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Friday 29 January 2016

Councils tell tenants to wait for bailiffs before moving out

An alarming number of private tenants are being told by their local council to ignore eviction notices served by their landlords – and to wait for bailiffs to turn up before moving out – in order to qualify for rehousing support, according to new findings*
Half (49 per cent) of tenants who’ve been served with a section 21 notice by their private landlord say they have been told to ignore it by their local council or an advice agency such as Shelter or the Citizen’s Advice Bureau (CAB).
The figures shine a light on the scale of the issue, which was recently highlighted by the Telegraph, and has been exacerbated by the increasing use of private landlords by local authorities to discharge their housing duties.
The NLA says that the advice is increasingly being offered because councils are refusing to accept tenants’ housing applications before an order for possession has been granted by a Court, despite guidance from Central Government that confirms all housing applications should be accepted from the time notice is served on the tenant.
NLA Chairman Carolyn Uphill said:
“We’ve always known that tenants receive this kind of advice and it’s a huge problem because it damages the confidence of landlords who work in the community to home those who aren’t able to access social housing.
“There is no justification for prolonging the stress and uncertainty brought by a possession case. Advice like this creates unnecessary strain on tenants, landlords, and the Courts Service, which must first hear the case and order possession before Councils are prepared to carry out their statutory duties.
“Nobody should ever be told to wait until the bailiffs turn up; it makes an already unpleasant situation much worse for everyone and creates a vicious cycle of misery and spiralling costs for all involved”.

Landlords could be sitting on £514m of unprotected deposits

Financial website has claimed that 284,000 landlords have failed to protect tenants’ deposits, amounting to £514m in unprotected funds. It has also called for a national register of landlords. commissioned the Centre for Economics and Business Research (CEBR) to carry out research into deposit protection.
It concluded that with approximately one in five (4.6 million) households in the UK now privately rented and the average protected deposit at £1,040, the total value of deposits paid by tenants and placed in protection schemes by landlords has now reached a whopping £3.2 billion. 
But despite the risk of fines for landlords who fail to protect their tenants’ deposits, claims 15% are still failing to do so. The site claims these landlords are together earning up to £8.5 million a year in interest on unprotected money, while leaving themselves and their tenants with no third party protection when their agreement comes to an end.
It is mandatory for all landlords to protect deposits for assured shorthold tenancies via a government backed tenancy deposit scheme within 30 days of receipt. Landlords must also give tenants prescribed information about where their deposit is protected, who they are renting from and how they raise a dispute. 

The schemes give landlords and tenants access to a free dispute resolution service if things go wrong when the tenant moves out, eliminating the need for court action in many cases. 
Hannah Maundrell, editor-in-chief at, said: “Renting is a money minefield and with troubled times ahead for the buy-to-let market, the problems caused by ‘dodgy landlords’ are only likely to get worse. While many landlords are doing the right thing and protecting deposits in one of the official government backed schemes, a worrying amount of money is falling through the cracks and far too many tenants are being left vulnerable.
“Renters must take control and ask landlords which protection scheme their money will be stashed in before signing on the dotted line. Existing tenants must ask for proof their money is protected if their landlord hasn't given them the correct written documentation.

“It’s not right that tenants are left responsible for taking their landlord to court if their deposit hasn't been protected. The government needs to step in and take decisive action. Introducing a compulsory register listing every landlord that rents out property in England and Wales would be a start. This works for Scotland and Northern Ireland and it seems crazy this hasn't been brought in across the UK. Add in tenants’ ratings and reviews to this too and you have both the beginnings of a solution that helps renters make an informed choice about who they’re handing over buckets of cash to; and the foundation for policing landlords that are currently going unchecked.”

UK annual house price inflation at 4.4%, stronger in Southampton?

