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Treasury loses £1.5 billion since hike in rented housing tax

Published On: March 28, 2023 at 10:12 am

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Categories: Landlord News,Lettings News,Property News

Tax changes in the private rented sector have contributed to the loss of £1.5 billion in Treasury revenue, according to new independent analysis commissioned by the NRLA.

The analysis, conducted by Capital Economics, found that restrictions in mortgage interest relief have contributed to there being 1.2 million fewer properties in the private rented sector in the UK than there otherwise could have been.

The research comes as renters across the country continue to face a shortage of homes to rent. According to Zoopla, compared to the five-year average, demand for rented housing is up 46% whilst supply is down 38%.

The supply crisis faced by renters follows the decision in 2015 by then-Chancellor George Osborne to restrict Mortgage Interest Relief in the private rented sector to the basic rate of income tax.

Capital Economics also finds that between 2010 and 2016 the stock of private rented housing increased by a rate of 3.7% a year. However, between 2017 and 2021, the period in which the mortgage interest changes were implemented, it grew by just 0.4% a year. 

The analysis reveals how, if private rented housing stock had continued to grow at a rate of 3.7%, there would have been a total of 6.8 million properties in the private rented sector in 2021 – around 1.2 million more properties than were actually available to rent. 

According to Capital Economics’ research, the annual income and corporation tax revenue from these extra rented properties would have boosted Treasury revenue by £1.5 billion. 

The NRLA is calling on the Government to undertake a full review of the impact of recent tax rises on the sector. It argues that this must assess the impact of the Mortgage Interest Relief changes on the market. Ministers must also consider the rationale for the change, given the Institute for Fiscal Studies has previously argued it is wrong to suggest landlords have been taxed more favourably than homeowners. 

Ben Beadle, Chief Executive of the National Residential Landlords Association, comments: “At a time when renters are struggling to find a place to live, today’s research shows that the Government has shot itself in the foot.

“The decision to restrict mortgage interest relief has not only stifled investment in the very homes tenants need, it has also come at a considerable cost to the Treasury in lost revenue.

“When you consider that the Government’s rationale for the changes has been refuted by the Institute for Fiscal Studies, it is clear that the Chancellor needs to review this misguided tax hike.” 

Landlords welcome plans to tackle unruly tenants

Published On: March 27, 2023 at 10:14 am

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Categories: Landlord News,Tenant News

Ministers have committed to give landlords more powers to evict unruly tenants as part of efforts to tackle anti-social behaviour.

Commenting on the announcement, Ben Beadle, Chief Executive of the National Residential Landlords Association (NRLA), says: “Anti-social tenants blight the lives of fellow renters and their neighbours.  Plans to end ‘no explanation’ repossessions risk making it harder to tackle such behaviour. 

“Whilst we will study the detail of the Government’s plans carefully, we welcome its commitment to strengthen the ability of landlords to evict unruly tenants. It follows extensive campaigning by the NRLA to ensure swift and effective action can be taken against those causing misery in their communities.

“The law must be on the side of the victims of anti-social behaviour and we are glad that the Government agrees.” 

Polling by the NRLA has found that 50% of landlords have at some point attempted to repossess a property because of a tenant’s anti-social or criminal behaviour. Of this group 84% had received no help in tackling it from their local authority and 75% had no assistance from the police in dealing with anti-social tenants.

Landlords seek capital and rental value gain with property upgrades

Published On: March 23, 2023 at 4:03 pm

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Categories: Landlord News,Property News

Acquisitive landlords have helped drive an improvement in standards in privately rented property, with four in five upgrading each rental home they purchase. 

Paragon Bank, the FTSE 250-listed buy-to-let mortgage specialist, found that 81% of landlords make improvements on every property they add to their portfolio.

The survey of over 500 landlords found 22% of landlords spend over £25,000 on upgrading a new portfolio property, with 18% spending between £10,000 and £20,000. 

On average, landlords expect to see a 19.8% increase in the property’s value after completing upgrade work, with a 16.5% increase in expected rental income. 

The research found that 40% of landlords prefer to purchase property in need of refurbishment, with 21% opting for properties that are ready for tenants to move into. 

