Tuesday, 22 August 2017

Tax changes mean a third of landlords plan to hike rents

A significant number of private landlords are planning to increase rents to help cope with changes to the way they are taxed, new research has suggested.
A study by Cover4LetProperty found that 32.5% of landlords are planning to increase their rent in the next 12 months in order to keep up with increased tax liabilities and costs as a result of legislation changes, including the scrapping of interest relief on mortgage payments.


While rents may be increasing, the research suggests that most buy-to-let landlords do not plan to change the size of their portfolios, with 83% of buy-to-let investors not looking to increase or decrease their property portfolio in the next 12 months.
In fact, just 14% of private landlords are looking to expand their portfolio within the next year.
When asked how happy they were with their tenants, 93% of landlords said that they were happy, 6% said they are “50/50”, and just 1% said they are unhappy.
Around half of the respondents also revealed that they are property investors, with the other half typically becoming accidental landlords due to inheritance, remarriage, or moving abroad and letting their home out.
Looking forward, many landlords are worried about the impact that “government meddling” will have on the private rented sector, along with increased tax liabilities and possible changes because of Brexit.

https://www.landlordtoday.co.uk/breaking-news/2017/8/tax-changes-mean-a-third-of-landlords-plan-to-hike-rents


Thursday, 10 August 2017

Stamp duty is holding up the housing market in England and Wales



Stamp duty, the property tax paid by buyers in England and Wales, is making the current housing crisis worse by causing a bottleneck in the residential real estate market, according to a new report.

It is deterring older buyers from downsizing and therefore freeing up homes for those further down the housing ladder and moving would rise by 27% if the tax was abolished, says the research from the London School of Economics and the VATT Institute for Economic Research.

The cost of the tax, which is zero up to £125,000, then rising in increments to 10% for properties worth over £925,000, is affecting buyers at many levels, meaning that they are staying put rather than moving, it suggests.

First time buyers, particularly those in London where prices are much higher than the rest of the UK, face paying stamp duty in many parts of the country. Second steppers looking for family homes are put off by the level of tax.

In addition, many pensioners in larger homes in more expensive areas are unable to move because buyers are put off by stamp duty, which costs £20,000 on a £600,000 home and £143,000 on a £2 million property.

‘The key message is that stamp duty hampers mobility significantly, it create a mismatch and distortions in the housing market. Our analysis suggests that mobility would be 27% higher if stamp duty was abolished or replaced with an annual tax on the value of property,’ said professor Christian Hilber, co-author of the report.

‘If you are a young family and you have an additional child, you’ll need an additional room, but the stamp duty is discouraging this kind of move because of the additional cost and lack of available homes to move into,’ he added.

‘Almost 90% of people want to own a home, but only 63% do. We reformed property taxes including stamp duty to help more people get onto the property ladder,’ said a UK Treasure spokesman.

‘In addition, we are helping people, including young families, to buy their first homes through policies such as Help to Buy and the Lifetime Isa, and the recent £2.3 billion Housing Infrastructure Fund which will free up over 100,000 properties in high demand areas,’ he added.

However, the report points out that economists have long criticised stamp duty as being inefficient. It concludes that this is indeed the case.

http://www.propertywire.com/news/uk/stamp-duty-holding-housing-market-england-wales/

Interview Liam Ryan of Assets for Life

Serial entrepeneur Liam Ryan describes his setbacks after owning two successful businesses and then bouncing back to form Assets for Life with his partner, Jay Munoz . They can be contacted via . This interview took place just before their flagship event "The Ultimate Property Experience" in Stratford, London.

Please like and share this video.


NatWest overhauls buy to let mortgage offer ahead of rules change

By Graham Norwood


NatWest Intermediary Solutions has announced a major overhaul of its buy to let mortgage offer, but it is bucking the trend of some other lenders.

As with other mortgage companies, portfolio applicants with four or more BTL properties will have to produce additional information on their other properties (residential and buy to let) to enable a full affordability assessment.


Additional information will also be asked for in relation to landlords’ experience, use of letting agents and future plans to expand or reduce their portfolio, while the same ‘higher’ stress rate will be applied to all other mortgages as well as the current application.

NatWest’s valuation service will assess rental demand and income for all other properties being let. By the end of this year it will introduce a revised interest coverage ratio calculation of 5.5 per cent x 135 per cent; in all cases expected rent will have to meet a minimum rental cover calculation of 5.5 per cent x 125 per cent.

However, unlike some other lenders NatWest is also increasing the total number of buy to let properties it will allow a landlord customer to own from four to 10, including unencumbered properties and properties mortgaged with another lender.

https://www.lettingagenttoday.co.uk/breaking-news/2017/8/natwest-overhauls-buy-to-let-mortgage-offer-ahead-of-rules-change

Wednesday, 9 August 2017

House price slowdown is excellent news – even if estate agents disagree

By Nits Pratley

The expense of property relative to earnings will probably keep UK house price inflation low this year. Photograph: Yui Mok/PA
Take your pick. House prices in the UK are rising at their slowest annual rate for four years, according to the Halifax’s index. Alternatively, June’s increase was the strongest monthly increase this year.

As ever with house prices, it’s best to prefer the longer perspective. On this occasion, that means ignoring the June’s very modest month-on-month pick-up of 0.4% and concentrating on the underlying trend. The mood is best captured by the fact that the May-July period recorded the fourth quarterly fall in a row, the first time that has happened since November 2012. In short, the market has slowed significantly this year. The annual rate of increase was 5.7% in January; now it is 2.1%.


This should be seen as excellent news, even if estate agents and those seeking a quick sale of their property may disagree. Back in March last year, house prices were rising at an annual rate of 10%, which was completely unsustainable given how slowly wages are increasing. Indeed, the position was becoming dangerous, especially from the Bank of England’s viewpoint. Double-digit house price inflation and rock-bottom interest rates make an unhealthy cocktail.

It’s too glib to say the referendum results turned the market. The vote for Brexit has been a factor, especially in London, but other forces are at work. The biggest is the sheer expense of houses relative to earnings. Average house prices remain about six times average earnings, a level last seen in 2007, just before the banking crash and recession.

“Affordability concerns”, as the Halifax coyly puts it, are the reason why the current tepid conditions will probably continue for a while. The only obvious countering pressure is the shortage of homes on the market, which is at all-time low according to the lender. Overall, economists predict house price inflation of 2% this year, a forecast that may even prove to be on the high side.

Paddy Power Betfair takes a punt outside the industry
Breon Corcoran, chief executive of Paddy Power Betfair, is 46, which is young to choose to quit as a successful boss of a FTSE 100 company. Shareholders may also feel it’s a bit early. Paddy Power and Betfair merged only 18 months ago and, after the initial enthusiastic applause, the share price has faded.

If Corcoran longs for fresh adventures, which seems to be the case, it would be understandable. He’s done 16 years in total at the two halves of the company. He quit as chief operating officer of Paddy Power in 2011 to lead a successful rehabilitation of Betfair. He then masterminded the £5bn merger with his old shop.


