Marketing No Comments

Fewer Landlords But Bigger Portfolios

There are now 220,000 fewer private landlords and close to 160,000 fewer rental homes than in 2017.

The finding comes from estate agent Hamptons International in its latest Market Insight.

It concludes that landlords are leaving the rental market because of a series of tax and regulatory reforms targeting at them.

‘Buy-to-let reached a peak of popularity in 2017, when 2.88m people were landlords. During the 2017-2018 tax year, the phased cuts to landlords’ mortgage tax relief began to bite, compounding the impact of the stamp duty surcharge on second properties that was introduced in 2016.

‘These and other tax changes were designed to eat into landlords’ profits, making it less likely that they would compete with first-time buyers for smaller properties. A tightening of the capital gains tax rules for landlords who have lived in their buy-to-let property at some point, which takes effect in April, is a continuation of this policy’.

There are signs that landlords who want to stay in the market are expanding their portfolios, suggesting the sector may be professionalising, said Hamptons. Some 30 per cent of landlords now own more than one property – double the percentage in 2011. The average landlord now owns 1.93 homes.

Departure of landlords is shrinking the private rented sector and rents are continuing to rise. Over the past 12 months, the average rent in Great Britain has risen by 3.6 per cent to £998 pcm, said the firm.

The landlords with the largest portfolios – 2.05 homes on average – are investors in the North East.

Investors in Yorkshire and the Humber and London own an average of 2.03 homes and 2.01 homes, respectively. By contrast, investors in Scotland or Wales are least likely to have big portfolios and own an average of 1.83 homes.

Scotland and Wales are also the regions where rents are growing at the slowest pace.

In January 2019, the average rent in Wales was £652 pcm, it is now £659 pcm, 1.2 per cent higher. In the south west, however, the average has jumped by 6 per cent from £784 pcm to £831 pcm over the past 12 months. In Greater London, there was an increase of 4.1 per cent, from £1,714 pcm to £1,783 pcm. The North is the cheapest place to rent, with a monthly average of £646 pcm, up from £625 pcm.

Source: Residential Landlord

Oxford
Marketing No Comments

Oxford best city for buy-to-let investment

Aldermore has named Oxford the best city for buy-to-let investment in the UK.

The city emerged top of 25 analysed in the bank’s Buy to Let City Tracker, with Manchester, Edinburgh, London and Norwich making up the rest of the top five.

Oxford’s biggest selling point for private landlords was that it was one of the largest private sector rental markets in the UK, with 28 per cent of all residents renting privately.

The city’s average monthly rent for a room was £596, it has low levels of vacancy and average property prices have grown at 4.8 per cent a year over the past decade.

The tracker analysed five measures of buy-to-let investment desirability. They were average total rent, best short-term returns through yield, long-term return through house price growth over the past decade, lowest number of vacancies as a proportion of total housing stock, and percentage of population renting.

The five cities ranked lowest on the list were Derby, Sheffield, Bradford, Newcastle and Wolverhampton.

Strong down south
Regionally, the south of England appeared strongest overall, with good long-term investment prospects. Bristol averaged annual house price rises of 4.8 per cent over the ten-year period, the same as Oxford.

The Midlands was revealed to be a mixed market, with Nottingham showing impressive short-term yield of 7.3 per cent.

Yorkshire was less strong overall, with lower average prices per room and below average yields.

“The number of people renting in the UK has grown rapidly, by 1.7 million in 10 years, and private landlords are increasingly a central part of the housing market,” said Damian Thompson, director of mortgages at Aldermore.

“The housing market is made up of multiple small markets with their own conditions and challenges.

“Regulatory changes and persistent economic uncertainty have affected regions differently and landlords need backing and advice from lenders,” Thompson added.

Written by: Liz Bury

Source: Your Money

Marketing No Comments

Just over half of private landlords do not use an agent at all – survey

Just over half of landlords do not use an agent to let or manage their properties.

A third (34%) use an agent for let-only, and just 9% use an agent for both letting and management.

The remaining 5% use an agent for management services only.

The finding emerges in a new survey of private landlords in England published yesterday by the Government – the first time the exercise has been carried out since 2010.

During that time, the number of households in the private rented sector has risen by 25% from 3.6m to 4.5m.

