Posts with tag: Buy-to-Let

Quarter of house sales fell through in final 3 months of 2015

Published On: January 6, 2016 at 2:00 pm

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Categories: Property News

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Data released today by Quick Move Now has indicated that the house sale fall through rate increased in the final quarter of 2015.

Figures from the report suggest that there was a house sale fall through rate of 27.94% in the last quarter, rising by 8.32% on the 19.62% recorded in quarter three of last year.

Consistent

Additionally, Quick Move Now revealed figures for the annual fall through rate, offering a better overview onto how the property market is performing in general.

The yearly fall through rate was revealed to be fairly constant throughout the whole in 2015, hovering around the 29% mark. As the year drew to a close, the fall through rate was 29.26%.

‘2015 was an interesting year for the UK property market and the fall through rates reflect that,’ observed Danny Luke, Business Manager at Quick Move Now. ‘Tougher lending criteria was introduced as a result of the Mortgage Market Review, which meant some prospective buyers found it challenging to secure a mortgage, or found they were able to borrow less than they had anticipated. In fact, nine percent of sales that fell through did so as a result of not being able to secure a mortgage.’[1]

Luke believes that, ‘the two biggest reasons for house sales falling through in Q4 2015 were buyers changing their mind (27.2%) and problems identified at survey or failed renegotiation following a survey (27.2%) which is unsurprising in the current market.’[1]

Quarter of house sales fell through in final 3 months of 2015

Quarter of house sales fell through in final 3 months of 2015

Lack of supply

‘A lack of properties coming to market has led to prospective buyers having to move very quickly in order to secure a property and may mean they put an offer in on a less than ideal property through fear that they’ll be unable to find anything else,’ he continued. ‘Some inevitably get cold feet about such a large investment, or find that a survey confirms their fears and pull out before the sale completes.’[1]

Mr Luke went on to say, ‘chain collapse still featured prominently, with 22.7% of property sales falling through as a result of chain issues and it’s definitely an issue very much on sellers’ minds. We get calls every day from sellers keen to secure a guaranteed sale so they don’t risk missing out on their onward purchase due to a chain collapse.’[1]

‘Seller pulling out for a higher offer (9%) and buyer health issues/personal problems (4.5%) make up the remaining failed completions,’ he concluded.

[1] http://www.propertyreporter.co.uk/property/1-in-4-house-sales-fell-through-in-q4-2015.html

 

 

Conservative Peer Attacks Buy-to-Let Tax Changes

Published On: January 6, 2016 at 12:46 pm

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Categories: Finance News

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Howard Flight, a Conservative peer, has attacked his own party’s changes to the buy-to-let sector.

Conservative Peer Attacks Buy-to-Let Tax Changes

Conservative Peer Attacks Buy-to-Let Tax Changes

Lord Flight, a former Conservative shadow chief secretary to the Treasury, has voiced his concerns over the forthcoming reforms to landlord taxes.

“I hope the Government will re-think its sudden attack on buy-to-let this summer and autumn,” he begins. “Otherwise, it risks the very crisis in the buy-to-let housing and lending markets of which the Governor of the Bank of England has recently warned.”

Flight warns that buy-to-let tax changes could cause a sharp decline in property prices, “if not a crash”.

He explains: “The only buy-to-let ‘tax advantage’ has been the ability for the interest cost [on buy-to-let mortgages] to be offset against an individual’s income to determine their tax bills – the very thing which the Finance Act measure has hit by limiting the tax deductibility of mortgage interest to a 20% tax rate.

“This will hit more modest buy-to-let investors the most, while many of the more sophisticated have their buy-to-let properties held via a company.”

Under the Finance Act 2015, buy-to-let mortgage interest tax relief will be cut, but landlords operating through a company will not be hit.

Additionally, from April, buy-to-let investors and second home buyers will be charged an extra 3% in Stamp Duty on properties worth over £40,000.

Flight warns that these two tax changes together could “put thousands of tenants’ security at risk”, as landlords rush to evict tenants and sell their properties.

He explains the significance: “Buy-to-let has provided some three million homes for those not able yet to afford to buy their homes – especially in London.”

The article, published on the Conservative Home website, arrives just days after a major accountancy firm, KPMG, warned that these tax changes could push rent prices up.

It believes that developers could struggle to sell new build property due to high Stamp Duty costs for investors, causing the supply of rental homes to drop and therefore driving rent rises.

