Written By Em

Em

Em Morley

Paragon Reports Buy-to-Let Lending Up 102%

Published On: November 26, 2015 at 3:44 pm

Author:

Categories: Finance News

Tags: ,,,

Paragon Reports Buy-to-Let Lending Up 102%

Paragon Reports Buy-to-Let Lending Up 102%

The parent firm of specialist lender Paragon Mortgages, The Paragon Group of Companies, has revealed its results for the year ending 30th September 2015.

The firm reported a 10.2% rise in underlying profit for the year, hitting £134.7m, from £122.2m in 2014.

Over the last 12 months, Paragon experienced a huge increase in activity, with buy-to-let lending reaching £1.33 billion, equivalent to 102% growth over the year, from £656.6m in 2014.

Its pipeline of new applications further highlights the increase in business. On 30th September, it stood at £713.7m, up by 72.1% on the same period last year.

Director of Mortgages at Paragon, John Heron, comments: “Access to retail markets through Paragon Bank has provided the group with a material diversification of funding. This has helped facilitate a step change in buy-to-let lending, driven by a significant broadening of our product range and a more consistently competitive position for both large-scale professional landlords and smaller scale property investors.

“It has been a fantastic year for the group overall and with our acquisition of Five Arrows Leasing through Paragon Bank, there will be more exciting opportunities to come.”1

Paragon’s figures indicate that landlords are still confident in the buy-to-let sector, despite a series of changes due for introduction in the near future.

Managing Director of Nova Financial, Paul Mahoney, has also “witnessed an increase in buy-to-let property investments” recently.

He continues: “Although the sector has endured some challenging changes on behalf of the Chancellor of the Exchequer, there is no disputing the returns that geared buy-to-let property investments have provided over the past 20 years; nearly tripling that of the FTSE all share index.

“With changes reducing the tax deductibility of mortgage interest and increasing Stamp Duty Land Tax, some may be a bit concerned regarding the impact.”

But Mahoney isn’t too worried: “Overall, the simple law of economics; supply (severe lack thereof) versus demand (increasingly strong) will prevail and property will continue to be a sound investment.”

Will you continue investing in property, or is your time as a landlord coming to an end?

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/new-buy-to-let-lending-up-102-at-paragon

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buy-to-Let Tax Changes will Push Rents Up

Published On: November 26, 2015 at 1:10 pm

Author:

Categories: Finance News

Tags: ,,,

Buy-to-Let Tax Changes will Push Rents Up

Buy-to-Let Tax Changes will Push Rents Up

Over two thirds of landlords believe that changes to buy-to-let mortgage interest tax relief will cause rents to rise, according to a survey by the Deposit Protection Service (DPS).

In the summer Budget, Chancellor George Osborne revealed plans to cut the amount of tax relief available for interest on buy-to-let mortgages.

The study, of 4,480 landlords, found that 69% believe the changes will push rents up, with more than a third stating that they are considering leaving the private rental sector. 35% said they might sell their rental properties.

Managing Director of the TDS, Julian Foster, comments on the findings: “Many landlords are currently facing a double-whammy of tax changes that could lead to increased rent for tenants – forcing them to sell or leave the rental market.

“Many landlords are small businessmen and women or accidental landlords, and taxation increases can affect their livelihoods and financial wellbeing.

“With many commentators predicting an interest rate rise next year, landlords are facing a series of financial challenges over the next few years.”1 

A future interest rate rise is also likely to have an impact on landlords’ finances, with 33% of respondents saying that they would pass on these costs to their tenants.

Around two thirds (62%) of landlords also said that they would be worse off due to changes to wear and tear tax relief.

From April next year, the automatic 10% tax break for wear and tear will be cut and replaced with tax deductions for the actual cost of replacing or repairing a property’s contents.

Do you agree with the findings of the survey?

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/landlord-tax-changes-will-lead-to-rent-increases-says-survey

BTL homes hit with increased stamp duty

Published On: November 26, 2015 at 11:26 am

Author:

Categories: Finance News

Tags: ,,,

In the Autumn Statement yesterday, Chancellor Osborne announced that the government is to increase stamp duty on buy-to-let properties and second homes by 3%. This is to become effective at the start of the new tax year in April 2016.