There have also been major changes since 2010, including tax changes, a Stamp Duty surcharge of 3% on the purchase of buy-to-let properties, and tougher lending criteria on buy-to-let mortgages.

The new Private Landlord Survey says: “These changes were made as part of the Government’s wider efforts to make the housing market work for everyone and to ensure the housing market delivers the homes the nation needs.”

The survey questioned almost 8,000 landlords and agents registered with one of the three tenancy deposit protection schemes.

It found a total of some 3.4m live deposits registered, equating to 1.5m landlords. Of that number only about 360,000 had registered the deposits themselves.

The survey also paints a picture of a cottage industry, with 94% of landlords operating as individuals rather than as part a company, and almost half (45%) owning just one property. Only 17% own five or more properties.

The average gross rental income that a landlord earns is £15,000.

After tax and other deductions, the average that a landlord gets is 42% of their total gross income.

According to the survey, half (53%) of landlords plan to keep their portfolios the same size, 11% plan to increase the number of properties, and 10% plan to reduce. A further 5% plan to sell all their portfolio.

Agents are more likely than landlords to raise the rent when there is a new tenancy, and also to take a larger deposit.

However, landlords (52%) are more reluctant than agents (37%) to let to certain groups of tenants, including those on housing benefit.

The survey also found that 25% of landlords and 10% of agents are unwilling to let to non-UK passport holders, while 18% of landlords and 6% of agents are unwilling to let to families.

Three-quarters of landlords and agents are willing to offer longer tenancies, but 70% said they would do so if it became easier to remove problem tenants.

The report also found that agents were more likely than landlords to be legally compliant – for example, 87% of agents carried out Right to Rent checks, compared with 62% of landlords for their most recent letting.

More agents than landlords provided tenants with the How to Rent guide, and with a copy of the EPC. Agents were also more compliant about fire safety and annual gas inspections.

Speaking about some of the findings, NALS chief executive Isobel Thomson said: “The results of this survey make for interesting reading, particularly given some of the anti-landlord and agent rhetoric that we have seen recently. In fact, we see that only 7% of tenancies end in eviction, that agents and landlords are willing to offer longer tenancies, and that most deposits are returned in full or part.

“NALS wants a better, safer private rented sector for all. These results show that in the main, agents and landlords are working hard to achieve that, and that the many tenants who rely on the sector do have a good experience.”

At 62 pages, this is a report dense with market information, insights and charts – and essential reading for agents, especially if there won’t be another one for eight years.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/775002/EPLS_main_report.pdf

Source: Property Industry Eye

Marketing No Comments

SOS for private landlords over Osborne tax

Thousands of buy-to-let landlords could be forced out of business when tax demands land early next year, according to a Scottish property expert.

In January, landlords will face having to pay significantly higher income tax bills as measures brought in by former chancellor George Osborne start to bite.

Paul Smith, chief executive of Helensburgh-based property investment adviser Touchstone Education, warned the tax demands could “spell disaster” for thousands of landlords and place further stress on local authority housing.

His comments came on the back of a warning last month by Scottish property management firm DJ Alexander that a flatlining of rental growth will see an exodus of landlords from the private rented sector.

From April 2017, the amount of income tax relief landlords can claim on residential property finance costs was restricted to the basic rate of tax. The changes also apply to income earned by UK taxpayers on holiday properties overseas.

The shake-up will require them to pay significantly higher tax bills than in the past, in some cases a doubling or trebling of previous rates.

The move comes on top of increases in stamp duty and the Land and Buildings Transaction Tax (LBTT) in Scotland. Smith said the tax changes were aimed at cooling the London market, but have meant that many landlords across the UK have been left with no choice but to evict tenants and sell-up or to increase their rents.

“Thousands have already exited the buy-to-let market, switching their investments into commercial properties or serviced accommodation. Those who remain will now have to pay significantly higher income tax bills for the first time,” he said.

At a recent seminar staged by Smith, one landlord delegate discovered he owed £120,000 in additional tax to be paid by the end of January. The tax rises will compound static rental growth in many parts of the country, highlighted by figures released by Edinburgh-based DJ Alexander last month.

Although the average private housing rental price has increased by 0.6 per cent in Scotland over the past year, in the medium-term growth is poor.

