Cap tenant deposits at three weeks as part of ‘fairer deal’ for renters, say Labour

The tenancy security deposits that tenants leave with landlords or their letting agents should be capped at a maximum of three weeks, and not the six weeks rent proposed as part of the Tenant Fees Bill introduced into Parliament last month.

The cap on security deposits was initially announced in November last year during the chancellor’s Autumn Statement.

Tenancy deposits are being capped because the government believes that they cause a significant affordability problem for tenants. But Labour firmly believes that six weeks is too high, which is why the party is attempting to amend the legislation to cut that cap in half.

Labour claims their plans would save tenants £575 on average compared to the government’s proposal of £1,150, based on a limit of six weeks’ rent.

Melanie Onn, Labour's shadow housing minister, said: “Labour is fighting for a fairer deal for all renters.

“We recognise the private rented sector is the fastest growing area of housing, and it is right that they are not exploited by unfair fees.

“This government has failed renters for the last eight years. Labour will hold them to account to make sure the power between landlords and tenants is rebalanced.”

https://www.landlordtoday.co.uk/breaking-news/2018/6/cap-tenant-deposits-at-three-weeks-as-part-of-fairer-deal-for-renters-say-labour

Buy-to-let remains an attractive asset class with the best yields up north

Buy-to-let returns continue to outperform many major asset classes with property investors in northern areas benefitting from higher yields, owed in part to lower property values, whereas southern regions unsurprisingly have the lowest yields given the higher housing costs, new figures show.

Data from TotallyMoney reveals that buy-to-let returns have remained strong in recent months despite the challenges that have faced the market, with Liverpool, Manchester, Middlesborough, Newcastle and Edinburgh proving to be the top performing regions thanks to high demand for rental properties.

The research, which analysed more than 580,000 properties, once again reveals a clear geographical divide between the north and the south of the country with northern regions coming out on top and the South East in particular showing particularly poorly.

Landlords in London have seen among the lowest rental yields.

Away from the capital, landlords with properties in Bournemouth’s BH14 and Crewe’s CW12 can also typically expect to receive low returns, according to TotallyMoney.

Joe Gardiner, head of brand and content at TotallyMoney, commented: “With students flocking to university cities year after year and looking for a place to live, it’s no surprise the student market is a dependable one for landlords.

“Since so many students are looking for accommodation, landlords may use this as an opportunity to drum up competition between them.

“But, due to the tenant fee ban, changes in mortgage tax relief, and tighter buy-to-let lending criteria, rental profits are now being squeezed more than ever. To maximise their returns landlords need to be savvier and that’s where our map and mortgage comparison tool can help.”

https://www.landlordtoday.co.uk/breaking-news/2018/6/buy-to-let-remains-an-attractive-asset-class-with-the-best-yields-up-north

Propio targets BTL investors for new property investment platform

Propio Properties has launched a new online property investment platform that it hopes will appeal to buy-to-let investors looking for a diversified investment portfolio.

According to the London-based property firm, the new investment platform, which provides would-be investors with a range of debt and equity opportunities, offers returns of up to 20%.

Parul Scampion, co-founder at Propio, commented: “With the bombshell of tax hikes buy-to-let investors now face, we’re hoping to offer far better returns with a greater level of transparency on the fees charged.

“We are also planning on launching an ISA product in the autumn which makes it even more tax efficient as there would be no tax to pay whatsoever on any returns. Best of all the earnings can be recycled and reinvested.”

Users log into the platform and allocate money either to specific projects or to a selection of pooled bonds which invest in multiple opportunities.

The website includes in-depth information about the opportunities, complete with independent valuation information and an explanation of the project’s timeline.

Investors get their cash back when loans are repaid, or developments are sold, with the duration depending on the type of project and on whether investors have taken a debt or equity stake.

