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Midlands Buy To Let Investors Most Likely To Expand

Buy let property investors in the Midlands are most likely to expand their property portfolios this year, according to research by specialist buy to let lender Paragon.

Overall, Paragon’s buy to let survey found that just 14 per cent of landlords in England and Wales are currently looking to expand their portfolios, with those in the Midlands most likely to buy an extra property.

Almost one in four (24 per cent) of landlords in the East Midlands plan to buy further investment properties this year, closely followed by 22 per cent of landlords in the West Midlands.

This compares to landlords in Wales, London Central, and the South West, where just 10 per cent, 9 per cent, and 8 per cent of landlords respectively intend to buy.

More than half (52 per cent) of those looking to invest further said they were targeting terraced properties. One in four, meanwhile, said they would look to buy a house in multiple occupation (HMO).

Semi-detached houses were being targeted by 32 per cent, while 26 per cent were looking to purchase flats for investment.

In addition to the popularity of the midlands, the research also showed that professional landlords with larger portfolios are more likely to invest further.

Just 8 per cent of landlords with one property are looking to invest, compared with 20 per cent of large portfolio landlords with 20 properties or more.

Of landlords with 2-3 existing properties 12 per cent are looking to expand, while 15 per cent of those with 4-5 properties are looking to buy further. 14 per cent of investors with 6-19 properties intend to purchase.

Paragon’s data shows nearly two-thirds of landlords plan to fund their next purchase with a buy to let mortgage

Richard Rowntree of Paragon commented: ‘Portfolio landlords have adopted a number of strategies to adapt to the tax and regulatory changes of recent years.

‘We’re seeing trends such as these landlords buying stock from smaller-scale participants as they exit the market or targeting higher-yielding properties such as HMOs.’

Source: Residential Landlord

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Buy To Let Property Investors Planning Investment In 2020

Buy to let property investors are positive about investment in 2020, according to research from The National Landlord Investment Show.

The research found that 60 per cent of UK landlords and property investors who attend The National Landlord Investment Show are looking to make investment in 2020, among some other interesting insights.

While the general narrative presented by the press about the future of UK landlords has been one that is negative due to high regulations of the private rental market and uncertainties of the UK buy to let market within a post-Brexit context, this new research seems to contradict that viewpoint.

The general feeling from the research was one of positivity looking ahead to the future for UK landlords and property investors is prominent as over half (54 per cent) expressed they are making an investment in 2020 into property to plan for a pension whilst 27 per cent admit they are landlords and property investors to build for their children’s future.

Out of the 60 per cent of UK landlords and property investors who are looking to make investment in 2020, nearly three quarters (71 per cent) have expressed a preference to invest in residential property.

The findings further present a detailed insight into the portfolios of UK landlords and investors attending the show with three quarters (75 per cent) indicating they do not own their properties within a limited company.

Additionally, an increasing number of UK landlords and investors are showing an interest in commercial as well as residential investment opportunities with almost 1 in 4 (23 per cent) now confirming they own commercial properties in their portfolio.

Tracey Hanbury, Director and Co-Founder of The National Landlord Investment Show commented: ‘What this research has shown is that contrary to other opinions within the industry there are exciting times ahead for UK landlords and property professionals.’

Source: Residential Landlord

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Buy To Let Property Investors Planning To Exit Market

New research has suggested that over a quarter of UK buy to let property investors are planning to exit the private rental sector this year.

The survey of 800 landlords, carried out by landlord insurance provider Simply Business, revealed that with uncertain market conditions, fourth fifths (82 per cent) of landlords are not planning on buying any more properties in 2020. Just one tenth (13 per cent) said they would buy another property this year, while a third (35 per cent) also reported a decrease in their rental yield in 2019.

The top reasons buy to let property investors gave for wanting to sell are tax increases and government reform, such as shifting House in Multiple Occupation (HMO) licensing, which added new stipulations on the minimum size of rooms, as well as banning of admin fees. Well over a tenth cited these as their reasons.

Other reasons that buy to let property investors gave for planning to sell include rising rental costs (10 per cent), cashing in on their investment (9 per cent), economic instability (5 per cent) and slowing house price growth (4 per cent). This comes after a third (35 per cent) also reported a decrease in their rental yield in 2019, which adds to the desire to sell.

A fifth (20 per cent) reported a decrease of 0-5 per cent, just under one in 10 (9 per cent) reported a decrease of 5-10 per cent and 3 per cent of buy to let property investors reported a decrease of 10-15 per cent.

