Posts with tag: Buy-to-Let

One in four would not tell their landlord about damage!

Published On: April 18, 2017 at 2:06 pm

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A new survey from TheHouseShop.com has revealed that one in four tenants wouldn’t inform their landlord if they made significant damage to their rental property.

Data from the report shows that while 15% of people would hire a professional to repair the damage incurred, over one in ten would attempt to fix issues themselves!

Damages

58% of respondents said that they would report any damages to their landlord, but 27% said that they would not.

Of the 27%:

*11% would attempt to fix damages themselves

* 15% would call on a professional

*Only 1% would hide the problem and hope for the best!

Of those honest 58% of respondents:

*24% would offer to pay the repair bill in full

*7 would contribute to the repair bill

*27 would wait and see if they were required to pay anything

One in four would not tell their landlord about damage!

One in four would not tell their landlord about damage!

Accidents

Nick Marr, Co-founder of property marketplace TheHouseShop.com, noted: ‘While the vast majority of tenants will not actively try to do damage to a property, accidents do happen, and even well-meaning and reliable tenants can end up inflicting significant damage during their tenancy.’[1]

‘The best advice I could give to landlords would be to encourage an open and honest relationship with their tenants, so that tenants don’t feel scared or nervous about reporting any damages as soon as they happen. Having a direct relationship with your tenants, as opposed to using a third party agent or management service, can be a great way to build trust and avoid any nasty surprises further down the line. However, it is important to remember that landlords should always conduct thorough checks and references on any potential tenants before they move into the property. That way you can hopefully avoid the nightmare tenant horror stories that so many landlords can recall in an instant,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/1-in-4-admit-they-wouldnt-own-up-to-landlord-about-damage.html

 

Ltd company landlords now own 20% of UK rental properties

Published On: April 18, 2017 at 10:19 am

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The most recent report from Countrywide has revealed that the number of properties being let by company landlords saw the largest year-on-year rise during Q1 of 2017.

These landlords are now enjoying a 20% share of the market, which is the highest proportion since records began in 2010.

Rises

Countrywide suggests that alterations to tax relief on rental properties, as announced in the 2015 Spring Budget, could be behind the increases.

Landlords letting properties in the capital are most likely to own their own property through a limited company, with 27% of properties let here being owned through this measure.

In fact, company landlord lets drive both the top and bottom of the rental market, with the most and least expensive properties more likely to be owned by a company landlord. During the last year, one quarter of homes let by a company landlord cost less than £500 pcm.

Ltd company landlords now own 20% of UK rental properties

Ltd company landlords now own 20% of UK rental properties

Rents

Rents slipped in March 2017, with the cost of a new let 0.3% lower than it was in the same month last year. The average rent for a new let in Great Britain is now £928-£3 less than one year ago.

This fall in growth was driven by London, the South West and Wales, where rents fell by 0.4% 0.2% and 6% respectively.

Johnny Morris, Research Director at Countrywide, noted: ‘The number of rented homes owned through a company is on the up. The incoming tapering of mortgage tax relief is likely driving the increase. Companies are generally taxed more favourably, particularly with recent changes by government to tax relief, so in many cases landlords can make cash savings by operating through a company rather than as an individual.’[1]

‘Rents fell again in March, mostly driven by falls in London.  Stock growth continues to outpace demand in the capital, giving tenants more negotiating power, pushing down rents.  In much of the rest of the UK rents continued to grow, although at a slower rate.’[1]

[1] http://www.propertyreporter.co.uk/landlords/company-landlords-now-own-1-in-5-rental-properties.html

 

Reputation of good landlords being tarnished by the bad

Published On: April 12, 2017 at 10:28 am

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Local councils have called on the Government to close a legal loophole permitting landlords to covert properties into multi-units that are marketed as self-contained flats.

Many landlords do this in order to secure the maximum level of housing level of housing benefit payments, that are paid directly to landlords on behalf of tenants.

Scam

The Local Government Association (LGA), which represents over 370 councils in England and Wales, feels that the housing benefit scam is leaving some tenants to live in poor and dangerous conditions. As such, the ‘Association has called for some accommodation to be closed and for more rogue landlords to be jailed, as opposed to being fined.

