Written By Em

Em Morley

Chancellor’s stamp duty holiday provides investment opportunity for landlords

Published On: July 20, 2020 at 8:19 am

Author: Em Morley

Categories: Landlord News

Tags: government,Mortgages for Business,Stamp Duty,summer statement

With landlords in a position to benefit from the tax savings announced in the Chancellor’s summer statement, Mortgages for Business says that property investors should not squander Rishi Sunak’s surprise boost.

Steve Olejnik, managing director of Mortgages for Business said: “Clearly, landlords need to take advantage of the stamp duty holiday before the window closes in March next year.

“Property investors are in a better position to qualify for a mortgage now that reduced stamp tax allows them to wield a larger deposit.

“Furthermore, if the measures Rishi Sunak has put in place underpin property values, the cut will help those looking to remortgage as well.

“Less obviously, landlords may not appreciate they need to act while they are well-placed to move in a way that owner-occupiers are not. We know property investors have been remortgaging with a view to picking up some bargains. Owner-occupiers have not been doing the same.

“Landlords have been preparing since the start of the lockdown, remortgaging to enlarge potential war chests with an eye on bagging bargains in the future. First Time Buyers don’t have that flexibility and owner-occupiers haven’t been remortgaging in the same way.

“That means landlords are currently very well-placed to seize the day. But that advantage won’t last forever. That’s why smart investors will start expanding their portfolios immediately, rather than waiting and then scrambling to try to do deals at the last minute.”

Mortgages for Business has carried out an analysis based on data from April and May this year regarding the reasons why investors were taking out buy-to-let mortgages.

The broker found that 30% of property investors did so with a view to expand their portfolio and grow their cash reserves. Comparing this to the information gathered at the same time last year, priorities were more focused on guarding against risk.

The research also indicated that 46% of landlords had been increasing the size of their loans – significantly higher than the long-term average of 38%.

The buy-to-let specialist says that, while sellers are more likely to come to the market before March 2021 – given buyers now have more money to spend – improving the stock of housing available to buy, this will not continue to favour those expanding portfolios forever.

Steve Olejnik also said: “This is all about expectations. At the moment, sellers are grateful for a sale and there are plenty of potential sellers who would put their property on the market if they thought they could get a deal done.

“Currently, sellers aren’t trying to grab the money that buyers had tucked away to pay for stamp duty – cash that was earmarked for the taxman. But the closer we get to March 2021, the more sellers are going to start making bids to grab the money that buyers had originally allocated to the government.

“They will see the spare cash sloshing around the housing market and become less inclined to negotiate. By the start of next year, the stamp duty holiday will have made sellers much more determined to get a good price – where they might have been more inclined to offer discounts. Landlords should be aware of that.”

The broker has also highlighted that their monthly mortgage volumes doubled in the run-up to the previous regulatory and fiscal changes, as landlords fought to beat the deadline.

Steve Olejnik continued: “This is all about expectations. At the moment, sellers are grateful for a sale and there are plenty of potential sellers who would put their property on the market if they thought they could get a deal done.

The new threshold for stamp duty has been increased from £125,000 to £500,000 in England and Northern Ireland. This will be in place until the end of March 2021.

Latest ONS rental prices index shows increases across the UK

Published On: July 17, 2020 at 8:10 am

Author: Em Morley

Categories: Lettings News

Tags: Index of Private Housing Rental Prices,ONS,PlanetRent,Ringley

The latest Index of Private Housing Rental Prices has now been released by the Office for National Statistics (ONS).

The highlights include:

Rent prices paid by tenants in the UK have increased by 1.5% in the 12 months to June 2020. This is unchanged since April 2020.
Rent prices have increased by 1.5% in England, 1.4% in Wales, and 0.6% in Scotland in the 12 months to June 2020.
London rent prices have increased by 1.2% in the 12 months to June 2020.

The ONS report addresses how the COVID-19 outbreak has affected this data: “The Office for National Statistics (ONS) is working to ensure that the UK has the vital information needed to respond to the impact of the coronavirus (COVID-19) pandemic on our economy and society; this includes how we measure the Index of Private Housing Rental Prices (IPHRP).