“Our fintech platform opens up exciting new avenues of funding for developers keen to share equity with others or whose schemes may not be big enough to excite the major banks who have been told to reign in lending,” said Scampion.

https://www.landlordtoday.co.uk/breaking-news/2018/6/propio-targets-btl-investors-for-new-property-fund

These are the big issues facing property investors, including BTL landlords

Brexit uncertainty, higher taxation and more stringent mortgage lending conditions are among the toughest challenges currently facing property investors, including buy-to-let landlords, according to new research.

A survey, undertaken by auction firm John Pye Property, sought the views of those at the heart of the UK’s property scene, including investors, landlords, owner occupiers and insolvency practitioners.

Some 38% of respondents highlighted uncertainty around Brexit as the biggest challenge affecting the property sector, with just over a quarter – 24% - pointing to higher taxation. Stricter lending criteria from banks were also a concern for 17% of those surveyed.

But despite these concerns, the majority of responses painted a positive picture of the current market.

More than half – 56% - of investors surveyed said that they felt that there are more appealing property investment opportunities available now compared to five years ago.

In terms of future plans, the research suggests that a significant number of investors plan to diversify their portfolios and focus more on securing long-term tenancies for their properties rather than pushing up yields.

More than four in five - 82% - investors said they were increasingly diversifying their portfolios in response to market conditions, while 72% said that securing a longer-term tenancy was more important than achieving the highest possible rental yield.

Richard Reed, head of property at John Pye Property, said: “Our survey is a useful way of engaging with existing and new clients and determining what they’re looking for.

“Some of the results weren’t surprising as Brexit uncertainty remains a challenge for many and investors are choosing to diversify their portfolio as a result of taxation changes. We were interested to gather insight on investor behaviour and increasing confidence in the regional markets.”

https://www.landlordtoday.co.uk/breaking-news/2018/6/these-are-the-big-issues-facing-property-investors-including-btl-landlords

Labour fights to have tenants’ deposits capped at three weeks worth of rent

Labour is trying to have a maximum tenant’s deposit of just three weeks’ rent.

Melanie Onn, shadow housing minister, said in a tweet yesterday: “Labour is fighting for a new three-week limit for rent deposits.

“The current deal for private renters is unacceptable – Labour in government would do more to protect them.”

Under proposals in the Tenants Fees Bill, the maximum deposit that could be charged would be capped at six weeks’ rent.

Yesterday, ARLA Propertymark chief executive David Cox told EYE: “As I laid out to the Public Bill Committee on Tuesday, the purpose of the deposit is to mitigate against unpaid rent and damage to the property.

“Many tenants do not pay the last month’s rent which is then covered by the security deposit.

“This amendment won’t allow for that, which risks leaving a landlord without the full final month’s rent or repairs for any damage.

“It’s not clear how this proposal of three weeks’ deposit has been worked out.”

The Bill has had its second reading in the Commons and is currently in committee stage, receiving oral and written evidence.

It will receive submissions until 5pm next Tuesday (June 12). These can be submitted to scrutiny@parliament.uk

http://www.propertyindustryeye.com/labour-fights-to-have-tenants-deposits-capped-three-weeks-worth-of-rent/

Hot property:how to sell your London house for more — maximise its design appeal

House hunters in the capital will pay an average of 12 per cent more for a design-led property.

Have you ever wondered why two houses on the same street with the same amount of floor space can sell for significantly different sums? The answer may well lie in the premiums commanded by good design.

London buyers can expect to pay an average of 12 per cent more for a property brimming with design features, according to new research commissioned by design-led estate agency The Modern House.

In the capital, beautifully-designed homes priced at under £1million sell for 10 per cent more per square foot than the average local sale price.

Luxury properties over £1million command an even heftier premium of 19 per cent.

Its extension by 51 Architecture, featuring a show-stopping bathroom with a huge skylight above the bath for stargazing at night, won a prestigious RIBA Award in 2008.Last July, The Modern House sold a property on Queensbridge Road in Hackney for £1.9million — 23 per cent above the area’s average for similarly-sized homes.