Industry figures indicate that private landlords received £9.3bn in housing benefit during 2015, over double the £4.6bn in 2006.

Councillor Judith Blake, LGA Housing spokesperson, observed: ‘No landlord can act outside the law and councils will do everything in their powers to ensure tenants can live in rented properties safe in the knowledge that local authorities are there to protect them.’[1]

‘However, the reputations of all good landlords are being tarnished by the bad ones and councils are being let down by the current system. Legislation is not keeping pace with the ingenuity to exploit loopholes which need to be closed as soon as possible,’ she added.[1]

Reputation of good landlords being tarnished by the bed

Reputation of good landlords being tarnished by the bed

Powers

Continuing, Blake said: ‘Legislation needs to be more joined up to prevent some landlords taking advantage of people at the sharp end of our housing crisis. Giving councils powers to be able to build more affordable homes is likely to be more successful at meeting necessary standards than the private rental sector, and help reduce the risk of tenants falling victim to potentially tragic and preventable consequences due to unscrupulous landlords.’[1]

‘Councils won’t hesitate to take irresponsible landlords to court for blatantly failing to comply with housing laws and any tenants who suspect their landlord of criminal behaviour or who have been evicted illegally should contact the housing team at their local council,’ she concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/4/the-reputations-of-good-landlords-being-tarnished-by-the-bad-ones-says-lga

 

HMOs in the North West outperforming standard buy-to-lets

Published On: April 11, 2017 at 10:09 am

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The most recent report from The Mistoria Group has revealed that HMOs are substantially outperforming more standard buy-to-let investments for both yields and returns in the North West.

Analysis shows that the average gross cash return before any charges or voids on HMOs with student or young professional tenants have risen to 12-15% over the last five years. This is in comparison to an average gross return of between 6-8% on a standard buy-to-let in the North West.

Greater Returns

HMO investors have seen a substantially higher return than standard buy-to-let investors during the last five years, with 13% in comparison to 7%. This comes despite the fact that the initial capital investment in a HMO is greater than for standard buy-to-let.

Mish Liyanage, Managing Director of The Mistoria Group, observed: ‘If investors buy HMOs in the right location, right market and from the right agent in the North West, they will achieve much higher yields than a standard buy-to-let in the Midlands or South East. Hence, HMOs provide a secure and an excellent performing passive investment to supplement your monthly income.’[1]

‘HMOs in Liverpool and Salford have become very popular with investors, as both cities have a high population of students and young professionals.  Also in both Salford and Liverpool, Article 4 is not in operation, so investors can convert a family home, or a home used by a single person (C3 -dwelling house/flat) to a small-shared house of up to six unrelated individuals (C4 –HMO), without any planning permission,’ he continued.[1]

HMOs in the North West outperforming standard buy-to-lets

HMOs in the North West outperforming standard buy-to-lets

Caution

Liyanage went on to note that each investor must show caution when choosing their purchase location:

‘Every investor needs to be cautious and ensure they buy in the right street, as yields can vary dramatically by postcode.  HMOs within walking distance of a University, or just a short bus or train journey away, will usually command the highest rents.’

‘Whilst the market conditions in many areas are becoming more developed and competitive, a HMO property with a superior spec can deliver landlords and investors an average gross rental yield of 13%, leveraged return on investment of 35% plus, before any charges and voids.’

‘For example, investors can acquire a high quality, three bed HMO which houses three students, from £120,000 upwards in Liverpool.  The return on investment is very attractive too, with 13% (8% cash rental and 5% capital growth). The gross rent on the property will exceed £1,235 pcm, as each room is rented out. Larger rooms, open plan living and kitchen areas, ensuites, TVs, unlimited broadband, premium kitchen appliances and furnishings are the type of features that help to generate a high yielding HMO.’[1]

[1] http://www.propertyreporter.co.uk/landlords/north-west-sees-hmos-continue-to-outperform-standard-btl.html

 

Rents will rise as result of tax relief changes

Published On: April 11, 2017 at 9:19 am

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New research conducted from online letting agent Upad has revealed that a number of buy-to-let landlords are still unaware of the alterations to mortgage interest tax relief.