“There is never a good time to leave,” he says now. Shareholders would agree. From £98 last August, the shares are £75.50, down 370p on Monday, so he can’t be said to be going out at the top in stock market terms. He, and the company, could argue that operations have been integrated faster than planned and profit forecasts this year look solid. Even so, the owners would probably prefer the full £50m of promised savings to reach the bottom line before the architect of the deal departs.

The replacement is Peter Jackson, 41, who, after a “rigorous and extensive” global search, has found within the boardroom. He is one of the non-executive directors. Jackson fits the bill from the important technology angle. His background is in banking and currency exchange, plus a six-month stint as UK boss of Worldpay, the payments firm. But Jackson’s experience in the gambling industry is confined to four years as a non-executive.

Maybe that’s sufficient training and there is, after all, no golden rule that bookies must appoint hardened bookmakers. All the same, you can understand why investors took fright. Paddy Power Betfair is the biggest online gambling firm in the world on some measures and its new jockey is a merely a promising newcomer.

Energy big six flowing against Ofgem current

The costs of supplying electricity are soaring, British Gas told us last week when it lifted prices by 12.5% – equivalent to £76 on an average dual fuel bill. But what’s this? Regulator Ofgem is moving in the opposite direction. It is cutting up to £19 off bills for 3 million customers with pre-payment meters. Ofgem says costs have fallen since its “safeguard” tariff was introduced in February.

In the tangled world of energy prices, half an explanation is possible. British Gas was looking back a few years, rather than a few months, when it was talking about costs. The company may also buy energy two years in advance, whereas Ofgem uses shorter horizons when doing its sums.

All the same, the gap between the regulator’s dual-fuel pre-payment tariff, which works out at £1,048 for a typical customer, and the standard variable prices of the big six is starting to look wide. British Gas put its own dual-fuel prices at £1,120, for example.

Like-for-like comparisons may be imperfect, but we can say this: a widening gap can only increase the political pressure for intervention.

https://www.theguardian.com/business/2017/aug/07/house-price-slowdown-estate-agents-rises-uk-wages

More BTL landlords needed to meet demand from a growing population

By Marc Da Silva

Supply and demand are perhaps the most fundamental concepts of economics, and it is the main reason why UK house prices have increased so much in recent years, and why Britain’s growing population will almost certainly push property prices even higher in the medium- to long-term.

The latest forecast from the Office for National Statistics that predicts a 8.4 million rise in the UK’s population over the next 22 years from last year’s 65.6 million, eventually reaching 74 million in 2039, spells bad news for young people trying to get a foot and the housing ladder, and underlines the urgent need for more private rented homes.

That is why the government needs to reverse many of its recently introduced anti-landlord policies, such as the scrapping of the ‘wear and tear’ allowance, phasing out of mortgage interest relief and the 3% stamp duty surcharge.

Jonathan Stephens, managing director of Surrenden Invest, said: “Whilst it’s wonderful that we can all enjoy a longer life and a larger population can positivity impact the size and capability of those of working age, it does also increase pressures on basic requirements such as housing – namely, where will we all live?!

“Successive governments’ record of building enough homes to meet demand we know has and remains woeful with the creation of new homes, especially within the private rented sector which is growing rapidly, being funded more and more by individuals and private institutions.


“With population forecasts such as these, it would seem wise for landlord investors to be encouraged, not penalised through stamp duty reforms and tax hikes as we have seen over the past 18 months.”

https://www.landlordtoday.co.uk/breaking-news/2017/8/more-btl-landlords-needed-to-meet-demand-from-a-growing-population

Monday, 7 August 2017

Have your say on the ‘state of PRS’

By Marc Da Silva


But-to-let landlords are being invited to take part in the Residential Landlords Association’s (RLA) latest quarter survey, designed to improve conditions in the private rented sector (PRS).

Part of the RLA’s strategy to ‘make renting better’ is to undertake a regular review of the PRS, and that includes conducting quarterly surveys to assess the state of the PRS.

The short survey will take around 10 minutes to complete and includes questions on issues related to licensing, tenancy deposits, letting agent fees and more.

The findings will help the RLA better understand the key issues affecting private landlords right now – as well as informing its future policy work.

Involvement in the research project is entirely voluntary, anonymous and participants are free to withdraw at any point and all information will be kept confidential. Only anonymous aggregated data will be presented in the report.


You have until 5pm on Friday 11th August to take the survey, which you can find by clicking here.

https://www.landlordtoday.co.uk/breaking-news/2017/8/have-your-say-on-the-state-of-prs

House price growth continues to ease, but prices are still 2.1pc higher than last year

By Sophie Christie


The average house price in the UK was £219,266 in July
Property prices are still rising - but at a considerably slower pace, the latest data from Halifax has revealed.

Prices in the second quarter of the year were 0.2pc lower than in the first quarter, according to the Halifax house price index.

But in the three months to July, prices were 2.1pc higher than in the same three months a year earlier, and prices rose by 0.4pc between June and July.

The latest data shows that prices have been falling successively for the past four quarters, the first time this has happened in almost five years.

However buyers are still having to fork out more for their bricks and mortar than they did last year.

The average house price in the UK last month was £219,266 − 10pc above the August 2007 peak and 42pc higher than the low point of £154,663 in April 2009, towards the end of the recession.

Russell Galley of Halifax said: “House prices continue to remain broadly flat, as they have since the start of the year.

"Prices in the three months to July were marginally lower than in the preceding three months, while the annual rate of growth has edged down from 5.7pc in January to 2.1pc in July; the lowest rate since April 2013."




Mr Galley said the squeeze on spending power, together with the impact on property transactions of stamp duty changes in 2016, along with affordability concerns, appear to have contributed to weaker housing demand.

“However, a continued low mortgage rate environment, combined with an ongoing shortage of properties for sale, should help continue to support house prices over the coming months,” he said.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said that while lenders were still keen to lend and mortgage rates were staying extremely low as a result, buyers were now facing the issue of finding a property they wish to buy, with a lack of supply in the market.

The average stock of homes for sale per surveyor - the housing market is experiencing a lack of supply CREDIT: RICS

Recent Halifax data also showed that London continues to dominate the country's list of the most expensive property locations on a per-square-metre basis.

The average price per square metre across the UK has increased by 236pc over the past 20 years; in Greater London prices have increased by 402pc.


http://www.telegraph.co.uk/property/house-prices/house-price-growth-continues-ease-prices-still-21pchigher-last/

Friday, 4 August 2017

Renting becomes cheaper than buying, particularly in the South East

By Marc Burns


For many years, rent has been called “dead money” and young people have been urged to “get on the housing ladder” so that they can put their money to good use buying an asset for themselves instead of paying their landlord’s mortgage.

Over recent years, however, attitudes to housing have been changing and so have the dynamics of the housing market, with renting becoming cheaper than buying in some of the UK’s key cities, particularly in the South East of England.

Renting is now cheaper than buying in over half of UK cities

The property website Zoopla tracks the cost of renting a two-bedroom home compared with the cost of servicing a mortgage on an equivalent property in the same area. The research assumes that buyers opt for a median-priced home and have a 90% mortgage with a 25-year term. Based on the data collected by Zoopla, renting is now cheaper than buying in 27 of the 50 cities they survey, this is a 14% increase from October 2016 when renting was cheaper than buying in only 20 of the same cities.