Looking ahead to this year, over a quarter (27 per cent) of landlords expect to see a further decrease in their rental yield in 2020. One in five (18 per cent) expect to see a decrease of 0-5 per cent, and a further 6 per cent of landlords expect to see a decrease of 5-10 per cent. Only 2 per cent of landlords expect to see a decrease of 10-15 per cent. However, over half (52 per cent) are still optimistic and expect their rental yield to increase in 2020.

Bea Montoya, Chief Operating Officer at Simply Business commented: ‘Landlords around the country are telling us that government reforms, tax increases, and rising rental costs are forcing them to put their investments up for sale. The tax increases imposed by the government are proving counter-productive for landlords, while ongoing political and economic uncertainty hasn’t been providing landlords with the confidence they need to stay in the market. But selling a buy to let is a big decision, especially if you’re selling more than one.

‘Any landlord looking to sell up should make sure they understand the complexities surrounding buy to let sales, particularly if the property is occupied. Any tenants should be made aware of plans to sell as early as possible and given reassurance their tenancy still stands. When it comes to selling, landlords need to understand any tax implications involved, such as capital gains tax. If the property is sold for more than it was paid for, there will be a capital gains tax liability.’

Source: Residential Landlord

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Buy To Let Property Investors Enjoying The Cambridge Effect

The residential property market in Cambridgeshire is performing well, impacted by the ‘global brand’ of Cambridge and the diversity of its market trends.

Research by property consultants Bidwells has found that Cambridge and the surrounding county has seen its residential property market rise three times quicker than the UK national average.

In the next 20 years, population growth in the Cambridge area is expected to be 24.5 per cent, placing pressures on demand on the city. Additional factors contributing to the success of the rental market are Brexit, high performing schools, improved transport links and the significant increase in housing throughout Cambridgeshire.

Rental costs have increased by approximately 3 per cent in the last 12 months with an average rent of just over £1250pcm in Cambridge. The strength of migration into Cambridge provides one of the key drivers of the residential lettings market.

One of the main reasons of this influx is due to the expansion of the Biomedical Campus where the total jobs on site at present are circa 12,300 with 7,500 to be created for the coming year, providing a total of 19,800 employees eventually on site.

It is not only the current influx of AstraZeneca employees that is significant but also other large companies and institutions such as Cambridge University, ARM and Addenbrookes Hospital, that have under-pinned the lettings market for many years now and will continue to do so in future. More recently companies such as Amazon, Microsoft Research and Apple to name a few, have joined the expanding technological highway of silicone fen.

Brexit, and the general uncertainty towards house values has meant that many people are opting to rent, boosting demand in the private rental sector.

Secondly, the number of high performing schools and colleges with a world leading university continues to attract many people wishing to live and work in Cambridge. Vitally, 64 per cent of residents in the area said that living within walking distance to a school was very important to them.

The confirmation of a Cambridge South Train Station opening next year highlights that Cambridge is an ideal location for London commuters too.

Source: Residential Landlord

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Buy To Let Property Investors Spend Over £3k Per Year On Investments

Buy to let property investors in the UK spend over £3,000 per year on their properties on average according to new research by LV General Insurance.

The insurance company found that landlords collectively spend a total of almost £4.7 billion over the year, equating to £3,134 each.

The spend was found to include renovations and refurbishments (£370), replacing/repairing (£370), fixing structural damage (£313), decorating (£265) and garden maintenance (£203).

Extra spend also came from damage caused by tenants, with carpets the most likely thing that landlords had to spend out for to replace, repair or clean, as reported by 66 per cent of landlords asked.

Damage to walls was next at 45 per cent, white goods (27 per cent) and doors (24 per cent).

Landlords therefore spend the most money replacing/repairing flooring (£322), white goods (£298), other items (£256), cleaning at the end of a tenancy (£178) and removing forgotten items (£149).

The amount of spend required varied across the UK. The South West saw the most money spent on repairing damage made by tenants (£3,461), whereas landlords in the North West spend the least on repairing damage (£2,738).

Tenant disputes were another thing that landlords often had to spend out on. Although 46 per cent have never experienced a tenant dispute, almost a quarter (23 per cent) have disputes at least once a year, with 6 per cent even quoting once a month.

The most common causes for tenant disputes are delayed rent (43 per cent), damage to property (41 per cent), cleanliness (33 per cent), disputes over bills or deposits (10 per cent), pets (9 per cent) and sub-letting (7 per cent).