House price growth remains steady in January

· House prices increased by 0.3% in January
· Annual house price growth broadly stable at 4.4%

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: “The pace of UK house price growth remained broadly stable during January. Indeed, annual house price growth has remained in a fairly narrow range between 3% and 5% since the summer of 2015. This trend was maintained in January, with house prices up 4.4% over the year, broadly in line with the 4.5% increase recorded in December. “As we look ahead, the risks are skewed towards a modest acceleration in house price growth, at least at the national level. The labour market appears to have significant forward momentum. Employment has continued to rise at a robust rate in recent months and, while the pace of earnings growth has slowed somewhat, in inflation-adjusted terms regular wages continue to rise at a healthy pace. “With this trend expected to continue and with interest rates also likely to stay on hold for longer than previously anticipated, the demand for homes is likely to strengthen in the months ahead. “The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.

Indeed, the market is already characterised by a shortage of stock, with the Royal Institute of Chartered Surveyors reporting that the number of properties on estate agents’ books remains close to all-time lows.”

Monday 25 January 2016

Early-morning immigration raid leads to £15,080 bill for landlord

A landlord has been fined for breaching regulations for houses in multiple occupation following an early morning raid involving immigration enforcement officers.
As a result, a London-based landlord, Selvakumar Francis, has appeared in court on charges connected with the condition and overcrowding of his property in Cambridge. 
Magistrates heard evidence that Francis had allowed the property to deteriorate and had not put in place basic fire safety precautions. Officers identified a number of defects that amounted to nine breaches of the Management of Houses in Multiple Occupation (England) Regulations 2006.
Francis pleaded guilty to the offences, was fined a total of £13,500 and ordered to pay the council’s costs of £1,460 plus the £120 Victim Surcharge – a total of £15,080.
During the inspection, officers from Cambridge council found that the fire detection system was inoperative with no fire detection to the kitchen or lounge. In addition, a fire door had been removed or not installed which, combined with the lack of fire detection to the downstairs area, meant that the tenants would not have been aware of any fire and would have been trapped in their rooms if fire broke out.

The hallway, which is the main escape route, was cluttered with three bikes, a mattress and several packs of laminate flooring.
There were eight beds within the three-bedroom property but only one toilet available for all of the occupiers. One of the rooms being let out was only 5.5 square metres and had a bunk bed put in it. The other two bedrooms had three beds in each room. One of these beds was broken and there was only one electrical socket for the three occupants to use, resulting in multiple electrical extension sockets being used, and increasing the risk of fire.
The magistrates said Francis was negligent and his actions “had a significant effect on human health and quality of life.”

Landlords say “reasonable chance” of judicial review of BTL tax change

The two landlords behind a campaign to seek a judicial review of George Osborne’s controversial mortgage interest tax relief change say they have been told there is a “reasonable chance of success.”
Landlords Steve Bolton and Chris Cooper have sought the advice of a legal team including Cherie Blair QC on the chance of securing a review of section 24 of the Finance (No. 2) Act 2015 - which includes the proposed restriction of mortgage interest tax relief at a basic rate, even for higher rate-paying landlords.
“The next step is for our lawyers, Omnia Strategy LLP, to send a letter outlining our case to the government with a view to commencing judicial review proceedings” says the landlords on their Facebook campaign page.
Bolton, whose Platinum Property Partners business has £200m of residential property in its portfolio, is working with fellow landlord Cooper to mount a legal challenge on behalf of around 250 investors in the PPP network.

The pair launched their campaign just before Christmas, quickly securing £50,000 through crowd-funding to get the initial legal advice and launch the challenge. 

The pair say on their Facebook page: “The Finance Act 2015 includes Clause 24, which overturns a fundamental financial business principle, where INCOME less COSTS equals PROFIT. The current government sees fit to change this tried, tested and proven commercial formula. In simple terms, the government believe that it makes complete sense to tax property owners on that part of the rent that has been paid to the lender as mortgage interest, as if that money was still in the property owners’ bank account!"

Sunday 24 January 2016

Rents rising at quickest pace for four years - is your Southampton buy 2 let returning more?

