Posts with tag: Buy-to-Let

Extent of surge in BTL activity in March revealed

Published On: April 11, 2016 at 9:22 am

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New figures from Countrywide have revealed the monetary extent of the surge in buy-to-let investment ahead of the stamp duty surcharge deadline.

The firm said that £28bn worth of sales were completed last month, a rise of 76% in comparison to the previous year.

Increases

Countrywide assessed the entire market and noted that landlords made up 23% of all home sales completed in March. This was compared to 13% at the same period in 2015. What’s more, in the two weeks running up to the deadline, over half of all property transactions were completed by landlords.

This rise in landlord business demonstrates that additional housing is being made available for tenants to rent. 22% more rental properties were on the market in the first quarter of 2016t than in the same period last year, contributing to lower rental growth.

However, this percentage increase in the number of homes to rent has not been followed by the increase in tenants looking for a home, putting increased pressure on rents. The total number of tenants registering their interest in rental property was up 16% in the first three months of 2016, in comparison for the same period in 2015.

Regional Rises

By region, London saw the biggest increase in newly rented properties, with numbers up by 40% on the first quarter twelve months ago. This said, London actually has a lower growth of tenant numbers, up by just 8% in the same period.

As a result, there has been a rapid deceleration in rental price growth, with rents in Greater London growing by 2.9% in March, as opposed to the 7.4% recorded a year ago.

The average rent in the UK increased by 3.4% in the year to March 2016, with rents accelerating quickest in the East of England, rising by 8.5%. This growth was driven by larger numbers of new tenants registering during the first quarter of 2016, with 34% the highest increase seen in any region.

Extent of surge in buy-to-let activity in March revealed

Extent of surge in buy-to-let activity in March revealed

Temporary Effect

Johnny Morris, research director at Countrywide, noted that, ‘quite at odds with the intentions of the policy, the first measurable effect of the introduction of the new stamp duty rate has been to increase the number of homes owned by landlords, although this will likely be a temporary effect as we see reduced investor activity in future months.’[1]

‘The increase in supply of homes to rent from landlords bringing forward purchases seems to have taken the edge off rental growth. A similar increase in tenants looking for a home to rent though would indicate this may not persist. The large number of sharers and people living with parents means there is a big store of pent up demand in the rental market,’ Morris concluded.[2]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/4/half-of-homes-sold-in-late-march-were-for-buy-to-let–countrywide

Fake Gas Safety engineer given suspended sentence

Published On: April 8, 2016 at 9:15 am

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A rogue gas fitter has been given a suspended jail sentence after illegally installing a gas boiler in a privately rented property.

What’s more, Mr Christian Winter undertook landlord’s gas safety checks that he had no authority to carry out.

Unsurprisingly, the boiler installed by Winter was later found to be extremely dangerous.

Incompetent

Mr Winter, trading as CJS Winter Plumbing & Heating Services of Ashburton in Devon, installed the boiler at a property in Kingerkerswell.

He then proceeded to undertake landlord’s gas safety checks at the property, despite having no competency in gaswork, or being registered on the Gas Safe Register. Winter also conned the landlord of the property by using a fake Gas Safe Register registration number on all of the records he produced.

Exeter Crown Court heard that Mr Winter’s illegal gaswork became apparent when the boiler he installed was inspected by properly registered member of Gas Safe.

Fake Gas Safety engineer given suspended sentence

Fake Gas Safety engineer given suspended sentence

Faults

On inspection, the registered engineer found various faults with the installation and subsequently classed the equipment as dangerous.

Further investigation from the Health and Safety Executive revealed Winter had used fraudulent Gas Safe details to con the landlord. When the landlord was eventually informed of the problem, she challenged Winter but still, he continued to lie about his supposed qualifications.

Breaches

In court, Winter pleaded guilty to breaching Regulation 3(3) and 3(7) of the Gas Safety (Installation and Use) Regulations 1998 and Section 3(2) of the Health and Safety at Work Act 1974.

As such, Mr Winter was given a suspended prison sentence of 12 months, ordered to complete 200 hours of unpaid work and told to pay costs of £3,327.80.