Managing director of LV General Insurance, Heather Smith, said: ‘Finding the right tenant is crucial. Although the majority rarely experience tenant disputes, it’s clear that, when they do, the disputes are challenging and potentially costly.

‘Our research found that 13 per cent currently don’t have landlord insurance, meaning they are missing out on things such as cover for accidental damage by tenants, loss of rent if the property becomes uninhabitable, and contents cover.’

Source: Residential Landlord

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Buy To Let Property Investors Want Fast Track Housing Tribunal

Buy to let property investors are calling for a fast track housing tribunal to help protect their property investments should the Section 21 ‘no-fault’ eviction process be abolished as planned.

Almost four out of ten landlords (39 per cent) would like the Government to introduce a fast track housing tribunal according to Paragon’s PRS Trends Report for Q2 2019 which surveys the views and experience of over 200 landlords.

The Paragon survey comes ahead of a Government consultation this summer, designed to gather views on how best to make the existing Section 8 process work more effectively.

Alongside a fast track tribunal, almost one quarter of landlords in Paragon’s survey (24 per cent) called for a shorter court process, one in seven (15 per cent) would like a guaranteed way to cover their costs and 7 per cent argued for the ability to submit evidence online.

The vast majority of landlords (84 per cent) said they felt the maximum time from serving notice to taking possession should be no longer than eight weeks. It is felt by that a fast track housing tribunal would help to speed the whole process up to enable landlords to regain their properties.

The survey was commissioned after the Government announced its intention to abolish Section 21 in April this year. In its place, it proposes that landlords should follow the Section 8 process which requires them to demonstrate that tenants are in breach of their rental agreement when serving notice.

Director of Mortgages at Paragon, John Heron, said: ‘Some of the main concerns for landlords around a move to the Section 8 eviction process relate to the efficacy of the existing court process. What we see here is widespread support for a fast track housing tribunal that can deliver a fair and timely solution for both landlords and tenants.’

Source: Residential Landlord

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Buy To Let Property Investors Optimistic About Future

Around two thirds of UK buy to let investors are optimistic about the future of the private rental sector, despite the challenges faced by landlords.

Furthermore, more than one in ten of these are ‘very’ optimistic when it comes to investment property growth and yields.

The findings come in the latest research by Cambridge & Counties Bank, which has highlighted that a significant number of landlords are using the current market volatility to grow their portfolios.

Due to the optimistic viewpoint held by landlords, nearly a fifth (19 per cent) are looking to grow their portfolios by a third and 11 per cent want to double it over the next three years. The research found that just 19 per cent of landlords are looking to sell.

While landlords are optimistic, Brexit remains the biggest uncertainty for property sector professionals with two fifths (40 per cent) of landlords conceding that it is top of their list of concerns.

Brexit is seen as a bigger risk than rising interest rates, a lack of confidence in the stability of lenders, and rising levels of tax, which were all cited by 32 per cent of landlords.

The student accommodation market was close behind the general private rental sector when it came to positivity, with a similar number (61 per cent) of landlords are equally optimistic about student accommodation in terms of growth, and 16 per cent ‘very’ optimistic.

Office buildings and commercial properties are viewed positively by two fifths (41 per cent) of those asked – though almost a third are not optimistic.

A significant number of landlords also say they will be refurbishing their buy to let and investment properties, with an average of £10,000 set to be spent. One in 10 (11 per cent) of respondents said they would spend more than £20,000, with 4 per cent forecasting they would invest more than £50,000 on their portfolio.

Chief Commercial Director of Cambridge & Counties Bank, Simon Lindley, said: ‘In spite of Brexit worries, it is great to see that the overall outlook for the commercial property sector is one of optimism.’

Source: Residential Landlord

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Investors Selling Up Buy To Let Properties Before Fee Ban

Many buy to let property investors are selling up before the tenant fee ban comes into force according to the latest figures from Arla Propertymark.

The number selling up buy to let properties in April reached its highest level since May 2018, rising from an average of four landlords leaving the market per lettings agency branch in March to five in April.

However, this could lead to higher yields for those landlords holding fast and not selling up. The proportion of agents who reported that landlords had increased rents rose to 33 per cent last month, up from 30 per cent in March.

The number of tenants negotiating rent reductions fell in April, from 2.9 per cent in March, to 1.9 per cent last month – the lowest figure seen since May 2016.

Despite some landlords selling up, tenants had a greater number of rental properties to choose from in April than a year ago, at 202 instead of 179 per lettings branch.

This could imply that larger portfolio property investors are using the opportunity to increase their portfolios as other landlords leave the market.