Rents in England and Wales rose at their fastest pace for four years in 2015 putting extra strain on household finances. The buy-to-let index from agents Reeds Rains and Your Move said the average rent hit £794 per month after increasing by 3.4% over the year, the highest rate since 2011 when it was 4%.
Inflation averaged at around 0% for the year, while wage growth came in at around 2%, meaning rents are rising much faster than both A shortage of housing supply in some areas of the country, particularly London and the south east of England, is driving up house prices and rents. The ONS said house prices in England rose 8.3% in the year to November 2015 to an average of £302,000. House building is running at around half the level needed to meet demand.
"Rents reacted strongly in 2015, powered by welcome warmth from household earnings, and growing pressure from supply – the more troubling lack of housing in the UK," said Adrian Gill, director of estate agents Reeds Rains and Your Move. "The combined force is skywards for rents. Such growth in rents is a mixed bag. The fact that the majority of tenants can afford higher rents is certainly good news, and should be seen as a positive indicator as we enter 2016. Yet over the longer-term, higher rents also raise a serious challenge for the future affordability of housing in this country. Everything else will need to keep up."
Chancellor George Osborne, who wants to increase home ownership in the country, has targeted the unpopular buy-to-let sector with a 3% levy on top of normal stamp duty rates for the purchase of additional property. The new tax should come in on April 1, 2016, after he announced it in the autumn statement. It followed his scrapping of a relief for buy-to-let investors that allowed them to offset mortgage interest payments against their income tax bills.
Gill warned against the moves by Osborne. "Last year also demonstrated how the cost of renting a home has begun to diverge from the wider cost of everyday living, as measured by standard rates of inflation," he said. "Again this demonstrated that maintaining the success and the current affordability of private renting will depend on the main issue at hand – getting more properties onto the market. Into 2016, all layers of government, regulators and lenders should be taking every opportunity to help the flow of much-needed investment in buy-to-let – far from some of the recent political moves to discourage landlords."
Buy-to-let lending has surged as investors rush to beat the new tax year. The Royal Institution of Chartered Surveyors (Rics) and the Council of Mortgage Lenders (CML) have both reported a spike in buy-to-let demand at the end of 2015, after Osborne unveiled his planned tax hike. The CML reported a 35% annual leap in gross buy-to-let lending in November 2015, when 23,300 mortgages were issued. It said the value of gross buy-to-let lending jumped 46% year-on-year in November to £3.5bn.

The Southampton Property market in 2016 and beyond!

A question I often get asked is how the Southampton property market will perform, particularly when you look at how stocks and shares have performed recently! As we all know property values are both a national obsession and a key driver of the British consumer economy.  So what will happen next in the property market?

Before we look to the future you need to look at what has happen over the last five years.  One of the key drivers of the housing market and property values is unemployment, as it drives confidence and wage growth – key factors as to whether people buy their first house, existing homeowners move up the property ladder and even buy to let landlords have an appetite to continue investing.
When the Tory’s came to power in 2010, the total number of people unemployed in Southampton stood at 2,058 (4%) Last month, this had dropped to 813 people.

As the Southampton job market has improved with better job prospects, salaries are rising too, growing at 3.4%p.a. - their highest level since 2009.  That is why, even with the turbulence of the last few years, property values in the Southampton are now 10.06% higher than they were five years ago.
Many homeowners have held back moving house since 2007 following the Credit Crunch but with the outlook improving, I expect some to seize the opportunity to move home, releasing pent up demand as well as putting more stock onto the market. With a more stable economy in the City, this will, I believe, drive a slow but clearly defined five year wave of activity in home sales and continued house price growth in Southampton.

My expectation is that Southampton property values will increase by 21.9% by 2021. Now that might sound optimistic to some, however values are currently rising in Southampton at 5.5%p.a. This forecast reflects both the positive and negative factors of our local market and the wider UK economy as whole.

So what about those negative factors that may affect the future of the property market.  Well the number of properties for sale in Southampton is lower than it was five years ago, restricting choice for buyers (but this can keep prices higher). Interest rates were being predicted to rise around Easter, but now I think it will be nearer to Christmas and finally the new buy to let taxation rules which are being introduced between 2017 and 2021 and of course the stamp duty changes for second home owners.