Not only is renting now more affordable than buying in 54% of UK cities, but in some cases the difference can be significant. In seven of the 27 cities, the differential was 20% or higher, in Cambridge it was almost a third and in London it was nearly half. By contrast, in the cities where renting was more expensive than buying, there were only four cities where the difference was a fifth or more.

The reason for the change

An extended period of low interest rates has helped to increase the effective affordability of mortgages, which play a hugely important role in the housing market.


In addition to this, over recent years, there have been various government initiatives aimed at helping home-buyers, particularly first-time buyers, which again have helped to improve affordability. This has stimulated demand in a market which has long suffered from chronic issues on the supply side, with the entirely predictable result of increased house prices.

Is this trend sustainable?

It’s hard to see how this situation can continue for much longer. Even if landlords own property outright and can therefore ignore the cost of servicing a mortgage, high home prices coupled with the government’s current approach to the private buy-to-let sector could well prove a strong incentive for landlords to sell up.

Private landlords with mortgages are facing tax and regulatory changes which could feasibly combine to give them less income with more risk, which again could be strong motivation for them to sell. Landlords disposing of properties would, of course, alter the dynamics of the housing market, potentially lowering purchase prices, or at least stabilizing them, and leading to upward pressure on rental prices due to the reduction in the number of available homes for rent. In addition to all of this, the direction of interest rates remains the elephant in the room.

Even though there has yet to be any obvious indication of rate rises in the near future, the fact that both residential and BTL mortgage applications are being reviewed in the light of potential rises clearly indicates that, at the very least, the Bank of England has the option on the cards.

Mark Burns is the managing director of property investment firm, Hopwood House.

https://www.landlordtoday.co.uk/breaking-news/2017/8/renting-becomes-cheaper-than-buying-particularly-in-the-south-east

Almost 81,000 Build To Rent units in England completed or planned

By Graham Norwood


New government figures reveal that there are 80,855 Built To Rent homes either completed or planned.

It says investment in this element of private rented sector could grow to £70 billion and could help create 15,000 homes specifically to rent each year by 2022. It also has the potential to reach a total of at least 240,000 homes built for private rent by 2030.


The figures were revealed during the announcement of a £65m boost from the government to - in the words of the government statement - “help unlock” over 7,600 new homes at Wembley in Brent, north London, with at least 6,800 of them for rent.

The Build To Rent sector has also won the backing of the Royal Institution of Chartered Surveyors and the British Property Federation.

A joint statement says proposals under consideration with government include changing planning rules so councils have to initiate more forward planning of rental need and locations for developments, as well as tenancies of three years or more - considered more family-friendly than the traditional six months tenancy commonly found in buy to let.

The BPF says 35,000 tenants have been offered tenancies of three years or longer in recent years, since more emphasis was put on longer tenancies and since the first Build To Rent schemes have completed.

“We fully support the introduction of affordable private rent, and the inclusion of build to rent and affordable private rent within the National Planning and Policy Framework and Planning Practice Guidance - a multi-tenure approach where all housing sectors receive the right policy support is critical to fixing the UK’s broken housing market” says BPF chief executive Melanie Leech.

Meanwhile RICS head of UK external affairs Geoff White says: “The government’s proposals to boost supply across all tenures is a welcome acknowledgement of the extent of the housing challenges and the scale of the response required.”

Housing and planning minister Alok Sharma says: “Whether renting or owning all families should have the security they need to be able to plan for the future. That’s why as part of our plan to fix the broken housing market we’ve been taking action to create a bigger and better private rental market, supporting new Build To Rent developments so that tenants can have greater choice.”

https://www.lettingagenttoday.co.uk/breaking-news/2017/8/almost-81-000-build-to-rent-units-in-england-completed-or-planned

Thursday, 3 August 2017

How To Become A Property Developer



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3 pieces of advice on how to become a property developer. If you dream of making money from property development then this video is for you.


11 million people to downsize their homes within 20 years

By Kate Hughes

Half of all pensioners are considering moving to smaller properties in a mass ‘exodus'

Do not pass go: downsizing could solve the housing crisis, experts say, but only if older owners have somewhere to go Getty
The UK could be on the brink of a huge property shift as 5.7 million people consider moving to smaller homes, new research suggests – but they could find few suitable homes to move to.

Half of those aged 65 and over would be tempted to downsize, an increase of 300,000 people in the past 12 months, according to the latest data.


About 38 per cent of the age group would consider downsizing now, with an additional 10 per cent encouraged to move with a stamp duty exemption, says housebuilder McCarthy & Stone as part of its annual Retirement Confidence Index.

With owners aged 65 and older expected to release an average of £80,000 each, and currently owning property worth around £1.5 trillion, this could equate to £450bn of equity to be spent on retirement funding or other expenditure at a time when the nation’s social care funding is under increasing pressure.

Roughly £720bn worth of property, including about 2.8 million bedrooms currently empty in older owners’ properties could be freed up for other buyers on the property market, McCarthy & Stone says.

But with long-standing suggestions that government could actively encourage downsizing through a series of measures including such tax exemptions, that figure could increase to more 11 million within 20 years.

This, the housebuilder – which constructs specialist retirement homes – says, would release around £877bn worth of equity.

“The rise in the number of those who want to downsize is an inevitable consequence of the UK’s rapidly ageing population,” says Clive Fenton, chief executive at McCarthy & Stone.

“Within the next 20 years, those aged 65 and over are expected to grow by almost 50 per cent, which will expose the UK’s grossly inadequate level of suitable housing for older people if we maintain the current status quo.”

As things stand, he warns, they are put off moving to smaller property due to the lack of suitable housing and the cost, he believes. “The Government needs to put specialist retirement housing and other forms of accommodation for older people higher up the agenda or we will simply lack the necessary infrastructure and support services, particularly from a health and social care perspective, to deal with such a huge demographic shift.

“The Government must build on the positive wording in the Housing White Paper and consider how it can influence market supply. The Government’s Help-to-Buy scheme and other initiatives aimed at first time buyers have spurred market supply of homes at that end of the spectrum but has done nothing to help the housing choices of those in later life.”

And this isn’t simply a case of a retirement home builder pushing for a bigger market. Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Every study about downsizing seems to confirm that there is huge untapped demand from retirees looking to move to smaller homes but the lack of suitable options is proving a deterrent.”

Knight Frank recently reported that there are now only 715,000 homes or 2.6 per cent of total stock in this country classed as “retirement housing” ranging from age-restricted developments to care housing, and the numbers are only rising very slowly.

It found that 25 per cent of over-55s would consider moving into purpose-built retirement homes in future – a potential pool of demand of nearly two million homeowners.

“If more over-65s downsized then the housing shortage could be eased bearing in mind the amount of existing accommodation, which is substantially under occupied,” Mr Leaf adds.

“Many retirees would like to sell in order to fund their retirement by moving down the ladder or help children or grandchildren move up the ladder.

“One radical solution, rather than rearranging the deck chairs on the Titanic, could be for downsizing or all vendors, rather than purchasers, paying stamp duty as an incentive to help unblock the market.”

His suggestion comes as Lloyds Bank calculated this week that homebuyers in England and Wales paid £8.3bn in stamp duty in 2016 compared with £7.1bn in 2015 – a 17 per cent increase despite reforms to the tax that came into effect in 2014.

