Posts with tag: Buy-to-Let

Government promises new affordable rent measures in White Paper

Published On: February 6, 2017 at 11:20 am

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The Government has pledged to put in place a new emphasis on tenants renting a property when it moves to unveil its housing strategy for England this week.

Housing Minister Gavin Barwell has promised more minimum tenancies and more homes built specifically to be rented out.

Available Housing

Mr Barwell said that the Government has not given up on making home ownership available to everybody.

However, Labour leader Jeremy Corbyn has noted that the rental market was, ‘incapable of giving people the security they need.’[1]

Speaking to the BBC’s Sunday Politics, Mr Barwell promised a package of measures would be included in the White Paper, which is due to be released tomorrow (7th February).

These measures will look to encourage more investment in building affordable properties to rent. Barwell defined these homes as at least 20% under the market rate, while he also encouraged councils to be more active.

Manifesto Promises

The last Conservative election manifesto stated: ‘Everyone who works hard should be able to own a home of their own.’ Mr Barwell said the Government remained committed to reversing the home ownership decline.

He observed: ‘Whether you’re trying to buy or you’re trying to rent, housing in this country has become less and less affordable because for 30 or 40 years governments have not built enough homes and this White Paper is fundamentally trying to do something about that.’[1]

This focus on tenanted properties was welcomed by Rico Wojtulewicz of the House Builders’ Association.

Wojtulewicz noted that if small and medium enterprises were better equipped, then the correct types of properties in the correct areas would materialize.

Also speaking to the BBC, he said: ‘Concentrating too much on volume house-building, as we’ve seen in the last decade, is problematic – not just for supply, but the type of supply.’[1]

Government promises new affordable rent measures in White Paper

Government promises new affordable rent measures in White Paper

Embarrassing

Barwell acknowledged that the most recent figures, indicating that the number of new homes were at a 24 year low, were embarrassing. He insisted that the Government was committed to building one million new homes in England by the year 2020.

However, he said that rules on the Green Belt were likely to be unchanged: ‘This idea that we can only fix our broken housing market by taking huge swathes out of the green belt is not true.’[1]

In response, Labour said that the build-to-rent proposals are far short of what is required.

Jeremy Corbyn said: ‘The private rented market is incapable of dealing with demand, incapable of giving people the security they need, and particularly in our major cities, it is so expensive that it means many poorer, middle-income, working-class families are getting moved out.’[1]

Instead, Corbyn has called for investment in council housing and further regulation of the private rented sector.

[1] http://www.bbc.co.uk/news/uk-politics-38873524

Landlords who haven’t signed up to Rent Smart Wales exposed

Published On: February 6, 2017 at 10:08 am

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An investigation is underway after the personal details of hundreds of landlords who have not registered for Rent Smart Wales were revealed.

Rent Smart Wales contacted people who had started but not completed the registration process. However, the email address of all recipients could be seen in these messages.

Cardiff Council, which deals with Rent Smart Wales has said it is aware of the issue and will investigate thoroughly.

Fines

Many buy-to-let investors in the country could face hefty fines or even prosecution for failing to sign up.

Over two months have passed since the Rent Smart Wales scheme became law. However, it is estimated that thousands of private landlords in the country have not yet signed up to the scheme, meaning that they are letting out their properties illegally.

The email sent to landlords read: ‘We are writing this email to you as you have a started but not complete landlord registration with Rent Smart Wales.’[1]

Douglas Haig, director for Wales for the Residential Landlords Association, noted: ‘We have long been warning of the need for greater security around the Rent Smart scheme to prevent this kind of error occurring. With landlords and letting agents expected to register by law, they need to have the confidence that their personal details will be handled sensitively.’[1]

‘Whilst we are sure this was an innocent mistake and a simple case of human error, we would like to see measures put in place to ensure it cannot happen again,’ he continued.[1]

Landlords who haven't signed up to Rent Smart Wales exposed

Landlords who haven’t signed up to Rent Smart Wales exposed

Licensing

Landlords and letting agents were given until the 23rd November to comply with the new legislation, before it became an offence to let or manage a property without the sufficient licence.