“At present, the price collection for this publication has been slightly affected, but this has not impacted the reliability of our estimates. A small change was made to how the data are collected in England; Tenancy Deposit Protection data have been used for less than 1% of the data in June 2020.

“The ONS remains committed to providing the best and most accurate information we can, serving the public good at a time when it is needed the most. As this situation evolves, we are developing several solutions to meet potential scenarios, depending on the amount of data that is able to be collected by our data suppliers, and to consider how we produce forthcoming publications. Users will be informed of any changes to how the data are measured.”

Read the full report here: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/june2020

Mary-Anne Bowring, group managing director at Ringley and creator of automated lettings platform PlanetRent, comments: “Today’s (15^th July) ONS figures highlight the resilience of the UK rental market, with steady rental growth across the board despite a turbulent period due to the Coronavirus pandemic.

“While the ONS stats show more subdued growth than other indices, all regions recorded positive growth throughout June.

“London in particular, recorded steady rental growth, demonstrating the robust nature of the capital’s rental market.

“For institutional investors such as pension funds and insurers looking to enter the UK rental market in search of steady income streams to match their liabilities, today’s figures are good news. Similarly, for buy-to-let landlords, it shows there is money to still be made in rental property, despite facing a tougher regulatory and tax environment.”

Searches for pet-friendly homes more than doubled since lockdown began

Published On: July 16, 2020 at 8:15 am

Author: Em Morley

Categories: Tenant News

Tags: lets with pets,Movebubble

Rental platform Movebubble has seen an increase in home-hunters searching for pet-friendly homes since the start of lockdown.

Searches for homes allowing pets have more than doubled (increasing by 109%).

The platform analysed internal data from over 700,000 users, comparing week 13 (commencing 23^rd March) to week 19 (commencing 4^th May). In particular there has been a surge of interest from city renters in the north, with searches increasing 140% in Manchester. In comparison, London saw a rise of 106%.

Looking at year-on-year data, searches for pet-friendly homes are up 65% compared to June 2019.

Properties with outdoor space are also more sought after, seeing a 193% rise in interest since mid-March. This could be seen to go hand-in-hand with the requirement to find a place that allows pets.

Aidan Rushby, CEO of Movebubble, commented: “Since lockdown came into effect, people have not only rapidly adapted to Home Walkthrough video viewings – but have shown a real shift in new priorities coming to light in the search for a new home.

“With millions of people now working from home or on extended furlough, many have taken the opportunity to quench long-held aspirations to have a pet to keep them company.

“While today’s forced remote working culture has been an adjustment for lots of Brits, many are looking forward to the possibility of working from home more after the pandemic subsides – suggesting we could see this burgeoning trend continuing.

“As pet owners ourselves, we know how it can be more challenging to find a home that accepts pets. The good news is things are changing.

“Earlier in the year, housing secretary Robert Jenrick called on landlords to make it easier for tenants renting a property with pets, so homeowners are being actively encouraged to consider responsible tenants with furry friends.”

TOP 10	Top 3 – South	Top 3 – North
1. E14, London (Canary Wharf)	1. E14, East London, Canary Wharf	1. M50, Salford Quays
2. M50, Manchester (Salford Quays)	2. NW1, London	2. M3, Manchester
3. NW1, London	3. HA0, Harrow	3. M15, Greater Manchester
4. HA0, Harrow
5. HA9, Harrow
6. E1, London
7. N19, London
8. M3, Manchester
9. UB3, Hayes, Harlington, Hillingdon
10. E17, London

The postcodes with the most pet-friendly landlords, according to Movebubble

Will buy-to-let business pick up in the next 12 months?

Published On: July 15, 2020 at 8:31 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,mortgages,Paragon Bank

According to Paragon Bank, four out of 10 brokers expect to write more buy-to-let business in the next 12 months. This information comes from the bank’s Financial Adviser Confidence Tracker (FACT) Index.

This index contains the results of a survey that included over 200 intermediaries. It shows that 41% of advisors said they expect more buy-to-let business, which is a slight dip on the 43% recorded in the first quarter of 2020. However, it is up from the 38% recorded from the final quarter of last year.

28% of intermediaries expect buy-to-let mortgage levels to remain stable.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, comments: “Despite the buffeting that coronavirus has caused to the mortgage market, and housing sector more broadly, there is clearly still strong and stable demand for buy-to-let via intermediaries, which is reflected in the results of this survey.

