Whatever further plans the chancellor has in mind for the PRS there is a train of thought that come 2020 many landlords could be making a loss on their rental returns. This idea is based on changes to mortgage interest tax relief coupled with a series of theoretical rate rises between now and 2020. There will always be theories and suggestions, although given there are a number of on-line mortgage calculators why not perform your own "stress test" based on theoretical rate rises. The chancellor has targeted landlords and we are yet to see whether more changes lay ahead, we sincerely hope not. At 6pm on 21st March, in the Council Chambers in Waltham Forest Town Hall, there is a landlord forum.
Our friend Marc Bradshaw will be braving the gruelling London Marathon again this year, raising money for St John Ambulance. We wish him all the very best of luck. Please consider sponsoring him at Marc's London Marathon fundraising page.The Virgin Money London Marathon is one of the great British sporting events, combining elite athletics, mass participation and record-breaking fundraising in one race. The course is a gruelling 26 miles 385 yards long, passing through the streets of London from Blackheath to the famous finish line at The Mall.
In a previous newsletter we considered some of the dangers associated with pricing your home in relation to other properties available for sale (i.e. those remaining unsold). This time we'll consider pricing in relation to the properties which have actually sold. When considering what asking price to quote, common sense dictates that the price of other homes, which have sold, could be a good indicator as to the price you should be quoting. However, your research may well prompt you to price your property at a level which could under- or over-estimate your optimum sale price. Irrespective of national trends, the property market is very sensitive to imbalances in supply and demand. When there are many buyers all seeking a particular type of property, of which there is only one available, the competition factor will result in the seller being able to maximise the achievable price.
At the start of a tenancy there will be certain information you should provide to your tenant, like a gas safety record/certificate, EPC, electrical certification, deposit protection documentation, an inventory and if applicable license conditions. Ensure your tenant is given all the essential paperwork, which can best be achieved by issuing a welcome pack, also containing copies of appliance manuals, safety instructions and emergency contact details. You never know when something might go wrong, but when it does it will need to be resolved, and often quickly. Consider all eventualities and have plans in place. Have a contingency fund and easy access to "checked-out" round the clock contractors who can tackle the more urgent types of repairs, at very short notice. Unlike a problem occurring at your own home, where you might decide it can wait an extra day or two, a rent paying tenant will have their own expectations on turn-around times.
George Osborne's budget on 16th March was pretty disappointing for the property market and it does seem that opportunities to encourage investment and to build more new homes were missed. The most important announcement was the confirmation that the 3% surcharge in Stamp Duty Land Tax (SDLT) on buy-to-let properties and second home purchases announced in the Autumn statement is to stay. Some commentators have suggested that this will push up rents, but we suspect that it will actually have the desired effect of making first time buyers more competitive in the market when bidding against a buy to let investor, who will generally pay a figure dictated by expected rental yields, not vice versa. The expected waiver of the 3% for institutional investors who buy more than 15 properties has not happened, further removing the types of investment that could have developed brownfield sites and desperately needed build-to-let developments.
There can be nothing better suited to the internet than property, and hits to property websites far outnumber those of any other industry. The ability to be able to search in the comfort of your own home, usually without having to provide any personal details, is certainly attractive and has transformed the way the public begins to look for their new home. So will the internet replace traditional estate agency? It would certainly seem not. Ultimately property search portals are regarded by buyers and tenants alike as a supercharged local property newspaper, with a fairly comprehensive selection of homes on offer. As many sellers have discovered, the benefits of using an estate agent far outweigh the simple ability to source a buyer or tenant. In some ways, finding the buyer or tenant is the easy bit!.
Over the past 2 years we have come across more and more tenants seeking shorter tenancies, or a tenancy with a break-clause allowing them the freedom to serve notice during the fixed term. The reason given - "we are saving up to buy our own home". Having said that the numbers are pretty low when compared with tenants looking for a more secure type of tenancy giving them a fixed period of certainty. We have read reports that up to 2/3rds of tenants are saving up for a deposit, with many prepared to look further afield in order to make their home ownership dream a reality. Elsewhere we have read that less than 50% of tenants have anything currently saved towards a deposit. Is the desire to own your own home anything new? Well no…., perhaps new to some is the realisation that if rents continue to rise the ability to save for a deposit becomes more difficult.