The private rented sector has experienced a significant improvement in the standard of homes over the past 15 years, correlating with the growth of buy-to-let finance, which Paragon’s new report, Raising the standards of privately rented property, examines.

In 2008, 44% of homes in the sector were defined as non-decent according to the Government’s English Housing Survey. Today, that figure stands at 23%.

The addition of good quality homes has diluted the presence of poorer stock; In 2008, 1.8 million privately rented homes were classed as decent, rising to 3.3 million in 2021 – an 83% increase. There has also been a reduction in the number of properties classed as non-decent – falling from 1.4 million to 990,000, a 29% reduction.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, comments: “Landlords have helped improve standards across the private rented sector over the past 15 years and the upgrading of stock they purchase is central to that.

“The vast majority of landlords will look to upgrade each new property to boost the capital value and the potential rental income. However, they also do this out of a genuine desire to provide a good quality home to their tenants.”

Asked why landlords make improvements to property, 83% of landlords said they did so to ensure they are providing a good quality home to tenants, with 82% doing so to make the property more attractive to tenants. Two thirds (66%) upgrade property to improve rental income and 57% look to increase the capital value. Meanwhile, nearly half (47%) upgrade property for energy efficiency reasons. 

Painting and decorating is the most common improvement that landlords typically make (95%) followed by installation of a new bathroom or kitchen (78%) and boiler (also 78%). Six in 10 (60%) also add new windows, whilst a third of landlords (36%) also make improvements to gardens.

One in ten landlords plan to exit the sector following spring statement

Published On: March 22, 2023 at 11:03 am

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Categories: Landlord News

Following a disappointing spring statement for the buy-to-let sector, lettings and estate agent Benham and Reeves has found that not only were half disappointed that a reintroduction of mortgage tax relief didn’t come to fruition, but one in ten now plan to exit the sector as a result. 

The survey of UK landlords commissioned by Benham and Reeves found that 49% were disappointed that whisperings of a potential reintroduction of mortgage relief were unfortunately just that and the Government didn’t decide to u-turn on the subject in last week’s spring statement. 

It was hoped that the Government would throw the buy-to-let sector a bone following a string of legislative changes that have caused many to exit the sector and 71% of those surveyed by Benham and Reeves stated that they would have also liked to have seen some other form of incentive announced.

12% of landlords also revealed that they had planned to increase the size of their portfolio but will not refrain, while a further 6% will still push on with their plans to expand their investment.

However, 10% stated that they will now reduce the size of their portfolio due to a lack of support from the Government, with an additional 8% already having planned to do so. 

What’s more, one in ten also stated that they plan to exit the sector due to a lack of government incentives to remain, while 7%, again, had already planned to exit prior to the spring statement. 

So where are those who exit planning to place their money? 

Stocks and shares ranked as the most prominent buy-to-let alternative, with premium bonds, bonds, commodities and classic cars also rank amongst the most popular alternative investment avenues.

Marc von Grundherr, Director of Benham and Reeves, comments: “The Government has been waging war on buy-to-let investors for quite some time now and many within the sector were hoping that the spring statement would finally see them thrown a sugar lump, rather than shown the stick. 

“Unfortunately this failed to materialise, but while disappointing, the majority of landlords remain unfazed and, let’s face it, unsurprised. Although they have no plans to increase the size of their portfolio, they also won’t be reducing it.

“However, one in ten have had enough and with the Government failing to incentivise them in any way, they are reducing their portfolios and exiting the sector. With some 2.74m landlords currently operating within the sector with around two properties per landlord, that’s a potential reduction of over half a million rental homes.

“This is, of course, bad news for the nation’s tenants, who will be left with even less choice when it comes to quality accommodation and an even higher commitment when it comes to the cost of renting.”

Landlords more worried by Section 21 reform than Stamp Duty or loss of tax relief

Published On: March 20, 2023 at 3:44 pm

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Categories: Landlord News,Law News,Lettings News

A third of landlords say that the scrapping of Section 21 is of major concern to them according to Mortgages for Business, a specialist buy-to-let broker.

