Posts with tag: accidental landlords

Accidental landlords in UK decline for first time in five years

Published On: October 16, 2019 at 8:58 am

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accidental landlords

The number of ‘accidental’ landlords joining the industry has begun to drop, according to a new analysis from Hamptons International.

The agent has estimated that one in 14 (7.1%) properties entering the rental market across Britain so far this year were listed for sale within the last six months.

It is considered that a slowing sales market has triggered some property owners to opt for letting their property instead of selling them on. This means that they have become ‘accidental’ landlords.

However, the overall proportion of homes let by ‘accidental’ landlords appears to be on the decline. Since 2018, this number has fallen by 8.6%. This is likely to be due to recent tax and regulatory changes in the private rental sector (PRS), with some facing increasing bills.

London apparently has the highest number of ‘accidental’ landlords, according to Hamptons International.

10.1% of homes listed to rent in the capital have been up for sales during the previous six months of 2019. This has actually decreased from 12.6% in 2018.

Aneisha Beveridge, head of research at Hamptons International, has commented: “Despite a weaker sales market, which tends to encourage accidental landlords, the proportion of homes to let having previously been listed for sale has fallen for the first time in five years.”

“Lower stock levels mean that the South continues to drive rental growth.”

Scotland and Wales have both seen the smallest changes in properties let by ‘accidental’ landlords, at -0.4% and -0.3% respectively. 

Scotland is at the bottom of Hamptons International’s table for percentage of properties let by ‘accidental’ landlords, whereas Wales is second:

– London, 10.1%

– Wales, 8.0%

– North East, 7.8%

– North West, 7.6%

– East of England, 6.2%

– South East, 6.0%

– South West, 5.8%

– West Midlands, 5.6%

– Scotland, 5.4%

– East Midlands, 5.3%

– Yorkshire and the Humber, 5.1%

Shelter Warns That Lack of Engagement from Accidental Landlords Has Serious Consequences for Tenants

Published On: September 18, 2018 at 9:00 am

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Shelter, the homelessness charity, has warned that it should be a requirement for landlords to be more engaged in the rental sector.

Furthermore, she added: “I’m increasingly thinking about those landlords whose behaviour and attitudes exist in the space between the RLA members and the ‘rogues’.
“The ones for whom becoming a landlord was necessitated by circumstance and wasn’t a conscious decision, the ones who have no interest in finding out more about the responsibility of providing another person’s home.

“These landlords may not be wilfully exploitative, but their disengagement and lack of awareness have serious consequences for their tenants and the lives being built in their properties. It is an enormous responsibility to be a landlord and it isn’t something that should be done half-heartedly.”

Neate said she hoped Shelter and the RLA can reach more of those ‘in-between’ landlords and “create a sector which is fully equipped across the board to provide the long-term, stable, good quality homes that are the foundation of wellbeing for individuals, families, communities and our society.”

The RLA publication also includes essays from Martin Partington, Chairman of The Dispute Service who accuses civil servants and politicians of not taking the rental sector seriously, while Luke Murphy, Associate Director at the Institute for Public Relations Research also calls for tax incentives for landlords who invest in the upgrade of the quality or energy efficiency of their property.

The essays were launched at an RLA parliamentary event this week attended by housing secretary James Brokenshire and the shadow housing secretary, John Healey.

Brokenshire commented:“I want to congratulate the RLA on 20 years of hard work helping make the private rented sector better for everyone.
“This is a vision shared by government and is why we have taken action to raise standards in the sector and protect tenants from substandard accommodation and unfair charges.
“There is much more still to be done to ensure everyone has a decent and safe home, and I look forward to continuing our work alongside the RLA in the months and years to come.”

Alan Ward, chairman of the RLA, added: “The RLA’s 20th anniversary provides an opportunity to take stock of where the private rented sector now is, and where we all want it to go.
“All the contributors recognise the importance of the sector in providing homes to many millions of people.
“As we go forward we need to ensure the sector works for tenants and good landlords alike, whilst rooting out the criminals who have no place in a modern rental market.”

Are accidental landlords causing issues for the PRS?

Published On: September 6, 2016 at 9:09 am

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A concerning new report has suggested that so-called accidental landlords could unknowingly be making serious issues in the private rental sector worse. These problems included property disrepair and unfair evictions.