Osborne said that, ‘more and more homes are being bought as buy-to-lets or second homes.’ He feels that many of these are bought by cash transactions that are not affected by the restrictions introduced in the Budget earlier this year.[1]

Affordability

‘Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy. So I am introducing new rates of Stamp Duty that will be 3 per cent higher on the purchase of additional properties like buy-to-lets and second homes. It will be introduced from April next year and we’ll consult on the details so that corporate property development isn’t affected,’ the Chancellor added.[1]

The stamp duty surcharge will raise each band by 3%. This means that for properties valued between £125,000 and £250,000, where stamp duty is 2%, buy-to-let landlords will have to pay 5%.

Further important information for landlords comes with the news that for the average buy-to-let purchase costing £184,000, they will have to pay a further £5,520 from April 2016.

There was good news for commercial property investors with 15 or more properties, who are thought to be exempt from the new charges. In addition, Mr Osborne has pledged to fund an extended Help to Buy scheme in London, alongside more money for the Starter Homes programme.

BTL homes hit with increased stamp duty

BTL homes hit with increased stamp duty

Capital Pains

In further alterations, buy-to-let landlords will be hit in the pocket by changes to the Capital Gains Tax. From April 2019, they will be permitted to pay any outstanding Capital Gains Tax within 30 days of selling a property, as opposed to waiting until the end of the tax year as the current rules permit.

Landlords are already set to get a lower rate of tax relief on mortgage fees. In this year’s Budget, the chancellor outlined plans for landlords to only receive the basic rate of tax relief (20%) on mortgage payments. This will be phased in from 2017.

Richard Lambert, CEO of the National Landlords Association, believes, ‘the Chancellor’s political intention is crystal clear, he wants to choke off future investment in private properties to rent.’ [1]

‘If it’s the Chancellor’s intention to completely eradicate buy-to-let in the UK then it’s a mystery to us why he doesn’t just come out and say so,’ he added.[1]

Where the money is going

Up to £60m of the funds raised by the stamp duty surcharge will assist home-buyers in England in locations where holiday homes have led to an increase in local prices.

In addition, the Help to Buy scheme will be extended to 2021, a year more than first planned. What’s more, an extension to the scheme in the capital will see purchasers who can raise a 5% deposit given a loan worth up to 40% of the property. This loan will be interest free for 5 years.

The existing maximum loan is for 20% of the property’s value elsewhere in the country.

In total, the Government has pledged to put an extra £6.9bn into housing in England. This includes an extra £2.3bn in loans for the government starter homes programme and £4bn given to housing associations and local authorities to build more houses for shared ownership.

A further £200m will be utilised to build homes for rent, with the aim to allow tenants to save for a deposit.

[1] http://www.propertyreporter.co.uk/hero/btl-and-second-homes-to-be-hit-by-3-rise-in-stamp-duty.html

 

 

ARLA Files Freedom of Information Request over Welsh Letting Agent Fees

Published On: November 26, 2015 at 10:01 am

Author:

Categories: Property News

Tags: ,,,

On Monday, the Rent Smart Wales scheme launched, applying to all Welsh landlords and letting agents.

ARLA Files Freedom of Information Request over Welsh Letting Agent Fees

ARLA Files Freedom of Information Request over Welsh Letting Agent Fees

Landlords and agents must register themselves and their properties and become licensed. This costs £3,728 for agents that apply online, but more for those using paper applications. The Association of Residential Letting Agents (ARLA) states that it was never consulted on these fees.

ARLA has filed a Freedom of Information request, demanding a breakdown of the figures from the Welsh government.

In an email to ARLA members, Managing Director David Cox expressed his irritation.

He wrote: “We are frustrated by the approach taken by the Welsh government in not making information available prior to the Rent Smart Wales launch date.

“This has jeopardised the goodwill of agents who are at pains to comply with the law and to continue to offer high quality service to landlords and tenants.”

Cox also addressed the other new legal requirement that was enforced on Monday, for all letting agents in Wales to display their fees.

ARLA insists that it knew nothing of this law until last week.

Cox continues: “Within this context, we urge our members to continue to work on the new requirement on displaying your fees.”