Stamp Duty rates changed in the December 2014 budget. Now you pay higher rates only on the proportion of the property price in the higher bands. Also, from April 2016, buyers of buy-to-let and second homes will pay additional stamp duty. Here's our handy guide to the new rates. BracketsStandard rateBuy-to-let/second home rate (from April 2016) Up to £125,000 0% 3% £125,001 - £250,000 2% 5% £250,001 - £925,000 5% 8% £925,001 - £1.5m 10% 13% over £1.5m 12% 15% Rates under the new system are based on various portions of the sale price e.g., for a sale price of £600,000 there is no tax to pay on the first £125,000, then 2% is payable on the portion between £125,000 - £250,000 (£2500) and 5% payable on the portion between £250,000 - £600,000 (£17,500): total tax due = £20,000.Under the previous system tax was payable at 4% on the £600,000: total tax due = £24,000.
This month's Market Report comes at a somewhat confusing time for the financial aspects of buying and selling a property. It is effectively a crossroads at which recent Government initiatives seem to collide. These include things like Help-to-Buy, SDLT Stamp and inheritance tax changes, and higher taxes for buy-to-let landlords and second home owners. Indeed, the Institute of Economic Affairs has said that almost all of the Government's interventions in the housing market have been "a step in the wrong direction". For example has the Help-to Buy scheme pushed prices out of reach for whom it was designed to help? There has been a huge rush among buy to let investors forming limited companies since the beginning of the year in order to avoid the 3% additional stamp duty that they will need to pay unless they complete by 1st April.
We came across an interesting article on leaseholds and it prompted us to think “how many of our landlords have leases below 80 years?” A lease below 80 years attracts a marriage fee and many lenders will not lend on a lease with less than 70 years left to run. The lower the length of lease, the more costly it will be to extend, so when you do come to sell this could well be a bigger problem than you think. Check your lease and if you need advice then speak with a suitably qualified surveyor or a solicitor. Before we start, please note we are not mortgage brokers and when it comes to giving mortgage advice this should always be left to an expert, such as an independent mortgage broker. We noticed a high street lender advertising a 5 year fixed rate mortgage deal at a rate sub 2% with another offering a 10 year fixed rate at around the 3% mark.
When considering the value of a property prior to putting it on the market, many vendors understandably look at the asking price of other properties currently on the market locally, and draw pricing conclusions based on this research. Whilst this is not an unreasonable way of determining value, there are some traps to look out for. Firstly, an important observation is that if a property is on the market, it is by definition “unsold”. Unless it is relatively new to the market, an unsold property can often be one that is overpriced. If it had been priced correctly it would have sold, but in the event the market has rejected a property then it will probably only sell if the price is reduced. The longer a property remains unsold the less impact it will have, so if you have a similar property and you price it at about the same level as the unsold property, the chances are that yours will remain unsold as well.
If your tenancy is to work out well from day one, there are a few key guidelines you should follow: Position yourself as a strong contender by having good references from previous landlords prepared in advance. Your new agent will of course want to verify these references but the landlord of a property you are viewing may have a choice of tenants to select from so why not show yourself to be a good option? Make sure you agree with the inventory and condition report, then sign and date it to avoid any misunderstandings down the line. Always ask for a written receipt for your deposit and details of where it has been lodged. Ensure you have emergency procedures in place and that your landlord or agent provides a telephone number to call if anything goes wrong. Know where the water, gas and electricity cut-off switches are in case of an emergency.
Having just celebrated its first birthday, new property portal On The Market (OTM), has so far struggled to have a significant impact on the two leading portals, despite its TV advertising campaign. The service sought to compete with the likes of Rightmove and Zoopla yet traffic to OTMs site has been anything but impressive. According to independent web monitoring firm Hitwise, of the three main players, On The Market’s web traffic accounts for between 2% and 3% with Zoopla fifteen times this amount and Rightmove accounting for 68% of total hits. (Dec 2015)The reason this is so important is that many agents have signed a five year agreement with OTM – which is much cheaper than Rightmove and Zoopla – on the basis that the agent can only subscribe to ONE other major portal! We regard this as a serious obstacle for vendors and landlords.
We enjoyed helping out with the Davies Lane Primary School Winter Fair. Letter is reproduced below.