Albert Hill, co-founder of The Modern House, believes design is “a real differentiator” for today’s house hunters, who are “prepared to dig deep” if they can see how a well-designed home would have a substantial effect on their lifestyle.

“More than ever, people are looking for transformative experiences and so the enthusiasm for investing in a great home space is not surprising,” he says.

Worth digging deep for: the bathroom of the RIBA-winning Queensbridge Road property

“Design and wellbeing are inextricably linked — good design can positively impact how a home is lived in and allows people to make the most of the space they have available.”

Despite turbulent market conditions, the design premium remains resilient, which Hill puts down to people moving less and taking a more carefully-considered approach to buying when they do.

“We’ve certainly witnessed a flight towards quality, with buyers favouring homes that are designed in a more mindful way,” he says.

“As the heat comes out of the market, houses are viewed less as pawns in the game of accumulative wealth and more as homes for living in and experiencing. Design is obviously an integral part of that.”

“People want unusual property that they fall in love with, not something ‘off the shelf’,” she says. “They aspire to live somewhere they feel proud of; somewhere that has been loved and beautifully-maintained but that also has a human side.Emma Rees, creative director at ethical estate agency Brickworks, agrees that buyers today are investing more emotion into the house hunting process, rejecting bland and uninspired properties for homes with more heart and personality.

“Exceptionally-presented property, realised with love, care and a good eye for design, will always attract greater attention and mean that others are willing to pay the extra, irrespective of the current market.”

To help those renovating or designing their own homes from scratch, Hill has created his own seven-point checklist to follow.

How to attract buyers with an eye for design

   

1. Use a carefully-chosen palette of materials throughout
2. Focus on natural light
3. Ensure a good flow of internal space
4. Consider the relationship between inside and outside spaces
5. Create visually-engaging forms in interior and exterior design
6. Conjure a sense of spatial drama, perhaps through high ceilings
7. Thoughtfully curate a range of fixtures and fittings

Sound intimidating? We have taken a look at four properties currently on the market, priced from £525,000 to £1.2million, and noted the design elements that have the greatest impact, so you can see how the above works in practice. 

Bedford Road, Seven Sisters: £525,000

This two-bedroom flat is a typical Victorian conversion but its thoughtful refurbishment by the current owners - stripped wooden floorboards and bold, artistic decoration - sets it apart.

Bespoke storage maximises space and carefully chosen furniture and light fittings create an elegant, timeless look.

The butler sink and grey, country style cabinets contrast fabulously with the herringbone-tiled splash-back and pale pink washed walls. The internal window cleverly draws natural light through from the living room.

Trinder Road, Stroud Green: £725,000

This two-bedroom flat is a complete reconfiguration and renovation, thoughtfully and creatively realised: from the striking, dark painted floorboards and blue kitchen to the on-trend, Crittal-style mirror and brass overhead lighting.

White, brick-shaped tiles coupled with the white-washed exposed brickwork of the chimney breast perfectly harmonise old and new, while the contrast with the dark navy tricks the eye and creates the illusion of more space. 

Royle Building, Islington: £895,000

The open plan layout maximises the small living space in this one-bedroom apartment, with feature lighting is used to designate different functions within it, such as over the dining table.

The bedroom is separated by a glazed door, making the total space appear bigger and maximising the flow of natural light.

Subtle detailing is added by herringbone parquet, which contrasts with the exposed concrete and red brick from the original building and wooden furniture and textiles add warmth to industrial-style interiors.

Victoria Park Road, Hackney: £1,200,000

The long skylight over the dining table floods this colourful space with natural light.

Bright purple kitchen units have been chosen to contrast with the muted tone of the larch panelling, which is used across the ceiling and to create seating for the dining table, making the entire space feel crafted and considered. The hob sits almost flush in a solid stainless steel worktop and minimal handles help present an uncluttered appearance.