20% of landlords were alarmingly oblivious to the fact that they could have to pay more money in tax as a result of the alterations. In addition, 47% have no clue have much more tax they could be paying in 2020, when the alterations to mortgage tax relief have been completely phased out.

Tax Relief Changes

Previous rules that allowed landlords to offset all of their mortgage interest against tax is being phased out during the next three years.

Once mortgage interest has been withdrawn by 2020/21, the consequences of Section 24 will mean that landlords will only be able to claim back a basic rate of 20% from their tax bill. As a result, their rental returns will be hit.

In addition, the research reveals that one in five landlords plan to raise rents in order to mitigate the cost of the new bill. This of course means that tenants could face a potential rise in rents as a result.

James Davis, CEO and founder of Upad, noted: ‘Higher tax will mean lower profits for many landlords, which is why some are warning that rents will have to rise this year. However, rent rises are likely to be deeply unpopular with tenants so landlords will need to think about adding some cost-effective, tax deductible improvements to their properties that justify asking for an increase. For instance, by providing complimentary Wi-Fi, upgrading the appliances or giving the kitchen or bathroom a makeover.’[1]

Rents will rise as result of tax relief changes

Rents will rise as result of tax relief changes

Reductions

For those landlords affected by the changes but yet to do anything about their future, there is still time, according to Davis.

‘You may need to sell off some low-yielding property, reduce some of your mortgage payments or change the ownership of your portfolio to protect the profitability of your business. Options include setting up a company to buy property or if you already own a rental property as a private individual, you could transfer it to a limited company,’ he observed.[1]

‘If you’re a higher rate or additional rate tax payer, or these changes risk tipping you into the higher tax bracket, and you own the property with a lower rate tax payer, you can transfer more of the rent to them to limit your overall tax bill. Another option could be to switch to fully furnished holiday lettings as these are exempt from the tax changes so you can still claim full mortgage interest tax relief,’ he concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/4/lower-profits-for-many-landlords-mean-rents-will-have-to-rise-this-year

 

Rental growth slows in the UK during Q1 of 2017

Published On: April 10, 2017 at 1:34 pm

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An increase in property options for tenants has led to a slower rate of rental growth in 2017 to date, with asking prices rising by just 1.8% year-on-year.

This is the smallest rate of annual growth since the final quarter of 2014 and less than half of the rate recorded one year ago, according to the most recent report from Rightmove.

Ups and downs

In addition, the data shows that for the first time since 2014, asking rents outside of London fell by 0.4% in the opening quarter of the year. This takes the average rent per month in the capital to £768.

Greater London saw average asking rents in the first three months of the year hit £1,937 per month-a rise of 1.5% quarter-on-quarter. Annually, falls have gone from a decline of 4.4% during the fourth quarter of 2016 to 4.2% in the first quarter of 2017.

What’s more, the report shows that new rental properties coming onto the market have been rising since the rush to purchase before last April’s 3% stamp duty hike. There are 12% more available properties for tenants to select from as opposed to the first quarter of 2016.

Lets

Rightmove also looked at the time taken to let a property, based on agents marking properties as let agreed on the portal. Nationally, this time is 10% longer on average than in the same period in 2016.

The time being taken to secure tenants has risen in all areas, with the exception of Wales, which has actually decreased by 5%.

Head of lettings at Rightmove, Sam Mitchell, said: ‘The supply boost following last year’s buy to let frenzy in the first few months of the year has continued through to 2017, introducing more competition in the market for letting agents trying to secure suitable tenants for their landlords’ properties.’[1]

Rental growth slows in the UK during Q1 of 2017

Rental growth slows in the UK during Q1 of 2017

‘This extra choice for tenants in many areas has inevitably led to properties taking longer to let than this time last year. However, agents are still reporting that well-priced properties in popular areas are letting quickly,’ Mitchell continued.[1]

Concluding, Mitchell said: ‘Agents’ properties need to stand out even more than before, so carefully considering how your property is presented is really important. Now might be the right time to encourage landlords to give the place a lick of paint or some new furniture to give them the edge to help secure the right tenant.’[1]

[1] http://www.propertywire.com/news/uk/rental-growth-slowed-uk-first-quarter-2017/