Demand from prospective tenants fell slightly in April, with the number registered to look for properties declining from 67 in March to 64 last month.

Arla Propertymark chief executive David Cox commented: ‘As predicted, April’s findings have shown an upsurge in the number of landlords selling their buy to let properties. In just a few days’ time, on 1 June, the Tenant Fees Act will come into force in England. This, coupled with the proposed scrapping of Section 21, is forcing landlords to either increase rents or leave the market altogether.’

He continued: ‘As supply of rental accommodation falls further, tenants will only be faced with more competition for properties, pushing up rent prices on good-quality, well-managed properties and decreasing tenants’ ability to negotiate rent reductions. In order to remain profitable, landlords will increase rents to cover the additional fees they are now faced with and as a result, tenants will continue to feel the burn.’

Source: Residential Landlord

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Buy To Let Property Investors Back As Prices Fall

Buy to let property investors are returning to the market as falling prices make property investments viable according to independent estate agent, haart.

The agent found that the number of landlords registering for buy to let property has risen by 7.9 per cent on the month but has fallen by 21.8 per cent on the year across England and Wales.

In London, the number has risen by 11.8 per cent on the month but fell by 28.1 per cent on the year. The number of buy to let property sales has dropped by 2.6 per cent on the year across England and Wales and fell by 71 per cent in London. Average buy to let property sale prices are down 11.9 per cent across England and Wales annually, and by 12.4 per cent in London.

According to haart’s figures, house prices across England and Wales fell by 0.6 per cent on the month and by 5 per cent on the year with the average house price now sitting at £218,556.

New buyer registrations rose by 23.2 per cent on the month and by 7.8 per cent annually. The number of properties coming onto the market this month rose by 12.3 per cent and has risen by 1.9er cent on the year. In March, there were 12 buyers chasing every property across England and Wales.

CEO of independent estate agent, haart, Paul Smith, commented: ‘Three years on from George Osborne introducing the 3 per cent hike in stamp duty surcharges on second homes, landlords are beginning to come to terms with the additional costs and are cautiously entering the market again. Our branches across England and Wales saw a monthly uptick of 7.9 per cent in the number of landlords registering to buy, a figure which has been continuing to grow since the start of 2019.

Interestingly, sale prices to landlords are down by nearly 12 per cent on the year which may be spurring on this activity, these price decreases could be causing the available stock to fall within lower stamp duty thresholds, making the stamp duty levy a little easier to stomach. Despite this, landlords are not back in their hundreds, the number of registrations is still down 22 per cent on the year. Whilst some brave souls are re-entering the market, the hammering buy to let property investors received in terms of various tax changes is still fresh in many of their minds.’

He concluded: ‘Clearly investors are recognising the value that can still be found in buy to let property, especially in comparison to the overvalued and faltering stock market. Although the property market hinges on confidence, the FTSE 100, gold and cash are far more volatile to socioeconomic impact, so investors are increasingly returning to property where they deem their money safest, and where the yields are highest.’

Source: Residential Landlord

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Buy To Let Property Investors £3.8 Billion Income Tax Bill

Buy to let property investors in England pay a minimum of £3.8 billion in income tax on their rental property earnings every year.

Further to our article last week confirming that UK landlords contribute as much as £16.1 billion per year to the UK economy, it seems that their income tax bill is huge as well.

New research carried out by the National Landlords Association has shown that the combined taxable income for landlords in England on a yearly basis in 2018 was recorded at £19.1 billion – when costs paid for regular maintenance, finance costs, and miscellaneous legal and management expenses are taken into account.

If the tax is simply calculated at the basic rate of income tax – and many landlords will pay much higher rates – this would equate to an estimated minimum of £3.8 billion in income tax annually.

This has become particularly pertinent as changes to the way landlord income is taxed were phased in by the government over the last few years, changes that are likely to push many landlords into a higher income tax bracket.

The huge income tax liability figure also excludes additional mandatory fees such as stamp duty land tax, capital gains tax, VAT, and the additional property levy

NLA chief executive Richard Lambert commented: ‘Far from being subsidised by the taxpayer, private landlords make a significant contribution to the public purse. Furthermore, changes to landlord taxation made in 2015 are forecast to increase HM Treasury’s receipts from landlords by almost £2 billion – pushing total estimated Income Tax contributions to £5.7 billion in years to come.

‘These dramatic increases in landlords’ tax liabilities in the UK has led many to conclude that it is no longer possible to achieve a reasonable return on investment, prompting them to sell their properties and close their businesses.’

Source: Residential Landlord