“We have seen a solid rebound in buy-to-let business since the housing market reopened in mid-May and landlords have been unlocking capital to invest and grow their portfolios further.

“We expect to see increased demand for rented property underpinning growth in the coming months as people delay house purchase or cannot obtain a mortgage with the removal of higher loan to value products in the residential market.”

Of those intermediaries forecasting an increase in buy-to-let business, confidence was stronger amongst directly authorised firms (46%) than appointed representatives (36%). Confidence was also firmer in sole adviser organisations (47%) than firms with between two to three advisers (34%) and four or more advisers (37%).

Richard Rowntree added: “Coronavirus has had a clear and damaging impact on the economy and the UK as a whole, but the long-term fundamentals underpinning demand for buy-to-let remain unchanged. The UK has a growing population with increasing numbers of households and the private rented sector will provide a good quality home for many of them.”

Eleven top tips for renting a property

Published On: July 14, 2020 at 7:59 am

Author: Em Morley

Categories: Tenant News

Tags: ARLA Propertymark,tenants,Top tips

ARLA Propertymark has shared its top tips for renting, now that the industry has gone back to normal following the ease of lockdown restrictions.

The association hopes to make the process of renting as smooth as possible with these eleven tips:

1. Work out your finances

First of all, you should figure out a budget and research which areas you can afford. According to Zoopla, the average cost of renting a property in the UK during the final quarter of 2019 was £886 per month. This tends to be lower for first-time renters starting out with a one- or two-bed property.

Remember that as well as rent payments, you might also need to factor in a budget for:

Gas
Electricity
Water
Phone
Broadband
TV license
Council Tax

2. View virtually

As of 13th May, the Government issued new guidance for England which allowed socially distanced viewings, that carefully adhere to public health guidance, to take place. Property viewings may be different from how they used to be, with some letting agents and landlords offering virtual viewings initially.

This can cut down the need to come into contact with other unnecessarily whilst the country is still in lockdown. If you like what you see online, then you can view the property in person. Just remember to keep your hands clean and you may also be asked to turn up with a face mask.

3. Know your rights

Before a tenancy agreement is signed, you need to prove that you have the right to live in the UK. You can find a list of what can be presented as proof in the Government’s Right to Rent guide.

It’s worth bearing in mind that temporary changes have been made to Right to Rent checks due to lockdown.

After you sign the contract, you must be given:

a copy of your new home’s Gas Safety Certificate (if the property has gas)
an Energy Performance Certificate (EPC) for the property
the Government’s How to Rent Guide
your Deposit Protection Certificate
the Prescribed Information (this may take a few days)
any license issued by the local authority (if the property is subject to any form of local authority landlord licensing scheme)
if you are a new tenant from the 1^st July 2020, you must also be given an Electrical Safety certificate

Phil Keddie, President, ARLA Propertymark comments: “Tenants who haven’t had to go through the lettings process at all, or at least haven’t since 2016, might be unaware of new legislation that has come into force since then. When signing a new tenancy, it’s important you keep on top of the costs, as well as your rights and responsibilities.

“From making sure you choose the right property, to knowing and understanding the legal process and your rights as a tenant, as well as adhering to the new rules around social distancing when viewing a property, there’s certainly a lot to consider. That’s why it’s important to have a reputable letting agent or landlord by your side to guide you through the renting process.”

4. Ensure you are protected

You need to make sure that you understand what kind of tenancy agreement you are about to sign. It is a legally binding contract, so it is important to read it carefully. Ask as many questions as you want until you are comfortable that you understand everything it contains and if you’re not happy, ask for any changes or amendments you want.

Letting agents should also have Client Money Protection and are required to display all fees they will charge you on their websites and prominently in their offices. This information should also include which redress scheme they belong to so that you can go to this scheme if you have an issue that you feel hasn’t been satisfactorily dealt with. ARLA Propertymark says that if a letting agent can’t provide you with this information, don’t use them.

5. Sort out the bills and insurance

If your agent does not do this for you, contact the utility companies used for your new home and provide them with meter readings, your move-in date, and the names of all the tenants (if you aren’t living alone).