If your property is currently on the market, it may be tempting to assume that your agent is in full control of the situation, and that sooner or later a buyer or tenant will materialise. But don’t be so sure! Sometimes an agent will take the same view and simply sit in hope having, apparently, exhausted their own marketing options. We believe in a much more proactive approach and would invite anyone who is currently “waiting in hope” to contact us for a free and confidential marketing review meeting. Our aim during these meetings is not to criticise your chosen agent, but simply to help you consider some key facts about the progress of your sale from day one and offer constructive advice where we feel there are things you could do to make a difference. For example, we would review the following in context: 1. The response to date and feedback from viewings and advertising. 2. The number of viewings in relation to local averages 3.
What a great start to the year! Confidence is strong in what appear to be signs of an early spring market and all the talk of an early interest rate rise have been kicked into touch. A rise anytime during 2016 now looks very unlikely and a recent article in The Times gives an opinion that the next rate rise may not happen until 2019 and that markets are pricing in a 50pc chance of a rate CUT this year.
Many people think that agents’ property particulars are designed to give a comprehensive overview of a property that is on the market. We believe this is not strictly the case, and that their role is to encourage people to inspect a property that might be suitable for them. Too often the agents’ particulars focus on extensive flowery descriptions of the property, instead of sticking to the information that matters most. Our knowledge of buyers suggests that people simply want to know enough detail about a property to decide whether to rule it out or decide to view it. Too much detail at such an early stage is unnecessary and can actually be counterproductive. Some detail on the other hand is deemed essential to many buyers and we always listen to what people have to say on this subject.
As we approach Valentine’s Day it would seem that there’s a fair bit of love involved in estate agency! Estate agents are, if anything, matchmakers after all and just as people fall in love with the right person, so buyers also need to fall in love with a property if the sale is to succeed. Just as a good matchmaker will not simply put people on a database and expect them to enter into a long term loving relationship, so our job is far more than a simple broking service. That’s why we go to great lengths in trying to understand our buyers’ needs, preferences, hopes, desires and aspirations in respect of their future home. Only through this understanding can we help guide them to the right property. Of course, our matchmaking brief may be to find a Cheryl Fernandez-Versini or George Clooney, which, in property terms, can be somewhat ambitious, but in all seriousness buyers tend to have up to ten factors on their wish list that they seek to fulfil.
When letting your property, your primary objective is simple – you want to find a reliable tenant who pays the rent regularly and looks after your property as you would yourself. The reality is usually more complex than this. Letting your property comes with legal obligations and social responsibilities, many of which are unknown to anyone who does not make a point of keeping up with this rapidly changing legislative environment.It is certainly worthwhile getting professional advice at the outset, not just about how to maximize the likely rent you can expect to receive, but also about how you can avoid the various traps and pitfalls along the way. There has certainly been a steady increase in the number of obligations and responsibilities imposed on a landlord of late.
The 29th February only occurs every four years – which is about as frequently as many people used to move house during the heady days of property speculation that sparked the boom market. Nowadays most buyers and sellers are more level-headed and don’t leap from place to place quite so often. They tend to move for “real” reasons such as a change of job, children on the way, downsizing, debt, divorce etc. These “real” sellers tend also to quote realistic asking prices, as their main objective is to move, rather than simply to sit on the market hoping that someone will buy their property at that flatteringly inflated figure an over-optimistic agent suggested they should quote in order to get the business! Yes, even in this market an unrealistic asking price can cause a property to “hang around” for longer than the seller can afford to wait.
So here we are at the beginning of a new year and one of the most impressive stats that we look back on goes back not just to 2015 but over the past 20 years. A report just out by PPRM suggests that property has outperformed every other major asset class at an average annual increase of 9.34%. In fact an investment in the London property market 20 years ago would have performed 2.5 times better than the FTSE and four times better than gold, which was actually only marginally ahead of cash savings!Most of this gain has been via capital appreciation, and rental yields have now fallen slightly representing an average of 4% in the northeast and just 2.7% in London,Of course, for most homeowners, property is a tax free investment. The tax angle on buy to let is certainly going to be more noticeable this year, with a 3% levy on second homes and a phased reduction in the amount of tax that can be claimed against a mortgage.