Read Lord Flight’s full article here: http://www.conservativehome.com/thecolumnists/2016/01/howard-flight-the-government-is-wrong-to-attack-buy-to-let.html

Property damage costs landlords £4.5bn per year

Published On: January 5, 2016 at 2:00 pm

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Categories: Landlord News

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Latest figures have indicated that landlords in Britain shell out a huge £4.5bn per year to fix property damage caused by their tenants. In addition, rent arrears account for around £900m per annum in costs.

Data from research conducted by TDS suggests that thousands of landlords are faced with property damage at the conclusion of a tenancy agreement. The most-common issues are broken appliances, damage to carpets and unauthorised decoration.

Disputes

According to statistics from the report, damage to property amounts to 56% of all deposit disputes. What’s more, TDS reports that 19.2% of all disputes raised resulted in 100% pay-out to tenants. On the other hand, 19.8% of deposit disputes saw landlords and agents paid out in full. In the remaining 61% of cases, monies were split between the different parties.

Founder and CEO of Imfuna Let, Jax Kneppers noted, ‘many landlords feel tenants are not held to account when damage is caused and that there is little they can do to protect their property. Furthermore, landlords have a poor record in winning tenant dispute cases.’[1]

Kneppers believes however that, ‘this could be changed dramatically if they ensure a few simple procedures are put in place at the start of a new tenancy agreement. For example, ensuring there is a fair contract in place for a new tenant along with a thorough and detailed inventory, will enable both parties to be treated fairly and reasonably. Time and time again, landlords are losing disputes because they’re not providing the right evidence to show that a tenant has damaged the property.’[1]

Property damage costs landlords £4.5bn per year

Property damage costs landlords £4.5bn per year

Protection

Mr Kneppers went on to say that, ‘the best way for landlords to protect their property and avoid a dispute is by ensuring that the condition of the property is fully recorded at the start of the tenancy, with a comprehensive inventory, along with a through check-in and check-out report.

All UK landlords are permitted to provide a detailed inventory to their tenants at the beginning of a new tenancy agreement.

Kneppers concluded by saying that Imfuna Let, ‘work with many landlords and agents who have managed to reduce property damage by carrying out mid-term inspections, supported by a thorough and professional inventory.’[1]

[1] http://www.propertyreporter.co.uk/landlords/property-damage-costs-landlords-%C3%A3%C2%A245bn-a-year.html

 

Government launches consultation on BTL regulations

Published On: December 31, 2015 at 11:47 am

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Categories: Finance News

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The Government has today launched its promised consultation on the jurisdictions that the Bank of England’s Financial Policy Committee should be allowed to implicate over the buy to let market.

This has been implemented in order to ascertain information on how the operation of the nations buy-to-let mortgage market could represent a risk to financial stability.

Targeted

Aimed primarily at individuals, institutions and associated bodies that could potentially be affected by the FPC’s powers of direction, the Government said it also would appreciate the views of other parties with an interest in housing market policies.

After the consultation has taken place, the Government has pledged to continue to examine the responses and utilise them accordingly to devise their instrument to place powers in legislation.

The Government believes that the Bank of England should have more powers to restrain the buy-to-let market if required. This could include directing regulators to permit lenders to put limits on their buy-to-let output.

In addition, the amount that buy-to-let investors could borrow or LTV could be altered and the Bank could also change the required ratio of perceived rental income to mortgage interest payments.

At present, lenders are not currently supportive of more controls for the market and warn that it does not necessarily need more regulations.

Changes

There have been calls for upcoming changes to the market, such as the 3% stamp duty charge from April, to take effect before any additional regulations are made. The Council of Mortgage Lenders director general Paul Smee said, ‘we understand the rationale for putting the macro prudential tools at the Bank of England’s disposal, but also recognise that this does not necessarily mean they will be used. In our view, buy to let does not constitute a market that currently requires further macro prudential intervention, especially as the effect of several recent tax changes is yet to be fully felt and evaluated.’[1]

‘We urge policymakers to be mindful of the risk of unintended consequences that could adversely affect the private rented sector, alongside their focus on ensuring that the buy-to-let market does not pose a threat to financial stability, ‘ he added.[1]

Government launches consultation on BTL regulations

Government launches consultation on BTL regulations

Confusion

Peter Williams, director of the Intermediary Mortgage Lenders Association, said that the industry could be confused by what the Government is trying to implement.