Landlords will insure the building and any contents that belong to them, but this will not cover your belongings. You can take out your own contents insurance if you want to financially protect them.

When sharing a property, it’s worth agreeing on a system for fairly splitting the cost of bills and making sure they are paid on time. You will all be jointly responsible, so if someone doesn’t pay their portion, the rest of you will have to make up the difference!

6. Lets with pets

You should check the tenancy agreement before signing if you wish to keep pets. If there is a clause stating that no pets are allowed, you should not break this, as it can be used as grounds for eviction.

If you have a pet, your landlord may also put additional clauses into your tenancy agreement related to owning a pet, such as making sure it doesn’t foul in the garden or inside the property, not leaving it alone in the property for too long and cleaning the property thoroughly before the end of the tenancy. Any damage to the property or extra cleaning that needs to be undertaken by the landlord can be deducted from your deposit.

7. Safety first

Your landlord must ensure there is a working smoke alarm on each floor of your home. There must also be a carbon monoxide detector in any room where solid fuels are burnt (such as wood, coal or biomass). They need to be tested and working on the first day of the tenancy.

8. Check the inventory

A list of everything that is provided with the property will need signing at the beginning of the tenancy. This includes items such as furniture, carpets, curtains, appliances, crockery, and cutlery. If anything on this list is missing from the property or isn’t in the state it says (for example, a stain on the carpet), you need to notify your landlord or letting agent.

If you don’t query any discrepancies now, you might not be able to prove later on that you didn’t cause the damage/lose the item, which can lead to money being deducted from your deposit to cover the costs.

9. Sort issues before they become problems

Make sure that all contact details are up-to-date for your landlord or letting agent. If you discover any problems with the property, don’t be afraid to let them know straight away. The sooner you report an issue, the faster it can be sorted. It can also prevent the damage from getting worse, costing your landlord even more money.

If you plan on leaving the property empty for a while during the colder months, leaving the heating on low can help to prevent pipes from freezing. If you’ll be away longer than a couple of weeks, let your landlord or agent know so they can keep an eye on the property whilst you’re away.

10. Keep good records

This could be vital if there’s a dispute when you move out. Useful items might include photos taken when you moved in (ideally, dated and labelled), receipts for any items you’ve replaced, correspondence about repairs and copies of your bills.

It’s also important to either get written consent from the agent or landlord or to keep accurate notes about any changes the landlord has allowed you to make to the property such as putting up pictures or painting walls so that when you move out you have proof of this.

11. Return the property as you found it

Most deposits disputes are over the condition of the property at the end of the tenancy. Make sure you give the property a thorough clean before you move out and leave the property in the same condition as the day you arrived.

Industry predictions for the UK property market

Published On: July 13, 2020 at 8:07 am

Author: Em Morley

Categories: Property News

Tags: JLL,Knight Frank,Rightmove,Savills,SevenCapital,Zoopla

Industry Predictions for the UK Property Market

This following is a guest piece provided by SevenCaptial.

Although COVID-19 has been affecting the property market for the majority of 2020, we’re still in the early stages of understanding the long-term impact it will have on the global and UK economies.

Following a pause in transactional volume, there has been a surge in listings and enquiries in the sales market over the past month, after record lows in March, April and May.

Despite the lack of data from actual transactions, SevenCapital has gathered insights, forecasts, and opinions from across the industry on what the outlook of the UK property market may be for the rest of 2020 and beyond.

Included in the UK property market update is collated research from market leaders including Savills, Knight Frank, Rightmove, Zoopla, and JLL.

Rightmove – Market update

According to a recent release from Rightmove, the average asking price of property coming to market in England is up by an average of 1.9%.

Over 175,000 missing sellers that couldn’t come to market from 24th March to 12th May have now sprang into action, with a record number of homeowners asking for valuations and daily new listings now up on last year.

Unique price analysis of new sales agreed indicates upwards price pressure, with buyers agreeing to pay 97.7% of the asking price on average, an improvement from 96.6% for sales completed in February this year.

Rightmove originally forecasted a 2% rise in the price of UK property coming to market in 2020. This update from Rightmove shows positive signs but we can assume they are now more modest about price growth for the remainder of 2020.

