Tag: Buy-to-let

When it comes to investing in property, it pays to know about the latest property hotspots and up-and-coming areas whether you are buying-to-let or simply looking for capital growth.

Buying at the early stages of a long-term plan offers good potential for an increase in property values and solid rental returns. So where potentially are the best spots to invest for the long-term?

Research by Glide, broadband and utilities provider , has identified 10 areas where properties offer the potential for a regeneration price growth premium in addition to average values in the local area.

The company made a series of FOI requests to local councils in order to find the number of empty dwellings and commercial properties across the UK.

Collectively, across both categories of building, in the month of September 2019 there were 617,527 empty buildings across the UK.

Of those councils which held the information, Birmingham was revealed as the leading council area for the most potential space, with 8,086 residential properties and 7,622 commercial buildings in the city and its suburbs being empty.

Second is Liverpool, where 15,339 buildings are currently not occupied, while regions across the North dominate the top five, with Manchester, Leeds and Bradford also ranking highly.

Jason Lloyd, head of residential at Glide, said: “The research has revealed the high number of empty properties and businesses across the UK, particularly across some of the major northern Council areas.

“But whilst it is troubling to see so much wasted residential and commercial space, it does represent a clear opportunity for developers, and hopefully this study will help prospective investors pinpoint where there is the most potential for growth.”

When investing in the buy-to-let sector it is important to have a good relationship with your tenants, and that often requires good communication.

If you communicate well, both parties will understand their responsibilities, know that the other is keeping to theirs, and the tenancy will typically run more smoothly, which is what is required if you are looking to keep a tenant in your property on a long-term basis.

Neil Cobbold, chief operating officer of PayProp UK, commented: “If tenants are clear on what to expect, they are more likely to be satisfied and stay in the property for longer – at least as long as those expectations are then met. This can help reduce arrears and void periods for letting agents and landlords.”

According to PayProp, providing better information to renters about what they should expect from landlords and letting agents can ensure greater customer satisfaction.

The lettings payment automation provider says that educating tenants on the roles and expectations of each party can reduce confusion – and also reduce the chance of disputes.

But with research by the National Landlords Association (NLA) revealing four out five – 79% – tenants require better information on the roles and responsibilities of landlords and letting agents, clearly more needs to be done in this area.

Cobbold commented: “Proactively educating tenants on the rental process from the outset can save agents time from having to mediate unnecessary disputes between landlords and tenants.

“Some key areas where tenants may lack understanding relate to financial obligations and property upkeep. It’s very important to make sure tenants are kept informed throughout the tenancy. Often tenants are set wondering: ‘Has my rent been received?’, ‘How much do I owe?’, ‘Is my deposit safe?’, ‘Is it my responsibility?’ and ‘Who pays for repair work?’”

The How to Rent guide is a valuable resource, and yet a study by the NLA found that 67% of almost 900 tenants surveyed said that they were not aware of the government’s How to Rent guide which is a legal obligation for them to receive one at the start of a tenancy designed to help them understand their rights and responsibilities.

Cobbold continued: “Agents could do more to promote the How to Rent guide to consumers. It’s a free government resource that is updated regularly and includes a lot the information renters may need,” he explains.

“By making sure tenants not only read but understand this guide, letting agencies can manage expectations from the outset of a tenancy and save time and money on creating their own educational materials.”

Aside from promoting the How to Rent guide, letting agents and indeed landlords could take additional steps to help educate tenants and improve renter satisfaction.

Cobbold adds that key lease terms such as payment dates, tenancy lengths and notice periods should all be set out in a clear and accessible manner so tenants know what is expected of them and when.

He added: “A concerted effort from agencies and landlords to provide renters with more clarity could make for a more harmonious and efficient private rented sector.”

The National Landlords’ Association (NLA) has once again called for the introduction of a properly funded housing court to cope with proposed regulatory changes and speed up repossession cases.

According to the Ministry of Justice, it currently takes private landlords an average of 22.6 weeks from making a repossession claim to the courts to it actually happening, which suggests the existing system is inadequate.

With the new Boris Johnson-led Conservative government expected to end the use of Section 21 repossessions in the private rented sector the number of repossession cases going through the courts is set to increase dramatically, and that is why the landlord association believes that the introduction of a new housing court would help speed up and improve justice for landlords and tenants.

The NLA also wants to see the government reform Section 8 evictions to end the logjam of repossession cases that will follow the scrapping of Section 21 evictions, as part of its pre-election promise to strengthen landlords’ rights of possession by reforming the law courts.

If this does not happen, the NLA fears that there could be a crisis in the PRS, owed in part to a major reduction in the number of homes available for rent and a disproportionately negative impact on the supply of housing for people receiving state benefits.