As you will have no doubt heard, the Chancellor of the Exchequer George Osborne announced a 3% hike in Stamp Duty Land Tax (SDLT) on buy-to-let properties and second homes in his Autumn Statement. This was met with “outrage” from various quarters, such as the Association of Residential Letting Agents (ARLA) and others who describe it as “the nail in the coffin of the buy-to-let and holiday home market. Shares in some major estate and letting agency firms fell on the news. Certainly if you are in a fortunate enough position to be able to buy an investment property or second home, then yes, an average £250,000 purchase will cost you an extra £7,500. This additional expense might ultimately have to be absorbed by the vendor, who may have to accept a lower offer than expected, as the investment buyer will have less in their pocket.
Selling your property is easy. Just advertise it on line and wait for the buyers to flock to your door!! If only! Sadly, too many estate agents rely on this approach, which inevitably results in disappointment. Indeed, in some respects finding the buyer is the easy bit. But, when you think about it, there is far more to moving than simply finding a buyer. At the refreshingly different estate agency Trading Places, we believe in helping you move, and this means going far beyond the service offered by most estate agents. It all starts with the amount of time, commitment and personal accountability that we invest in our valued clients. We won’t simply rush in, measure up, stick pictures of your property in our window and hope for the best. We will take the time and trouble to understand all relevant aspects of your situation and then we will work with you to achieve what you want.
Important safety announcement for all consumers who have purchased a Hotpoint, Indesit or Creda branded tumble dryer after April 2004. Please see attached safety recall notice for full details. 160108205106_0001.pdf (56.
Section 21 changes The section 21 notice is the landlord’s best friend, allowing the landlord to seek possession of the rented property for no reason, other than the agreed period of renting has finished. The Deregulation Act 2015 has substantially changed the rules around these notice for. Since first introduced in 1989 the section 21 … Continue reading Lettings Newsletter Winter 2015
The section 21 notice is the landlord’s best friend, allowing the landlord to seek possession of the rented property for no reason, other than the agreed period of renting has finished. The Deregulation Act 2015 has substantially changed the rules around these notice for. Since first introduced in 1989 the section 21 notice has survived almost unchanged. It was changed in 1996 so that it had to be in writing, but nothing more serious. Now the Deregulation Act 2015 has made a number of major changes that all landlords need to be aware of. The first change is to remove the requirement for the periodic version of the notice (the notice under section 21(4)) to end at the end of a period. Before this change there was only one day in the month when the notice could end, now it can end on any day in the month. It still has to be in writing, it still has to be at least two months long and no shorter than a notice to quit. The last point can be ignored from monthly or weekly rentals.
We were delighted to attend Davies Lane Primary School on Saturday 5th December for their annual Christmas Extravaganza Fair to give out the star prize in the raffle. The kids were having a fantastic time playing, making wonderful creations and painting everything that wasn’t moving, and some things that were. The volunteers and staff were absolutely amazing, a real credit to the school. We look forward to offering them our continuing support.
It was a real pleasure to have met Rev Jack Dunn, the new vicar at St Andrew's Church, following the recent Christmas sale. We were delighted to give to him our contribution to the fund, which in total has raised a healthy £840. He spoke enthusiastically about the recent afternoon tea club with an attendance of over 100 people and other events including karate. He explained that the church were hoping to get extra funding from the national lottery to upgrade the church hall and to introduce other activities such as a toddler group for local families. His enthusiasm to make a difference in Leytonstone was very infectious and we at Trading Places wish him the very best.
The Home Office has announced that from February 1, 2016, the Right to Rent scheme will be extended across England. This means all private landlords, or their agents, in England, including those subletting or taking in lodgers, will have to check new tenants have the right to be in the UK before renting out their property.The scheme is being extended following an evaluation of the first phase in the West Midlands and has received the continued input of a panel of industry experts, housing and homeless charities and local authorities.Right to Rent is one part of the government’s ongoing reforms to the immigration system to make it harder for people to live in the UK illegally.As of February 1, anyone who rents out private property in England will need to see and make a copy of evidence that any new adult tenant has the right to rent in the UK (for example a passport or a biometric residence permit).