Caroline Jones from Bruton Knowles, said: ‘The enforcement powers under Rent Smart Wales are now active. This means failure to comply with the legislation is an offence. However, we know of numerous cases of people living outside of Wales who had no idea on the new Rent Smart scheme. Our fear is that there are many landlords out there who are blissfully unaware of their legal obligation.’[1]

Continuing, Jones noted: ‘One final consideration is how will Rent Smart Wales enforce any fines on those who genuinely didn’t know they had to register. We can see a lot of resistance by those who will claim they didn’t know anything about the scheme.’[1]

‘Tenants who have any concerns about the conduct of their landlord or agent can report this via the Rent Smart Wales website, however we think an element of common sense should be employed if there are cases of owners located outside of Wales, having not signed up.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/12/thousands-of-landlords-face-prosecution

 

Tax changes are not having desired impact, says peer

Published On: February 3, 2017 at 10:46 am

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The head of one of the country’s biggest franchise agency groups has stated that the Government’s tax assault on buy-to-let will not impact the drivers that will ultimately lead to rental sector expansion.

Ian Wilson, head of MartinCo said in a trading statement to the City, that the fundamental drivers for the expansion of the private rental sector remain in place:

  • High migration
  • Low supply of new housing stock
  • Deposit issues for first-time buyers
  • Pension reforms for over 55’s

Performance

MartinCo suggest that total returns from buy-to-let investment during the past ten months have outperformed all other asset classes. The prospect of owning a rental property to obtain income in retirement, alongside benefitting from rising capital values, remains an attractive one.

Tax changes are not having desired impact, says peer

Tax changes are not having desired impact, says peer

Mr Wilson said: ‘We do not envisage the Government’s recent interventions in the buy-to-let sector significantly impacting our business. Buy-to-let investors have generally reduced gearing in their portfolios over the years since 2008 and are believed to be able to absorb rising interest rates.’[1]

‘We are well positioned to sell investment properties if investors decide to exit and our research suggests that larger buy-to-let investors would purchase this stock. Early indications from the mortgage industry show that investors are beginning to incorporate their activities into trading companies to avoid the stamp duty surcharge and to retain the benefit of interest tax relief on buy-to-let loans,’ Wilson added.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/tax-changes-not-hitting-buy-to-let-significantly-says-agency-chief

Housing chief slams Right To Rent

Published On: February 2, 2017 at 2:50 pm

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An industry peer has moved to lambast the Right To Rent legislation, suggesting that the Government is largely unaware of its impact.

Mr John Perry, senior policy advisor at the Chartered Institute of Housing, feels that the Government must rethink the scheme before it rolls out to Scotland, Wales and Northern Ireland.

Application

Writing in The Guardian, Mr Perry said that no one knows if the Right to Rent bill is achieving its objective or if it even being applied whatsoever.

Perry wrote: ‘The Home Office has admitted it cannot monitor the scheme and it’s a fair bet given the limited publicity that at least a proportion of England’s 1.8m private landlords are still completely unaware of it.’[1]

‘Refugees who have been accepted in the UK often have to wait many weeks for documents to prove it – and many become homeless because they can’t get either a social or a private tenancy. Meanwhile British people can also be affected if they have no passport or other accepted proof of UK residence, and there are a raft of other circumstances that could mean a person may not satisfy the checks,’ he warned.[1]

Housing chief slams Right To Rent

Housing chief slams Right To Rent

Checks

At present, Perry thinks that there are 11,300 daily Right To Rent checks, but as of December 2016, there were only 654 individuals without documents attempting to rent.

Concluding, Mr Perry said: ‘The additional work by landlords was estimated by the government to cost a staggering £4.7m a year. It’s time for the government to seriously reconsider the impact of right to rent on vulnerable tenants and would-be tenants before it is rolled out to Scotland, Wales and Northern Ireland. It’s simply not good enough to claim that the scheme has a deterrent effect when the proven benefits are so limited and there are regular reports of the damage being caused.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/right-to-rent-housing-chief-says-its-not-good-enough

Tenants outraged by Santander contract clause

Published On: February 2, 2017 at 10:20 am

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Tenants and housing groups have vented fury towards Santander, after the lender included a clause in its buy-to-let mortgage contracts that requires landlords to raise rents by, ‘as much as can be reasonably achieved.’

Despite the wording appearing in Santander’s contracts since 2011, it has only just come to light, as buy-to-let investors continue to feel the pressure of the raft of recent tax changes.

