Supply Has Halved in Last Ten Years – but Demand is Still Growing

The average agency branch had 72 properties on its books in 2005. Today that number is closer to 37.

Numbers released by the NAEA show how much supply has diminished in the last decade. Indeed, numbers have fallen since just two years ago – each branch had roughly 45 properties in 2014.

Upwards Graph

Meanwhile, demand has increased. Not at the same rate, though. There were 360 applicants registered per property branch at the end of 2015, compared with the slightly lower figure of 302 in 2005.

This is due to increase slightly in the coming months. April’s Stamp Duty deadline will cause a brief spike while investors try to save on extra tax costs, with the expectation that first-time buyers will be incentivised to try and buy their own property again after the deadline while investors lick their wounds.

Guest Bloggers Wanted

Throughout 2015 we worked with some great experts within the property industry to bring you informative and entertaining guest blog posts, ensuring that you stayed one step ahead of the property market.

With the New Year in full swing, we are really excited to announce that we are once again, looking to work with comblog_letterspanies and professionals to update our readers and clients on the latest in the world of property.

What’s more, we are always active on social media and this year we have some big plans, including the launch of our brand new blog website!

So, if you are an expert in the property market in your area, we’d be honored to feature your work on our blog. We are looking for submissions on any property topic, specifically aimed at any of the following:

• Landlords
• Tenants
• Buyers
• Sellers
• Students

Maybe there is a property trend you have noticed in your local area, a type of property which sells well, or not, or an area which is receiving regeneration and/or additional starter homes. Whatever the topic, if it’s important and interesting to those in your local area, we’d love to hear from you.

Please get in touch with our team and email social@whitegates.co.uk who are ready and waiting to hear from you!

The Fool-Proof Inventory

Being a landlord is a time-consuming business, and one that can be quite stressful. As with any walk of life, it makes sense to get things done the right way, first time, every time, to ensure an efficient and positive relationship with your tenants. That’s why we’re bringing you some tips on the perfect inventory.

 

The Basics
Some landlords don’t use inventories. However, getting your tenants moved into your property requires knowledge, by both parties, of what state the property is in, and how it should be expected to have changed when the tenancy is over.

For this reason, an inventory is essential to both parties having legal security. The quality of the inventory will have an impact on the quality of the tenancy and the quality of the property at the end of the tenancy.

Inventories are the foundation for many landlord/tenant disputes, and to prepare one for the property will save you any sleepless nights should the property return damaged, over-worn or have serious electrical or plumbing issues.

The perfect inventory should be arranged by you or the letting agent, and will include the following:

 

An Input From The Letting Agent
If you use an agent, it makes sense to keep them involved in all aspects of your tenancies. You may wish to let your agent take care of the inventory entirely, which can be arranged if you are on a Fully Managed service. Contact your agent if you would like them to organise an inventory for you.

An Inventory Clerk
These people are independent, professional, and experienced. They will ensure that the property is accounted for, top to bottom, in a level of detail that will cover all bases in any eventuality. This is the best way to guarantee a water-tight inventory.

 

Photographs
Words aren’t as exact as images. If there is an issue over a stained wall or scratched sink, a photo taken of the item before a tenancy begins will clear up many disputes immediately.

There are two sides to this deal. Landlords will know what the tenant has damaged at the end of the tenancy, and tenants will know when a landlord is trying to charge them for damage they didn’t cause. As long as both parties are trustworthy and responsible, photographic evidence in an inventory will be readily accepted, so beware anyone who refuses.

 

Unfurnished properties
Just because the tenant is using their own belongings, that doesn’t mean the nuts and bolts of the property aren’t subject to an inventory. Walls, kitchenware and white goods all fall within the confines of an inventory, especially if they show signs of age or wear.

 

Promises, Agreements And Signatures
That’s right. An inventory will include the tenant’s legal responsibility to present the property in the same condition it was left in on the day they moved in – including hoovered floors, kitchen surfaces and all crockery accounted for.