Savills

Long-term, Savills remains more optimistic, with a continued expectation of price growth over the next five years. Furthermore, large parts of the prime market looked good value in the run-up to the current crisis which should underpin those sectors. However, the pace of recovery will depend upon the state of the wider economy.

Interest rates are now expected to be lower for longer. Savills original 2020 forecast of 15% UK house price growth over 5 years included an assumption that the Bank Base Rate (BBR) would rise to 2.0% by the end of that period. Oxford Economics’ current forecast is for it to be 1.0% under both baseline and downside scenarios.

Savills expects a small drop but as the economy opens, we should see a recovery. Low bank base rates and mortgage lending confidence should see the UK market remain relatively stable and will boost a quicker recovery. Mortgage lenders are in a much better state than compared to the last financial crash which means they are more likely to lend as the market unlocks. The time of this recovery will also depend upon wider economic recovery, but government schemes such as furloughing staff have relieved pressure on property prices.

JLL

JLL expects real estate activity to be slow for the short term with investor sentiment dampened.

While many investors have paused new acquisitions, select well-funded institutions and high-net-worth investors with longer-term investment horizons will be among the first movers. JLL also states reduced international student intakes pose a risk to student housing.

The COVID-19 pandemic will undoubtedly change the way we live and work for the foreseeable future, and new trends will emerge that will become part of our ‘new normal’.

Although investment into real estate has fluctuated over the years through various downturns, the overall trend has been for higher allocations to real estate, and JLL sees no reason for this trend to reverse. Real estate continues to offer good risk-adjusted returns that are less correlated to other asset classes. This is where the advantage of real estate and a diverse portfolio is emphasized, remaining stable when the equity and commodities markets are seeing increased volatility.

Over the long term, JLL still believes real estate remains an attractive asset class.

Knight Frank – Market update

Knight Frank expects a drop in property prices in the short term with a bounce back of 5% in 2021.

Knight Frank reduced their forecast to 728,000 sales for this year, a decline of 38% on 2019 levels. Their previous forecast, which was published at the beginning of April, pointed to a 3% fall in UK house prices.

A 20% drop in prime London prices since 2014 would shield this market from further falls.

Knight Frank commented: “Residential will remain a stable asset and may actually become more desirable when compared to commercial, due to changes in way of life and working environments.”

Knight Frank further commented: “If we add into the mix the fact that we have low new-build rates coming through in 2020, low inventory and low-interest rates, it becomes less likely we will see significant further falls from here.”

Zoopla – Market update

Zoopla’s Cities Index in April was conservative due to market activity, but they expect a slow rate of growth to become more marked over the summer. Demand for homes in England rose by 88% after the housing market reopened in England.

House prices will not change significantly in the next two months as most sales agreed before the start of the coronavirus pandemic will continue.

In the long term, house prices will be largely influenced by unemployment rates.

In a recent survey by Zoopla, around 60% of would-be movers across England say they plan to go ahead with their property plans, although 40% have put their plans on hold because of COVID-19 and the uncertain outlook.

The number of property sales agreed is also steadily rising since the market reopened. But it will take some time for these numbers to rise significantly.

Zoopla also forecasts a post-COVID-19 bounce and expects a clearer picture to emerge when more sales are completed.

Andy Foote director at leading UK property developer SevenCapital commented: “These are unprecedented times. However, property is again proving its stability and strength as an investment vehicle. What is important now more than ever for investors continuing with their investment strategy is remembering the core principles of property investment which are buying in the right location, working with trusted developers and investment partners with a strong track record and buying with a long-term mindset.

“Property, particularly now, should be considered a long-term investment and then no matter at which point of the property cycle you buy, providing you invest in a quality product in the right area with strong, sustainable tenant demand, your property should pay dividends over time.”

Bio

Andy Foote, SevenCapital Director.

During the past 22 years, Andy has successfully built five businesses within the Motor Finance, Residential Property, Recruitment, and Charity Sectors. He currently sits on the boards of Seven Invest, The Brain Tumour Charity, Alexander Daniels, and University of Nottingham Impact Board. Along with his co-directors, Andy has built the distribution channel at SevenCapital which offers investors a unique 360-degree service, including sales, mortgages, furniture, property management, rental, and exit.