Posts with tag: Buy-to-Let

Landlord fined for not following correct eviction procedure

Published On: January 14, 2016 at 12:01 pm

Tags: Buy-to-Let,evictions,landlord,rogue landlords,tenants

A Birmingham landlord is counting the cost of his errors, having been ordered to pay substantial costs for illegally evicting a family of nine.

Mr Mirsad Solakovic, 37, of Sparkbrook in the city, was fined £700 and told to pay £1,500 following his rogue dealings.

Unlawful

Solakovic was found guilty of unlawfully evicting the family from a home in Bordesley Green, which was a contravention of Section 1(2) of The Protection from Eviction Act 1977.

The landlord asked his tenants to leave but did not serve them with the appropriate notice. As a result, Birmingham City Council wrote to the agent managing the property, outlining the correct legal procedure to be followed in order to successfully gain possession.

Subsequently, the agent served a new notice giving the tenants two months notice to leave the property. However, Mr Solakovic decided to ignore this and changed the locks to the home.

One of the family members returned home to find he was unable to access the home and immediately called the police. Despite this, Solakovic did not allow the family to return, only allowing one tenant to retrieve a few personal belongings.

Landlord fined for not following correct eviction procedure

Processes

Councillor John Cotton, Birmingham City Council’s cabinet member for neighbourhood management and homes, reminded landlords and agents that there are legislations that must be adhered to when looking to evict tenants. Cotton noted, ‘when relationships break down between tenants and landlords there are strict legal processes that have to be followed and council officers are here to help both sides move forward.’[1]

‘In this case, Mr Solakovic took the law into his own hands and unlawfully evicted a family. Today’s prosecution sends out a clear message that we will not tolerate this behavior and will pursue those landlords who operate outside the law,’ he concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/1/birmingham-landlord-fined-2-200-for-illegal-eviction

Upcoming SDLT rise will have ‘drastic’ affect

Published On: January 14, 2016 at 11:11 am

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,landlords,rental market,SDLT,Stamp Duty

The chairman of a leading property and construction group believes that the upcoming changes in stamp duty tax could have a major impact on the property market.

Mark Webb, chairman of the property and construction group at Smith and Williamson, believes the proposed increase of SDLT rate by 3% from April 1^st will, ‘drastically affect the profit margins of many in the property industry.’[1]

Changes

Upcoming alterations in legislation will see an increase of 3% from April on tax paid on buy-to-let, second homes and other residential properties that are purchased by individuals. In addition, residential properties bought by trustees, except from where there is a life interest and residential properties purchased by corporates or collective investment vehicles.

One exemption, where there has been a block purchase of a minimum of 15 residential properties, is being considered further.

A consultation document reads that the increased rates of SDLT rates will apply to the majority of transactions above £40,000 in England, Wales and Northern Ireland.

Upcoming SDLT rise will have ‘drastic’ affect

Key issue

Webb believes that, ‘the key issue affecting corporates is any available exemptions. The government is considering an exemption from the higher rates, with the possible intention of targeting this at cases where there is a bulk purchase of at least 15 residential properties in one transaction. It is seeking evidence as to whether making such an exemption available to individual investors as well as non-natural persons would support the government’s housing agenda.’[1]

‘The intention otherwise is that the first purchase of a residential property by a company or collective investment vehicle is subject to the higher rates of SDLT. Thereafter, as purchases of further properties would also be subject to the additional 3% charge, apart from where bulk purchases can be made, this would add a significant uplift in costs for corporates,’ he continued.[1]

Lack of encouragement

Mr Webb went on to say, ‘while appreciating that the new proposal may encourage investment in new sites, increasing the stock of housing, it will do little to encourage corporates and funds to invest in and improve other housing, such as small holdings being sold off by individual landlords trying to leave the industry. Where such properties are bought up by institutional investors, such as REITS, which the Government seems to want to encourage, the additional SDLT charges are likely to lead to higher rents rather than additional supply.’[1]

‘It should be recognised though that all options appears to remain open. The consultation has asked for all comments around an exemption and we expect funds, individuals and companies owning significant amounts of property or contemplating significant investment to argue that an exemption should apply,’ Webb concluded.[1]

[1] http://www.propertyreporter.co.uk/property/stamp-duty-rise-could-drastically-affect-property-industry.html

Energy efficiency compliance deadlines revealed

Published On: January 13, 2016 at 2:18 pm

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,energy efficiency,landlords,rental market,tenants

The Government has recently announced new information for landlords regarding energy efficiency compliance in rental accommodation.