The landlord will have the right to withhold part or all of the tenant’s deposit if they fail to meet the criteria set out for the property and its upkeep.

 

Meter Readings, Keys And Wall Colours
This is to ensure that the tenant hasn’t decorated without permission, lost keys, created new ones or used abnormal levels of gas and water during their time in the property.

 

The inventory is an essential part of protecting your asset, and also communicating to your tenants that you are a professional landlord. If you require help with preparing a great inventory, or are interested in upgrading to a Fully Managed service, please contact your local Whitegates office today.

In A Nutshell, January 2016

Surge In Buy-to-Let Loans For Companies
There has been a surge in applications for privately owned companies since landlords learned of April’s Stamp Duty changes.

Mortgages For Business, a specialist broker, found that 38pc of its applications in December 2015 were from limited companies – up from just 15pc in October.

Another lender, Aldermore, has reduced rates and removed fees for its limited company mortgages.

Landlords will be incentivised for two reasons – avoiding the Stamp Duty surcharge, and getting mortgage interest relief, therefore only paying tax on rental profits.

Landlords can avoid the stamp duty charges if their portfolio has more than 15 properties. Any landlord with a smaller portfolio will only be exempt if they turn their portfolio into a privately owned business – therefore swapping landlord taxes for corporation tax.

Source: This is Money

 

UK Rents Ballooned In 2015
Rents rose in ten of 11 regions in 2015.

Brighton and Bristol recorded an increase of 18pc in rents, with Edinburgh and Newcastle following closely with rises of 16pc.

London rents increased by 11pc, a figure also matched by Liverpool.

Source: City AM

 

Supply Is At A New Low
Just 386,000 properties are up for sale in England and Wales, nearly half the number in 2008.

The property search engine, Home, says the number has fallen 47pc since the recession.

New supply has increased, but not at the rate that properties came off the market.

Average house prices in January are up to £288,000, an 8.2pc increase from January 2015.

Properties are staying on the market for an average of 117 days.

Source: Property Industry Eye

Landlord Responsibilities

Ensuring you are legally protected as a landlord safety is a very important topic. Here, we will outline your responsibilities as a landlord, and hopefully provide you with some handy tips to staying on top of your property management and legal compliance.

Discrimination
You have a responsibility to treat all prospective tenants equally and without prejudice.

Documents??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
From 1 February 2016 you must ensure any applicants for new tenancies have the right to live in England and rent a property. This includes checking original documents for all adults living in the property. You will also make repeat checks if residents have a limited right to stay in the UK.

Gas

Your tenants are living in the property, but the property is still yours. As such, that places a responsibility on you to guarantee the safety of your tenants within reasonable circumstance.

As a landlord you should ensure all gas safety equipment is safely supplied and installed, including provision for maintenance by a registered engineer.

You will carry out an annual gas safety check on each appliance, plus give tenants an up-to-date gas safety check record before they move in.

Electric
You need to ensure the electrical system is safe, and that all appliances are safe. If any sockets, light fittings, cookers, white goods etc. are faulty or not in full working order, you have an obligation to fix these before the property can be let.

Fire

A fire alarm must be on each storey of the building, and a carbon monoxide detector in any room with a useable fireplace or wood burner.

Escape routes must be accessible at all times. All furniture must also comply with fire safety laws.

You should provide fire alarms and extinguishers if the property is a large HMO.

Repairs
You will look after the property’s structure and exterior – no asking tenants to pay for broken roof tiles.

tools_workshop_expert_workman

You will also deal with the foundations of a working property – pipes and drains, sinks, baths, heating and hot water, gas appliances and electrical wiring, for example. You will also have to pay for any damage caused by attempted repairs!

If you are a landlord for a block of flats or any building with a communal area, you will have a responsibility to deal with staircases and external doors.

You will need to detail whether you are okay with tenants making their own repairs. This will be in the tenancy agreement. You also cannot force tenants to make repairs that are your responsibility.

