Posts with tag: private rental sector

The Government is Not Trying to Kill Off Buy-to-Let, Says Housing Minister

Published On: April 13, 2016 at 11:22 am

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The Government is not trying to kill off investment in the buy-to-let sector, insists the Housing Minister, Brandon Lewis.

Responding to claims from ex-Conservative MP Michael Portillo during the Association of Residential Letting Agents (ARLA) conference, Lewis said that the Government’s intention is to create a more professional private rental sector and eliminate rogue landlords.

The Government is Not Trying to Kill Off Buy-to-Let, Says Housing Minister

The Government is Not Trying to Kill Off Buy-to-Let, Says Housing Minister

Landlords have recently been hit by changes to their finances, notably the 3% Stamp Duty surcharge and the change in the Wear and Tear Allowance.

From April next year, landlords will also see a reduction in the amount of tax relief they can claim on their buy-to-let mortgage interest payments. Finance expert Paul Mahoney, of Nova Financial, explains how these changes will affect landlords’ lettings businesses.

However, Lewis told agents at the conference that the Government is still backing the private rental sector through schemes such as Build to Rent.

He insisted: “Our primary focus is increasing supply and homeownership. Most people – 86% – want to own their own home, but we also want a private rented sector. We want more institutional money and more professionally managed property.

“Buy-to-let is still an area with capital security and revenue returns, so there is still an attractive revenue model.”1 

Lewis added that schemes such as Right to Rent would crack down on rogue landlords.

Answering questions from the audience, Lewis also said that he would look into introducing electrical safety rules, similar to those already enforced in Scotland.

He was also interested in measures to make it easier to avoid court proceedings in tenant evictions.

For all of the changes affecting the buy-to-let sector and property market, remember to check your landlord updates at LandlordNews.co.uk and on social media.

1 http://www.propertyindustryeye.com/housing-minister-denies-government-is-trying-to/

Interest in Buy-to-Let Properties Falls by Over a Quarter

Published On: April 13, 2016 at 8:39 am

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Interest in new buy-to-let property purchases fell by over a quarter in March, as the Stamp Duty deadline loomed, according to new data from Rightmove.

Inquiries dropped by 27% compared with March last year, reversing the upward trend recorded between December and February, when interest rose by 24% annually.

The Head of Lettings at Rightmove, Sam Mitchell, comments: “This waning of interest definitely seems to predict a slowdown in the buy-to-let market, but what’s not yet clear is if this will only turn out to be a short-term pause.

“It could be that some investors are waiting until the tax changes have had time to bed in before they review their business and continue to make purchases. If this removes some of the competition for smaller properties, then it could spell good news for many first time buyers.”1

Interest in Buy-to-Let Properties Falls by Over a Quarter

Interest in Buy-to-Let Properties Falls by Over a Quarter

76% rise in buy-to-let sales in March compared to the previous year, as landlords rushed to beat the Stamp Duty surcharge.

Rightmove also found that the average rental asking price increased by 0.8% in the first quarter of the year.

Average rents ranged from a huge £2,021 per month in London – a 1.6% rise on last year – to £538 a month in the North East – down 0.5%.

However, some of Rightmove’s figures contrast with newly agreed actual rent figures released by HomeLet.

HomeLet’s research shows that the average rent in the capital is now £1,536 – up by 7.7% over the past year – and for the rest of the UK (excluding London), the average rent is £755 per month.

In the North East, however, Rightmove and HomeLet figures are only £7 apart, with HomeLet reporting £531 a month.

HomeLet’s study also found that in March, 37% of its insurance policies were bought by landlords with new properties. This was just 24% last year.

The CEO of Barbon Insurance Group, Martin Totty, says: “We’ve continued to see increases in rents on new tenancies in almost every part of the UK during the first quarter, as the private rental market has responded to the pressures of an imbalance between demand and supply.

“However, external factors may now come into play: the Stamp Duty increase has already had an impact and that surge in the acquisition of property by landlords could now cause a short-term increase in the supply of rental property in some areas of the country. In the longer term, changes to rules around buy-to-let mortgage interest being offset against tax bills, coupled with the Bank of England’s instruction to lenders to apply more exacting criteria on buy-to-let lending, may have a limiting effect on supply.

“The data from the HomeLet Rental Index will be eagerly anticipated over the next few months as an indicator of the impact these changes may have on the market. However, despite these factors, we expect the private rental sector to continue to play a crucial role in a housing market where population growth will continue for the foreseeable future, according to official projections.”2 

We will continue providing you with landlord updates on all the goings on of the market.

