Southampton buy 2 let will yield 7% with low tenant risk!

This is a nice large 1 bed flat with excellent space planning. The property is well located close to Bitterne Train station and is about 1.5 miles from Southampton City Centre. The unit is on the market at £120k and benefits from a long lease and sensible service charges. We let a ground floor unit in this scheme at £625pcm and this unit would let at a similar level. Gross yield is attractive at 7% and net yield is also strong given the low service charges. This would make a good buy 2 let investment despite George Osborne's recent changes to the private rented sector. Worth a look; full details can be found here. http://www.rightmove.co.uk/property-for-sale/property-41441877.html

Should Southampton Landlords furnish their buy 2 let properties?

The big question for many landlords is whether they should let their property furnished, or unfurnished. Now, of course in such a wide marketplace there’s many people that would be interested in a furnished property, and likewise with unfurnished. In fact, we ran a quick poll on Twitter to find out what the average tenant would prefer – 64% of tenants would prefer unfurnished whilst 14% prefer furnished and a further 22% would be open minded when looking for a property. We've taken a look at the pros and cons of both furnished and unfurnished to help you decide which would be the best fit for your property before you put it on the market.

Furnished properties are popular with young tenants, it could be their first home and they may not have all of their own furniture yet. By offering the property furnished you’re potentially opening up to a wider audience that may be interested in a furnished property. One issue, however might be the maintenance issues that go with furniture. The tenant should always look after the furniture, however if it got damaged or broken you could end up with a maintenance dispute on your hands. If a tenant falls in love with your furnished property, but already owns their own furniture, they could be put off by the thought of paying storage costs for their furniture, which they will likely prefer to have in their new home with them.

Unfurnished properties appeal to many people, as shown in our statistics above. This is likely to be because tenants can add their own stamp and style to a property, and for tenants that already own furniture, they can move all of their belongings with them. An unfurnished property offers flexibility to the tenant, they can decide what furniture goes in what room, it can also help to make the property feel more like home. Whilst furnished properties can also feel extremely homely, many people aspire to own their own furniture, unfurnished properties help to achieve this aspiration.

Ultimately, it is down to the landlord to decide which would best fit their properties, however, when looking at our statistics there’s a clear cut winner and unfurnished seems to be what the majority of tenants would look for when viewing a property.

HMRC reports whopping 70% leap in transactions thanks to SDLT surcharge

There was an extraordinary 70 per cent leap in residential transaction volumes in March this year compared to the same month in 2015 - the first quantification of the extraordinary surge to beat George Osborne’s stamp duty surcharge.

HMRC’s provisional data shows 165,480 residential transactions in March, which was 41.5 per cent higher than in February.  

The Revenue says the large increase in transactions for March was very likely to be down to the three per cent surcharge being introduced on April 1 for buy to let and second homes. It says the same applies to Scotland, where the Land and Buildings Transaction Tax surcharge - mirroring the stamp duty surcharge south of the border - was an issue.

HMRC mentions that buyers may also have been trying to beat new and much-anticipated restrictions on buy to let mortgages as a result of expected Bank of England reforms, expected to be rubber-stamped in the coming weeks. 

The figures produced by HMRC are dramatic enough but are in fact they are adjusted to take account of seasonal fluctuations and other irregularities. 

When these are not taken into account, the non-adjusted residential totals are even more dramatic with last month’s figure being 74.8 per cent higher compared with February, and 77.1 per cent higher than March 2015.

https://www.estateagenttoday.co.uk/breaking-news/2016/4/hmrc-reports-whopping-70-leap-in-transactions-thanks-to-sdlt-surcharge

How much have house prices risen since the last European Referendum?

Since the 1975 in-out referendum, where Britain decided to remain in Europe, the average price of property has outperformed shares and eclipsed the growth in value of gold. In fact, only 30 out of 164 quarters (18%) since Q2 1975 have seen negative house price growth.

Property crowdfunding platform, Property Partner, has been crunching the numbers and their research has revealed that the UK housing market has seen a more than eighteen-fold increase (1751%) in average prices since the last time voters were asked whether Britain should stay in or out of Europe.