In Scotland annual rental price growth was last above 2 per cent in June 2015 and has fallen steadily, even going into negative territory four times since then.

David Alexander, managing director of DJ Alexander, said that although there “probably won’t be many tears shed for private sector landlords leaving the Scottish market”, he stressed they play an essential part in providing vital housing stock.

The Scottish private rented sector has doubled in the past 15 years and now accounts for over 15 per cent of all housing.

Source: Scotsman

Private landlords
Marketing No Comments

Private landlords in London earned £7bn last year

Private landlords in London earned £7bn from their residential property investments in the year from 5 April 2017 to 2018, making up 20% of the UK’s buy-to-let income, estate agent ludlowthompson has found.

Landlords resident in London saw 6.4% growth in income from their property in the last year, up from £6.6bn year-on-year. This compares to the UK-wide average of 4.3% growth in property income, to £34.8bn in 2017/18 up from £33.4bn in 2016/17.

Stephen Ludlow, chairman at ludlowthompson, said: “Landlords, living in London and across the UK, can be sure their buy-to-let properties remain a sensible, long-term investment.

“Whilst house prices are not a one-way bet, they have been far less volatile than other asset classes like shares.

“When you see the share price of one of the UK’s biggest banks fall 9% in a day, based on no corporate news at all, you can see why investors prefer the relative stability of residential property.

“The benefits of buy-to-let extend beyond landlords. The private rental sector plays a vital role in ensuring there is a healthy supply of high-quality rental accommodation that enables labour mobility. Renting is, in fact, part of the solution to the housing crisis.”

Despite government changes to available tax relief, buy-to-let landlords are still set to benefit from approximately £16.7bn in relief even once the changes are fully phased in by 2020.

ludlowthompson added that private residential landlords living in London made on average of £20,000 in property income in the last year, while UK-wide, landlords made an average £14,000.

Some 16 of the Top 20 UK hotspots for private landlords with the highest average amount of annual property income per capita were in London. Private landlords resident in Hackney, for example, made on average £24,000 in the last year from property.

Source: Mortgage Introducer

‘normal’
Marketing No Comments

Most Landlords Surprisingly ‘Normal’ According To Research

Two-thirds of private landlords have what is classed as ‘normal’ jobs, renting out property to supplement their main income.

New research from online letting agent MakeUrMove found that the most common occupations for landlords are jobs in IT, teaching and accountancy. Surprisingly, just 5 per cent of buy to let investors are full time landlords who own five properties or more, which suggests that very few landlords profit from large portfolios.

Although many landlords are in the business through choice, the number of accidental landlords has risen significantly in recent years. The research found that a mere 18 per cent of landlords became landlords through intending to create a property investment business. 16 per cent of landlords let a property that they inherited and 22 per cent became landlords through a range of circumstances, such as being unable to sell a home.

The fact that more than half of landlords own just one property refutes the conception that all landlords are wealthy.

Managing director of MakeUrMove, Alexandra Morris, said: ‘These figures shed some light on what British landlords really look like. The reality is that wealthy, multi-property owning landlords are quite rare. Most landlords are ordinary people working in normal jobs who are renting out a property to try and save for their retirement or to supplement their main income. With 53 per cent of landlords owning one single property, it’s clear that most landlords are not living off a portfolio of properties. They work as electricians, taxi drivers, hairdressers or social workers – they are just normal people who want to maintain healthy, stress-free relationships with their tenants.’

She continued: ‘We’ve found that a good number of landlords fell into renting their property through unforeseen circumstances such as inheriting a property or struggling to sell their own house. Many of these landlords start on a consent to let mortgages and later become buy to let mortgage holders, having a mortgage on the property means they are forced to pass on the costs to their tenants.’

Source: Residential Landlord

piggy bank 661969 960 720
Marketing No Comments

Investing in properties for retirement is no longer sustainable

Nearly one million private landlords face a pension black hole after new laws and regulations mean the income from their properties won’t sustain them in retirement, MakeUrMove has found.

Some 43% of private landlords invested in a property to provide for themselves in their retirement, with many actively encouraged to do so as a safe, secure retirement option.

However three quarters of those landlords said they will consider selling their properties if they start to make too small a margin, or fall into the red due to additional costs.