1 http://www.propertyindustryeye.com/interest-in-buy-to-let-purchases-drops-off-by-over-a-quarter/

2 https://www.landlordtoday.co.uk/breaking-news/2016/4/london-rents-7-7-up-on-last-year

Many Tenants Experiencing Problems with Their Landlord

Published On: April 12, 2016 at 2:44 pm

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More than half of all tenants in London and the South East have experienced problems with their landlord, according to a new study. One of the most common issues is failing to have repair work completed on their rental properties.

The survey by Tenants Plus found that having to deal with bad landlords is the biggest worry of tenants, beating sky-high letting agent fees and rent rises.

Many Tenants Experiencing Problems with Their Landlord

Many Tenants Experiencing Problems with Their Landlord

The research also found that around 40% of hopeful tenants have to view up to five properties before finding a home due to fierce competition in the private rental sector.

The process of finding a rental property is also becoming increasingly stressful, with four in ten tenants worried about the cost of moving home. More than half of the 597 members of generation rent surveyed are worried about problems with their landlord.

Additionally, 4% of tenants in London and the South East said they fear being evicted from their properties. This is the highest rate in Britain and double the national average.

London’s private rental sector has boomed in recent years, as spiralling house prices push the capital’s prospective first time buyers out of homeownership.

At present, around a quarter of Londoners rent from private landlords. It is believed that by 2025, just 40% of those living in the capital will own their own home, compared to 60% in 2000. Shockingly, three quarters of young Britons believe they will live in the private rental sector forever.

In the last ten years, the rental market has been growing by an average of 17,500 households per month.

Research by housing charity Shelter found that around half of those living in private rental accommodation have had to borrow money to cover their rent.

Data from the Government shows that rent prices rose by 19% in London over the last five years, with the typical two-bedroom flat now costing over £1,600 per month.

Tenants Plus’s Wayne Treveil comments on the findings: “It is not agents and landlords that are the main offenders here, but successive governments that do not deliver on new housing promises.

“There is an obvious need for the Government and next mayor to prioritise more stable tenancies and commit to building the genuinely affordable homes young Londoners are desperate for.”1

The Residential Landlords Association (RLA) has recently released its London mayoral manifesto, which details the changes it hopes to see under the new mayor. It includes the call for the mayor to take action on the number of empty homes across the capital.

1 http://www.standard.co.uk/news/london/bad-landlords-are-biggest-bugbear-for-private-tenants-a3222376.html

CEO of lettings agency in scathing attack on the government

Published On: April 11, 2016 at 10:54 am

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A chief executive officer of a leading lettings agency has slammed the Government’s performance for its first year in office.

Writing in the property magazine Estates Gazette, Ian Wilson, chief executive of Martin & Co, gave David Cameron just two out of ten in a ‘scorecard exercise.’

Performance

Mr Wilson’s analysis focused on how policies implemented or announced in the last twelve months have impacted on the residential property market.

In the last year, cuts in landlords’ mortgage interest tax, the rises in stamp duty on buy-to-let transactions, Right to Rent immigration checks and alterations to Wear and Tear allowance have all had impacts on the sector.

Wilson is particularly damning in his assessment, noting, ‘the Conservative government has failed the private rental sector. Unintended consequences of the reforms are emerging, with residential landlords fighting to complete on properties before April, pushing first time buyers aside. House prices are artificially high in the UK because of restrictions on land use dating back to World War 2.’[1]

CEO of lettings agency in scathing attack on the government

CEO of lettings agency in scathing attack on the government

Solutions

Continuing, Wilson said, ‘the private rental sector has been superb in providing housing solutions for those unable to buy a home and as such, the sector has doubled in the last 20 years, organically and with no government support. Individuals have invested in the buy-to-let sector out of their own pocket, made feasible by allowing the interest on a Buy to Let loan to be offset as a business expense.’[1]

‘The changes the Conservative are imposing have not only caught people off guard, undermining confidence in a highly valuable sector of the market, but have deliberately penalised small time landlords, the stalwarts of the sector. Meanwhile corporate organisations, who have offered little in the way of housing solutions, retain in all tax benefits. The government needs to think hard before using a blunt instrument in a fragile housing market as it could have far longer term implications,’ Wilson added.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/4/agency-chief-gives-cameron-2-out-of-10-for-lettings-sector-performance

 

Future of buy-to-let positive, landlords suggest

Published On: April 1, 2016 at 11:51 am

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Further defiance from buy-to-let investors in the face of today’s increases in Stamp Duty alterations has been recorded by new research from Aldermore.