The average home owner now pays £12,693 in stamp duty over their lifetime as they move up the housing ladder.

“Alternatively, older people could share larger houses with their grandchildren, possibly converting their family homes to flats rather than being isolated and dependent on outside care while younger people pay high rents for sub-standard accommodation,” says Mr Leaf.

“Whatever happens, the Office for National Statistics said the number of over-65s is projected to grow twice as fast as the working-age population over the next 10 years so the problem needs to be addressed sooner rather than later.”

http://www.independent.co.uk/money/spend-save/uk-pensioners-downsizing-smaller-homes-11-million-retired-housing-market-a7872351.html

Wednesday, 2 August 2017

Lack of supply keeping house prices high – Nationwide

By Marc Shoffman

House prices grew on a monthly basis for the first time in two months as average prices reached £211,671 in July, Nationwide says.

The latest Nationwide House Price Index shows prices were up 0.3% on a monthly basis, reversing falls of 0.2% in May and 0.1% in June.

The figures were also up 2.9% annually, which is a slight dip on the 3.1% growth recorded in June.

Robert Gardner, chief economist for Nationwide, said: “Ultimately, housing market developments will depend on wider economic performance.

“The UK economy slowed noticeably in the first half of the year and there has been little to suggest a significant departure from recent trends in the quarters ahead.

“While employment growth has remained relatively robust, household budgets are coming under pressure as wage growth is failing to keep up with the rising cost of living.

“This suggests that housing market activity is likely to remain subdued, with the balance in the market shifting a little further towards buyers in the quarters ahead.

“Nevertheless, constrained supply is likely to continue to provide support for house prices and, as a result, we continue to expect prices to rise by around 2% over 2017 as a whole – only modestly lower than the levels recorded in recent months.”

Lucy Pendleton, director of estate agents James Pendleton, said: “Market conditions just beneath the surface are keeping this ball in the air despite much talk recently of the market starting to roll over.

“The big question is where is support for house price growth coming from?

“Supply and demand is always a supportive factor but this kind of market behaviour shows just how imbalanced it has become. Prices seem to be finding any excuse to hold their ground and exploiting it.

“The cause has to be lack of supply, placing a squeeze on the number of homes coming to market, helped in June by mortgage approvals slumping to a nine-month low with transactions levels also depressed.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, agreed that supply was an issue.

He said: “Although these figures on the face of it look quite encouraging when one considers the fall in transactions, it is clear that prices are being supported by a lack of property on the market.

“We would have expected transactions in particular to be higher compared with last year bearing in mind how much quieter the market was 12 months ago following the introduction of the stamp duty surcharge.

“On the plus side, activity could be much lower considering current political uncertainty and fortunately there does seem an enthusiasm among serious buyers and sellers to get on with the job in hand.

“The current climate is also providing an opportunity for first-time buyers at least to better compete for smaller properties.”

http://www.propertyindustryeye.com/monthly-house-prices-returned-to-growth-in-july-nationwide/

The most affordable cities in the UK for first-time buyers

By Sophie Christie

Only 2pc of properties in Brighton are affordable for first-time buyers CREDIT: LUKE MACGREGOR
Virtually all first-time buyers in Brighton are being priced out of their own city, with new data revealing that only 2pc of properties in the seaside resort are affordable for new buyers.

While most would assume that London is the least affordable place for first-time buyers, it's Brighton that takes the dubious title, with average property prices at £352,303 and a minuscule percentage of properties considered affordable.

Bristolians also struggle to get a foot on the property ladder, with only 29pc of properties in the region – carrying an average asking price of £268,070 – affordable for FTBs.


The research by Post Office Money, which focused on the affordability of 14 of the UK's largest cities, shows that just 30pc of London homes are reasonably priced for new buyers, as they face average asking prices of £534,272.

The affordability of each city was calculated by seeing what proportion of each geographical area had a median house price lower than 4.5 times the average income of first-time buyers in that region.

The most affordable area is Southampton, where the average property price is £199,074 and 98 per cent of properties are accessible to FTBs. Norwich and Nottingham are also among the UK’s affordable hotspots, with 93pc and 89pc of properties in these areas costing less than 4.5 times the income of first-time buyers.


With average house price growth having increased by 15pc since 2011, compared with an increase to the average first-time buyer's income of 13pc over the same period, the UK housing market remains a challenging environment for many.

Owen Woodley of Post Office Money said: “Our data shows that almost two-thirds (62pc) of home sales are still in areas across the country that remain within reach for those looking to take their first steps on the property ladder, and first-time buyers can really benefit from thinking outside the box to realise their property aspirations."

http://www.telegraph.co.uk/property/uk/affordable-cities-uk-first-time-buyers/

Tuesday, 1 August 2017

Buyers in England and Wales paid 17% more in stamp duty tax in 2016



Home buyers in England and Wales paid £8.3 billion in stamp duty in 2016 compared with £7.1 billion in 2015, a 17% increase which is contributing to the cost of moving home, a new analysis shows.

The average home owner pays £12,693 in stamp duty over their lifetime as they move up the housing ladder and those in London who bought for the first time in 2001 will have spent an average of £40,576 in stamp duty.

The research from Lloyds Bank shows that a typical first time buyer would have paid an average stamp duty of £758 in March 2001, £1,989 for their second home in March 2009 and £9,946 for their final step in March 2017.

The rise in 2016 reversed the £571 million decline between 2014 and 2015, which resulted from the stamp duty reforms that came into place in December 2014, the data also shows.

‘Rising house prices have caused stamp duty payments to continue to increase despite the reforms that came into effect from December 2014. As a result, the £8.3 billion raised in stamp duty in 2016 was more than £2 billion higher than at the peak of the last housing boom in 2007,’ said Andrew Mason, Lloyds Bank mortgage products director.

‘The average home buyer pays £12,693 in stamp duty in total as they move up the housing ladder. This average, however, disguises substantial regional differences with home movers, with those in Greater London paying over £40,000. Escalating stamp duty payments have contributed to significant increases in moving costs in recent years,’ he added.

The highest overall stamp duty bills are paid by buyers in London and the South East. In London they pay a total of £40,576 or 320% more than the average for England and Wales. In the South East, the overall bill is £20,133 while the lowest bills are in the North at £4,212 and Wales at £4,489.

Other research findings show that the proportion of first time buyers paying stamp duty has risen in the past 16 years from 47% in 2001 to 78% in 2017. In Greater London, 100% of first time buyers face paying stamp duty with 98% of first time buyers paying the tax in the South East. The only region where fewer than half of first time buyers pay stamp duty is the North 41%.

In the southern regions, nearly all home movers now face paying stamp duty with the data showing it is 100% in London, 99% in the South East, 97% in the South West and East Anglia. By comparison, 72% of home movers in the North and 78% in Wales pay stamp duty.

http://www.propertywire.com/news/uk/buyers-england-wales-paid-17-stamp-duty-tax-2016/

Prime London tenants 'seek smaller rental units with better amenities'

By Graham Norwood


Prime central London is seeing the rise of the micro-apartment, according to new research, as squeezed accommodation budgets have seen singles and couples opting for location and convenience over size.

