Southampton landlords need to assess the impact of Universal Credit.

The Department for Work and Pensions (DWP) has announced that the national roll-out of Universal Credit (UC) has started, with more than 150 jobcentres starting to handle UC claims over the next two months.

However, it will only be single claimants and couples with no children that are eligible for the scheme. Landlords cannot be paid directly as the scheme combines various benefit payments into one lump sum.

The roll-out sees people in Yorkshire, Tees Valley, London, The Highlands, Thames Valley, and Gloucestershire, able to claim the benefit.  A full list can be found on the government website.

Universal Credit replaces: income-based Jobseekers Allowance; income related Employment and Support Allowance; income support; child tax credit; working tax credits; and housing benefits.

The government claims that UC helps people get back into work sooner, earning more, and making them less likely to fall back into poverty by reducing the amount they claim gradually, as opposed to completely cutting claimants off, depending on how much they make in work.

The Residential Landlords Association (RLA) has urged landlords to ensure they are aware of any tenants who may need to claim benefits.

The DWP also recently announced 2015/16 discretionary housing payments budget outlining how much local councils will receive to help residents struggling to meet housing costs.

The overall budget has been cut by 25%.  As Universal Credit is rolled out, private tenants, affected by under-occupation penalties or restrictions to their “housing element” caused by limits to “maximum rent”, the benefits cap, non-dependents etc. can apply for DHP funding. The scheme remains the responsibility of councils.

http://www.landlordtoday.co.uk/news_features/National-rollout-for-Universal-Credit

Fantastic Southampton buy-2-let will yield 6.4%

This super second floor flat certainly ticks all the boxes. It’s a great size at 748sq ft. has an ensuite,  parking and a nice balcony to enjoy the Itchen water views. The city centre is a short hop over the Northam Bridge and you can hear the crowds roar in the distance in St Marys on match day. It's in great decorative order and has no chain. It will appeal to a wide tenant pool and will command a rent in the order of £825pcm. Gross yield based on asking price is good 6.4% and net 5.7%.  Worth a look!

Southampton property auction produces a good buy-2-let.

Back on the 27th of January we ran the slide ruler over a couple of properties which were listed for auction last week. One of the properties on Malmesbury Rd, Shirley had two studios and a ground floor flat which was producing an annual rent of £11,800. The property sold at a little over guide at £163,000 giving it's new owner a gross yield of 7.24%. Convertng the two studios to a good 1 bed and refurbing the ground floor unit could push the income to c£15k for small enough outlay. Someone has got a nice deal - well done

Ban on revenge evictions edges closer

A long and technical debate in the House of Lords on Wednesday night ended with amendments to the Deregulation Bill being passed which are likely to lead to the outlawing of so-called ‘retaliatory evictions.’

Although the amended legislation has to be ratified by the Commons and then receive the Royal Assent, in essence the Lords agreed that landlords would be prevented from evicting a tenant using a section 21 notice within six months of receiving an improvement or hazard awareness notice.

It is likely that when a complaint alleging a revenge eviction is received relating to a private rented property, the local authority for the area will contact the landlord to resolve the problem, only serving a statutory notice if the landlord is clearly at fault and there is a serious issue with the property.

However, in practice many landlord bodies believe this will lead to landlords being deterred from issuing eviction notices even for legitimate purposes, and creates the possibility of tenants ‘playing the repair rule’ and submitting multiple requests for work to be done in order to avoid eviction even if there are circumstances where they are in rent arrears.

Lord Ahmed, for the government, said that the amendments which went on to be agreed would benefit both landlords and tenants, and covered four points.

Firstly they would offer protection against retaliatory eviction, secondly that all evicted tenants would receive at least two months’ notice before having to move out, thirdly that legitimate evictions should continue to take place smoothly, and finally that a section 21 procedure could not go ahead if certain basic requirements had not been fulfilled by landlords (for example, the provision of an EPC or annual gas certificate).
http://www.landlordtoday.co.uk/news_features/Ban-on-revenge-evictions-edges-closer

Repossessions fall 26% as the market improves

The number of repossessions fell to 21,000 in 2014 - 26% fewer than the 28,900 in 2013, and the lowest number since 2006, according to latest data from the Council of Mortgage Lenders. At 0.19%, the repossession rate was also lower in 2014 than at any time since 2006.