On Sunday 13th September Leytonstone Town Centre will again play host to Waltham Forest Council's annual Car Free Day, which will be taking place between 1pm and 6pm. It's all part of the Leytonstone Big Weekender. Following on from last year's successful event which attracted several thousand visitors, the 2015 event will again provide visitors with a vibrant car free street environment where they can enjoy an afternoon of FREE entertainment, including live bands, performers, an international market, cycling displays, children's entertainment and numerous stalls. The day is part of London wide series of events to promote Travel Awareness. High Road Leytonstone will be closed to traffic, between the junctions of Harvey Road and Gainsborough Road. Church Lane and Kirkdale Road will also be closed to traffic with parking suspended. The traffic diversion routes are shown on the plan below.
You rarely turn on the TV to watch the news these days without some story about immigration. From the plight of those fleeing North Africa to lorries stacked up on the motorway while officials deal with striking workers and those trying to enter the UK through Calais making the most of the traffic chaos. To add to all that the government have now announced further measures for landlords in respect of immigration act penalties. The original trial was in the West Midlands, it ran from December 2014 for 6 months (though those operating in that area are still required to continue the ‘Right to Rent’ checks even after the trial). Following the trial it was always the intention to introduce the scheme nationwide, the trial was simply to learn any lessons from the small scale exercise.
We received a lovely letter from Davies Lane Primary School where we supported their Annual Summer Fair on 13th Jun 2015. It was a great day and we were proud to be part of it.
In the rush up to the General Election one piece of legislation to find its way through onto the statute book was the Consumer Rights Act. This legislation is quite wide reaching and certainly not only focused on the private rented sector, even though it does include specific provisions that apply in the private rented sector. Following on from decisions by the Advertising Standards Authority (ASA) last year, this legislation makes it a specific requirement that agents’ fees are clearly displayed on web sites and within their own offices. This change will make the “guidance” of the ASA into clear law. Part 3 Chapter 3 covers the requirements to display fees and allows local Trading Standards to enforce the legislation with penalties of up to £5,000. The requirement to display fees does not include a requirement to display rent and deposit amounts.
The Queen's Speech has implications for home-owners and landlords. From the BBC:"Plans to support home ownership and extend the right-to-buy scheme to 1.3 million social housing tenants in England feature in a new Housing Bill. Under the plans, housing association tenants will be able to buy the homes they rent at a discount. There will also be help for first-time buyers, with 200,000 starter homes made available to under-40s at a 20% discount. Both are commitments which were included in the Conservatives' general election manifesto. The government says the bill will increase the housing supply and ensure local people have more control over planning."Full report at: http://www.bbc.co.
This is a large piece of legislation covering a wide range of issues but for the rented property world the parts of interest are 30 to 41.
Our friend and contractor Marc Bradshaw is running the London Marathon in April 2015! We're supporting him all the way as he raises money for St. John Ambulance - a great cause. Please help us by making a donation. We'll bring you further news of his run after the event:http://uk.virginmoneygiving.com/MarcBradshaw The Virgin Money London Marathon is one of the great British sporting events, combining elite athletics, mass participation and record-breaking fundraising in one race. The course is a gruelling 26 miles 385 yards long, passing through the streets of London from Blackheath to the famous finish line at The Mall.
The new budget is here, George Osborne's sixth. Here's what it might mean for you:http://m.bbc.co.
Regulations have now been laid in Parliament to require private rental properties to be brought up to a minimum level of energy efficiency from April 1, 2018.It means the clock is now ticking for such homes to achieve an EPC rating of at least E.http://www.propertyindustryeye.com/rental-homes-must-achieve-e-energy-rating-within-three-years-legal/A government amendment due to be debated on Wednesday has major implications for how agents deal with repair requests and how private landlords can take possession of their properties.The proposed ‘retaliatory eviction’ amendment to the Deregulation Bill would extend existing restrictions on a landlord’s powers to evict where they do not protect a deposit or have a licence where required, to alleged health and safety hazards.The change could mean a six-month delay on serving a Section 21 notice where a tenant had complained in writing about the state of a property.http://www.propertyindustryeye.
