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Monday 30 November 2015

Will the stamp duty increases on second homes drive up rents in Southampton?

The Residential Landlords Association (RLA) has warned that the stamp duty hike announced in the Autumn statement will only worsen the current shortage of accommodation and drive up the cost of rents.
The Chancellor stated that ‘solving the housing crisis was a top priority’. But the RLA said the focus again seems to be help for first-time buyers and home ownership with the announcement that those buying second homes and investing in buy-to-let will pay an extra 3% stamp duty than others buying a primary home to live in.  
This is another hit for landlords who are still anxious about how changes to mortgage interest relief (MIR) announced in the Summer Budget will affect them.

Given that the private rented sector has accounted for the large majority of new dwellings created in England between 1996 and 2013, this extra burden threatens to reduce the number of new homes available at a time when demand continues to rise.
RLA chairman Alan Ward said: “The biggest losers from the Autumn statement are tenants who will now find it even harder to get the accommodation they want at a price they can afford. The extra stamp duty on buy to let’s will exacerbate an already serious shortage of properties in many areas reducing choice and driving up rents.
“The government should be encouraging landlords to invest, not doing everything they can to discourage them.”

Friday 27 November 2015

Southampton studio flat will make a good buy to let yielding 7% with no stamp duty!!

This nice studio unit has just come on the market at £90k. It is currently tenanted at £525pcm and has the added benefit of off road parking. It is really well located being close to all the Oxford St has to offer! It is also well positioned for Solent Uni and the businesses in the city and Ocean Village. Gross yield is good at 7% and no stamp duty! It won't be around for long Full details are here

Wednesday 25 November 2015

Southampton investors - stamp duty to increase by 3 % for Buy 2 Let properties!

Chancellor George Osborne has announced in the Autumn statement an increase in stamp duty on second homes and buy 2 let properties of 3% which will become effective in April 2016. More to follow when we have had a chance to review the full statement 

Friday 20 November 2015

Buy-to-let demand will continue to soar

Demand for buy-to-let is set to soar with each new generation while home ownership will continue to plunge.
Fewer than half of those born in 1990 will own their own home by age 40, according to new data from Savills.
Its latest Residential Property Focus 2015 reveals that 53% of those born in 1960 could look forward to owning their own home by the age of 30, rising to 71% by the age of 40 and 79% by the age of 50.
Of those born in 1980, just 35% owned their home by age 30, and this is projected to fall to 26% for those born in 1990.
By age 40, most will be in rented accommodation, with just 47% predicted to own their own home.

Jonathan Stephens, managing director of Surrenden Invest, a specialist buy-to-let consultancy, said the figures spell good news for investors.
"Quite simply, falling rates of homeownership mean rising rates of renters, so the growing situation in the UK creates a substantial opportunity for those looking to make their money work for them by investing in residential real estate.
“Of course, alongside this it is important to remember that the area in which you invest is important too – a few miles difference, particularly in major cities like London, Manchester and Liverpool, can have a big impact on yields."

This is particularly true of London properties, he said. House prices are projected to rise by 21.5% in central London and by 18.2% in outer London over the next five years, according to Savills.

Will Southampton tenants face a “winter of discontent”?

Tenants asking their landlords to do anything more than the most urgent repairs face an uphill struggle this winter, according to research by the chartered accountancy firm, HW Fisher & Company.
In a study of residential landlords, the firm found almost a third (31%) intend to spend less than £250 on maintaining furniture and fixtures in the current tax year. The figure compares poorly with previous tax years, with 86% of landlords saying they usually spend more than £250 per year – and 14% saying they normally spend over £1000 a year.
More than twice as many landlords plan to spend the bare minimum – under £250 –  on maintenance this year compared to normal years, in which a mere 14% spend this little.
Their reluctance to spend on maintenance now has been triggered by a planned change in landlords’ tax allowances that gives them a perverse incentive to delay spending until next April.
The current wear and tear allowance, which the research shows is claimed by 86% of landlords letting furnished property, is paid whether or not they have repaired or replaced the property’s furniture and fittings.

But from next April the current rules – which give landlords a flat rate tax deduction of 10% of their rental income – will be scrapped in favour of a new system, under which they will only be able to deduct costs they actually incur.
Tim Walford-Fitzgerald, Tax Principal at HW Fisher & Company, explains: “The new system is intended to be fairer and more transparent, only giving landlords tax relief for the money they really pay out.
“But the impending change has thrown up an anomaly – landlords can spend nothing on maintenance this year and still claim 10% tax relief on their rental income. And they could save more tax on what they do spend if they delay doing so until after April.
“So it’s not surprising that many are holding off on all but the most essential maintenance until the next tax year. This is smart tax planning – but it will come as little comfort to tenants struggling with battered furniture and tatty carpets in their homes.”
The research also found that nearly two thirds of landlords (64%) disapproved of the plan to end the current wear and tear allowance, with almost as many (58%) viewing the present flat rate system as fairer than its proposed replacement.

