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Saturday 29 November 2014

Southampton freehold house yielding 6.2% on the market at £165k

This is a cracking little two bedroom semi-detached freehold property situated in Freemantle. The property comprises two good sized double bedrooms, three reception rooms, kitchen, downstairs WC and family bathroom. A key feature of this property is the off road parking and a lovely private rear garden. The property would benefit from modernisation, bathroom, kitchen etc. Given its proximity to Southampton Central train station (0.5 of a mile) and the city centre it will appeal to a varied tenant pool and will command a rent of £850pcm. Gross yield based on asking price of £165K is good at 6.2%. Yield should end up at circa 6% post refurb and final negotiation on price.

Nationwide: house price growth slows again in November

House price growth slowed for the third consecutive month in November, according to a closely-watched index compiled by Natiowide.
The average UK house price edged up 0.3pc to £189,388 in November, bringing the annualised growth rate to 8.5pc, down from 9pc in October.
Robert Gardner, chief economist at Nationwide, said that mortgage approvals had also dropped. He said the number of mortgages approved for house purchase in September was nearly a fifth lower than at the start of the year and 27pc below the long-term average.
Mr Gardner added that the housing market cool-down was at odds with trends in the wider economy.
“There is something of a disconnect between the slowdown in the housing market in recent months and broader economic indicators, which have remained relatively upbeat," he said. "While cooling in the London market is a part of the story, this is unlikely to be main explanation for the slowdown."
Mr Gardner said the cool-down was not due to affordability, which he said "does not appear overly stretched" since first-time buyers represented an unusually high proportion of mortage activity.
He expected the market to pick up again in the next few months.
“Forward looking indicators, such as new buyer enquiries point to further softness in the near-term. However, if the economy and the labour market remain in good shape and mortgage rates do not rise sharply, activity is likely to pick up in the quarters ahead," he said.

The annual rate of house price growth is coming off the peaks seen earlier this year. Source: Nationwide
This news comes as the Land Registry releases its monthly house price data.
The figures, the most accurate of all property indicies, are a month behind Nationwide's and show that the average house price in England and Wales hit £177,377 in October, compared with the peak of £181,269 in November 2007
It recorded annual growth of 7.7pc last month and house prices were up 0.1pc on September.

Friday 28 November 2014

Southampton property portfolio for sale yielding 6.6%

Ten two bed units have come on the market in a modern apartment block. They are well located being just over half a mile to Southampton Central train station. The units are modern, well-proportioned come with ensuites and car parking. The will appeal to a varied tenant pool and tenant demand will be strong. They are currently let on AST's. Current market rent on the units would be in the region of £825pcm which would give a gross annual income of £99k. Gross Yield is 6.6% based on asking price, should improve with negotiation! Tempting.

Thursday 27 November 2014

The rise of Britain’s ‘part-time’ landlords

Britain is seeing a boom in ‘part-time’ landlords where people are letting properties on the side to boost their main income, according to new research from LV= landlord insurance.
It found that more than one in twenty (7%) British adults rents out a property to supplement their income and receives an average monthly rent of £678, equating to nearly £28 billion a year across the country.
Landlords in London and the South East collect the highest rents at £1,079 and £816 respectively, followed by the West Midlands (£678) and East Anglia (£676). Approximately 60% of this is spent on borrowing costs, management fees and maintenance costs, leaving landlords a healthy pre-tax profit of 40% on average.
The trend is mainly being driven by people moving to a new home and then renting out their old one. In fact, over half (55%) of these landlords are renting out properties that they never intended to, often because they wanted a bigger property (15%), they had to move for work (10%) or they wanted a garden (8%). One in twenty (6%) landlords say they ended up renting out a property because they moved in with a partner and did not want to sell or couldn’t sell their own.
John O’Roarke, managing director of LV= landlord insurance, said: “Renting out a property can be a great way to cover your costs if you are unable to sell or want to hold on to a home and make some extra money from it, but it is not without risk. Landlords not only need cover for any damage to their property but they also need to think about their tenants and how they will house them if the property becomes uninhabitable, as well as the lost rental income. If you are thinking of renting out a property you should check the current regulations for letting properties in your area and make sure you have the right cover in place.”

