Posts with tag: rental market

Landlord jailed after cannabis cultivation

Published On: May 9, 2016 at 9:16 am

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A buy-to-let landlord has been put behind bars after being found guilty of growing cannabis with a value of £75,000 in one of his properties.

Despite claims that he was unaware of the cultivation, James Sullivan, 61, was given a three-year jail term.

Scent down

Officers were alerted to the illegal cultivation after detecting a scent from the street outside the house in Plymouth. When entering the property, the officers found 64 mature plants, some of which reached 4ft in height.

Mr Sullivan, a former paratrooper, was found guilty of growing cannabis between December 2012 and February 2013 and was sentenced to four years behind bars. However, this conviction was quashed by the Court of Appeal.

Addressing the most recent conviction, judge Ian Lawrie said: ‘you are a man of good character and what on Earth possessed you to get involved in criminal activity at this stage in your life, I do not know. But you are going to have to pay a heavy price.’[1]

Landlord jailed after cannabis cultivation

Landlord jailed after cannabis cultivation

Going to pot

The case of Mr Sullivan highlights the need for landlords to be wary of their tenants growing cannabis in their rental property.

In the last year alone, police seized 456,911 plants across Britain, according to Direct Line for Business. In London, 59,002 plants were found, more than in any other part of the country.

Birmingham is also the second city in terms of cannabis cultivation, with police in the West Midlands confiscating 52,218 plants. In greater Manchester, officers found 33,547 plants.

Jane Guaschi, business manager at Direct Line for Business, noted, ‘the consequences of a cannabis farm on a landlord’s property can be financially catastrophic.’[1]

Offering advice for landlords, Guaschi said, ‘landlords should check to see if their insurance policy covers them for malicious damage as it’s not just the structural damage that could have insurance implications, it’s the financial headache of the clean-up that will hurt the landlord’s back pocket. What’s more, landlords could face the loss of rent and the stress of the legal wrangling during periods of repair or eviction.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/landlord-jailed-for-marijuana-related-crime

UK rents up 4.9% in Q1, outside of London

Published On: April 13, 2016 at 10:51 am

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Rents for new tenancies in the UK experienced more growth in the first quarter of 2016, according to new research.

Latest figures from the HomeLet Rental Index show that rents on new agreements signed for properties outside of London were 4.9% greater than in the first three months of 2015. Average rents now stand at £755 per month.

In London, those signing new tenancy agreements were faced with average rents 7.7% greater than those one year ago.

Greater than inflation

Data from the HomeLet report indicates that rents continue to rise well ahead of inflation, with demand still showing no signs of cooling. These results however come ahead of reforms, such as increases in Stamp Duty, which are forecasted to have a substantial impact on the buy-to-let sector.

In addition, results from the report show evidence that residential landlords soared to the market ahead of the changes. HomeLet recorded a marked increase in enquiries for landlord insurance. 37% of insurance policies taken out by landlords were few new properties, in comparison to 24% in the same period in 2015.

London saw average rents for new tenancies rise to £1,536 and the region has once again seen prices increase more quickly than in other areas of the country. The gap between the capital’s rent rises and that of the rest of the UK is 2.8%.

Only the North West of England saw rents fall in the three months to March.

UK rents up 4.9% in Q1, outside of London

UK rents up 4.9% in Q1, outside of London

Continual increase

Martin Totty, Chief Executive Officer at Barbon Insurance, said, ‘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.’[1]

‘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,’ Totty added.[1]

Concluding, Totty said, ‘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.’[1]

[1] http://www.propertyreporter.co.uk/landlords/new-rents-outside-the-capital-rise-49.html

 

Is the North East the buy-to-let hub?

Published On: April 12, 2016 at 9:20 am

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Interesting new statistics may have revealed where the future of buy-to-let will be most prominent.

Research from the National Landlords Association shows that the half as many landlords in the North East have decided to sell their property during the past year than those in the rest of England. But just how will this affect the area moving forwards?

Northern Rule

In comparison to those in the North East, the number of landlords looking to sell in London has quadrupled since the announcement of increased stamp duty and cuts to mortgage tax relief.

Over the same period, the total of landlords looking to offload their property in the North East rose by only 7%. This was 40% less than the national average rise of 12%.

Further figures released by ARLA indicate that demand for rental properties in the North East rose by 17% between January and February of this year.