NLA-commissioned analysis carried out recently by Capital Economics using the organisation’s most recent members survey found that if the government abolishes Section 21 without additional reforms, the supply of private rented houses in England would fall by 20%, or 960,000 dwellings, because landlords would sell-off their rented properties to house buyers rather than other landlords.

It adds that there would be a 59% drop in the number of private rented dwellings available to households which claim local housing allowance or universal credit – 770,000 fewer dwellings – because landlords would choose not to rent their property to people with an unreliable record on paying their rent.

In addition, the number of homes facing rental increases would amount to 600,000 homes, which is 13% of the sector, because the reduced supply of rented housing would force up rental costs

Richard Lambert, the NLA’s chief executive, said: “We congratulate Boris Johnson on his return to No. 10 Downing Street as prime minister of a new Conservative government. We now stand ready to work with him and his team on the reform of housing regulations in a way that does not do long term damage to the supply of private rented housing.”

“No-one should be in any doubt about the dire consequences for the supply of private rented housing in this country if the government abolishes Section 21 without any effort to reform the law courts and strengthen landlords’ rights of possession. There would be nearly 1 million fewer houses available for rent and the people who would be hardest hit would be some of the most vulnerable in our society: those in receipt of state benefits.”

The Residential Landlords Association (RLA) is calling on the government to ensure that reforms are made to the way good landlords can repossess properties in legitimate circumstances.

The new Conservative government has pledged to end Section 21 repossessions in the rental market.

The party also pledged to strengthen the rights of good landlords to repossess properties when they have good cause to do so, and that is something that is urgentlly needed sooner rather than later according to the RLA.

The group is calling on ministers to ensure that the new framework provides comprehensive grounds upon which landlords can repossesses properties in cases such as anti-social behaviour and tenant rent arrears, with guarantees about the timeframes involved for each and measures to prevent abuses by problem tenants.

The RLA also wants this to be underpinned by developing a dedicated, properly funded housing court to ensure considerable improvements to the time taken to rule on, and enforce, possession cases.

David Smith, policy director for the RLA, commented: “We look forward to working constructively with the government as it develops its plans for the private rented sector.

“With the demand for rented housing remaining strong it is vital that the Conservatives’ plans for the sector, whilst being fair to tenants, have the full confidence of landlords.

“The election should also be seen as an outright rejection of Labour’s plans for rent controls. They would have undermined investment in the sector, choked off supply and made it more difficult for tenants to find the good quality homes to rent they need.”

Rents are forecast to see strong growth over the next five years, according to the latest residential property forecast from the Royal Institution of Chartered Surveyors (RICS).

With demand from tenants gathering pace, at a time when there has been a sharp decline in the number of new properties for renting, the trade body forecasts that national rents will rise by about 15% between now and mid-2024.

With tenant demand continuing to rise, RICS forecasts that rents will increase by around 2% over the next 12 months and about 3% annually over the next five years.

The latest Residential Market Survey by RICS for November shows a net balance of -29% of surveyors reporting a fall in landlord instructions which is twice the negative rating in November 2018.

A separate study recently conducted by the Residential Landlords Association (RLA) found that there has been a sharp rise in the number of landlords exiting the buy-to-let market, which largely explains why there has been a fall in the supply of properties to rent.

David Smith, policy director for the RLA, commented: “If the decline in the supply of new homes to rent continues to fall whilst demand is still rising, this is going to lead to a crisis in some areas as tenants desperately search for somewhere to live. This is all the result of increased taxation and other measures over the last three years and the result has been highly predictable as we said it would be.

“The new government needs to urgently address the problem and make changes in the forthcoming budget to relieve the pressure on landlords and encourage new investment to meet the demand.”

There is growing uncertainty over where the responsibilities of private sector tenants and their landlords meet, according to a study by a major broadband and utilities provider.

While a landlord is legally responsible for things like property repairs and safety in terms of gas, fire and electrical appliances, among other important issues, it would appear that a growing number of younger tenants expect their landlord to go above and beyond and take on greater responsibility for basic amenities, based on the research by Glide.

The company surveyed 1,000 tenants either currently renting a property, or who have previously, to find out which issues they expect their landlords to be responsible for dealing with.

The study found that one in seven – 14% – renters expect landlords to step in to resolve arguments over bill payments, and 34% of under-25s would call their landlord to change a lightbulb, despite the fact that this is generally an obligation of the tenant unless specified otherwise in the terms of each individual rental agreement.

Almost a quarter of tenants – 23.2% – said that they even tend to leave a dispute over parking up to the owner of the premises to resolve.

What’s more, over one in five – 21.9% – tenants believing their landlord should be responsible for fixing their Wi-Fi.

Richard Price, sales director of Glide Shared Living, commented: “Being a landlord comes with its fair share of responsibilities and a duty of care for the tenant, but increasing demands from occupants has led to the lines becoming blurred in terms of exactly what is and isn’t under a landlord’s remit.

