Posts with tag: rental market

Landlords told to wait to replace furniture

Published On: February 21, 2016 at 10:10 am

Tags: Buy-to-Let,landlords,rental market,tenants,wear and tear allowance

Landlords are being advised to wait until the 6^th April to replace any furniture in their property.

Accountants Blick Rothenberg LLP are guiding landlords to wait until after this date, when the 10% wear and tear allowance is replaced. These costs will then become deductible under a new relief.

Changes

Robert Pullen, personal tax manager at Blick Rothenberg noted: ‘from April 6 2016, the favorable 10% wear and tear allowance for fully furnished residential properties will no longer be available.’[1]

‘Instead, only the actual costs incurred in replacing furniture, furnishings, appliances and kitchenware provided for the tenants’ use will be deductible. Initial costs are not allowed, only the replacement of such items. The Government expects this measure will bring in around £165 million/year from 2017 onwards,’ he continued.[1]

Pullen went on to say that, ‘this is a significant step away from the wear and tear allowance, bringing the position more in line with general deductibility of repair costs or replacing toilets, boilers etc. Landlords of fully furnished properties will feel this change adds additional complexity to an increasingly complicated area of deductible costs, following closely on the heels of the restriction to finance cost expenditure.’[1]

Landlords told to wait to replace furniture

Relief

Mr Pullen sees the changes as good news for landlords owning part or unfurnished homes, who will now be able to claim the new relief. At present, landlords do not generally receive much relief for associated costs after changes brought in from April 2014.

HMRC have pledged to provide ‘comprehensive guidance’ on the more complicated areas of whether a replacement is considered an improvement or not. Where the furniture is replaced to a modern equivalent, the improvement as a result of technological advances should be ignored, so that the cost is allowed in full.

However, qualifying furnished holiday lets and commercial buildings are not covered by these rules. As such, relief on the initial cost of items, as a well as replacements, remain allowed.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/2/landlords-advised-to-wait-until-april-to-replace-furniture

Young, would-be homeowners stuck in rental properties

Published On: February 17, 2016 at 10:22 am

Author: Em Morley

Categories: Property News

Tags: buying homes,homeownership,landlords,property,property market,rental market

A think tank has presented a gloomy outlook for would-be homeowners looking to take their first steps onto the property ladder. It claims that most working households on average incomes will be forced to rent for the indefinite future.

Analysis from the independent Resolution Foundation body indicates that for this group, home ownership will approach just one-in-ten by 2025.

Decline

With the largest decline in young families owning property is for those on modest incomes, it has also slipped for those that are on benefits and on higher incomes.

As a result of this, home ownership is becoming more and more the domain of older and wealthier households.

Data from the analysis shows that those aged 65 or older now make up 32% of all homeowners. By contrast, those aged between 18 and 34 account for just 10%, down from 19% in 1998.

In addition, under 35 modest income working households have also recorded sharp declines. Homeownership has dropped from 57% in 1998 to 25% at present. In contrast, levels of private renting have more than doubled, from 22% to 53%.

Young, would-be homeowners stuck in rental properties

Capital pains

This decline is more harshly felt in London, where the proportion of younger people on modest incomes owning their own property have fallen to 13% over the last ten years. This is a drop of more than 50%.

Should this trend continue in the capital, young homeowners on modest incomes would slip to less than one-in-twenty by 2025.

Nationally, homeownership currently stands at around 63%.

‘With the average modest income household having to spend 22 years to raise the money needed for a typical first time buyer deposit-up from just three years in the mid-1990’s-it’s no surprise that owning is increasingly a pipe dream for many,’ observed Matt Whittaker, chief economist at the Resolution Foundation.[1]

‘Schemes such as Help To Buy can only ever help a minority-often providing a leg-up to those who would eventually climb onto the housing ladder anyway. More than half of those benefiting from Help To Buy to date have household incomes in excess of £40,000. It is hard to imagine any way out of the home ownership crisis facing those on low to middle incomes that doesn’t involve significantly boosting house building,’ Whittaker added.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/figures-show-why-private-rental-sector-is-dominated-by-young-tenants

Many landlords unaware of Right To Rent obligations

Published On: February 15, 2016 at 10:08 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,rental market,Right to Rent,tenants

Landlords are once again being warned that they must comply with the regulations of the Right to Rent scheme, with a shocking new survey suggesting that the majority are unaware of the changes.

An investigation carried out by the Residential Landlords Association (RLA) revealed that 72% of landlords do not understand their duties under the policy. More alarmingly, 90% said they had received no information about the new law before it was rolled out nationally on 1^st February.

Concern

There is tangible concern in the buy-to-let sector that many landlords are at risk of a £3,000 fine, as a result of not carrying out the correct checks.

Maynard Burton, a partner at law firm MFG solicitors, said that he was becoming increasingly concerned that landlords will be caught out. He noted that, ‘landlords who do not act face fines of up to £3,000. That’s potentially ruinous for someone who is self-employed and I’m concerned, as are other specialists, at just how few landlords have grasped not only their obligations, but the implications for them.’[1]

Many landlords unaware of Right To Rent obligations

‘They really need to get advice immediately on the checks they should be making and the records they should be keeping,’ he added.[1]

Right To Rent Duties

Designed to make it more challenging for illegal immigrants to rent and ultimately stay in Britain. However, critics say that that the scheme makes landlords carry out duties to carry out checks normally conducted by trained immigration officers.