Out of the 21,000 total number of repossessions, 16,100 were on owner-occupied properties, and 4,900 were on buy-to-let properties.

At 0.3%, the repossession rate on buy-to-let mortgages was higher than the 0.17% on owner-occupier loans, despite the fact that the underlying arrears rate was lower on buy-to-let lending than on home-owner lending. This is unsurprising, as lenders offer extended forbearance to owner-occupiers to help them get through periods of financial difficulty without losing their home.

 Chart 1: Possessions, buy-to-let and owner occupied markets

Source: CML Research

There were also fewer mortgages in arrears at the end of 2014 than at any time since 2006. 1.05% of all mortgages were in arrears equivalent to 2.5% or more of the mortgage balance - down from 1.29% at the end of 2013 (and 1.12% at the end of the third quarter of 2014).
http://www.cml.org.uk/cml/media/press/4129

Central Southampton 1 bed apartment yields 6%

This large 1 bed unit has just come on the market at £130,000. It is located on the 1st floor, has allocated parking and extends to just under 450sq.ft. It is in need of redecoration and some updating but it will prove popular with tenants given its location close to Portswood (Waitrose is a 5 min walk), Southampton Common, The University and the City Centre. Your tenant pool will be varied and will include: professionals, post grads, medical staff and uni lectures who favour this location. Properly presented the unit will achieve £650 to £675pcm, which even after allowing for some refurb work will return 6%. The property last sold at the height of the market in December 2007 at £138k, so relatively speaking not bad value. And the all-important EPC rating is fine at C. This could be a nice tidy little buy2 let

Will Southampton property prices surge as pensioners invest in Buy-to-Let?

A new generation of pensioner landlords is expected to flood the buy-to-let market, pushing up house prices for first-time buyers, as more people turn to property to fund their retirement.

The number of people planning to take money out of their house to supplement their pension has increased dramatically, according to a study from YouGov and investment adviser, Old Mutual Wealth.

The study showed that 11pc of those approaching retirement plan to buy a second home to rent out, compared to the 6pc of pensioners who currently rely on this form of income.
Annuity reforms which come into effect in April, allowing baby-boomers to withdraw their pension in one lump cash sum, are expected to fuel a wave of purchases of one and two bedroom flats to rent.

This surge, combined with the UK’s chronic housing shortage, particularly in Greater London and the South East, will drive up prices for those not yet on the ownership ladder.

Analysis from the property group, Savills, has identified approximately £3  trillion of net housing wealth tied up in owner-occupiers’ homes, much of which is held by older households who have paid down the bulk of their mortgage debt and seen significant house price growth.

“Pre-retirees face much more pressure to use some of that latent wealth, given pressures on pensions and an increasing need to help their children get on or move up the housing ladder. That means they are much more likely to consider downsizing, either reinvesting the sums released into rental property or passing it down a generation,” said Lucian Cook, head of residential research at Savills. 
The YouGov data also found that 15pc of those preparing to retire are planning to downsize from their main home, compared to 2pc of the current pool of pensioners. If a proportion of these move into retirement villages, it will free up more family homes and curb price growth for those moving into their second or third house.

“This [pensioners downsizing] is likely to free up some family housing while also increasing demand for smaller properties, offsetting some of the constraints on transaction levels that result from mortgage regulation and potentially narrowing some of the gap in pricing on different rungs of the ladder,” said Mr Cook.
However, those approaching retirement could have an unhealthy over-reliance on property, warned Adrian Walker, a director at Old Mutual Wealth.

“For many people, their home is the place where they brought up their children and can have a strong emotional attachment. Giving that up can be a struggle and people have historically preferred to hold on to the family home and pass it on to their children,” he said.
“But attitudes are changing. More people understand that they may need to use value tied up in property in order to help fund retirement.”

A Labour win in May’s general election could also upset retirement plans. The introduction of rent controls, a policy advocated by the Labour leader, Ed Miliband, could deter reputable landlords and drive up rents for tenants, experts have warned.

http://www.telegraph.co.uk/finance/property/11399655/Pensioner-landlords-could-drive-up-house-prices-for-first-time-buyers.html