Compared to other investments, residential property has outperformed all other asset classes including stocks and shares (increased 9.5 times since 1975) and gold (up by more than 12 times).

Residential property prices in London have risen the most, rocketing by 3200% - almost double the annual UK average house price growth - since the second quarter of 1975 when Prime Minister Harold Wilson put forward a referendum on what was then known as the European Economic Community (EEC).

Today, a little more than four decades on and just over two months from the UK’s second ever European referendum (June 23), the average UK house price is now £198,564. Back in June 1975, house hunters were being asked to fork out on average £10,728 – today, in real terms, taking into account inflation, that would have been just £99,949.

Property Partner analysed quarterly house price figures dating back to just before the Common Market referendum in June 1975. Out of 164 quarters since Q2 1975, only 30 (18.3%) have seen negative house price growth. From Q2 1990 to Q3 1993, there were 14 consecutive quarters of negative growth, the longest stretch in the past 40 years.

Just before the last European referendum, quarterly price growth had slowed dramatically to 7%, a year after hitting 18.2%, and two and half years after recording the highest ever quarterly average house price rise of 42%. Average quarterly price growth didn’t fall as low as 7% again until Q4 1980, more than five years on from the referendum.

The following table shows a snapshot of the UK and regional average annual house prices in Q2 1975 (April-June) compared to Q1 2016 (Jan-March), just three months before the EU referendum.

REGIONS	Average house prices - 1975 Q2 (£)	Average house prices - 2016 Q1 (£)	% CHANGE
LONDON	13,818	455,984	3200%
OUT METROPOLITAN	13,692	344,371	2415%
OUTER S EAST	11,414	255,325	2137%
SOUTH WEST	10,972	221,703	1921%
EAST ANGLIA	10,605	204,948	1833%
EAST MIDS	9,365	162,082	1631%
NORTH WEST	8,698	144,914	1566%
WEST MIDS	10,353	168,585	1528%
NORTH	8,569	123,864	1345%
WALES	10,137	141,525	1296%
YORKS & HSIDE	10,837	144,361	1232%
SCOTLAND	10,543	139,911	1227%
N IRELAND	9,855	123,225	1150%
UK	10,728	198,564	1751%

Source: Nationwide House Price Index

Dan Gandesha, CEO of property crowdfunding platform Property Partner, said: “With all the nervousness and uncertainty around whether Britain is going to stay in or out, our research shows that although average house prices softened in the run up to the last referendum in 1975, they have risen a staggering eighteen-fold since, leaving all other asset classes in the shade.

There is never any guarantee that prices will continue to rise, but even taking into account factors which may put a brake on growth, such as the recent 3% stamp duty hike on second homes and buy-to-lets, if the past is any indication, property will remain a strong long-term investment.

London in particular has been consistently the star performer, although the capital has been transformed in the past four decades attracting huge inward investment. Whatever the result on June 23 May, London will remain a truly global city.”

http://www.propertyreporter.co.uk/property/how-much-have-house-prices-risen-since-the-last-european-referendum.html

Interest In Buy-To-Let Drops By Over A Quarter As Tax Changes Begin

• Interest in new purchases from buy-to-let investors dropped 27% in March compared to the same month last year as April 1st tax change starts to bite
• The fall reverses the upward trend between December and February which saw a 24% year-on-year increase in buy-to-let enquiries, indicating a potential slowdown in new investor purchases at least in the short-term
• Demand from home-hunters is at an all-time high with a record number of Q1 enquiries, so the pause from investors could give some first-time buyers more of an opportunity to make a move
• Investors looking for the best yields could look to counties like Durham and Merseyside: Peterlee offers the best rental yield over the next year (9.1%) followed by Bootle (8.6%)

Some buy-to-let investors took a break from looking for new properties in March as the new tax changes deadline loomed, new data from Rightmove reveals.

Whilst Rightmove recorded its busiest ever Q1 for enquiries to estate agents, the intentions of buyers shifted in March, with the number of people saying they were planning to buy a property to rent out dropping by 27% compared to the same month last year. This contrasts with the increase in interest seen from investors between December and February (+24% year-on-year) as they tried to make last minute purchases before April’s additional 3% tax deadline.