The room leads seamlessly through to the main living area of this four-bedroom house, but the panelling makes the kitchen feel like a defined space. It also opens directly onto the garden, dissolving the barrier between interior and exterior.

https://www.homesandproperty.co.uk/property-news/how-to-sell-your-london-house-for-more-maximise-its-design-appeal-a120961.html

Property portals ‘at saturation point and can only raise prices by so much’ – where do they go from here?

The big property portals have reached saturation point – with no new customer agents to recruit.

The big property portals are also being warned that they can only raise prices by so much, and that as long as most of their income comes from agents paying to list, there is not much diversification.

In his latest report, expert Mike DelPrete says RIghtmove and Zoopla have taken completely opposite stances: Rightmove has stuck to the knitting, whereas Zoopla has gone for a ‘one stop shop’ diversification.

Delpret observes that ‘adjacent revenue streams’ are far less profitable than classified listings.

But he also credits Zoopla as being the ‘global leader’ in diversification.

He says its portal-only business accounts for 25% of revenues, and that ZPG has spent a lot on acquisitions, at £450m.

He says it has executed its strategy well.

Despite this, DelPrete thinks that “the verdict is still out on the synergy value”.

It is not, he says, what he would call a runaway cross-sell success. ZPG’s businesses include portals, utility switching, estate agents’ software, and more.

http://www.propertyindustryeye.com/property-portals-at-saturation-point-and-can-only-raise-prices-by-so-much-so-where-do-they-go-from-here/

Landlords’ immigration checks ‘creating a hostile environment’, says RLA

The controversial Right to Rent scheme requiring landlords to check the immigration status of new tenants is fuelling discrimination and should be scrapped, according to Residential Landlords Association (RLA).

Right to Rent, which was rolled out across England last year, requires landlords to establish that tenants have a right to be in the country by taking copies of documents such as passports or identity cards? However, it has been suggested by some campaigners that the initiative has left British citizens without passports as well as foreigners at a disadvantage in the private rental market.

“In reality the Right to Rent is creating a hostile environment for those who need, and are legally entitled to, housing in the UK but cannot easily prove it. This is causing needless tension and concern for tenants and landlords,” said David Smith, director of policy for the RLA, who would like see what he described as an “unwelcome policy” suspended.

The RLA is supporting an application by the Joint Council for the Welfare of Immigrants (JCWI) being heard in the High Court tomorrow for a Judicial Review of the policy.

Both organisations argue that the policy discriminates against foreign nationals, especially those, such as the Windrush generation, who cannot easily prove their right to remain in the UK.

Smith added: “The Windrush scandal has shown that even trained immigration officers can make serious mistakes. This highlights how inappropriate it is to demand that untrained landlords become enforcers of government immigration policy.

“Those who cannot easily prove their right to rent with documents landlords are clearly familiar with are finding it increasingly difficult to access the homes they need.”

Research by the RLA has found that, as a result of the Right to Rent policy, 42% of landlords are now less likely to rent to someone without a British passport for fear of prosecution for getting things wrong. 

In a recent report on the scheme, David Bolt, independent chief inspector of Borders and Immigration, concluded that the Right to Rent policy has “yet to demonstrate its worth as a tool to encourage immigration compliance” and that the Home Office is “failing to coordinate, maximise or even measure effectively its use, while at the same time doing little to address the concerns of stakeholders”.

The hearing comes as the Labour Peer, Baroness Lister, will use a question in the House of Lords on tomorrow to ask about the government’s plans for the Right to Rent in light of the Chief Inspector’s report. Chai Patel, legal policy director at the Joint Council for the Welfare of Immigrants, said: “When asked for evidence that the hostile environment was working, Amber Rudd could only point to ‘anecdotes’. Sajid Javid said there were no measures in place ‘as such’ to evaluate it. We’re talking about the policies that inflicted so much harm on the Windrush generation, and our Home Secretaries are operating in the dark. But even now, the Home Office is opposing the Chief Inspector of Borders and Immigration’s strong recommendation that right to rent be independently evaluated.