According to data analysed by London Central Portfolio there is increasing demand for smaller properties which offer an affordable option for tenants who wish to be centrally located near their place of employment or study. 

In a similar dynamic to prime London’s sales market - where luxury properties have suffered most in the face of the changing tax landscape and Brexit uncertainty - LCP says prime London’s rental market is also notably fragmenting by size and price band.

Over the last 12 months, 42 per cent of properties let have been studios or one bedrooms by tenants prioritising lifestyle and transport links over square footage. On the other hand, demand has been notably slower for larger rental properties as families consider less central options, offering greater value and more space. 

“Tenants are now looking for more affordable options, choosing central locations and an easy commute to work or university. This is reinforcing the new trend for the globally mobile to seek highly specified micro-apartments, with well optimised space, whilst families tend to opt for more suburban locations where smaller budgets can stretch to larger homes and ideally the possibility of outside space. Indeed, significant discounts to asking rent of over 10 per cent for the most expensive, luxury rentals are now being reported” explains Naomi Heaton, LCP’s chief executive.

It is also taking much less time to find tenants for smaller micro-apartments. 

Over the last year, the average marketing times for two-bedroom properties has reached 85 days, increasing to 98 days for three bedroom and a significant 119 days for three-plus bedroom units. 

This is 42 per cent longer on average than for one-bedroom or studio units, which are seeing a much greater level of demand from the single tenant and couples that the PCL market attracts. For LCP’s portfolio, 63.9 per cent of tenants are now single dwellers.

Another indication of the trend in prime London towards micro-apartments is the number of properties being rented by price band. 

Over 1/3 of properties let have rents under £500 per week whilst only 3.2 per cent of units have been rented over £2,000 per week. Some 70 per cent of units being let now have rents of under £750 per week.

Monday, 31 July 2017

Have we reached 'peak London' as millennials leave in record numbers?

By Rosie Walker

Traditionally, London lures the talented young – but high rents now mean that the capital may no longer be able to hang on to them, as thousands opt for far cheaper living elsewhere in England. Photograph: REX/Shutterstock
A room in a friend’s rented north London houseshare came up recently. Usually, this would mean an instant queue of prospective tenants waiting for their 10-minute interview slot, followed by an unpleasant few hours of decision-making. This time, my friend reported, whole days passed without anyone getting in touch. We wondered if it might be the first hairline crack in some huge chasm about to rip through life as we know it – if, in the future, we would look back on the empty wasteland of the city and remember that day as The Day London Turned.


The news last week that the number of people leaving the capital has reached a five-year high will come as no surprise to anyone trying to house themselves in the capital. Whatever the political shocks of the last year, some things are unchanged: house prices continue to bear no relation to earnings, private landlords remain largely unregulated and rents continue to eat up two-thirds of the average Londoner’s wages. Plus, it’s dirty, noisy, overcrowded and the Central Line on a hot day is enough to make anyone dream of Milton Keynes.

If the number of those leaving is increasing (the report says 93,300 people fled this year), London is still growing, overall. And we don’t know from figures like these how much is “pull” and how much is “push”; how many are homeowners cashing in on the London property bonus, buying something bigger and taking portable careers with them, and how many are wrenching themselves away from families, social networks and jobs that don’t exist outside of the capital.

If London really is past its peak, it is perhaps good news for the rest of the country. Youngish people (those in their 30s are leaving at a higher rate than other age groups) with skills and energy can revitalise regions that have suffered from London’s tendency to vacuum up opportunity. If this is an example of markets being benign and beautiful, leavers, whether they’re jumping or being pushed, can create new culture, start businesses, improve schools and, yes, maybe even smarten places up with their demand for better coffee. They can bring with them their experience of living in a global city. Even better, London’s greedy landlords will get their comeuppance and discover, as if in a sweet nursery fable, that you really can set the rent so high that people will stop paying it.

But the report lists St Albans, Dartford and Cambridge as the top destinations for leavers, meaning it’s unlikely they’ll be doing any of these things, as their jobs will still be in London and they’ll be too knackered (and poor) from the commute. Even for those moving beyond the boundary of what is thought reasonably commutable (an ever-extending boundary, which now takes in Bristol at £11,000 for an annual train ticket), skills and a can-do attitude only go so far; you can’t magic industries or professions out of thin air.

And some jobs only exist in London. Anyone who wants to work in politics, national media, much of the creative industries or the arts has to be able to live here and to say “just choose a different job” is to make a stark argument about social mobility: that nobody without family wealth or parents living in London ought to be allowed into these professions. We have to hope that those taking – or looking for – jobs outside London genuinely want those other options, rather than giving up on careers they were well qualified for simply because they couldn’t afford to house themselves.

And if the leavers are teachers, NHS professionals, firefighters, social workers, who really can transfer their skills out of the capital, it hardly needs explaining why that is terrible news for London. Schemes over the past 15 years to provide various forms of homebuying subsidy for keyworkers have been confusing and ineffective; many, illogically, require salaries that public sector workers don’t earn. I know a web designer who somehow managed to secure a place on one. He worked in advertising, so he could afford a place on a scheme designed to keep desperately needed public servants in London.

The irony is that the less we intervene in the housing market, the more we find ourselves having to over-engineer who gets to live in certain places. I was asked to be on a planning group for a new housing project designed to provide low-cost housing for artists in a neglected part of east London. A valiant effort to stem the tide of developers – but who should be eligible for a place? How much art should an artist contribute to their community? Is pottery more socially valuable than screen printing?

Independent housing co-ops are pioneering in spirit, but they tend to select members who are most like themselves or who meet criteria based on arbitrary values. Not that the state is any more thorough: keyworker housing schemes rarely include street cleaners or care workers employed by private agencies – the people doing the work of the public sector, but not actually employed by it. Other kinds of social value are just as hard to measure: aren’t local news reporters or charity campaigners also useful?

It might be simpler to base policy on a person’s economic circumstances, rather than on the kind of person they are. It’s as if, instead of intervening in the market enough to level the playing field (for example, taxing landlords and second-home owners heavily or giving renters proper rights), we’d rather tilt the playing field at such an angle that most people can’t even walk on it, then allow a few to be handpicked and placed strategically.

Fact is, London’s population is still growing, prices aren’t crashing and the city’s landlords are not worried. But it’s understandable why we attach great significance to this “exodus” story: it taps into our unease about the skyscrapers going up that nobody lives in, about living costs rising, about the creeping privatisation of public life.

Whether we, London dwellers, dream of the promised land elsewhere or fear we will be forced to leave, we want to believe there will be a reckoning, a rebalancing. Whatever methods we use to try to control who can afford to live in our capital, it matters for everyone. But, in terms of “exodus”, London’s population only recently rose back to where it was before the Second World War; there might be a long way to go yet.

Rosie Walker is co-author of The Rent Trap.

https://www.theguardian.com/commentisfree/2017/jul/30/can-exodus-from-london-be-good-for-britain-reviving-the-regions

Top tips for getting tenancy deposit protection right

By Marc Da Silva



Despite the anti-landlord policies adopted by the government, many investors continue to be drawn to the buy-to-let market as the returns routinely outperform those of other investments

Buy-to-let returns continue to beat many other mainstream investments, including commercial property, UK government bonds and cash, while remaining a highly popular alternative to the volatility investors often risk when investing in the stock market.