Property values in the North are still around half as much as those in the South. The average home in the North of England costs over £150,000 less than a similar property near to London.

Is the North East the buy-to-let hub?

Is the North East the buy-to-let hub?

Attractive

Ajay Jagota, founder and Managing Director of North-East sales and lettings firm KIS, observed, ‘there’s already been speculation that the tax changes could see 500,000 rental properties sold this year, but that doesn’t mean that their owners aren’t going to buy elsewhere-and anecdotally there seems to have been a real uplift locally in enquiries from investors from outside of the region looking to invest in property in the North East.’[1]

‘There’s no question that the region will become more attractive to investors in the coming months. Not least because the North East’s lower house prices will mean that the 3% rise in Stamp Duty on additional properties introduces last week and Bank of England plans for new affordability tests and stricter borrowing limits for buy-to-let mortgage won’t be so painful in this part of the country,’ Jagota continued.[1]

Yields

Mr Jagota went on to say, ‘the return on a typical buy-to-let property in London is currently something like 5.2% compared to as much as 7% in somewhere like Gateshead. You get a similar rental yield on a property in Peterlee than you do in London, with the added attraction that you can buy almost five properties there for the price of one in the capital.’

‘We don’t offer the same capital appreciation as other regions of the UK, but it’s clear that the North East has a lot to offer property investors-and as more competition can lead to lower rents and better homes, they have a lot of offer renters too,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/could-the-north-east-become-the-uks-new-buy-to-let-capital.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

 

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

ONS figures show changing face of UK housing market

Published On: April 7, 2016 at 12:01 pm

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Interesting data released by the Office of National Statistics (ONS) shows the economic downturn has shifted the demographic of home ownership in Britain.

Results from the latest economic review report from the ONS show the proportion of households who privately rent their home increased sharply following the downturn.

Surge

Those renting from a private landlord increased from 6% to 11% in the twenty years from 1988 to 2008. However, there was then a jump to 16% in the six years to 2014.

In contrast, the proportion of households owning their property increased slowly from 56% to 71% between 1981 and 2008. This figure then fell to 67% by 2014.

The fall in homeownership, coupled with the rise in private renting, reversed a three-decade trend of increasing numbers of home owners. The ONS report shows that this partly reflects tighter mortgage lending and the performance of house prices during the recovery period.

What’s more, the report shows that these features have assisted in cutting the fraction of households owning their own home with a mortgage. This has fallen from 43% in 1991 to only 31% in 2014.

Trends

While trends in homeownership have begun to reverse, the impact on specific groups of the population have been greater. The number of people choosing to stay living with their parents for longer has increased substantially, with patterns in tenure amongst independent property owners also altering.

Numbers of young people living in privately rented accommodation have risen massively both since the economic downturn and in the last decades. In 1987, only 9% of people aged between 26-30 rented. However, this figure increased to 19% by 1997, 30% by 2007 and 39% in 2014.

Nearly one-third of those aged between 31-35 privately rented accommodation in 2014, with one in five people aged between 37 and 41 renting.

ONS figures show changing face of UK housing market

ONS figures show changing face of UK housing market

Fall in ownership

A recent rise in private rentals has been driven by the sharp fall in home ownership and the lower number of mortgages being taken out. Between 1977 and 1987, individuals living in a property with a mortgage increased. However, in the next two decades, the proportion of young people of these properties decreased, but the mortgage owning population between 45 and retirement age increased. This reflects that many purchasers between 1977-87 were youngsters who had now matured.

Differences recorded between 2007 and 2014 are alarming. The report highlights the prevalence of mortgagors is presently lower than in 2007 for every age group below 55.

It shows that the increase of private rentals has been particularly noticeable amongst 21-25 year olds. Proportions of renters in this age group increased from less than 20% in the 1980’s to over 60% in 2014. Smaller percentages of these groups live in mortgaged homes than in any time since records began.

Rent by regions

In London, rent accounted for 34% of disposable income for renters during 2014, in comparison to just 15% for those in the North East. The South East and West saw ratios of renters above 25%, with the East Midlands, Yorkshire and the Humber and Northern Ireland below 20%.

According to the report, the figures reflect movements in the prices of rent across regions. Rents in the capital and South East have become unaffordable, while those in the North are much cheaper.