Williams said, ‘in the Autumn the Chancellor, in giving evidence to the Treasury Select Committee, appeared to state unequivocally that the power to place limits on place limits on buy to let mortgage lending was to be granted without the previously advertised consultation having taken place as to whether new powers were justified at all.’[1]

‘Recently the Governor of the Bank of England also appeared to suggest that he was preparing to exercise such powers,’ he continued. ‘Now the consultation on what those powers might be has finally materialised, there is much that should be discussed and challenged.’[1]

‘The points advanced in support of further regulation do not appear to be well supported by evidence. At the same time there is considerable work required on the part of lenders and trade bodies to bring together a detailed response, and we should be reassured that this will not be a waste of time if the consultation is simply to rubber stamp a decision already made behind the scenes,’ he concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-buy-let-regulation-2015123111379.html

 

 

Nearly half of BTL landlords looking to raise rents in 2016

Published On: December 31, 2015 at 10:30 am

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Categories: Landlord News

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As 2015 comes to a close, a new survey suggests that 2016 could be an expensive year for tenants.

Data from a report conducted by SpareRoom.co.uk found that 45% of buy-to-let landlords are looking to increase rents in the coming year, with 18% planning on raising them by more than 3%.

Legislations

The most common reason landlords questioned gave for stating their plans to raise rents were the upcoming changes in legislation, with 38% giving this as their catalyst. This suggests that future cuts to mortgage interest tax relief, stamp duty alterations and the national Right to Rent roll out could be felt by tenants and landlords alike.

Additional reasons for rent hikes were local rent increases (23%), expensive property repairs (6%) and greater mortgage repayments (4%).

The table below indicates how landlords plan to change rents in the coming year:

Landlords: What do you plan to do with rents in 2016? Response (%)
Raise by more than 3% 18%
Raise by less than 3% 27%
Keep the same 52%
Lower by less than 3% 1%
Lower by more than 3% 2%

[1]

Nearly half of BTL landlords looking to raise rents in 2016

Nearly half of BTL landlords looking to raise rents in 2016

Reality

A harsh reality is that average rents per room could rise by more than 3% in 2016. During this year, the typical UK rent for a double room in shared accommodation increased by 8.6% to stand at £593, according to SpareRoom’s analysis.

In the capital, average room rents increased by 6.3% to hit £721 per month.

‘The roll out of Right to Rent legislation, removal of mortgage interest tax relief and changes to the wear and tear tax break from 2017, on top of stamp duty changes coming in 2019, means buy to let looks like far more of a risk than it did at the start of the year,’ noted Matt Hutchinson, director of SpareRoom.co.uk. [1]

‘The worry is that tenants will bear the brunt of these changes. And if renters end up being the ones to shoulder the burden of legislative change, something has gone very wrong. The private rental sector is already under immense pressure,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/45-of-landlords-say-they-will-raise-rents-next-year.html

Landlord banned for letting out -sub-standard garage

Published On: December 30, 2015 at 12:02 pm

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Categories: Landlord News

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There has been precious little Christmas cheer for a landlord in Leicestershire, who was banned after renting out a converted garage space.

Environmental health officers found a family living in below-standard conditions in the detached double garage in Braunstone Town, Leicestershire. This was despite the garage having undergone a partial conversion and being equipped with a kitchen, bathroom and bed-sit room,

Inadequate

Council officers found the property to have no heating, inadequate insulation and no smoke alarms. What’s more, the windows and doors of the property were found to have rotten.

On a further visit, officers found a major fault with the electrics. Just one plug socket was found to be of a safe standard. The family, including one small child, were paying £800 per month to live in the converted garage!

Thankfully, the spirit of Christmas prevailed, with the family now re-homed after renting the garage for 7 months.

Landlord banned for letting out -sub-standard garage

Landlord banned for letting out -sub-standard garage

Concerns

One of the greatest concerns of the inspectors was the main garage door, which was not removed by the landlord. This meant that tenants had no-where to sit with sufficient natural light.

Environmental health officers served a prohibition order on the property, which states that the landlord will be prosecuted should anyone be found to be living in the property before works are completed.

A council spokesman said, ‘it is hard to believe that any landlord thinks that it is acceptable to let a family live in the conditions found in this property.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2015/12/ban-for-landlord-who-let-out-sub-standard-converted-garage