Money
You have a responsibility to inform your tenants about rent increases, and you will have detailed this in the tenancy agreement. You also cannot force a rent increase – tenants have the right to say no, and this does not entitle you as landlord to evict the tenant.

You therefore have a responsibility to not discriminate against tenants who reject a proposed rent increase.

You also have a responsibility to protect a tenant’s deposit. The money is still theirs and they are entitled to a portion of it (or all of it) dependent on disrepair in the property at the end of the tenancy.

Contacts
You must provide a legitimate name and contact address, and should also provide the letting agent’s details if you are working with one.

Manners
Yes – manners. The property may be yours, but this is the tenants’ home. You have a responsibility to leave them be and live in peace, and must arrange suitable visit times. You may only enter the property ‘uninvited’ in the case of an emergency.

You must let your tenants use all rooms, as much water and electricity as they need, and only contact them within reason.

Law
If you want to evict a tenant, you must abide by the law and follow all necessary procedures, even in outstanding circumstances.

Let an Agent Help
Landlords have a lot to do, and the business isn’t just about owning a property and collecting rent. It takes work and it takes time. If you do not have the time to look after your entire portfolio, or simply need a helping hand, please feel free to contact your local Whitegates office today.

Main Residence Relief & And Capital Gains Tax

The concept that you can sell your home without paying tax on any profit that you make is well-known. However, the position becomes slightly more complicated if you have more than one property, if you also use your home for business purposes, or if you have let it out at some point during the period that you have owned it.

Full relief is available if you have owned your home and lived in it as your main residence throughout the period you have owned it. The relief extends to the grounds and any buildings in the grounds as long as these are not more than 5,000 square metres. If the grounds exceed this, they may still be eligible for the relief if they are reasonable for the enjoyment of the property.

Spouses and civil partners – only one main residence
Married couples and civil partners are only entitled to one main residence between them for the purposes of the relief.

More than one property
If you have more than one property in which you live as a home, for example a city flat that you live in during the week and a family home in the country, you can choose which property is your main residence for the purpose of the relief. It is not only MPs who can take advantage of flipping to secure the best capital gains tax position. You must nominate which property is your main property within two years of the date on which your combination of homes changes by writing to HMRC.

Business use
If you use part of your home exclusively for business, that part is not eligible for main residence relief and any gain on sale must be apportioned between the business and non-business parts of the property. This restriction can be overcome by not using any rooms exclusively for business, for example using a room for business during the day and homework in the evening. If this cannot be avoided, any gain arising on the business part may well be sheltered by the annual capital gains tax exempt amount (£11,100 for 2015/16).

Letting it out
In most cases, if you let your home out during the period of ownership, only partial relief will be available as the let period will not qualify for main residence relief. Where the property has been lived in as your main residence at some point, a separate relief, lettings relief, may be available to reduce any chargeable gain. The chargeable period will also be reduced by the final period exemption.

Last 18 months
Where a property has at some point been the taxpayer’s only or main residence, the gain relating to the last 18 months of ownership is always exempt.

If you have any enquiries about your tax obligations and tax avoidance, please visit taxinsider.co.uk.

Tenants have some advice for landlords

Upad has completed its annual survey of tenants and their opinions on renting and landlords.

The consensus was an expected one: renting is too expensive and time-consuming, and landlords have the power to make it a lot easier.

rent_free

72pc of tenants wanted to hear from their landlords at least four times a year, even if for a brief check-up on the property and the tenants themselves. 33pc said they wanted landlords to contact them every month.

Lengths of tenancy varied spectacularly. 32pc of tenants wanted the flexibility of a six-month tenancy, with frequent renewals. However, 12pc said that they ideally wanted to settle into their property – a contract of three or more years was their choice.

In 2015, 47pc of tenants think that admin fees are the worst thing about renting. This is a significant increase – the figure was 27pc in 2014.