Sam Mitchell, Rightmove’s Head of Lettings, comments:
“This waning of interest definitely seems to predict a slowdown in the buy-to-let market, but what’s not yet clear is if this will only turn out to be a short-term pause. It could be that some investors are waiting until the tax changes have some time to bed in before they review their business and continue to make purchases. If this removes some of the competition for smaller properties then it could spell good news for many first-time buyers with a deposit ready as they may find now is the ideal time to make a move.”

Buy-to-let investors not deterred by the tax changes and looking for the best yields could consider buying in areas in the north such as Durham and Merseyside. The top four locations for best yields are all in these counties, with Peterlee in Durham highest at 9.1%, followed by Bootle in Merseyside at 8.6%. In third place is the neighbouring town of Birkenhead offering a yield of 7.8% and fourth is Stanley in Durham at 7.7%.

Mitchell observes:
“These areas where you can buy a two bed property for around £60-70k seem to offer a sound investment as long as the demand is there from tenants, so it’s worth speaking to local agents about what the rental market is like.  Whilst the highest demand for rental properties is often in the South and the East of England, this quarter’s data shows demand is growing in Manchester in places like Ashton-Under-Lyne and Stalybridge so they’re worth considering this year as well.”

Greater London (+1.3%) and the North West (+1.1%) were the strongest performing regions this quarter for rental increases, with the South East and East of England both falling by 0.1%, though the East of England’s annual increase of 5.9% still sees it outstrip all other regions.

http://www.rightmove.co.uk/news/interest-in-buy-to-let-drops-by-over-a-quarter-as-tax-changes-begin

House of horrors let at £700 per month shut down by council

A dangerous and dilapidated three-bedroom house rented to a family with two young children has been closed down by Newham Council. 

The council’s private rented sector licensing team visited the property last week and found evidence of it being partially gutted for renovation works while still being rented out for £700 a month to a couple with two children living on the ground floor.

During the inspection of the property in Manor Park officers found hot water from a bath in the tiny kitchen being used to clean crockery in the kitchen sink, exposed electrical wiring, walls stripped back the brick work and missing ceilings in unoccupied upstairs bedrooms.

They also found chimney breasts removed in rooms occupied by the family downstairs, but no supporting steels had been put in place and a fridge freezer in use in the back garden.

The council issued a prohibition notice to the landlord, banning anyone from living inside the house until it is made safe.

Sir Robin Wales, Mayor of Newham, said: “This was truly a house of horrors. It was unsanitary and unsafe. The ceilings could have collapsed at any time, the wiring could have sparked a fire, but this landlord saw no problem putting this young couple and their children in grave danger and charging them for it.

“Without our licensing scheme we may not have come across this family and been able to take them out of harms way. And now this landlord will pay for his negligence.”

Newham Council’s data warehouse, which uses information from across council services and from outside agencies, helped the team to identify this property as being rented out. The landlord who did not have a licence will now be prosecuted under the Housing Act 2004 for failing to have a licence and for poor management of the property. If he allows anyone to live in the property before it is declared safe by the council’s building control team he could also face prosecution with an unlimited fine. A video of the property is attached:

https://www.youtube.com/watch?v=OXUdja3345w

https://www.newham.gov.uk/Pages/News/Dangerous-house-shut-down-by-Newham-Council.aspx

SOUTHAMPTON LANDLORDS SET TO RAISE RENTS TO COVER HIGHER TAXES

Almost all landlords are considering increasing rents to pay for the higher taxes they now face.

In a survey the Residential Landlords Association found that 84% of private sector landlords are likely to consider increasing rents following the Chancellor’s recent tax assault on the buy-to-let sector.

It also found that 78% of landlords felt that the changes would deter them from investing in more properties to rent, with half considering getting rid of properties. This is in the face of rising demand for rented housing with the agents, Savills, predicting that one million new homes to rent will be needed by 2021.

In a statement the RLA said that whilst fewer buy-to-lets being bought might meet the Chancellor’s desire to free up some properties for home owners, for the increasing number of people who cannot afford to buy or who prefer not to, the tax changes will make it more difficult and more expensive for them to access housing.