Investors that I speak to, know that with interest rates at their current level, the cash in their Building Society or Bank accounts is falling in value! Property prices, by contrast, have grown over the years, even after the property crashes, far outstripping bank accounts and inflation.

Property is a long term investment, it has its’ up and downs, but it has always outperformed, in the long term, most investments. Whether you are a first time buyer in your 30’s, trading up as the kids grow or you are looking to plan for your retirement I feel the Southampton property market will produce good medium to long term returns.  Just make sure you buy the right property, at the price in the right location, whatever your investment goal.

Average UK house prices up 7.7% in a year

House price index UK summary
  • UK average house prices increased by 7.7% over the year to November 2015, up from 7.0% in the year to October 2015. The average UK mix-adjusted house price in November 2015 was £288,000.
  • House price annual inflation was 8.3% in England, 1.3% in Wales, 0.4% in Scotland and 4.6% in Northern Ireland.
  •  Annual house price increases in England were driven by an annual increase in the East (10.2%), the South East (9.8%) and London (9.8%).
  • Excluding London and the South East, UK house prices increased by 5.8% in the 12 months to November 2015.
  • On a seasonally adjusted basis, average house prices increased by 0.8% between October and November 2015.
  • In November 2015, prices paid by first-time buyers were 7.4% higher on average than in November 2014.
  • For owner-occupiers (existing owners), prices increased by 7.8% for the same period.

Sunday 17 January 2016

Tenants advised to wait for bailiffs before leaving rented property

The Telegraph has raised the issue of how local authorities are increasingly encouraging evicted tenants to stay put in a property until the bailiffs arrive.
Professional landlords won’t be surprised at councils’ advice but amateur landlords could be surprised by the approach which encourages non-paying tenants to ignore their landlords’ requests to leave a rented property.
The Telegraph article highlights the case of one family who rented out their home while living abroad. They gave the tenants notice to leave when they returned but the council advised the renters to stay in the property until the last possible moment, leaving the owners homeless.

The problem is most common in London and Birmingham and other areas of high rental demand.
David Lawrenson, of, described the councils’ approach as “stupid” and said it doesn't encourage landlords to take on people who are financially vulnerable.

Alan Ward of the Residential Landlords Association said councils were unable to help people until they had nowhere else to go and pointed out that tenants cannot be rehoused until the bailiffs are at the door.

landlord fined £2,200 for illegal eviction

A Birmingham landlord has been fined £700 and order to pay £1,500 costs for illegally evicting a family of nine.
Mirsad Solakovic, 37, of Sparkbrook, Birmingham was found guilty of unlawfully evicting the family from a property in Bordesley Green, in contravention of Section 1(2) of The Protection from Eviction Act 1977 on 2 October 2013.
Solakovic had asked his tenants to leave without serving the appropriate notice. Birmingham City Council wrote to the agent who was managing the property at the time outlining the legal procedure to be followed to obtain possession. Although the agent served a new notice giving the tenant two months to leave, Solakovic took ‘the law into his own hands’ and changed the locks.

When one of the sons living at the property came home later that day he discovered the locks had been changed and called the police. Solakovic refused to let the family return. Instead he allowed one family member to enter and retrieve a few belongings, and then crammed the rest into the garage.

Birmingham City Council’s cabinet member for neighbourhood management and homes, Cllr John Cotton, said: “When relationships break down between tenants and landlords there are strict legal processes that have to be followed and council officers are here to help both sides move forward. In this case, Mr Solakovic took the law into his own hands and unlawfully evicted a family. Today’s prosecution sends out a clear message that we will not tolerate this behaviour and will pursue those landlords who operate outside the law.”

Sunday 10 January 2016

Southampton buy 2 let will yield 6.4%

Whitworth Court is a nice little scheme located 5 mins walk to Bitterne train station. The unit has allocated parking and is a reasonable size with a good layout. We let units in this scheme at £600 pcm to a wide tenant pool.The unit is currently under rented at £550.  This unit has 123 years on the lease with a combined ground rent and service charge cost of £860 p.a. Gross yield is good at 6.4% based on asking price of £112k and it nets down to 5.7% after direct property costs. It would make a tidy buy 2 let here in Southampton. Full details at:

Sunday 3 January 2016

Will the young people of Southampton ever own their own home?