Burton went on to say, ‘it’s easy to sympathise with landlords who feel that these new rules are effectively turning them into unpaid immigration officials. Equally, it’s easy to feel frustrated at the lack of information that has been given out by the authorities. But the law is here and it’s in force. Landlords have to act now.’[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-warned-over-immigration-check-fines.html

Carry out mid-term inspections now, urges AIIC

Published On: February 13, 2016 at 10:01 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,letting agents,mould,property,rental market

Landlords are being advised that now is the perfect time to carry out a mid-term inspection of their rental property.

The Association of Independent Inventory Clerks (AIIC) is calling for prompt inspections as many homes could be suffering from mould, generally caused by condensation issues.

Prevention

In order to prevent the problem from escalating, the AIIC urges landlords to carry out these checks on properties in the next few weeks.

‘Mould can be caused by a lack of ventilation or incorrect drying of wet washing-even if just one tenant is living in the property,’ noted Patricia Barber, Chair of the AIIC. ‘It can also be caused by on-going leaks both inside and outside the property, blocked gutters and missing roof tiles.’[1]

If mould is found to be present in a property, the AIIC advises that landlords should ensure that this is not due to external factors, lack of ventilation or any other issue that they can easily solve themselves.

Carry out mid-term inspections now, urges AIIC

Instructions

On the other hand, if a build up of mould is being caused by substandard living conditions, the landlord should inform their tenants of actions required in writing.

These should include:

reference to ventilating the property
wiping down walls and windows
using extractor fans
not putting damp washing on radiators or heaters
rubbing down and mould spores as soon as they are noticed

Barber concluded by saying, ‘if mould is not dealt with on a regular basis the resulting damage could cause both tenant and landlord a lot of money at the end of a tenancy.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/2/landlords-urged-to-carry-out-mid-tenancy-inspections

Two-thirds of tenants saving for own property

Published On: February 12, 2016 at 11:28 am

Author: Em Morley

Categories: Finance News

Tags: first time buyers,landlords,mortgages,rental market,tenants

An interesting new report suggests that over two-thirds of tenants are saving for a deposit and are willing to move away from family and friends to get onto the property ladder.

A study conducted by PropertyLetByUs.com, one of the leading online letting agents, also shows that just under a third of tenants have given up on owning their own home.

Moving

46% of tenants said that they would only be able to afford a property if they were to move to a cheaper area. One in six said that they would consider a lodger to help them with their mortgage costs.

When asked how long they thought it would take to purchase a property, one third said within the next two years. Almost 20% said that they would be able to afford a home in the next three years, with 4% thinking it would take five years.

Over half of tenants aspire to move up the rental ladder before buying their own home, with 51% stating their intent to move to a nicer property when they can.

Two-thirds of tenants saving for own property

Saving

Jane Morris, Managing Director of PropertyLetByUs.com, noted, ‘despite the recent media attention on Generation Rent, our research shows that the majority of tenants are actively saving for a deposit and are looking to buy a property in the next five years.’[1]

‘Savvy tenants recognise that they may have to look further afield for properties they can afford. Many are prepared to move to areas that are some distance from their friends and families,’ Morris continued.[1]

Morris went on to point out, ‘the latest stats how that a growing number of young people are renting for longer. According to PwC, almost 60% of 20-39 year-olds in England will rent their homes by 2025, while just 26% will have got on the housing ladder. This younger age group will find it increasingly difficult to buy and are likely to be older than previous generations, before they can afford their own home.’[1]

Concluding, Morris said, ‘what is clear is that the majority of tenants still aspire to purchasing a property. But many tenants recognise that they will have to make sacrifices and compromise, so they can afford to buy a home of their own.’[1]

[1] http://www.propertyreporter.co.uk/landlords/majority-of-tenants-saving-for-first-home.html

BTL transactions made by LTD co’s rise in January

Published On: February 3, 2016 at 11:31 am

Author: Em Morley

Categories: Finance News

Tags: Autumn Statement,Buy-to-Let,landlords,private ltd companies,rental market

Transactions made by private limited companies made up 43% of the total number of buy-to-let applications during January.

This is the main finding of a report conducted by broker Mortgages for Business, with this figure up from the 38% recorded in December.

Feasible option

‘Landlords have woken up to the fact that transacting via a corporate vehicle is a feasible option and in many cases, the most prudent route going forward,’ noted David Whittaker, Managing Director of Mortgages for Business. ‘I wouldn’t be surprised if the percentage continues to rise as landlords, especially the higher tax rate-paying ones, prepare for the forthcoming changes to relief on finance costs.’[1]

BTL transactions made by LTD co’s rise in January

‘The increase is due to landlords trying to get as many purchases as they can completed before the stamp duty surcharge comes into effect on 1 April, after which I would expect transactions to return to more considered levels,’ he added.[1]

The total number of applications for buy-to-let mortgages, made by both individuals and limited companies, increased by 27% in January, in comparison to December 2015. Undoubtedly, the upcoming changes in Stamp Duty surcharges and the abolition of tax-relief for landlords have been key factors in this growth.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/2/ltd-co-btl-transactions-rise-again-in-january