The poll found that 33% of landlords were worried by the reform of Section 21 as part of the Renters Reform Bill.

The buy-to-let broker says government plans will effectively create open-ended tenancies whereby landlords will have to give a reason for eviction — such as rent arrears or antisocial behaviour — as well as include evidence of the tenant’s shortcomings.

Gavin Richardson, the managing director of Mortgages for Business, comments: “Fears surrounding the scrapping of Section 21 are a driving force behind landlords not remortgaging and selling-up instead.”

In future, all tenancies will be assured tenancies that will continue indefinitely unless ended by one of the new Section 8 grounds for possession. These include: if the landlord wants to sell the property (or move into it) or if there has been a breach of the tenancy by the tenant.

Richardson comments: “Section 21 notices have been abused for years. They have been used as a vehicle for ‘revenge evictions’, for instance, where renters who have complained about their property are evicted in retaliation.

“I don’t think the reforms will prove to be that bad. First, tenants didn’t have to do anything wrong to justify a Section 21 notice — they could have been paying the rent on time and taking good care of the property. Sensible landlords rarely turf out good tenants who pay their rent as they want them to stick around. So this reform will disproportionately hit bad landlords abusing Section 21, rather than the reputable end of the market.

“Second, tenancies can still be ended if there has been a breach of the tenancy by the tenant.  Furthermore, the Government has said it will introduce a new ombudsman to settle disputes between tenants and landlords without the need to go to court — and speed up court processes where possession cases require them. The Government has also promised to digitise the courts’ agenda ahead of these reforms to ensure a swift resolution to these cases.

“Third, owners will be able to end a tenancy if they plan to move back in or sell it — that was the real danger of this reform, anything that inadvertently risked landlords’ ability to realise the value of their housing assets through disposal.

“The loss of full tax relief on mortgage interest payments for individual landlords, the Stamp Duty surcharge on additional property property purchases, and the need to ensure properties meet energy efficiency rules expected to apply from 2025 are all far more significant for landlords.

“You’d never guess that from the Government rhetoric though. For instance, I don’t think for a moment that Section 21 exacerbated homelessness as one Tory communities secretary claimed. The politicians are irresponsibly trying to curry favour with tenants: the country will suffer as the private rented sector — with its efficient use of property stock — dries up. 

“The Government needs to stop trying to gain cheap brownie points by taking a pop at the private rented sector and needlessly spooking landlords. It is the reason the Government has lost the confidence of responsible landlords.”

Mortgages for Business’ research found that the chief concern of landlords was higher mortgage rates (a concern of 63% of landlords) followed by Section 21 reform, EPC regulations, and tax (both a concern of 32% of landlords).

Gavin Richardson comments: “Of the big concerns raised by the business people working in this entrepreneurial sector, government is responsible for all of them — from Kwasi Kwarteng’s catastrophic mini-budget smashing up rates to new EPC legislation and the changes to the way the Private Rented sector is taxed. 

“It’s hard to see how this is the work of the party of business. The Government is making it harder to start and grow a business in the private rented sector. The UK is not a place where property entrepreneurs know they can build on their ideas and find success. Landlords’ potential is being restrained.”

10 tips for moving house with a pet

Published On: March 16, 2023 at 9:15 am

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Categories: Tenant News

Pet-friendly property experts Essential Living have teamed up with dog behaviour and training specialist Sue Ketland to share ten tips for making the transition safe and stress-free for you and your furry friend:

1. Gradually prepare your pet for the move

Moving house is an unsettling time for a human, let alone an animal who isn’t involved in the decision-making process or aware of what’s happening next. For this reason, it’s a good idea to start by slowly preparing your pet for the house move over time. The earlier you start, the more time they will have to adjust. 

With dogs, moving house can be an easier experience compared to cats, as dogs tend to form stronger bonds with their owners rather than being attached to a specific place. However, the disruption of a move can still be stressful for dogs as they thrive on routine.

There are a few things you can do to prepare your pet for the move. For example, try to acclimatise them to the sight and sound of boxes or items being packed and moved in your current home, whilst maintaining a consistent routine as much as possible.   