Yet, many landlords are putting their property investments - probably their biggest assets - at risk by failing to comply with basic legislation, such as placing their tenants’ deposits in a government-backed tenancy deposit scheme within 30 days of receiving the deposit.

Deposits taken on assured shorthold tenancies in England and Wales by landlords or letting agents must be protected within 30 days in any one of three government-backed insurance based or custodial deposit protection schemes operated by MyDeposits, Deposit Protection Service (DPS) and the Tenancy Deposit Scheme (TDS).

Insured scheme

The insurance product enables landlords or agents to retain the deposit during the tenancy but in return pay a protection fee to the scheme.

Custodial scheme

The custodial scheme allows landlords or agents to hand over the deposit for protection during the tenancy, with no fees attached. The scheme is funded entirely from the interest earned from the deposit pool.

There are separate tenancy deposit protection schemes in Scotland and Northern Ireland.

The three appointed scheme administrators in Scotland are Letting Protection Service Scotland, Safedeposits Scotland and MyDeposits Scotland.


In Northern Ireland, the schemes are Deposit Scheme Northern Ireland, MyDeposits Northern Ireland and Letting Protection Service NI.

Although it has been mandatory to hold a tenancy deposit in a tenancy deposit scheme since 2007, as many as 300,000 landlords are estimated to be running the risk of a heavy fine for not placing money into a government authorised scheme, research reveals.

Even if the property is managed by an agent, it is the landlord’s responsibility to ensure the deposit is properly protected.

Here are some top tips from the Residential Landlords Association for getting deposit protection right:

+ If you accept the deposit in installments, remember that each individual payment would need to be protected within 30 days of receiving each part.

+ If you have an agent managing the deposit protection, ask for a copy of the deposit protection certificate – if your agent doesn’t protect the deposit on time then you will be liable for between one and three times the deposit amount.

+ If you choose to use insurance-backed deposit protection such as TDS Insured or DepositGuard, include a stipulation in the tenancy agreement about what will happen to any interest the deposit generates at the end of the tenancy.

+ Ensure you include in your tenancy agreement all the reasons that you might need to use the deposit – e.g. cleaning, redecoration, damage, removal of items, replacement of items, rent arrears, gardening, etc. If you have not put a clause stating that the deposit may be used to cover loss in the instance then should a dispute arise you may be unable to claim the money from the deposit.

+ Ensure you make a thorough inventory and check in/out report which includes the condition, age and cleanliness of all items – this will give you a good starting point in any deposit deduction claims.

+ Remember that you must serve the prescribed information along with the scheme leaflet within 30 days of receiving the deposit. It is generally a good idea to have evidence that the tenant received such as their signature or proof of postage.

https://www.landlordtoday.co.uk/breaking-news/2017/7/top-tips-for-getting-tenancy-deposit-protection-right

Friday, 28 July 2017

Three agents expelled by Property Ombudsman after failures to co-operate

By Rosalind Renshaw


Three agents have been expelled from membership of The Property Ombudsman (TPO) scheme for two or more years, after failing to pay awards made by the Ombudsman or comply with TPO’s Codes of Practice for Residential Estate Agents and Letting Agents.

The decisions to expel Shields & Co (Nottinghamshire), LPC Lettings Limited (Liverpool) and Blackhorse Property Management Limited (Bradford) follow complaints made against the companies by landlords, tenants and, in one case, a vendor.

Across the three cases, unpaid awards and rent which had not been passed to the respective landlords, totalled nearly £11,000.

The complaints were independently reviewed and upheld by the Ombudsman, who ordered payment of the money to those owed, together with awards for avoidable aggravation in all of the cases.

TPO members are required to comply with any award and/or direction given by the Ombudsman and accepted by the complainants.

In the first case, a landlord contacted TPO when he was unable to resolve his dispute relating to rental payments owed by Shields & Co on four separate properties.

TPO liaised with Shields and the complainant in an attempt to set up a payment plan as a resolution, but an agreement as to the terms was not reached.

Sheilds & Co did not respond to the case review but their communication in relation to the payment plan was enough to satisfy the Ombudsman that the landlord was owed the full sum of £2,657.15 in rental payments.

A further £500 to reflect the significant aggravation caused was also awarded. Similarly, a complaint made against LPC Lettings for not passing on rent totalling £5,967.54 was also supported by the Ombudsman. An award of £600 was granted for the avoidable aggravation.

This case highlighted the importance of letting agents ensuring they keep client money in a separate designated account and transfer all monies due to clients promptly.

A further case against the same company covered a wide variety of issues, including renovations, invoicing and quality of repairs, treatment of tenants as well as rental payments.

The Ombudsman criticised LPC for failings on several counts and instructed them to pay an award of £550 as full and final settlement. LPC Lettings was subsequently expelled from the TPO scheme for a minimum term of three years.

In the final case, Blackhorse Property Management Limited (BP) was expelled from both sales and lettings redress membership of TPO for a minimum of three years following two separate cases brought against them.

The first  related to a lack of tenant referencing where the Ombudsman made an overall award of £350.

The second case against Blackhorse, made by a potential seller, concerned the transparency of the contract, potential loss of viewings and insufficient complaints handling for which the complainant was awarded £300.

The three agents were referred to TPO’s independent Disciplinary and Standards Committee, which decided to expel the agents for failing to implement the Ombudsman’s decision.

An agreement between all the existing redress schemes means the three  will not be able to register for any form of redress until the awards are paid. Redress registration is required for the agents to trade legally.

Gerry Fitzjohn, chairman of the TPO board, said: “Wherever possible, we will always facilitate early resolutions between agents and consumers.

“However, agents that do not cooperate with our investigations, as in these cases, put themselves at greater risk of having a complaint upheld, as the Ombudsman only has the consumer’s evidence to consider.”

http://www.propertyindustryeye.com/three-agents-expelled-by-property-ombudsman-after-failures-to-co-operate/

Coming soon! My interview with serial entrepreneur Liam Ryan of Assets for Life




Coming soon my interview with serial entrepreneur Liam Ryan of Assets for Life

Foxtons and Countrywide profits plunge as they blame 'unprecedented' uncertainty in the market

By Sam Dean and Isabelle Fraser

London-focused Foxtons has been struggling in the sluggish property market CREDIT: PETER PAYNE
Beleaguered estate agents Foxtons and Countrywide have reported big falls in profits as they continue to be dogged by the sluggish property market.

London-based Foxtons posted a 64pc fall in profits, while Countrywide, the UK's biggest estate agent, recorded a 98pc collapse in pre-tax profits in the first half of the year.


Both companies' shares slumped in early trading, with Foxtons down 5.3pc and Countrywide, which owns brands such as Hamptons, down 9.7pc to a record low.

Foxtons said the market had been hampered by “unprecedented economic and political uncertainty" as it revealed that first-half profits plummeted from £10.5m to £3.8m in the six months to the end of June.

The decline was driven by a 29pc drop in revenue from property sales against tough comparisons from last year, when the company benefitted from a “surge in transactions” before stamp duty went up.