Friday 13 November 2015

House prices to rise 25 per cent in next five years warns RICS

UK House prices are expected to rise by 4.5 per cent for each of the next five years - a cumulative increase of around 25 per cent according to the RICS.
The culprit over the long term - as it has been in the short term - is a shortage of stock. RICS says demand continues to considerably outpace supply and the number of new instructions decreased in October for the ninth month in succession. 
In fact, the institution says the supply of new stock to the UK market has been in decline since the middle of 2014, with the number of new instructions only increasing in one of the months since then.

Demand, meanwhile, is strong. Following a small pick-up in agreed sales in September, activity was little changed this month across the UK. This chimes with HMRC transactions data, which continues to see the number of sales rising consistently over the year.
“It’s hard to get away from the issue of supply when it comes to the current state of the housing market. The legacy of the drop in new build homes following the onset of the global financial crisis is now really hitting home, with both the sales and letting markets continuing to show demand outstripping supply on a month-by-month basis” says Simon Rubinsohn, RICS chief economist.

“If the five year projections regarding the outlook for both prices and rents is anything to go by, property is set to become even more unaffordable going forward making the Government’s focus of boosting the delivery of new-build homes absolutely critical.”

Tenants don’t want longer tenancies, says DPS survey

Eight out of 10 renters want tenancies of a year or less, 40,000-strong survey by The Deposit Protection Service (DPS) suggests.
39,855 tenants whose deposits are protected by The DPS’ responded to the survey, with 80% saying that they preferred agreements that lasted no longer than 12 months.
Almost 90% said that they preferred agreements that lasted up to two years, with 34.60% of the total saying they wanted contracts for six months or less.
Julian Foster, DPS managing director, said: “This comprehensive survey suggests that the idea that tenants crave longer tenancies is a myth.
“Like landlords, many tenants prefer the flexibility provided by shorter tenancy agreements rather than being locked into long commitments over where they live and who they rent from.
“Tenancy agreements are vital ingredients in establishing happy tenancies for both landlords and tenants, and it’s critical that they reflect the needs of both parties.”

Almost seven out of 10 tenants said that they preferred a rolling contract of one or two months’ notice at the end of their tenancy rather than a new fixed-term contract, which was preferred by 28%.
Tony, 48, from Bolton, told The DPS: “I’m currently working on a short-term contract, so a shorter tenancy works far better for me. The nature of my work means I move around so I don’t want to be trapped somewhere or risk paying large sums for no good reason.”
Mitchell, 25, a chef in Weston-Super-Mare, said: “I prefer short term contracts as they don’t tie you down to one property.”
Mary, a 74-year-old retiree from Wiltshire, said: “I preferred a shorter-term agreement because my husband and I were in between properties. We didn’t want to be tied down and, if we wanted to stay longer, we could always go ‘periodic’ at the end.”
George, 25, in Lancaster, said: “I’m a student so I need flexibility over where I live.”

RLA offers energy advice to HMO landlords

The Residential Landlords Association (RLA) has offered advice to HMO landlords affected by the new regulations affecting the provision of heat and energy in shared housing.
A European Union directive on energy efficiency was updated in 2012. One of the key elements of energy efficiency is ensuring that those people who are directly using energy can see what they are using and take steps to reduce their usage. It is this that the directive is targeted at.
“As a result, the government passed The Heat Network (Metering and Billing) Regulations 2014,” explains RLA policy director David Smith, “These require that anyone providing heating, cooling, or hot water to someone who is required to pay for it whether directly or by incorporation in their rent must provide a metering system of some description to allow that person to measure their use and provide thermostatic valves to allow for a degree of control to be exercised by that user.”
The new regulations have caused a great deal of concern as the cost of fitting all this in many HMO properties would be prohibitive. There is an exemption to allow the changes not to be made where the cost is disproportionate but it was not clear how it was to be applied. The situation was further complicated by the wording of the EU directive which makes reference to apartments, a concept that is not commonly used in Britain.
In order to help resolve the situation the National Measurement and Regulation Office (NMRO), the body responsible for enforcing the new regulations, has updated its guidance.

“The new guidance makes clear that the regulations do not apply unless the energy user is in possession of a self-contained property which contains sleeping, washing, and cooking areas. Any communal provision of washing and cooking facilities will mean that the regulations will not apply,” said Smith, “Therefore, the only landlords likely to be affected are those providing bedsit accommodation. These landlords will need to consider the technical feasibility and cost effectiveness of installing hot water meters, heat cost allocators, and thermostatic radiator valves in each bedsit to allow measurement of the amount of heat energy being supplied.”
If the landlord considers that it is not technically feasible or financially viable to install these items, then they will need to repeat that assessment every four years. Where a renovation or work is being planned that will create bedsits then the regulations will also need to be considered and metering is likely to be required. Affected landlords are also obligated to notify the NMRO of their status along with specified information.
Practically, given that a thermostatic radiator valve costs less than £10 it is likely that landlords will need to give serious consideration to fitting these. Meters may be avoidable as these are more expensive.
Failure to comply with the regulations is an offence with an unlimited fine.