Previously, it was announced that by April 2018, it would become a criminal offence to let out a property with an F or G property rating at the beginning of a new tenancy agreement.

Deadlines

Now, the Residential Landlords’ Association has said the Government has issued new dates for the next energy bands. These are as follows:

April 2020-the minimum requirement of an E or above rated property will apply to both new and existing lets
2025- Properties will need to be brought up to an energy efficiency of D or above
2030-Minimum target of all rental properties to be at least a C energy efficiency rating

Concern

However, the RLA has expressed concern over the accuracy of EPC’s. Richard Jones, policy advisor and company secretary of the RLA, noted that, ‘the Building Research Establishment estimates that around 100,000 properties have an incorrect F and G rating so these ratings should be better than they are.’[1]

Energy efficiency compliance deadlines revealed

‘This means some of those currently rated at the lowest banding Band G ought to be reclassified as Band F and quite a number of those that are in Band F do in fact meet the Band E requirement,’ he continued. ‘We are making repeated representations to the Government on this issue because we firmly believe that EPC’s must be accurate before compulsion is brought in.’[1]

In addition, Jones believes landlords and agents acting on their behalf are permitted to work out the best way to adhere to these newly announced deadlines.

‘If you carry out improvements piece by piece, going first to Band E and then subsequently Band D and then onto Band C a different approach is required than if you carry out a whole house improvement to go straight to Band C from the outset,’ he concluded.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/1/new-deadlines-revealed-for-lettings-sector-energy-efficiency-compliance

Where are the Northern hotspots for BTL investment in 2016?

Published On: January 13, 2016 at 12:10 pm

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,investment,landlords,northern England,Stamp Duty

2016 looks to be a busy year for buy-to-let investment in the North of England.

Recently, Rightmove.com predicted that the average price of a property in London could increase to a cool £1m later this year, on the back of high demand, cheap mortgages and lack of accessible housing.

Savvy

Differing trends in the market, coupled with upcoming legislation changes mean that savvy investors could save significantly by purchasing lower entry real estate properties in the North.

Lower house prices, increased yields and extortionate southern property prices are all leading the North of England to become a prime location for buy-to-let landlords looking to expand their portfolio.

What’s more, the lucrative student market is also continuing to thrive, with many of the UK’s most popular universities located in northern regions.

Location, location, location

Experience Invest has moved to highlight the top 5 northern cities, where buy-to-let and student property investment is set to thrive in 2016:

Liverpool

The Merseyside city has notoriously been a location for high rental income for a number of years, offering some of the greatest returns in Britain. 25,000 purpose built student rooms have been promised by 2017, therefore there is set to be a lot of potential for prudent landlords.

Manchester

At the centre of the Northern Powerhouse Scheme, Manchester is arguably the best northern location in which to invest. A growing population means there is increased demand for housing, from tenants and investors alike. The east and north of the region have good rental yields lower priced properties.

There are also 105,000 students currently attending four major universities in the city, again giving landlords plenty of demand for accommodation.

Newcastle

Offering favourable returns, the North East has often been seen as a lucrative investment area for buy-to-let. Yields of 9% are regularly achieved in central Newcastle, in comparison to a nationwide average of 6%.

Once more, student population in this city is thriving. Since 2008, a further 11,000 student rooms have been given the go ahead to accommodate demand.

Where are the Northern hotspots for BTL investment in 2016?

Sheffield

Benefiting from a large renovation in the previous ten years, the Steel City is now firmly back in contention as a top investment location. Boasting a young population, Sheffield’s rental property is being taken far quicker than supply becomes available.

The city has one of the cheapest tram networks in the country, has the superb Meadowhall shopping complex and a thriving music scene. 60,000 students attend the city’s two universities and formerly being one of them, your author can confirm that Sheffield is the place to be!

Leeds

As the 3^rd biggest city in the UK, Leeds is undoubtedly popular amongst investors. With an expanding population, the city has seen more and more students congregate in Headingly and Hyde Park on its outskirts.

In the centre, former warehouses and Victorian terraced buildings are interspersed with more modern apartment blocks and offices. Despite being a popular location, house prices are nowhere near those seen in the capital.

What trends will BTL market follow in 2016?

Published On: January 12, 2016 at 12:18 pm

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,landlords,remortgaging,rental market

Buy-to let remortgage transactions outweighed purchases by more than two to one in 2015, according to data released by Mortgages for Business.