“The Right to Rent scheme imposes costly red tape on every landlord in the UK, and the government has no evidence it’s working. Meanwhile, landlords themselves tell us it encourages them to discriminate against foreign nationals. Denying individuals the right to rent property only increases the power of exploitative rogue landlords and employers. 

“We have been forced to bring this legal challenge because Theresa May and Amber Rudd would not listen to the evidence. We hope Sajid Javid takes a more rational view.”

https://www.landlordtoday.co.uk/breaking-news/2018/6/landlords-immigration-checks-creating-a-hostile-environment-says-rla

Rents in prime property market in London forecast to rise this year

Rents in London’s prime property market are approaching positive territory, falling by just 0.1% in the 12 months to May 2018, the latest index figures show.

The figures from real estate firm Knight Frank also show that in the middle price bracket rents increased by 1%, indicating 

that in this sector where demand is stronger the lettings market is leading the recovery. But, overall, political and economic uncertainty is continuing to impact on demand in London’s prime lettings market, according to Tom Bill, head of London residential research. However, Knight Frank forecasts that rents will grow by 0.5% in 2018. It follows a 15% decline in the number of properties listed for rent in the 12 months to April as more landlords explore a sale after tax changes affecting issues like mortgage interest relief and wear and tear allowances.The index report also shows that the number of tenancies agreed at £5,000 plus a week rose 24% in the year to April, while below £1,000 the increase was 12%. In prime outer London, the number of tenancies agreed above £1,000 a week rose 28% in the year to April compared to a 19% increase below £1,000. It is the opposite trend to the prime central London sector and Bill said it shows demand among price sensitive corporate tenants is rising in better value for money locations in prime outer London.

Indeed, rental values are strengthening in prime outer London where levels of new supply have fallen. There were 13% fewer new listings in the year to April than the previous 12 months and while annual rents fell by 2.7% in May, this was the strongest since July 2016.

‘Despite data from Lloyds Bank showing that confidence in the UK economy ticked up in May, uncertainty surrounding post-Brexit trading arrangements and the timing of the next interest rate rise have contributed to sterling weakening against the dollar in recent weeks, reversing gains made this year,’ said Bill.

‘Strong equity markets, low interest rates and generally robust global economic growth have combined to increase IPO activity on global stock markets over the last 12 months. Financial services remains a key driver of activity in prime sales and lettings markets in London,’ he added.

https://www.propertywire.com/news/uk/rents-prime-property-market-london-forecast-rise-year/

UK lettings market sees a rise in the number of landlords leaving the sector

The number of landlords leaving the private rented sector in the UK increased in April with letting agents reporting that those selling reached the highest level since 2015.

The number of prospective tenants registered per member branch increased by 9% while a quarter saw rents increase, according to the latest monthly report from the Association of Residential Letting Agents (ARLA).

Overall the number of landlords selling their buy to let properties rose to five per branch, up from four in March when the figure rose for the first time in almost a year, to four landlords per branch, after sitting at three landlords consistently since April 2017. The number of prospective tenants registered per member branch continued to rise and agents had 66 tenants on their books on average, the strongest demand seen since September last year, when there were 79 registered per branch.

The number of tenants experiencing rent hikes increased to 26% in April, the highest since September 2017 when 2% of landlords put rents up for tenants and year on year, this has risen from 24% in April 2017.

The number of rental properties letting agents managed remained the same as the previous month in April, with 179 on average per branch. Year on year, this figure is low. In April 2017, agents managed a similar 185 per branch but in April 2016, they managed 185 and 193 were recorded in 2015.

‘The barrage of legislative changes landlords have faced over the past few years, combined with political uncertainty has meant the buy to let market is becoming increasingly unattractive to investors,’ said David Cos, ARLA chief executive officer.

‘Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred. This in turn is hitting renters most, at a time when a huge number of people rely on the rented sector, and leaves us with the question of where will these people find alternative homes,’ he pointed out.