In forcing rents up the Government is hitting those it is keen to support into homeownership by making it more difficult for them to save for the deposit they need.

The RLA is calling on the Government to exempt all rental property making a net increase in the supply of new housing from the 3 percentage point stamp duty levy.

A total of 39% of landlords reported that they would be more likely to invest in new build rental housing if this was exempt from the levy.

RLA Chairman, Alan Ward said: “The Chancellor’s tax policies are impacting on tenants’ lives – not only are more than four in five facing rent increases but half of landlords may be selling rented property, which might result in tenants being given notice to leave their properties.
http://news.rla.org.uk/landlords-set-tover-higher-taxes/

LANDLORDS BLAST ‘PREMATURE’ MEASURES TO CURB BUY-TO-LET

Proposals by the Bank of England to curb buy-to-let lending are premature according to the RLA.

The Bank claims increased buy-to-let lending is now a risk to the economy as a whole and wants to impose new controls, including strict affordability tests taking into account borrowers’ costs and personal income.

It also wants to see lenders take into account potential future interest rate increases and a special underwriting process introduced for ‘portfolio landlords’ with more than four properties. The new measures have gone out for consultation today.

The Residential Landlords Association, whilst agreeing that no landlord should take on debt that they cannot afford, is warning that the proposals are premature given the considerable tax changes being made to the sector which are likely to cool the market.

In February the Treasury Select Committee warned that measures taken to curb buy-to-let could come at a cost to the wider economy given the importance of the sector to supporting and encouraging a flexible labour market.

David Smith, the RLA’s Policy Director said: “The Bank needs to be careful that it does not over-react to the current surge in buy-to-let applications which are aiming to beat the tax increases coming in April. These include a three percentage points extra levy on stamp duty and abolition of mortgage interest relief. It is likely that the impact of these will significantly reduce the demand for borrowing.

“We would urge the Bank to tread carefully and avoid any premature moves that could stifle the supply of the one million rental properties the country desperately needs.”

http://news.rla.org.uk/landlords-blast-curb-buy-to-let/

Will Southampton Landlords move towards limited companies

A survey of nearly 1,400 private rented sector landlords undertaken by BDRC Continental on behalf of Paragon Mortgages has revealed that increasing numbers are considering moving their property investments into limited company vehicles.

The move comes as landlords plan for the increased rate of stamp duty on buy-to-let purchases and cuts to landlord tax relief.

Of the landlords surveyed, 41% indicated they are considering moving their portfolio into a limited company following the Chancellor’s decision to limit tax relief available to landlords last year. 

A further 5% have already established limited companies. For larger landlords with 20 or more properties, 14% are already operating as limited companies, while 63% are considering it.

In terms of portfolio growth, 43% of landlords surveyed agreed that the stamp-duty increase will affect their buy-to-let purchasing plans over the next couple of years. This figure rises to 63% for larger landlords with 20 or more properties.

 Despite uncertainty about what impact the changes to tax relief and stamp duty might have however, tenant demand amongst landlords is still perceived as being high. 

Demand for rented property in Q4 2015 was strongest in the South West where 40% of landlords reported demand to be rising. Landlords in the North East experienced the weakest demand, with just under a quarter (24%) of landlords reporting increased demand.

Reflecting this demand, average yields have also remained stable and averaged 5.6% across the country – unchanged on the previous quarter. The North West saw the highest yields, at 6.2%, while outer London had the lowest, at 5.1%.

John Heron, director of mortgages at Paragon, said: “Recent government interventions into the buy-to-let market are now beginning to impact landlord sentiment and plans. The fundamental drivers of the market however – tenant demand and yields – remain strong so there are competing dynamics at play.

“It is interesting to see that concern about the impact of changes to stamp-duty and tax relief is greatest among larger landlords. This concern is likely to grow now that the government have confirmed that landlords with larger portfolios will have to pay the increased rate of stamp-duty on buy-to-let purchases.”

https://www.landlordtoday.co.uk/breaking-news/2016/4/landlords-move-towards-limited-companies