House prices up by 2.9% in Q1 of 2016

Published On: April 7, 2016 at 10:50 am

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Data released today indicates that the average UK house price now stands at £214,811, with annual property value growth hitting 10.1%.

The report from the Halifax also shows that average property values rose by 2.6% in March, in comparison to the previous month. What’s more, prices in the first quarter of 2016 were 2.9% greater than those recorded in the last three months of 2015.

Annually, the rate of growth increased from 9.7% to 10.1%-the greatest yearly increase since the three months to July 2014.

Rush

Observers suggested that the rush of buy-to-let investors striving the beat the Stamp Duty increases deadline contributed significantly to driving prices up.

However, there could well be a lull in price rises over the next two months. Martin Ells, Halifax housing economist observed, ‘worsening sentiment regarding the prospects for the UK economy and uncertainty ahead of the European referendum in June could result in some softening in the housing market over the next couple of months.’[1]

Howard Archer, chief UK and European economist at business research firm IHS, also noted, ‘post April, a likely warning of buy-to-let and second home interest may modestly dilute housing market activity and ease upward pressure on prices.’[1]

House prices up by 2.9% in Q1 of 2016

House prices up by 2.9% in Q1 of 2016

Spiralling demand

Long term, house prices are very likely to continue to rise, with demand outstripping supply in the majority of regions.

Mr Ellis added, ‘current market conditions remain very tight with an acute supply/demand imbalance continuing despite an improvement in the number of properties coming onto the market for sale in recent months. This, together with continuing low interest rates and a healthy labour market, indicate that house price growth is set to remain robust.’[1]

By property type, prices of flats have risen more markedly than any other since 2008, rising by 57% over the period. This was in comparison to 37% for residential property as a whole. Detached homes having risen by 20% in the same timeframe, with terrace and semi-detached houses recording rises of 38% and 34% respectively.

[1] http://www.theguardian.com/money/2016/apr/07/uk-house-prices-pick-up-pace-101-annual-increase-halifax-brexit?utm_medium=twitter&utm_source=twitterfeed

Rogue landlord in Birmingham jailed for neglect

Published On: April 7, 2016 at 9:15 am

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A rogue landlord from Birmingham has been jailed for a whole host of safety breaches in a four-floor property in Edgbaston.

Cyrus Bassiri was sent to prison for 19 months and told to pay £13,820 following his disregard for health and safety in his rental property.

Greedy

During sentencing at Birmingham Crown Court, Mr Bassiri was described as ‘greedy and cynical’ and was told he put, ‘profit before the safety of tenants’ by Judge Mary Stacey.

The Court heard that two fire alarms in the property did not work and that a fire escape was blocked by a washing machine and display cabinet. What’s more, emergency lighting was fitted incorrectly and a fire door was found to be damaged.

When firefighters raised their concerns with Mr Bassiri, he responded in an ‘aggressive and bullying’ manner.

Exploitation

Judge Mary Stacey told Mr Bassiri, ‘you have been greedy, you have been cynical and you have been exploitative of the occupants of this property in your control. Having failed to address the matters raised by the fire brigade you responded to their attempts to get you to comply with your legal obligations by being aggressive, by bullying behavior, by threatening to take them to court and expose them to the press.’[1]

Previously, 59 year old Bassiri had admitted three counts of failing to adhere to general fire precautions and two of failing to comply with an enforcement notice.

Rogue landlord in Birmingham jailed for neglect

Rogue landlord in Birmingham jailed for neglect

Disregard

Mark Jackson, prosecuting, noted Mr Bassiri had already been handed a six-month suspended sentence for breaches of fire safety regulations in another property in 2012. In addition, a member of the public complained over further disregard to fire safety rules in the property during 2013.

Mohammed Afzal, defending, argued Bassiri had wrongly believed he was the victim of a plot to force him out of the property and there were ‘only three tenants.’ He also claimed Mr Bassiri was, ‘distracted by a business dispute and was under severe pressure.’[1]

Buy-to-let investors should utilise advice for landlords on fire safety before making a purchase.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/4/birmingham-landlord-jailed

 

 

 

New rental adverts soared ahead of SDLT changes

Published On: April 6, 2016 at 11:54 am

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New to market rental adverts for properties soared ahead of the changes in Stamp Duty Land Tax on April 1st, research has revealed.

