make sensible goals on how much deposit you will save and by when
  • Draw up a budget to help make goals
  • Set a maximum price
  • Think about moving savings into a high interest ISA
  • Talk to a lender about the amount you can borrow
  • Locate and research your target area
  • Compare house prices and typical rents
New Year's Property Resolutions

New Year’s Property Resolutions

Selling in 2016

  • Look at listings and sales prices in the local area
  • Make relevant improvements and renovations to the property
  • Update tired features
  • De-clutter, put things into storage units and throw away tat!
  • Tidy and clean gardens

Renovating in 2016

  • Make a realistic budget
  • Decide what can and can’t be done to the property
  • Leave any expertise to the professionals!
  • Enjoy it! Choosing features from cushions to curtains should be a fun factor as your new decoration begins to take shape

 

 

The West of England Rental Standard has Launched

Published On: January 7, 2016 at 12:45 pm

Author:

Categories: Landlord News

Tags: ,,,,

Four county authorities have launched a scheme for accrediting landlords and letting agents in the west of England.

The West of England Rental Standard encompasses Bristol City, North Somerset, Bath and North East Somerset, and South Gloucestershire councils.

The West of England Rental Standard has Launched

The West of England Rental Standard has Launched

The scheme officially launched on 5th January. It was created to provide a single mark of accreditation for landlords and agents in South Gloucestershire and the west of England.

Organisations that accredit landlords and agents are being encouraged to apply to be endorsed accreditation providers, if their schemes meet the standard.

The West of England Rental Standard sets out specific key criteria for rental properties and encourages landlords to do more than simply meet legal requirements.

It details a minimum standard that landlords and letting or management agents must reach and creates a kite mark, so that tenants can be sure that their property and landlord meet the standard.

The standard aims to become the single accreditation scheme for compliant landlords and agents within the region, and hopes to help tenants find good quality homes.

Councillor Ben Stokes, Adults and Housing Committee Chair at South Gloucestershire Council, comments: “South Gloucestershire has approximately 14,600 privately rented properties, and schemes such as the West of England Rental Standard will help to protect tenants by promoting good landlords and exposing the poor ones.

“We want to work with and support accrediting bodies, landlords and letting agents to provide tenants with good quality rental accommodation for our residents.”1

The rental standard is a voluntary scheme and does not replace the enforcement methods available to councils to make sure that landlords comply with legal requirements.

For an initial period of three years, Bristol City Council will administer the scheme on behalf of the four county authorities.

Organisations that operate in South Gloucestershire and the west of England are invited to complete an application form and return this with an application fee by 12th February 2016.

Successful organisations will be announced in March, alongside a publicity campaign.

More information about the standard and how to apply can be found here: www.westofenglandrentalstandard.co.uk

1 http://www.southglos.gov.uk/news/west-of-england-rental-standard-launches/

BTL landlords well set to deal with interest rate rise

Published On: January 7, 2016 at 11:55 am

Author:

Categories: Finance News

Tags: ,,,

Buy-to-let landlords in Britain are sure to be pleased with the results of a new survey by YouGov, which suggests that they are well placed to cope with expected higher borrowing costs in the coming year.

In addition, the study found UK landlords are financially resilient, with 75% of those questioned believing they would have no problems paying their mortgage, should a 1.5% rise in the bank rate materialise.

Planning

Over 60% of respondents said that their rental income would stay above their mortgage payments if a rise was to occur, with 40% stating that they already had enough cash saved to cover increased borrowing charges.

The Council of Mortgage Lenders (CML) said that it expects buy-to-let purchases to dip in 2016, but with buy-to-let remortgaging remaining robust.

Data collated by the CML from lenders accounting f or 90% of new lending suggests that the typical stressed mortgage rate being used by the industry has risen by 50 basis points to between 5.6% and 5.7%.

Bob Pannell, chief economist at the CML, believes that landlords have a list of range of strategies for coping with increased mortgage costs. He says that these include the positive cash flow provided by rental payments and access to stored contingency funds.

Dampening

Mr Pannell also pointed out that the number of upcoming tax measures announced in recent months are likely to have a dampening effect on the sector’s future growth prospects.

‘The reduction of tax reliefs available to private landlords from 2017/18 onwards, announced by the chancellor in the summer 2015 Budget, will adversely affect the future cash flows for affected landlords,’ Pannell noted.[1]

He went on to say that, ‘landlords should be able to mitigate the direct financial impact in a number of ways,’ before claiming that, ‘the YouGov research corroborates our view that the overall impact will be to lift rents higher and to narrow the availability of homes in the private rented sector.’[1]

‘The direct effects appear modest, but are likely to be reinforced by the stamp duty changes, announced in the chancellor’s autumn statement. The rapid succession of recent tax changes also risks having a significant indirect effect on investor sentiment, altering the direction of travel for buy to let lending and the further expansion of the private rented sector,’ he continued.[1]

BTL landlords well set to deal with interest rate rise

BTL landlords well set to deal with interest rate rise

Future

Statistics from the CML’s latest market forecasts suggest that house purchase activity from buy-to-let landlords will slip in 2016-17. With the significant lags in Government housing initiatives moving to improve further housing supply, questions are being asked about the future of rental accommodation.

‘In this context, macro-prudential intervention, if or when it is applied to buy-to-let lending, carries a significant risk of unintended consequences for the wider housing market. We will continue to work closely with the Bank of England, to reinforce its understanding of the sector and to ensure very careful calibration of any forthcoming measures,’ Pannell concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-buy-let-landlords-2016010611398.html