The regulations come into force from 31 December 2015. Bedsit landlords should make their notification to the NMRO promptly using the standard forms. They should also fit thermostatic valves and undertake a written assessment of cost if they do not propose to fit meters.

£5m government to crack down on rogue landlords

The government has announced new funding to crack down on rogue landlords and tackle 'beds in sheds'.
Communities secretary Greg Clark said the money will help up to 65 councils tackle rogue landlords who let out substandard homes and “make tenants’ lives a misery”.
The worst affected councils which have a large proportion of private rented stock in their areas and significant problems will be able to bid for a share of the fund to tackle irresponsible landlords who provide unsafe living conditions, exploit innocent tenants and blight communities.
The fund will also target ‘beds in sheds’ which are often rented to vulnerable migrants by ruthless landlords who charge them extortionate rents to live in cramped conditions.
Councils can use the money to:
• Increase inspections of property
• Carry out more raids
• Initiate more enforcement action and prosecutions
• Demolish sheds and buildings that are prohibited

Communities Secretary Greg Clark said: “We’re determined to keep the country building and increase the supply of good quality homes that families want, both to buy and for rent.
“Key to this is rooting out the minority of landlords in the private rented sector that let out poorly-maintained and unsafe properties to vulnerable tenants, making their lives a misery.
“Council-led efforts mean more than 3,000 landlords have faced enforcement action and even prosecution in the past two years – today’s £5 million funding, combined with the extra powers we’re bringing forward, will help them go even further.”
Housing minister Brandon Lewis said: “The majority of tenants are happy with their home, but the private rental sector is still afflicted by too many rogues – who rent dangerous, dirty and overcrowded properties without a thought for the welfare of their tenants.
“That’s why we are inviting the worst affected councils to come forward and apply for extra funding, so they can root out the cowboys and rogue operators.
“The government is determined to crack down on rogue landlords and this funding, alongside measures in the Housing and Planning Bill, will further strengthen councils’ powers to tackle poor-quality privately rented homes in their area.”
The Residential Landlords Association (RLA) welcomed the new funding. Policy director David Smith said the RLA wanted to see ‘rogue’ (he RLA prefers ‘criminal’) landlords driven out of the sector once and for all.
“We have long maintained that it is not the lack of regulations that has allowed criminal landlords to get away with causing misery for tenants, but the lack of enforcement. There is currently a tiny number of prosecutions taking place.

“This extra funding will help councils to do more to root out bad landlords and ensure that they are prosecuted and that tenants are protected against them ever renting out property again.”

Friday 6 November 2015

£205,000: average house price hits new high as market bounces back

UK house prices are growing annually by 9.7 per cent according to the Halifax, which says "improving economic conditions" lie behind the acceleration in values.
The average price of a flat or house across the country is now £205,240 says the mortgage lender.
Its latest house price index reveals that the annual rate of growth has gone from 8.6 per cent a month ago to 9.7 per cent now. During October itself, house prices rose by 1.1 per cent, following last month's decline of 0.9 per cent.
"House prices in the three months to October were 2.8 per cent higher than in the previous three months. This was slightly above the average of 2.5 per cent on this measure over the first nine months of the year” explains Halifax housing economist Martin Ellis. 
“Improving economic conditions and household finances, together with sustained low mortgage rates, have boosted housing demand during 2015. Strengthening demand is filtering through in to higher sales levels although the ongoing shortage of supply is acting as a significant constraint on activity” he says.
“The imbalance between supply and demand is likely to persist over the coming months, maintaining upward pressure on house prices.”
The Halifax data appears in line with the findings of Connells, the agency chain which has reported that its prices rose by an average of around three per cent in the third quarter of the year, with another two per cent expected by the end of December.
Its new home sales have been particularly strong - they are running 40 per cent higher than 2014.
Meanwhile Savills is the latest high-end agency to give its forecast for the housing market in 2016 and following years.
It says that overall the scale of interest rate rises will dictate the pace, distribution and sustainability of house price growth, but it anticipates that average UK prices will rise 17 per cent by the end of 2020, but with big regional variations.
For example, the south east of England will see price rises of 21.6 per cent in that time while the north east will see increases of only around 12.0 per cent. London prices rill rise 15.3 per cent on average by the end of 2020 but with some outer areas - notably Walthamstow and Lewisham - outperforming the higher-value inner areas.