Paragon reports 82% increase in its buy-to-let lending in 2014

Paragon Mortgages’parent company, The Paragon Group of Companies, has today released its full-year results for the year ended 30 September 2014 and revealed pre-tax profits of £122.2 million, an 18.1% increase on the previous year (2013: £103.5 million).
The past year has seen robust growth in Paragon Mortgages’ buy-to-let activity, with completions for the year increasing by 82.5% to £656.6 million (2013: £359.8 million). In addition the pipeline of new business at the end of September represents a strong platform for further growth at £414.8 million (2013: £231.9 million).
The credit quality of the £8.6 billion buy-to-let portfolio remains excellent, with arrears levels improving across the year to just 0.25% (2013: 0.35%), which is significantly below the CML’s market average of 0.69% in Q3 2014.
During the past 12 months the Group also completed a total securitisation issuance of £929.7 million, after closing its fourth deal of the year in November.
John Heron, managing director of Paragon Mortgages, said: “Over the last 12 months we have seen strong growth in our buy-to-let business, with completions increasing by more than 80%. This has been made possible by the improved scale and cost of our funding which has allowed us to deliver more attractive products for the benefit of our landlord customers and the intermediary market.
“Paragon Mortgages continues to be a significant part of the Group and contributed £80.5 million to pre-tax profits – a 14.5% increase on the previous year. Looking ahead, we expect strong and increasing tenant demand to continue to drive high levels of growth for buy-to-let mortgages and Paragon will be at the centre of the development of innovative solutions and competitive pricing in this market.”

Landlords HMO licence revoked

A Hounslow landlord has been stripped of his HMO licences after letting out filthy bedsits which were potential death traps.
Hounslow Council revoked Ifthikar Uddin's licences for properties in Avonwick Drive and Fairfields Road on the grounds he was not a 'fit and proper' person to hold them.
The council also banned Uddin from acting as a managing agent for any house with multiple occupiers.
The sanctions were imposed in the summer but Uddin appealed. His appeal failed last month and the ruling has just been made public.
Hounslow Council leader Steve Curran said: "We will not tolerate rogue landlords in Hounslow. Where we have the evidence and power we will crack down hard on these parasites who are making profits from vulnerable people, often on sky high rents."
Uddin rented out bedsits in houses without holding an HMO licence, which is required for any house in the borough with three or more unrelated occupiers.
Properties he owned or managed were also found to have inadequate fire safety, dangerous boilers, electrical hazards, damp and mould.
In one property, the tenants had no control of the heating or hot water supply, which were controlled by their landlord living next door.
Council officers found 16 people living in one two-storey, four-bedroom house, and how one room was less than half the legal minimum size of 6.5sqm, with barely enough space for a bed.
Uddin was company secretary of Key Property (UK), in Bell Road, Hounslow, when the letting agency was fined £42,500 in September last year after being found guilty at Feltham Magistrates' Court of 15 housing offences.

Wednesday 26 November 2014

Great video for Southampton landlords on the student rental market

Are HMRC chasing Southampton Landlords?

Our accountant has advised us that HMRC have started to issued demands for Class 2 NIC (National Insurance Contributions) to property landlords.  This is a very worrying trend, particularly with HMRC able to assess individuals for up to 6 prior tax years.  In recent correspondence, HMRC have stated:

Please note that the taxpayer may be considered as self employed through his property income, and as such may be liable to Class 2 national insurance contributions.”

However, in 2003 there was a Special Commissioners’ case on this topic in which they held that the taxpayer was not a self-employed earner for NIC purposes.  Accordingly, his rental activities did not require him to pay Class 2 NIC.  In our opinion, this should be the end of it, but in some correspondence  they are ignoring this case and sending out a nine point questionnaire! 

If you receive such an approach from HMRC we would recommend that you seek expert advice. It is worthwhile chatting it through with David and his contact details are:

David Tilsley Limited

Chartered Certified Accountants & Chartered Tax Advisers
91 Lakewood Road
Chandlers Ford
SO53 5AD
Tel: 023 80 254900