Meanwhile, Countrywide said its pre-tax profits fell to £447,000 in the same period from £24.3m last year, as the number of homes it sold fell 20pc compared to the same period last year. The company added that in London it was "seeing increased differences between vendors and buyers on price expectations while both groups wait to see how the political situation unfolds".

Countrywide is in the process of streamlining its business and boosting its digital offering to compete with online-only estate agents. Alison Platt, the chief executive, said she "wouldn’t describe [the 98pc fall in pre-tax profits] as dramatic," as the company's earnings before interest, taxes, depreciation and amortisation were within expectations. But she admitted: "We’re not optimistic about the housing market in the next half and our mantra has been one of self help."

She added: "We cannot sit here and say we will wait for market to come back because our view is it won’t in the next few years."

Anthony Codling, an analyst at Jefferies said: "The costs of this strategy are being felt before the benefits." He added: "We continue to believe that Countrywide is doing the right things."

Both companies' focus on lettings mitigated some of the losses felt in sales. Countrywide said that its revenue from lettings in London climbed by 5pc, while Foxtons' letting revenue fell by 2pc. There are turbulent times ahead for both as the Government introduces a ban on one-off tenant fees. When the policy was announced last year, Foxtons shares fell more than 10pc.


Foxtons said the changes to stamp duty had continued to weigh on the property market, adding that the unexpected general election had led to a “further slowing” of transaction levels in the second quarter.

It warned that it expected trading conditions to be “challenging” for the rest of the year, but insisted that London would remain a “highly attractive property market for sales and lettings”. Despite the results, Mr Codling was positive about the controversial estate agent. He said: "Foxtons is a fighter and although the results took a hit in the first half, with cash on its balance sheet it has the stamina to stay in the ring for many more rounds to come."

Foxtons reduced costs by £3.7m in the first quarter compared to the same period last year, and chief executive Nic Budden said its performance had been “resilient”.

He added: “While conditions remain challenging, we are confident that these initiatives, together with the strength of our network, our balance sheet and our brand will support long-term growth for our shareholders."

Wednesday, 26 July 2017

Commercial property investment in UK holding up despite political uncertainty



Commercial property investment volumes in the UK increased by 1% in the first half of 2017 to £27.2 billion despite uncertainty caused by the general election.

However, average prime yields in June remaining static at 4.7% due to ongoing uncertainty, according to the latest analysis report from international real estate advisor Savills.

Savills forecasts that total returns are expected to be around 5.5% for UK commercial property in 2017 and improve throughout the next five years.

Offices being the most popular sector, accounting for 39% of investment in the first half of the year and in terms of location, investment was split 50/50 between London and the rest of the UK.

Savills says that sectors which could still see yields harden slightly by the end of 2017 include food stores, M25 offices, regional offices, retail warehouses, industrial distribution and industrial multi-lets despite economic and political uncertainty.

The report suggests that the continued weight of overseas investment targeting UK property is likely to maintain current pricing while the current gap between yields for prime and average commercial property is currently approximately 160 basis points (bps), close to the 10 year average of 180 bps.

‘UK commercial property is in good health, with investors continuing to be attracted by its underlying strengths, with overseas buyers additionally benefitting from the current currency discount. Indeed, volumes in the first half could have been higher, but have been held back by lack of sellers, rather than any reluctance from buyers,’ said Richard Merryweather, joint head of UK investment at Savills.

According to Steve Lang, director in the commercial research team at Savills, whilst uncertainties from the various worldwide political changes may create some localised volatility, particularly as the reality of Brexit negotiations become more apparent, the higher income returns from UK property look set to maintain its attraction with a wide pool of investors.

‘Indeed, in June we observed that a major US pension fund is looking at a build to core strategy in the UK, looking to make physical improvements or agree new leases in order to move assets into core, demonstrating the willingness for some funds to move along the risk curve in order to access UK stock,’ he said.

Another BTL lender changes criteria ahead of new portfolio rules

By Graham Norwood

Accord Buy To Let is the latest lender to change its lending criteria for portfolio landlords with four or more investment properties, in accordance with stricter underwriting standards being introduced in the autumn.

Accord will assess the financial strength and competency of a portfolio landlord by taking into consideration their experience in the buy to let market, their full property portfolio and any outstanding mortgages along with their assets and liabilities.

All background properties must collectively meet a minimum rental calculation of 135 per cent interest coverage ratio at a stressed rate of 5.0 per cent.


This brings it in line with Bank of England Prudential Regulation Authority requirements for more thorough underwriting standards for ‘portfolio landlords’ with four or more mortgaged properties. All buy to let lenders must implement the new standards by September 30.

There will be no changes to Accord’s loan to value limits, maximum loan size or minimum income criteria, while stress rates and the number of properties accepted will remain the same.

Last week we reported on similar changes introduced by Paragon Mortgages.

https://www.lettingagenttoday.co.uk/breaking-news/2017/7/another-btl-lender-changes-criteria-ahead-of-new-portfolio-rules

Tuesday, 25 July 2017

Rent4sure offers a service ‘landlords can rely on’, says IT director

By Marc Da Silva

Living next to inconsiderate neighbours can be a nightmare, but letting to bad tenants can prove costly, especially when issues, which are simply out of your control, take a turn for the worse. And there are very few things worse for a landlord than a bad tenant.

If a tenant is not looking after the property or regularly failing to pay their rent on time, the experience can really make a landlord’s life unhappy.

While measures such as credit checks and tenant referencing can minimise the chances of letting a property to bad tenants, there are no guarantees that what may appear to be a perfect occupant may turn out to be a tenant from hell.

As one of the UK’s leading suppliers to the letting industry, Rent4sure provides a comprehensive range of services and specialist products, including credit checks, full references, company references, a ‘know your customer’ service, rent protection, legal expenses insurance, tenants liability insurance, and landlords insurance, all providing first class support to the letting industry through an online platform.

“Our innovative, cloud-based platform is now considered to be one of the most advanced, cutting-edge and intuitive platforms in the industry, thanks to the fact that we, unlike many of our competitors, have our own in-house IT department, with several developers working on our products at any given time, said Jack Webb-Heller, IT director at Rent4sure.

The company, which works with more than 30,000 tenants a month, generates most of its business from tenant references, but it also offers a range of insurance products that appeals to buy-to-let landlords, including rent protection and legal expenses insurance, tenancy liability insurance, and landlords building and contents insurance.


“As a specialist provider to the letting industry, agents and landlords can rely on us for advice, opportunities and support. It’s what we’re here for,” Webb-Heller added.

https://www.landlordtoday.co.uk/breaking-news/2017/7/rent4sure-offers-a-service-landlords-can-rely-on-says-it-director

No fault evictions: time to put an end to this unscrupulous practice

By Dan Wilson Craw
No fault evictions allow private landlords to turf tenants out without any reason. It’s legal but its use is on the rise and it needs to stop

Joseph Rowntree research attributes 80% of the recent rise in evictions to the no fault process. Photograph: Alamy

For every school in England there are five children without a home. The Local Government Association reports that 120,000 children are living in temporary accommodation. The primary cause of this homelessness is the end of a private sector tenancy, ie eviction.