This worrying report is entitled, ‘The impact of accidental landlords on the private rented sector,’ and was written by property expert Kate Faulkner. Funding for the piece was provided by the TDS Charitable Foundation.

Issues

Faulkner has already penned a separate report, called, ‘who are the individual landlords providing rented accommodation?’ This report highlights that a substantial section of landlords providing accommodating to private tenants are not actually professional landlords. Instead, they are accidental landlords, who never thought of letting their property.

Of course, this has implications for the Private Rental Sector, as there is a risk that some tenants could end up renting from landlords with limited knowledge of the responsibilities attributed to being in this role. Accidental landlords could struggle with rules and regulations, alongside managing costs.

The report suggests that accidental landlords could unwillingly be contributing to the serious issues of property disrepair. The latest English Housing Survey reveals that 29% of properties in the private rented sector are, ‘non-decent.’

Are accidental landlords causing issues for the PRS?

Are accidental landlords causing issues for the PRS?

Focused

Commentating on her report, Faulkner said, ‘due to the impact that accidental landlords can have on the Private Rental Sector, this report considers the definition of accidental landlords and why a landlord who isn’t wholly focused on making money from property may end up being potentially more likely to let one that is substandard and accidentally treat tenants unfairly.’[1]

Data from the report indicates that in some regions, this type of landlord could make up 30% of rental stock for tenants. Faulkner has called on councils to be more aware of the problem as they could let to unsuspecting tenants and unknowingly break letting laws.

In order to educate accidental landlords, the report suggests that lenders and insurance companies give as much information as possible to help them understand their rights and responsibilities.

Understanding

Faulkner has also called on local authorities, policy makers, tenants groups and others that provide services to landlords to ensure that their own staff understand tenants’ rights. She hopes that eventually, accidental landlords will be better equipped to let their properties legally and to treat their tenants fairly.

Concluding, Faulkner said, ‘the problem with accidental landlords is that as they don’t do this as a business they may well not have any way of keeping up to date with changes in rules and regulations. As a result, continuing to simply introduce new legislation to solve the issues around disrepair or tenant security of tenure may have little impact on this sector of the market. A concentrated effort to tackle better education and briefing of accidental landlords may actually be one of the key ways to improving standards in the Private Rented Sector.’[1]

[1] http://www.propertyreporter.co.uk/landlords/are-accidental-landlords-causing-problems-for-the-private-rented-sector.html

 

71% of accidental landlords unaware of tax changes

Published On: April 5, 2016 at 10:31 am

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Research from Direct Line for Business indicates that over half of new buy-to-let mortgage applicants are unaware of mortgage tax relief alterations. The firm highlights that accidental landlords are most likely to be unaware of the changes in legislation.

Concern

A survey of mortgage brokers revealed concerning results. 62% of respondents said they were unaware of changes to mortgage tax relief or the EU’s Mortgage Credit Directive. This is extremely worrying as these changes could impact on their mortgage availability criteria.

This number rose to 71% amongst so called accidental landlords-those who rent out a property having inherited due to unforeseen circumstances. Mortgage advisers suggest that accidental landlords account for 17% of the total new mortgage applications. Overall, buy-to-let mortgage applications have grown by 29%, according to the report.

In addition, just 7% of mortgage advisors said they felt the Mortgage Credit Directive will have a positive impact of buy-to-let mortgage approvals. 59% said they believed it would have a negative effect. Concern is growing that the Mortgage Credit Directive will see landlord mortgage lending seen as consumer lending, thus making accidental landlords subject to more stringent lending criteria.

From next April, changes to mortgage tax relief will see landlords unable to deduct mortgage interest payments before working out their bill. Instead, they will receive a tax credit, equivalent to 20% basic-rate tax on this amount.