‘As demand for private rented homes massively continues to outstrip supply, the Government can no longer divert its attention from the broken housing market. The recent news that the Government is regulating the industry is a step in the right direction, but ultimately we just need more homes,’ he added.

https://www.propertywire.com/news/uk/uk-lettings-market-sees-rise-number-landlords-leaving-sector/

Letting agents report record numbers of landlords heading for the exit

A record number of landlords are now exiting the market, letting agents say.

The ARLA Propertymark Private Rented Sector Report shows that the number of landlords exiting the market rose to five per branch in April, up from four in March, the highest since the data started being recorded in 2015.

The figure had risen for the first time in March after sitting at three landlords consistently since April 2017.

The number of prospective tenants registered per member branch also rose, from 66 to 72 between March and April, the strongest demand since September 2017 when there 79 registered per branch.

However, supply was flat at 179 properties on average per branch.

In comparison, in April 2017 agents managed a similar 185 per branch but in April 2016 they managed 185, and 193 were recorded in 2015.

The research also showed the number of tenants experiencing rent hikes increased to 26% in April – the highest since September 2017 when 27% of landlords put rents up for tenants.

This was up 24% year-on-year.

David Cox, chief executive of ARLA Propertymark, said: “The barrage of legislative changes landlords have faced over the past few years, combined with political uncertainty, has meant the buy-to-let market is becoming increasingly unattractive to investors.

“Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred. This in turn is hitting renters most, at a time when a huge number of people rely on the rented sector, and leaves us with the question of where will these people find alternative homes?

“As demand for private rented homes massively continues to outstrip supply, the Government can no longer divert its attention from the broken housing market.

“The recent news that the Government is regulating the industry is a step in the right direction, but ultimately we just need more homes.”

http://www.propertyindustryeye.com/lettings-agents-report-record-numbers-of-landlords-heading-for-the-exit/

Tenants face rent bombshell

Rent hikes are inevitable unless the government reverses tax changes for landlords, it has been claimed. 

Tenants face paying an average of £23 a month more in rent, totalling £414 across a typical 18-month tenancy, according to MakeUrMove.

The online letting agent forecasts that the average monthly rent, which it says currently stands at £918 a month, is set to rise by 2.5% in 2018.

Overall, the company predicts that around 2 million tenants across the UK will be hit with rent hikes totalling a combined £46m or so a month, as many landlords are forced to pass extra costs onto tenants by pushing up rents.

The government has attempted to create what the former chancellor George Osborne described as a “level playing field” between landlords and those buying homes to live in, by increasing taxes for landlords such as increasing stamp duty costs, cutting mortgage interest relief, scrapping the ‘wear and tear’ allowance, among other measures.

The impending tenant fees ban is also contributing to create a perfect storm of financial pressures on landlords, leaving many with little alternative but to increase tenants’ rents to cover their costs.

Renters in London in particular are in for a rough ride, with around half of landlords in the capital planning to increase rents. In the North East and Scotland tenants will also be adversely affected, with 46% and 45% respectively of landlords in these areas saying they will be forced to increase rents due to recent tax and legislation changes. Alexandra Morris, managing director of MakeUrMove, said: “Rents have already been increasing year on year, and it’s likely that 2018 will be the year that sees UK tenants feel the biggest impact yet from the recent changes introduced to the private rental sector.

“From our experience, we know many tenants are already stretching their monthly budgets to afford rental properties, and additional rent increases could be the final straw, tipping them into debt or rent arrears.”

In addition to the implications on rents, the recent study by MakeUrMove also found that 10% of landlords would definitely have to sell their property due to legislative changes, reducing the supply of much needed rental stock.

Morris added: “The value of these landlords cannot be underestimated, they are central to the UK’s rental sector and add valuable capacity to the market, and the Government needs to recognise this and start to support them, for the sake of the UK’s millions of tenants.”

https://www.landlordtoday.co.uk/breaking-news/2018/5/tenants-face-rent-bombshell