More deposit changes Although the Government had promised legislative changes to deal with the Superstrike court cases, their original proposed changes had some serious flaws and so, following lobbying from the industry, the Government have made some further amendments to the proposed Deregulation Bill in respect of deposit protection. The original changes were in four … Continue reading Lettings Newsletter Winter 2014
Although the Government had promised legislative changes to deal with the Superstrike court cases, their original proposed changes had some serious flaws and so, following lobbying from the industry, the Government have made some further amendments to the proposed Deregulation Bill in respect of deposit protection. The original changes were in four paragraphs. The first paragraph is essentially unchanged and requires ‘Superstrike deposits’, i.e. those received before April 2007 but going statutory periodic after April 2007, to be protected by a scheme. This was the essence of the Superstrike judgement so no real change anyway, just a clarification. However, the logical implication of the Superstrike decision was that all statutory periodic tenancies and other renewals also needed to comply with deposit regulation, though it was a little less clear how a deposit held in the custodial scheme could be “re-protected”.
Trading Places were delighted to donate a Hudl 2 tablet computer as the top prize for a fundraising event on behalf of Davies Lane Primary School on Saturday.
We've heard of "bijou", but this is quite something. The potential inhabitant of this £100,000 Streatham flat will have to put up with compact living for the bargain - as the property measures just 206 sq feet. Read the full story at http://www.standard.co.uk/news/london/london-flat-on-sale-for-under-100000--but-you-have-to-access-bed-via-a-ladder-9784642.
The Bank of England has held UK interest rates at a record low of 0.5%.It has also decided not to extend its quantitative easing programme, designed to stimulate lending in the economy, beyond the £375bn already spent.Read the full story at http://www.bbc.co.
First-time buyers in England under the age of 40 could buy a house at 20% below the market rate if the Conservatives are re-elected, David Cameron has pledged.The Conservative leader said a future government led by him would build 100,000 new homes for such people.They would be built on brownfield land already identified for development and exempt from some taxes, he said.He was speaking as the party prepares for its annual conference this weekend.Conservative politicians and activists will gather in Birmingham from Sunday for what is the final conference before next May's general election.Full article at http://www.bbc.co.
Following the Superstrike versus Rodriguescase in June 2013, the Government said they would amend the legislation to negate the affect of Superstrike (a decision they had not anticipated). Following private amendment suggestions for the Deregulation Bill, the Government have now tabled proposed amendments to deal with Superstrike.The essence of Superstrike was that the deposit was taken before deposit protections started in April 2007 and the fixed term ended after April 2007, when deposit protection was in force. A statutory periodic tenancy then arose by virtue of section 5 of the Housing Act 1988. The two questions for the court were a) was the statutory periodic tenancy a new tenancy or the same one continuing and if it was a new tenancy b) should the landlord have done anything with the deposit (as no money physically changed hands).
With the Olympic Park right on our doorstep, the Commonwealth Games opening today, and Spurs, West Ham, Leyton Orient, Romford, Dagenham and Charlton Athletic all pretty much round the corner, sport is never far from our minds.The BBC have a fantastic quiz to find out which sport is right for you. I got "Bowls"!http://www.bbc.co.
This year has seen several changes to court issues.The first change brought in from 22 April was that the fee for accelerated possession proceeding applications (using form N5B) has increased from £175 to £280. The same prices apply to rent arrears possession using form N5, if submitted to the local court.Whilst these are steep increases the greatest increase lies in the online possession system where the fees for the N5 have increased from £100 to £250. This has significantly eroded the cost advantage of the online service.In May 2014 several of the court forms were changed and so all applications must now be on the revised forms. You can always check the latest versions of forms on the HMCS website and the court form finder.Lastly and by no means least, is the legislation contained within ‘The Legal Aid, Sentencing and Punishment of Offenders Act 2012’.
On the 14 May 2014 the Immigration Act 2014 received Royal Assent. Though the law is “passed”, we are now awaiting it being activated by a commencement order and this is awaiting some statutory guidance that forms part of the legislation. It is anticipated that the legislation will be brought into force in a trial area, possibly Manchester, in October 2014.From fears of millions of foreign immigrants flooding into the UK at the beginning of the year and the European Elections just past, immigration never seems far off the agenda.The purpose of this legislation is not about the feared Romanian influx, which would have been totally lawful, but addresses unlawful immigration. Part 3 specifically addresses a number of areas where unlawful immigrants will find it more difficult to stay in the UK. It brings in provisions relating to rented property, bank accounts driving licences and health care.