Property Partner, a property crowdfunding platform, analysed the number of new rental properties being advertised between 28th March-3rd April. It then compared these figures to those recorded between 21st-27th March in over 90 towns and cities across the UK.

Results show that in 85% of locations, there was a significant increase in the number of new rental properties coming onto the market.

Rises

In a number of areas, rises recorded were substantial. Telford in the West Midlands saw listings up by nearly 160% in the week of the changes coming into force. New to market properties in Stevenage nearly doubled.

Five of the top ten areas in terms of rise in rental properties coming to market were found to be in the North of England.

Of all major cities, London saw new property listings increase by 19.4% between 28th March-3rd April, in comparison to the previous week. In Manchester and Birmingham, new advertisements were up by 28.7% and 49.9% respectively.

New rental adverts soared ahead of SDLT changes

New rental adverts soared ahead of SDLT changes

Final rush

Dan Gandesha, CEO of Property Partner, observed, ‘inevitably, there was a final rush by investors to complete on property purchases ahead of the 1st April stamp duty surcharge deadline.’[1]

‘More rental properties on the market is good news for tenants, but sadly this looks like a temporary blip. The savings landlords have made may turn into losses further down the line. Future cuts to mortgage interest tax relief and likely interest rate rises could wipe out profits and force many landlords to sell up,’ he continued.[1]

Looking to the future, Mr Gandesha said, ‘longer term, we’re likely to see the supply of rented properties dropping and rents increasing. The pressing issue is to get Britain building more homes for tenants, as well as buyers.’[1]

‘The Government has changed the whole structure of the UK buy-to-let market and made it less attractive and viable for amateur landlords. Once the dust has settled on the stamp duty hike, anyone looking to invest in residential property would be wise to consider alternatives to traditional buy-to-let, which do away with the hassle, expense and tax implications,’ Gandesha concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/new-to-market-rental-properties-spiked-before-stamp-duty-dealine.html

Advice for landlords-check your agreements are compliant!

Published On: April 6, 2016 at 9:18 am

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Concerning new research from landlord insurance provider Direct Line for Business suggests that some landlords have no formal tenancy agreement with their tenants.

According to the firm’s investigation, 10% of landlords have no legally binding contract with their renters.

Compliance

Data from the research shows that where contracts are place, landlords could be unknowingly asking tenants to sign forms that are not legally compliant. Of landlords who do not use a letting agent, 58% said that had used modified agreements for old agent contracts, other landlords (38%) or a template they found on the internet (20%).

Most commonly, the investigation found landlords utilise agents when they first rent out their property, but then use older contract templates when agreeing renewals. This lack of legally reviewed tenancy agreements could be an explanation why 13% of landlords said they have had difficulties with disputes coming from tenant’s rental contracts over the past two years.

More reason for concern was highlighted with the news that 9% of landlords admitted to not informing their tenants that their deposit had be held in a tenancy deposit scheme. This is a legal requirement and must be done within 30 days after a deposit has been taken. Alarmingly, 4% of landlords said they had not taken any deposits from their tenants!

Advice for landlords-check your agreements are compliant!

Advice for landlords-check your agreements are compliant!

Protection

Nick Breton, Head of Direct Line for Business, noted, ‘tenants and landlords need a contract in place to protect both their interests. Contracts, deposits and deposit protection all help to make clear what is expected from each party when renting a property and which can help minimise disputes where possible. If an old contract is adapted it may not comply with new legislation or be relevant for the current market. Given the volume of disputes arising from tenancy agreements it’s important to get the contract seen by a legal professional before it’s signed.’[1]

‘We understand that getting legal documents in place can be complicated which is why we’ve launched our new Legal Documents Service for landlords. Not only can this save landlords time and money, but creating the documents is both quick and easy and most importantly, they can be reviewed by a Solicitors Regulation Authority regulated law firm to ensure they are legally compliant. Based on our research of solicitor prices, it is estimated each landlord using the service would save over £2,503’ Breton added.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-beware-check-your-contracts-58-may-not-be-legally-binding.html