However, this is likely to change during 2016, if the results for quarter four are any sort of a guide.

In the final quarter of 2014, remortgages for vanilla buy-to-let property accounted for 64% of transactions. HMO’s and Multi-Unit Freehold Blocks saw larger remortgage activity, at 78% and 88% respectively.

Unsurprising

David Whittaker, managing director of Mortgages for Business, noted, ‘the results aren’t surprising; for some time now landlords have been making considerable savings through remortgaging. Many have also been releasing equity to make improvements and plans further purchases, However, I anticipate that we will see a reversal of this trend in the first quarter of this year as landlords hurry to expand their portfolios before the stamp duty surcharge kicks in on 1^st April.’[1]

‘The number of enquiries for purchase finance is already well ahead of where we were this time last year, particularly from those looking to sell their personally owned property into a corporate vehicle,’ he added.[1]

What trends will BTL market follow in 2016?

Pace

Yields for all property types increased in Q4 of 2015 but in real terms, continued to fall as rental income struggled to keep up with rising property prices. Returns for the more complex properties however remained well above the 6% mark.

The total number of lenders in the market remained at 33, with the number of buy-to-let mortgage products rising to an average of 975.

Whittaker observed that, ‘it is unlikely that this average figure will be topped going forward unless new lenders enter the market, or some of the existing providers start to offer products to limited companies. Of course, that figure is only an average-at one point at the beginning of December our tracking system, Mortgage Flow, showed £1,168 products..’[1]

[1] http://www.propertyreporter.co.uk/finance/will-btl-purchases-transcend-remortgages-this-year.html

Councils tell tenants to stay put until legally evicted

Published On: January 11, 2016 at 4:05 pm

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,councils,landlords,rents,Section 21,tenants

An extraordinary move from councils across Britain is seeing many calling on tenants to stay put in buy-to-let property when asked to leave by their landlord.

This in turn has left many law-abiding landlords hundreds of pounds out of pocket after paying legal costs.

Remarkable

Councils are said to be using this tactic as the latest attempt to deal with Britain’s housing shortage.

Remarkably, some owners returning to their properties after living abroad are being faced with tenants refusing to move until they are legally evicted.

The eviction process takes around four months on average and is extremely costly for landlords. Experts believe the ‘sit-in’ problem is more acutely found in London and Birmingham, where demand for rental homes far outweighs supply.

David Lawrenson of LettingFocus.com, described the councils’ plan as, ‘stupid,’ before adding that, ‘it doesn’t encourage landlords to take on people who are financially vulnerable.’[1]

Worsening

Landlords having to deal with tenants staying put in their homes has gradually got worse as Britain’s house shortage continues to escalate. According to Rightmove, almost five people compete for every property available to let across the country. This figure rises to one in nine for rental property in the capital, as Rightmove says demand is at an, ‘all time high.’[1]

A rise in population and immigration has not been matched by the country’s housing stock. As a result, rents have spiralled.

For many, particularly in the South, suitable properties are unaffordable and would-be buyers are turning to local authorities for assistance. Those that have approached councils are being told that they cannot get help unless they are homeless and are being advised to stay put in rental accommodation until they are legally forced out.

Waiting game

Alan Ward, Chairman of the Residential Landlords Association, said it is a standard procedure for tenants to be told to stay put, providing there was no other homes in the area that they could afford. Ward said that tenants needed to wait until they were evicted before looking for a council property.

Councils tell tenants to stay put until legally evicted

Mr Ward said that the problem is, ‘becoming acute in some areas, not necessarily because there are fewer homes due to landlords exiting the market, but because there are more people seeking them. It partly comes back to immigration, as there are lots of people coming to this country and they typically want to rent properties.’[1]

‘The council only gets involved when a tenant is looking for social housing. Tenants are told they cannot be rehoused until the bailiffs are at the door,’ he added.[1]

Section 21

Landlords faced with tenants who will not vacate their property need to serve a Section 21 notice. Should the fixed term in the contract have already ended, this gives the tenant two months to find a new property.

If the tenant is unable to find a new home after two months, the landlord can apply for an eviction in court. Following this, it can take between six and eight weeks for the judge to grant a possession order.

[1] http://www.telegraph.co.uk/news/uknews/12092051/Councils-responding-to-Britains-housing-crisis-by-telling-tenants-to-stay-put-in-buy-to-let-properties-when-landlords-ask-them-to-leave.html