I had the most interesting chat with a mature couple (in their early/mid 50’s) from Bassett the other day, whilst viewing one of our rental properties. The property wasn't for them, but their son, who wanted a second viewing with his parents to get the parental blessing. Now I know that isn't the norm, but in this case the parents were going to act as guarantor.

We got chatting about the Southampton property market and how they had bought their first property in the city just after they got married in the late 1980’s when they were in their early/mid 20’s. Anyway, we got chatting about how the youngsters of the UK seem to rent more than buy nowadays and from that the conversation covered a number of similar topics. I want to share the highlights of that conversation with you today.

Their son, like many 20 to 30 year olds in Southampton, desperately wants to own his own property and the parents said he had read in the Telegraph recently, when you compare house prices to earnings, the current 20 to 30 something’s generation have to spend more of their salary in mortgage payments than any previous generation. The demand for private rental sector accommodation in Southampton is huge. There are in fact 25,247 private rental properties in Southampton at the last count, impressive when you consider there are 16,707 council houses in the city. However, let us not forget 54,550 properties are owner occupied (30,559 with a mortgage).

Let us all be honest, private renting doesn't have the stigma it had a few decades ago and it might surprise people that even though us Brit’s class ourselves as a nation of home-owners, roll the clock back 100 years and over 75% of people rented their own home (and it was all from private landlords as council housing only started to come in with the ‘homes for hero’s’ after the first World War). It might also surprise you to learn that at the time of the 1971 census, still more people rented than owned their own home.

Looking at the affordability issue, I have proved time and time again, it is in fact cheaper to buy a property than rent, when one looks at starter homes for first time buyers. 95% mortgages have been available to first time buyers for over four years and whilst you could certainly find better properties in better condition in better areas, terraced houses can be bought for as little as the early £100,000’s in the Portswood area of Southampton (meaning a modest deposit of £5,000 would be required).
When it came to affordability, I was able to tell them that when they bought their first house in Southampton in 1988, the ratio of house prices to salary was 7.54 to 1 in Southampton ... and here was the surprise for both of us, today’s ratio is only 6.53 to 1!
I said I believed there had been a cultural attitude change towards renting property in Britain and that this quiet revolution was likely to be permanent. In the 60’s, 70’s and 80’s, saving for the deposit was everything and buying a house was everything. Youngsters today have far much more disposal income today than people had in the Callaghan and Thatcher years, but choose to spend it upgrading their mobile phones every 12 months, the newest tablet or PC, a newest 50” plasma LCD TV and two sun drenched holidays a year, than go without and save for a deposit.

Yes, there are horror stories of tenants living in rat infested properties with landlords who charge massive rents and don’t repair their properties. But that is very much the exception as most tenants rent homes of a quality they couldn't ever to afford to buy. Twenty years ago, if you said you rented a property, you were considered the lowest of the low ... but now it’s the norm.

So with mortgage affordability being well within the bounds of most first time buyers, the level of deposit required for a 95% being surprisingly modest (starting off at c.£5,000 in Southampton as mentioned above) until we change our attitudes, the UK housing market is slowly but surely turning into a more European model, where people rent for long periods of their life, then eventually inherit their parent’s properties and subsequently become home-owners themselves, albeit later in life.

Hence, I cannot see the demand for decent, high quality rental properties ever dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure you buy the right property, at the price, in the right location. And we are more than happy to help with those decisions.