A study of nearly 1,000 landlords by YouGov on behalf of Aldermore looked at how the changes have affected existing and would-be investors. Questions asked included if landlords would increase rents, look to sell their property and how they thought the sector would evolve in the future.

Rises

70% of respondents to the survey noted that they expect the number of tenants in the private rented sector to rise in the next five years. 33% feel that the gross value of the buy-to-let market will fall in the next twelve months.

63% of landlords in the UK said they only own one investment property, which they rent out. 95% of respondents said they had five or less properties in their portfolio.

Future of buy-to-let positive, landlords suggest

Future of buy-to-let positive, landlords suggest

Fearless

Charles Haresnape, group managing director for mortgages at Aldermore observed that the figures, ‘show that the majority of landlords believe there is nothing to fear for the future of the buy-to-let market in the UK.’ He feels, ‘it is clear that the vast majority of landlords fall into the accidental category and as such would be unaffected by upcoming changes as they are not actively looking to build a rental portfolio.’[1]

‘With 70% expecting the number of people in the private rented sector to rise over the next five years, it is vital that regulation does not stifle this hugely important segment of the UK housing market, particularly at a time of significant constraints,’ he continued.[1]

Concluding, Haresnape said, ‘the majority of our buy-to-let customers are committed long-term landlords. While they will obviously not welcome an increase in stamp duty, over the course of a 20 year investment the sums remain relatively small and are unlikely to significantly affect the buy-to-let market.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/3/btl-market-has-strong-future-say-landlords

 

Property price inflation to cancel out Stamp Duty

Published On: April 1, 2016 at 9:31 am

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Today sees the additional 3% stamp duty surcharge come into force on buy-to-let and additional properties in England and Wales.

However, new analysis from national estate agent, Jackson-Stops & Staff suggests the reforms will fail to have the desired effect of putting off buy-to-let investors.

Inflation

Following a surge in investment during the run up to the deadline, there are already signs that purchasers will not be deterred by the changes. A key reason for this is that many investors will see property price inflation compensate them for the additional stamp duty, within one year or less.

Jackson-Stops & Staff warn that the greatest losers of the stamp duty reform will be tenants, with landlords ultimately passing on their additional costs to rental prices.

Research from the Association of Residential Letting Agents (ARLA) indicates that the majority of landlords keep their investment property for more than one year. Data shows that 33% of landlords keep their buy-to-let property for between 11-2o years. This suggests that many landlords reap benefits from house price growth in the long-term.

[1]

Level playing field

Nick Leeming, Chairman at Jackson-Stops & Staff, noted, ‘the Government, through it’s new stamp duty surcharge, is trying to make the playing field more even between property investors and first-time buyers by eating into landlords’ profits.’

‘Our message to landlords is that when you do the sums and look at the direction of house prices, placing money in bricks and mortar is still by far the best investment vehicle. If property prices continue on their trajectory, within a year or less of buying their investment property the vast majority of landlords would have earned back all the money given through stamp duty, even with the new 3% surcharge, by doing nothing at all-just sitting back and watching the price of their home increase. Therefore the idea that the stamp duty tax will act as a deterrent is a fiction, as for most landlords it won’t amount to a significant figure,’ he added.[1]

Property price inflation to cancel out Stamp Duty

Property price inflation to cancel out Stamp Duty

Demand

Continuing, Leeming observed, ‘the Bank of England has clearly noted that the 3% stamp duty surcharge is unlikely to ease buy-to-let demand from investors and has now announced its own intervention to cool the market. From a landlord’s perspective it appears as though UK institutions are out to get them. Around half of all privately rented homes are owned by landlords with buy-to-let mortgages, providing homes for people who choose to rent as a lifestyle choice or are trying to get onto the housing ownership ladder.’[1]

If the research is correct, eight of ten regions of England and Wales will find capital gain will negate additional stamp duty payments within a year. The two regions where predicted capital gains on an average priced home do not cover the increase are in the North East and North West.

Concluding, Mr Leeming said, ‘the North East and North West regions of the UK, where house price growth is more restrained at present, are the only regions where landlords will find capital growth in the first year does not eclipse the new stamp duty they would have to pay. These two regions are also the only two where home owners currently pay no stamp duty on the average home as the average property price still remains under £125,000, the price level where stamp duty first bites. Tenants here are more likely to see landlords in future pass on this additional cost via rent and we also anticipate investors to be more assertive when they negotiate on buying a home, which will be reflected in lower offers.’[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-to-be-compensated-for-stamp-duty-rise.html