Alexandra Morris, managing director of MakeUrMove, said: “Smaller, casual landlords have been impacted by rising costs of managing their properties, with 38 percent citing the high cost of repairs as one of their biggest concerns.

“The problem impacts landlords with a buy-to-let mortgage the most severely, as these additional overheads, combined with recent changes to the private rental sector, mean smaller landlords hoping for a steady income in retirement are now worrying that their properties won’t even cover their own costs.”

A surge in supply of properties on the housing market could mean these landlords struggle to sell, leaving them unable to cash in their pension investment or being forced to sell for less than anticipated.

The problem disproportionally affects older landlords, who have little time to make changes before they need to rely on their properties for a retirement income, with those over 55 most concerned about making too small a profit on their properties.

Investing in property as a pension plan is more prolific in the over 35’s, with 47% of this age group admitting to doing so, compared to just 24% of their younger counterparts.

Eileen Cooper, a landlord with two properties, has felt the impact of changes first hand. As a self-employed, part-time landlord, Cooper was relying on the rental properties to provide an income later in life.

She said: “We planned to buy another property once the mortgages on our current rental properties are paid off, however we have now decided against this due to the new laws and regulations brought in by the government, along with the ongoing changes to the tax system, which make it much less viable as a long-term investment.

“Due to changes in laws and regulation, the time required to manage the properties isn’t worth it.”

Source: Mortgage Introducer

real estate 465100 960 720
Marketing No Comments

Warnings of likely rent hikes and mass exodus of small private landlords as tax changes bite

There are new warnings, including from Savills, that the buy-to-let market is looking increasingly bleak with landlords deterred from entering the sector or considering quitting it altogether.

According to one study, as many as three-quarters of landlords could quit, including 10% who say they are definitely selling up, while four in ten say they will be forced to put up rents.

The majority of landlords thinking of getting out of the sector have just one property and say they will sell if they are making a loss, breaking even, or even just not making enough profit to make it worthwhile.

They blame continued financial pressure and costs created by a steady drip of new legislation, specifically citing the impending tenant fees ban, and the loss of tax relief on mortgage costs which is currently being phased in.

The new survey of 1,000 landlords has indicated that 41% will be forced to increase rents – but has also revealed that a majority will not hike rents because they believe tenants are already at the edge of  affordability.

The survey was conducted by 3Gem for online letting agent MakeUrMove.

Managing director Alexandra Morris said: “The result of the rising costs associated with the changing legislative and regulatory environment will either be increased rents or landlords having to sell their properties.

“The worst-case scenario will be a housing market crash if landlords default on their mortgage payments or decide to cut their losses. The Government is currently sleep-walking into this crisis. The alarm bells should be ringing. The Government needs to act now to ensure it remains financially viable for landlords to meet their financial obligations.

“While we wholly believe the industry needs to be regulated, the taxation changes could have a huge impact on smaller landlords.

“They might struggle in the new environment, having potentially devastating effects on the housing market. This is particularly concerning when private landlords provide a vital role as the backbone of the UK housing market.

“The Government is supposedly bringing in this legislation to protect tenants, but the unintended consequence will likely be landlords having to increase rents, especially if they are forced into debt on their rental property. And this is the best-case scenario. In reality it could be much worse.”

Savills has also expressed concern, saying that the combination of prospective interest rate rises and the reducing ability to offset mortgage interest costs against tax is proving a double whammy for landlords.

Lucian Cook of Savills said: “It’s why we’re beginning to see signs of some people exiting the sector or reducing their porfolios.”

Landlord associations have repeatedly warned of a likely exodus of small private landlords, principally because of the loss of ability to offset mortgage interest costs against tax. Anecdotally, agents have reported in EYE posts  being instructed to sell properties rather than re-market them to let.

From next month, landlords will be able to offset only 50% of their mortgage interest costs against tax, rather than the 75% they are currently able to offset. This figure will continue to drop until 2020 when the ability to claim any tax relief will be scrapped and replaced by a tax credit worth 20% of mortgage interest.

* The Residential Landlords Association has today rebranded to add the tagline “The home for landlords”. It follows the rebranding last month of the National Landlords Association which added the tagline “The Knowledge Network”.

Source: Property Industry Eye