Depending on how far away your new home is, walk them around the neighbourhood or to the local park. Not only will this introduce them to the new sights, sounds and smells but get you both excited for your future routine together. Also, it’s a great way to get to know other dog walkers in the area and make friends ahead of the move.

2. Make sure your new garden is pet-proof

Before your four legged friend officially moves into your new house, make sure the garden is secure first. 

To prevent your dog from running away or any fall-outs with the new neighbours, carefully inspect how secure the boundary is in your garden. For instance, if there are holes in the fence or big gaps in the hedge then it won’t be long before your dog sniffs out an escape route.

3. Register with a local vet

If you’re moving further afield, don’t forget to register with a vet in your local area. Have this on your to-do list ahead of the move to ensure that you have medical support nearby. 

In the unfortunate event that something does happen to your pet shortly after you move in, at least you are prepared for it.

4. Ask a close friend or family member to pet sit on moving day

On the day of the move, arrange for your dog to stay with a trusted friend or family member while the house is being loaded and unloaded. This will reduce the risk of your dog straying or getting scared by unfamiliar people, such as removal company employees.

It will also allow you to complete the move as quickly and efficiently as possible, without the added worry of your pet getting in the way or upset on the day.

5. Get any noisy DIY out the way

Depending on how long your pet can stay away, aim to get any noisy DIY jobs such as drilling and hammering done before they join you in the house. You don’t want their first impression of their new home to be a scary or overwhelming one.

6. Try to maintain their typical routine

Keeping your pet, especially dogs, to their usual routine will help with the settling-in process. 

For example, try to maintain the same feeding procedures as you did at your old address as this will create less disruption for them. If your pet is used to being fed in the kitchen, try to do the same in your new home. When it comes to their walking or sleep routine, aim to mimic this too with the length of time they typically get.

While your pet can be flexible and the odd hour or day won’t make a drastic difference, it’s important to remember that too much change at once could have a negative effect and they may start to show signs of this in their behaviour.

7. Plan how to safely transport your pet 

When your house is prepped and ready for the arrival of your pet, make sure that you have a plan for transporting them there, especially if it’s a significant journey to your new address.

In line with The Highway Code, you will need a doggy seatbelt or a vet-approved pet carrier to transport your furry friend by car.

Also, consider appropriate stop off points en route, especially if they are nervous travellers or the journey will take more than two hours. Have a bowl, some of their favourite treats and spare water packed in the car ready for any rest breaks.

8. Keep something familiar in their new home

Bring some things to their new home that will remind them of their old environment. For instance, avoid washing your pets bedding ahead of the move or buying a new one, as their scent will help them to settle in faster.

9. Take time off work

It’s also recommended that you take a few days off work while both you and your pet settle into your new home. Try to avoid going straight back to the office and leaving them alone in an unfamiliar place for an extended period of time.

When it comes to accessing support from your employer, Denise Monteiro, legal assistant at national law firm Richard Nelson LLP, adds: “If you require time off from work to look after your pet, book in some time to have an open and honest conversation with your manager or HR team as soon as possible.

“Check your work contract and internal policies to see what support you are entitled to so you are ready to discuss your options or any challenges ahead of the meeting. 

“For instance, pawternity leave, or pet leave, has become increasingly popular since the pandemic, as employers recognise the growing role our pets play in our day-to-day lives. Also, if you are required to work in the office full-time, there may be an option to make a work from home request during the settling in period. 

“However, in the unfortunate situation that there are limited to no support options available via work, annual leave may be the only way you can support your pet properly from home.”

10. Get professional support if your pet is acting out of character

If your pet is showing signs of being distressed or depressed, it’s important to seek professional help sooner rather than later. Pacing, whinging, shaking, hiding, damaging the home, and not wanting to eat are all signs that your pet might be struggling with the move.

There are a wide range of support services available to help both you and your furry companion. For instance, Woodgreen Pet Charity have experts and behaviourists on hand to offer free advice and support at all times, from managing behavioural issues to financial concerns. 

Try not to panic and remember to be patient with your pet. Like you, they will need time to adjust to their new environment. With the right support and guidance, your pet will soon settle into their new home and be back to their happy, playful selves.