He adds: “The cost of licensing is far higher than expected. We are disappointed that ALRA was not consulted on these fees and are demanding under the Freedom of Information Act that the Welsh government provide a breakdown of the calculation of these figures.”

Cox believes that the license conditions will require agents in Wales to have professional indemnity insurance in place, offer Client Money Protection and belong to an independent redress scheme.

Cox told members that he anticipates “updating you on our discussions with the Welsh government soon”1.

The Welsh government says that its new regulations are a template for the rest of the UK.

ARLA’s Freedom of Information request can be found here: http://i.emlfiles1.com/cmpdoc/6/9/5/5/4/files/336151_foi-request-rent-smart-wales-nov-2015.docx.pdf?dm_t=0,0,0,0,0

1 http://www.propertyindustryeye.com/arla-slaps-in-freedom-of-information-requests-after-not-being-consulted-on-wales-charges/

Calls for Client Money Protection to be Compulsory for All Letting Agents

Published On: November 25, 2015 at 4:07 pm

Author:

Categories: Finance News

Tags: ,,,

Calls for Client Money Protection to be Compulsory for All Letting Agents

Calls for Client Money Protection to be Compulsory for All Letting Agents

The Government has been urged to make Client Money Protection (CMP) compulsory for all letting agents. It is regarded as an important and easy reform to benefit the private rental sector.

SAFEagent has again called for mandatory CMP, asking the Government to include a proposed amendment presented by the Managing Director of the Association of Residential Letting Agents (ARLA), David Cox.

The amendment would be included in the Housing and Planning Bill, which is currently going through Parliament.

SAFEagent launched its campaign in 2011 and has more than 3,000 offices signed up. It is working to raise consumer awareness among landlords and tenants of the need to use an agent with CMP.

Chair of SAFEagent, John Midgley, says: “We welcome the positive action the Government is taking to deal with rogue landlords and agents. Mandatory membership of a redress scheme for all agents was a step in the right direction, but consumers get no recompense through those schemes if an agent misappropriates their money.

“Only by introducing a mandatory requirement for all agents to be included under a CMP scheme can the consumer be afforded that protection.

“It is great that the industry is now pulling together to protect consumers – something that the SAFEagent steering group has advocated since the start of its campaign.

“We hope to build on this goodwill for other consumer protection initiatives, which we are planning.”1

Midgley’s views have been sent to Brandon Lewis, the Housing Minister.

If you use a letting agent, remember to look out for whether they have CMP in place.

1 http://www.propertyindustryeye.com/calls-mount-for-ministers-to-make-client-money-protection-mandatory-for-agents/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rent collector jailed for running over tenant

Published On: November 25, 2015 at 2:30 pm

Author:

Categories: Landlord News

Tags: ,,

A son of two landlords has been put behind bars for 10 years, after he deliberately ran over a tenant following a heated dispute over rent.

Mr Shahid Hussain drove his vehicle at Muhammed Pervez outside the rented accommodation in Bradford in July 2014. As a result, the victim was left with injuries to his jaw, cheekbone, eye socket, teeth and nose. In addition, he was left with severe bruising to his hands, back, legs and torso.

Guilty

As a result of his attack, Mr Hussain was found guilty of causing grievous bodily harm with intent. In addition, Hussain and brother-in-law, Mohammed Khurshid were found guilty of two charges of committing an act intending to pervert the course of public justice after the pair threatened and abused witnesses at the scene of the crime.

The court heard that Mr Pervez was involved in a confrontation with Hussain, after he had gone to collect rent on behalf of his parents, the landlords of the property. The Bradford Telegraph & Argus reports that Mr Hussain drove his car at Mr Pervez before reversing the vehicle back over him.

Rent collector jailed for running over tenant

Rent collector jailed for running over tenant

Sickening

Even more sickening was the fact that Mr Hussain had two young children inside the vehicle at the time of the attack. After Mr Pervez had been hit, Mr Khurshid is then alleged to have arrived at the scene driving a different car.

Witnesses reported that Khurshid shouted, ‘are you happy now? This is what happens when you don’t pay your rent,’ at the stricken victim. Not content with these actions, the two men then turned on witnesses, saying, ‘you had better not make this look bad for us. We will track you down.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2015/11/10-years-in-jail-for-rent-collector-who-deliberately-drove-over-tenant