Unfortunately, there is no official explanation for this, because private landlords don’t need to give a reason when they ask tenants to leave. In a study released on Sunday, Joseph Rowntree Foundation attributes 80% of the recent rise in evictions to this “no fault” process.

This process is enshrined under section 21 of the Housing Act 1988. The other eviction route is section 8, where evidence of a breach of the tenancy is required. Section 21 evictions are therefore easier.

Section 21 was designed to encourage investors and their mortgage lenders to enter the private rented sector and provide a flexible supply of housing. But it worked too well, attracting amateurs gambling on rising prices, with no interest in providing long-term homes.

The right to evict gives landlords enormous power over their tenants. Many tenants don’t even know they exist until a two-month notice to quit arrives through the letterbox; if valid it cannot be appealed. It has also allows the worst landlords to ignore disrepair – they can simply kick out tenants who complain. The coalition government did bring in protections against these retaliatory evictions but they apply only to tenants who live in an unsafe home – an estimated 17% of the total, according to the government’s recent English Housing Survey.

That survey also found that one in six private renters moved in the past three years because the landlord asked them to leave or, raised the rent or had a “poor relationship” with them, making staying untenable.

This particularly affects those renters who don’t have a spare £1,000 for the average deposit (pdf), £400 for the average letting agent fees, and more than £900 for upfront rent and moving costs – all payable before their current landlord releases their deposit.

It also partly explains why we are seeing a huge rise in homelessness as a result of eviction – accounting for 78% of the rise in homelessness since 2011. Some 24% of private renters claim housing benefit; and the fear for these people is that a blameless eviction would leave them struggling to find an affordable replacement in the private sector. As Joseph Rowntree Foundation says, unfreezing housing benefit is critical in order to avoid the arrears that are driving some evictions and homelessness. But it is only part of the solution. According to the English Housing Survey, 66% of private renters have no savings, so, even if they can afford rent, an unwanted move could plunge them into crisis too.

While building more homes for long-term rent is important, we need a quicker solution. Ending section 21 could just be it.

Landlord groups claim their members only evict delinquent tenants and only use section 21 to do that because it’s quicker than section 8. The English Housing Survey begs to differ, finding that 63% of evictions happen when a landlord plans to sell or otherwise use the property.

The majority of landlords, who are interested in keeping reliable tenants have no need for section 21.

Landlords should be legally accountable for ending a contract early. Enforcing a penalty for this type of behaviour, which could be paid to tenants, at a high enough rate that it could pay for setting up a new tenancy, would discourage blameless evictions. There should also be limits on rent rises to prevent unscrupulous landlords pricing out tenants.

Reforming this damaging law is Generation Rent’s top priority. With a quarter of families now living in private rented housing, paying rent should, at the very least, give tenants security.

Dan Wilson Craw is the director of Generation Rent

https://www.theguardian.com/housing-network/2017/jul/25/no-fault-evictions-landlords-tenants

Friday, 21 July 2017

Leasehold homeowners are ‘overpaying to extend’ leases

By Felicity Hannah

Leaseholders are being charged extortionate fees to extend their leases, but that’s not the only expensive, and largely unknown, problem plaguing owners and buyers


Homeowners living in leasehold properties are being asked to pay extortionate prices to extend the leases on their homes. That’s the conclusion of the London School of Economics and Political Science (LSE), which has analysed data from 8,000 sales of leasehold properties showing how the sale price varied depending on how much time was left on the lease.

The cost of extending a lease relies on a concept called relativity, which describes how the value of the home drops as the lease term runs down. The lower the relativity, the more it costs to extend the lease.


It’s a tricky concept but the outcome can have a dramatic effect on costs. Relativity is expressed as a percentage and it’s the difference in value between a short lease and an effectively freehold home – such as one with a 999-year lease and low, fixed rents. The lower the relativity, the more it costs to extend the lease.

The problem is that the LSE research suggests that the current practises underestimate the value of leases when there are under 70 years remaining. And that means that leaseholders who pay to extend their leases could be paying thousands of pounds too much.

James Wyatt, a chartered surveyor and one of the authors of the research, said:  “Our findings mean that many leaseholders may be seriously overpaying for lease extensions. Our alternative, evidence-based calculations could result in savings in the order of thousands of pounds for most leaseholders, and much more for owners of some of the most expensive properties.”

The findings are yet another blow for leaseholders who have been rocked by a series of scandals suggesting they are being overcharged, under-informed and potentially even exploited.

Campaigning against clauses

It was recently revealed that some developers, including Taylor Wimpey, were selling homes with 999-year leases but adding clauses that doubled the ground rent every 10 years. That meant they incurred significant additional costs within just a few decades, affecting their sale value.

Buyers also found that their leaseholds had been sold onto investment companies. Instead of being able to buy them after a couple of years for a few thousand pounds, they were being asked for 10s of thousands.

Campaign groups have sprung up demanding action and in the spring Taylor Wimpey announced it would pay £130m to alter the terms of doubling leases for some owners of newly built leasehold properties.

At least now the government has noticed the issue. Despite the Queen’s Speech being heavily dominated by Brexit, the issue of leasehold transparency was included.

The speech included: “We will consult and look to take action to promote transparency and fairness for leaseholders. We will look at the sale of leasehold houses and onerous ground rents, working with property developers, the Competition and Markets Authority and others.”

However, this was put forward as an aim and not detailed as part of any particular bill. It does show that alleviating buyer concerns is back on the government’s agenda.

Consumer confusion

The Home Owners Alliance (HOA) has warned that the issue of leasehold properties is exacerbating the country’s homeownership crisis. In fact, it has issued a strongly worded statement accusing the sector of “widespread malpractice and lack of consumer understanding”.

Whether it could be regarded as malpractice or not, there is certainly no doubt about the consumer confusion. HOA research shows that just 58% of leaseholders questioned said they knew the length of their current lease, and almost a quarter of these said it was less than 80 years. That is widely seen as the number at which the lease begins to harm the property’s value and so its ‘mortgageability’.

What’s more, property listings often don’t offer information on the tenure of the homes for sale. In fact, less than half of those surveyed actually specified whether a home was freehold or leasehold. And only a quarter of the listings specified the amount of time left on the lease.

Paula Higgins, head of the HOA, said: “Unscrupulous and avaricious actors within the property industry are using sharp leasehold practices to line their own pockets and fleece householders.”

She added: “Developers and estate management companies rely on leasehold to bamboozle consumers, charge exorbitant administration fees, ever increasing ground rents and render properties unsellable.

“The situation is exacerbated by the fact that many estate agents are themselves ignorant about leasehold and fail to inform and educate their customers properly. The government needs to take urgent legislative action to protect people from these practices, help people who are already trapped and avert a full-blown crisis.”

Perhaps the one good thing to come out of the scandals and the extension prices and the baffled buyers trapped in a home they apparently own but pay rent on, is that more people are reading up on leaseholds and their limitations. At the very least, developers are facing greater scrutiny of their leasehold practises – from government, from campaigners and from buyers themselves.

http://www.independent.co.uk/money/spend-save/leasehold-homeowners-overpaying-extend-leases-fees-sales-housing-market-a7848556.html