“As such, it is easy to see why there can be a number of demands across the UK that landlords perceive as unreasonable, and so it is more important than ever for both parties to receive clarity about which issues will be addressed by who in the terms of the rental agreement.”

Accord Buy To Let is attempting to improve its service and make its mortgage products more widely accessible by amending its criteria and documentation.

The intermediary only subsidiary of Yorkshire Building Society will now accept a minimum income requirement of £25,000 per application, as opposed to at least one applicant requiring £25,000 minimum income. The move is designed to create greater flexibility for landlords.

In addition, the number of years’ evidence required from self-employed applicants has been dropped from three years to two years.

Chris Maggs, senior commercial manager at Accord Buy To Let, said: “We have reviewed our criteria to improve the service we provide to brokers. These changes will not only increase turnaround times, but will make our products more accessible to a broader range of landlords.

“These latest updates come at the end of a very exciting year for Accord Buy To Let. In the last 12 months we’ve made efficiencies to the application process by replacing signed declarations with a tick box to ensure we can keep our turnaround times as low as possible. We’ve also improved our proposition with the launch of an 80% LTV range, increased maximum age and term and introduced a new income and tax-based Income Cover Ratio (ICR) of 125%.

“Landlords have had a number of challenges to face over the last few years, and it’s likely for the short term at least there will be continued uncertainty, but we are constantly looking for ways we can support the sector and help more property owners grow their businesses.”

Accord Buy to Let recently made modest reductions to the cost of its 80% loan-to-value buy-to-let mortgage range.

The latest products for purchase and remortgage include two-year fixed rates at 3.31% with a £950 fee or 3.85% fee-free.

There is also a five-year fixed rate deal available at 3.63% with a £950 fee.

All mortgages come with a free valuation and £500 cashback or £250 cashback and free legal services for remortgage products.

Simon Garner, product manager at Accord Buy to Let, commented: “We know the present uncertainty in the market is impacting decisions, so following recent improvements to our criteria, we’re continually reviewing the range to offer landlords the most competitive rates.”

Thousands of landlords trapped in developer contracts with spiraling costs could be entitled to compensation, according to legal experts.

Around 100,000 homeowners across the UK, including many buy-to-let landlords, are estimated to be affected by onerous ground rents.

Britain has long had leasehold homes, but only in recent months has the ground rent scandal exploded.

A complete ban on new houses sold as leasehold is now being proposed by the government, while it also wants to reduce ground rents to zero.

In addition, the competition watchdog has now formally launched an investigation into the housing market over the mis-selling of leasehold properties.

Daniel Brumpton, partner and head of Nelsons’ professional negligence team, said: “The Competition and Markets Authority [CMA] has formally launched an investigation into the housing market over the misselling of leasehold properties, which will investigate permission fees, ground rents and other terms associated with leasehold properties.

“The competition watchdog will be consulting with developers, lenders and freeholders requesting information in relation to how leasehold agreements are drawn up, agree and subsequently maintained by the parties. The report will also consider the effects that ‘unfair’ terms have on leaseholders and have asked for people to share how they have affected their lives.

“Developers and freeholders could face legal action if the watchdog finds evidence of leasehold mis-selling.”

The East Midlands-based law firm Nelsons is prepped to take on compensation claims from property owners in the East Anglia, East Midlands, Yorkshire, North East and far North West regions.

Brumpton says that there is a lot landlords can do if they are caught in the ground rent trap.

He added: “There are currently four million leasehold properties in the UK, with around 100,000 of these being affected by onerous ground rents.

“We’re ready to help landlords who have found themselves unwillingly involved in the leasehold mis-selling scandal to bring a professional negligence claim against the conveyancing solicitor they instructed to help with the purchase of the property.

“If the solicitor failed to give you advice about the existence and implications of the onerous ground rent clause, we can assist you in suing for damages.

“Historically, ground rents have been low – no more than around £50 per year. However, in the last few years, housebuilders have started to increase ground rents to an initial charge of between £250 to £500 a year.”

Brumpton points out that some developers have also added clauses in the lease that allow them to review the ground rent periodically, for example, every five, 10 or 25 years. Typically, the review clause allows the freeholder to increase the ground rent at each review.

He continued: “In theory, a ground rent that doubles every 10 years doesn’t sound too bad. However, most leases are set for the long-term such as 999 years. If a ground rent of £250 per year doubles every 10 years, you can expect to pay £16,000 per year after 60 years. For many people, that’s simply unmanageable. This is also not something a landlord of a buy-to-let property could expect to pass on to tenants either.

“If you are a leasehold owner who purchased a new build property in the last 10 years, you should check your lease to see what it says about ground rent and what you can expect to pay.”