71% of accidental landlords unaware of tax changes

71% of accidental landlords unaware of tax changes

Significant alterations

Nick Breton, Head of Direct Line for Business, said, ‘the new EU legislation on mortgages coupled with the Government’s increase in buy-to-let taxation could significantly alter the buy-to-let market, so we would encourage any mortgage applicants to think carefully about the new law and how this could impact them as a landlord.’[1]

‘With house prices in the UK rising by 7% in the year leading to October 2015 and with the estimated average deposit standing at more than £61,000, it is imperative that landlords are able to maintain a suitable amount of property to house the population of young people saving up to buy their first property or those seeking a temporary stay in a town or city,’ Breton added.[1]

[1] http://www.propertyreporter.co.uk/landlords/accidental-landlords-most-at-risk-warns-new-research.html

 

Legislation could seriously affect accidental landlords

Published On: March 10, 2016 at 11:55 am

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So-called accidental landlords are being warned that they could be refused cheaper mortgages, due to a lesser-known piece of legislation.

The EU Mortgage Credit Directive, coming into force at the end of the month, has been designed to stop, ‘risky’ mortgage lending. In addition, the initiative redefines landlord mortgages as ‘consumer lending,’ forcing them to be subject to tighter lending criteria.

Checks

In addition, new mortgage affordability checks will be introduced as part of the scheme. These are being implemented to ensure borrowers can afford their repayments-not only at their initial rate, but also if rates were to spiral by up to 6%.

These rules will also apply to those who are remortgaging. This means homeowners who are changing mortgage deals in order to take advantage of lower rates could be told they are unable to make repayments cheaper than what they are already making.

This move is most likely to impact on so-called accidental landlords-those who did not purchase a home intending to rent it out, but circumstances have forced them to do so.

Unaware

Alarming research from Direct Line indicates that 62% of new buy-to-let mortgage applicants are unaware of the changes. This figure increases to 71% for accidental landlords.

From next year, alterations to mortgage tax relief will see landlords unable to claim tax relief on mortgage repayments. At present, landlords can deduct mortgage interest repayments from their bill. However, the changes will see them instead receive a tax credit equivalent to 20% basic-rate tax on this amount. If interest rates were to rise, some landlords could well finish up paying tax on losses.

Legislation could seriously affect accidental landlords

Legislation could seriously affect accidental landlords

Ludicrous

Ajay Jagota, founder and MD of sales and lettings firm KIS, noted, ‘it sounds completely ludicrous for lenders to deny people cheaper mortgages because they can’t afford them and there’s good reason for that-it is completely ludicrous!’[1]

‘There is no question that this directive will create mortgage prisoners, people stuck overpaying on loans at a time when mortgage rates could be falling to their lowest ever levels. Literally anyone can end up an accidental landlord-through inheritance, through family breakdown or through having to relocate for work. Most of the time they have no ambition other than to cover their costs until their circumstances change and there’s a real risk that they might have to raise their rents just to cover those costs,’ he continued.[1]

Concluding, Jagota said, ‘lenders should have the right to waive the affordability criteria when they’re remortgaging if there’s no increase in borrowing. If nothing else, this directive seems to fly in the face of EU’s commitment to a free market by denying people access to the full range of financial products available to them.’

[1] http://www.propertyreporter.co.uk/landlords/eu-tells-accidental-landlords-they-cheaper-mortgages.html

HMRC targets landlord underpayments

Published On: March 14, 2014 at 5:20 pm

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HM Revenue & Customs (HMRC) are in the process of contacting landlords to ascertain additional information regarding their rental income and further measures. It is thought that landlords with property in London, East Anglia and the South of Wales are being most targeted.

Questions

Some of the information that HMRC are requesting includes property addresses and the number of tenants residing within them. In addition, landlords may be asked to provide details of how they came to acquire the property and if they have a mortgage. Landlords using Self Assessment will be asked to provide information to support their declaration of income.

HMRC targets landlord underpayments

HMRC targets landlord underpayments

Crackdowns

This particularly move from HMRC comes as part of the process to crackdown on rogue landlords. October last year saw the Inland Revenue start to use more extreme measures to chase landlords who had either paid little or no tax. Then, in November, a campaign was launched designed to tackle so-called accidental landlords who had underpaid taxes.

HMRC said that they were presenting landlords with a fair, “opportunity to bring their tax affairs up to date,” and to get, “the best possible terms to pay the tax they owe.”[1] This will be covered under the Let Property Scheme, which requires full information on unpaid tax in return for a fair option for preferred payment conditions.
[1] http://www.landlordexpert.co.uk/2014/03/14/residential-landlords-across-the-country-are-facing-a-new-crackdown-as-hmrc-targets-underpayment/