Strongest December since 2006 as Rightmove forecasts 6% rise next year

The seasonal 1.1% (-£3,120) dip in the price of property coming to market this month is the lowest December fall since 2006. It gives a final flourish to 2015’s strong property market, pushing the annual increase up to almost £20,000 (7.4%), and is a strong indicator that upwards price pressure will continue in 2016.
Miles Shipside, Rightmove director and housing market analyst comments: “Whilst a fall is the norm at this time of year, this is December’s best post-financial-crash performance, signalling another round of price rises in 2016. Despite the shortage of suitable stock in many parts of the market, demand for housing is on the up. Although the average price of property coming to market is already up by a hefty 7.4% compared to a year ago, Rightmove forecasts that prices will reach and breach new records next year.”
Price forecast:
Rightmove’s 2016 forecast is for new seller asking prices to rise by 6%. In spite of increasingly stretched affordability and rising taxation of the buy-to-let sector, there remains a stark imbalance of demand in excess of suitable supply.  Rightmove analysis of email enquiries sent by potential buyers to estate agents since the start of October this year shows a jump of 37% compared to the same period in 2014. In contrast to this surge in demand, the number of properties coming to market has fallen by 5% over the same period.
Shipside observes: “Whilst initiatives are in place to encourage developers to build more new homes to supplement the supply of existing ones coming to market, the lead-times are long and developers face capacity constraints. In the meantime strong demand is being further fuelled by the additional momentum and aspiration for home-ownership that schemes such as Help to Buy create. We therefore predict that the average asking price will be another £17,000 higher by the end of 2016.”
City-regions in demand:
Rightmove predicts that Outer London prices will rise by circa 6% in 2016, so looking further north and west may seem increasingly attractive. Analysis of Rightmove data by Dr Alasdair Rae, of the University of Sheffield, suggests that we may see an exodus of highly-skilled workers leaving the capital for more affordable yet vibrant cities such as Leeds, Edinburgh, Cardiff and Manchester. This ripple effect won’t reach all towns and cities and continued stagnation or price falls are likely in less sought-after areas in the north and west of the country, especially if buy-to-let investor activity tails off. As choosier buyers demand easier access to amenities to satisfy convenience and lifestyle demands, expect to see increased price divergence between the more buoyant large urban markets and smaller urban areas that can’t offer the same range of facilities.
Dr Rae predicts: “2016 may be the year when many young urban professionals finally give up on the London market and consider long-term career moves to the UK’s large, buoyant city-regions, such as Manchester, Leeds, Cardiff and Edinburgh. They are already very popular and pricey because of what they offer, but may seem cheap to London émigrés priced out of the capital.”
Making the most of April 2016 stamp-duty changes:
There are some interesting and imminent dilemmas for several different sectors of the market following the Government’s recent Autumn statement about a 3% surcharge on buy-to-let and second home purchases. Some would-be buyers or sellers may want to move more quickly while others may be better advised to delay their transaction until after the stamp duty changes.
Shipside advises: “Those looking to expand their property portfolios will be trying hard to find suitable properties to buy and then complete the purchase before the April deadline. Those selling for the first time are likely owners of properties suitable for renting out, so they may be best advised to take advantage of any surge in investor activity and market as soon as possible. Given that the legal process could take six weeks or so once a buyer is found, they only have between now and the middle of February to take advantage of this artificially induced boost to buyer demand.”
Financially-stretched landlords may also consider early action and look to sell now. While rents are forecast to rise in popular locations to improve their returns, some of the hoped-for increase in capital values may be dented in this sector once the stamp duty changes have gone through.
Shipside explains: “Highly-geared landlords who are worried about the upcoming changes to mortgage interest tax relief should consider whether this is an opportune time to exit the market. Again they need to act quickly as buy-to-let investors looking to purchase will want to complete before the April deadline.”
First-time buyers on the other hand may feel the increase in tax levied against buy-to-let investors in this sector will help them to secure a better deal if they delay agreeing to buy until it is too late to complete before the April deadline.
Shipside speculates: “If a buy-to-let investor wants to buy the same property as a first-time buyer, their purchase costs are going to be 3% higher if they do so post-April. That may mean their returns will not stack up to make it attractive, and they will potentially be at a disadvantage compared to would-be owner-occupiers looking to get onto the property ladder. Prices may therefore have a period in the relative doldrums in this lower-priced sector, until the dust has settled. However, demand among fellow first-time buyers remains strong so waiting for prices to fall could be just wishful thinking. A lot depends on the dynamics of your local property market so doing your local research is very important as always.”