Outrage

A private landlord who spotted this clause in her contract, subsequently contacted industry Mortgage Strategy.

Talking to the magazine, the landlord said: ‘The public views landlords as greedy, but how many people are aware that landlords are being forced to increase rents by banks such as Santander?’[1]

The Santander contract states that when rents are up for renewal the landlord must “get written advice from a qualified valuer [as to] whether the market rent at the date of the review is likely to be higher than the rent currently payable,’ she added.[1]

Santander requires a copy of the valuer’s advice in these circumstances and goes on to say: ‘If the valuer advises that the market rent at the date of the review is likely to be higher than the current rent, you will take all steps to ensure that the review takes place and leads to the maximum increase in the rent which can reasonably be achieved.’[1]

Reaction

One of the UK’s leading mortgage commentators, Ray Boulger, believes the clause, ‘does not square very well with the best interests of consumers.’[1]

Dan Wilson Craw of campaign group Generation Rent, noted: ‘This behaviour is undermining landlord-tenants relationships. Most of the time landlords won’t raise because they want to keep reliable tenants. Being forced to maximise returns will result in unnecessary churn in the market and the destabilisation of tenants’ lives.’[1]

James Daley, director of campaign group Fairer Finance, observed that the clause is: ‘Ethically, it’s absolutely the wrong thing to do. The market for rents should be competitive, and landlords should have the freedom to set rents that tenants can afford to pay and are willing to pay.’[1]

Tenants outraged by Santander contract clause

Tenants outraged by Santander contract clause

Disagreement

Responding to the criticism, a spokesman for Santander said: ‘The contract has been in place and remained unchanged since we entered the market in 2011. Landlords should set their rents at a prudent level that is fair for the tenant (based on market rates) and that ensures they can continue to service the debt. Our interest is that the landlord ensures they can continue servicing the loan.’[1]

‘Any potential to increase the rent is only that which can be ‘reasonably achieved’. There is plenty of discretion for the landlord to set a rent that they and the tenant agree, and no direct obligation imposed by us that the rent should be the maximum possible,’ they added.[1]

[1] http://www.telegraph.co.uk/investing/buy-to-let/santander-tells-buy-to-let-landlords-raise-rents-maximum/

 

BTL investors seemingly undeterred by Stamp Duty

Published On: February 1, 2017 at 12:38 pm

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New data released from the Council of Mortgage Lenders indicates that the number of homes eligible to pay stamp duty rose to 62,800 in Q4 of 2016.

This was a rise from 56,200 in Q3 and 30,400 in Q2 and suggests that people are still believing in the buy-to-let sector.

Stamp Duty rises

The introduction of the 3% increase in Stamp Duty during April of last year was widely expected to deter many investors from purchasing. However, the lure of high yields, low void periods and capital appreciation is still proving high for a number of people.

Many investors are still adding to their portfolios , reflected in rise in the amount that buy-to-let investors borrowed to invest in property during the final stages of the year.

Landlords borrowed £3.2bn in November 2016, up by 10% month-on-month, the greatest amount since the stamp duty changes were introduced.

The Treasury made £1.19m from the additional surcharge on second homes since the second quarter of last year.

BTL investors seemingly undeterred by Stamp Duty

BTL investors seemingly undeterred by Stamp Duty

Windfall

Nick Leeming, chairman Jackson-Stops & Staff chairman, said: ‘So far £1.19m worth of stamp duty receipts are estimated to be attributable to the additional 3% element payable on second homes, a significant windfall for Treasury coffers.’[1]

‘Between Q2 and Q3 the number of second homes liable for the 3% surcharge nearly doubled. This increase is understandable as many buy-to-let investors would likely have rushed to make purchases before April 1st, but the number of liable second home transactions is up again in Q4 to 62,800. The data suggests that buy-to-let investors are not being deterred by the new tax which is supposed to be dampening demand from this group to the benefit of first-time buyers. We will see the true impact of this policy in time, but my fear is that additional costs will be passed on to tenants,’ he continued.[1]

Concluding, Leeming noted: ‘The better solution is a real concerted drive to build more homes, rather than targeting buy-to-let investors – I hope the upcoming Housing White Paper contains a real blueprint for change in this regard.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/1/buy-to-let-landlords-undeterred-by-stamp-duty-surcharge