Tenants also valued honesty and integrity from their landlords, especially when ‘selling’ a property to them. Tenants were concerned that landlords exaggerated room sizes and underplayed problems the property had; needless to say, this was a major turn-off for prospective tenants.

Tenants also wanted two key changes to their deals – firstly, and obviously, they wanted their landlord to lower rents whenever possible. Secondly, tenants wanted the right to decorate their properties to their own tastes, especially when staying in their property for longer than a year.

If you would like to know more about how to establish positive and long-term relationships with your tenants, please contact your local Whitegates office today to discuss your issues with our team.

*The Upad survey came from a sample of 700 tenants.

*Source: Upad

The End Of Wear And Tear

Currently, a wear and tear allowance is available to landlords who let furnished residential accommodation. The allowance is designed to cover the cost of replacing furniture and furnishings and is available regardless of whether the landlord has actually spent any money on replacements in the tax year.

However, in the summer 2015 Budget the Chancellor announced plans to replace the allowance with a deduction for the actual costs of replacement. The new rules will apply from 1 April 2016 for corporation tax purposes and 6 April 2016 for income tax purposes.

Calculating the allowance

The wear and tear allowance is fixed at 10% of net receipts from the furnished letting. Consequently, the higher the rent, the greater the deduction. Net receipts are the receipts from letting the property less any expenses borne by the landlord that would normally be borne by the tenant, such as council tax and utility bills. The allowance is given as a deduction in computing profits.

Replacement relief

The replacement furniture relief will apply to landlords of unfu????????????????????????????????????????????????????????????????????????????????????????????????rnished and part-furnished properties, as well as to furnished properties. However, it will not be available in respect of furnished holiday lettings. Under the new relief, landlords will be able to claim a deduction against profits for the cost of replacing furniture, furnishings, appliances and kitchenware provided for the tenant’s use in the property. The relief will cover the replacement cost of items such as beds, sofas, chairs, wardrobes and other pieces of furniture, televisions, white goods, curtains and carpets, linen and crockery, and cutlery. However, a deduction is only available for the replacement cost, not the cost of the initial purchase.

Planning opportunity

The replacement of the wear and tear allowance by the new relief creates a planning opportunity, making it worthwhile where possible to delay replacing furniture and furnishings until April 2016 or later. This tactic will enable the landlord to claim the wear and tear allowance for 2015/16 and a deduction for the actual cost of replacement in 2016/17. If items are replaced before April 2016, they will be covered by the wear and tear allowance and no further relief will be available under the new regime.

Example

Harry lets out a full-furnished house. The rent is £800 a month. The tenants meet the cost of utility bills and council tax.

He plans to replace the sofa, an armchair and curtains in the not too distant future and expects the replacements to cost £750. No further replacements are envisaged before April 2017.

If he undertakes the replacement before 6 April 2016, he will be able to claim the wear and tear allowance of £960 (10% (£800 x 12)) for 2015/16. He will not be able to claim a further deduction for the actual costs of replacing the furniture and furnishings.

However, if he delays making the replacement until after 5 April 2016, he can claim the wear and tear allowance of £960 for 2015/16. It does not matter that he has not actually spent anything on replacements. He will also be able to claim a deduction of £750 in 2016/17 for the actual cost of the replacements under the new relief. Delaying the replacement will save him tax of £300 in 2016/17, assuming that he is a higher rate taxpayer (£750 @ 40%).

For more property tax saving articles please visit: www.taxinsider.co.uk

Who Sells When, and Should You Market Your Property Into the New Year?

In much the same way warm coats are sold just before the cold months hit us, and bikinis are sold as the sun comes out, houses also sell seasonally. The difference is, nobody really notices – because they’re always being sold!

The key is to remember that there are different types of buyer and different types of property – so here is a breakdown of what you can expect to happen in any given calendar year.white

Young Couples and Singles

houses2

These are the people who kick-start the property chain. In theory, first time buyers will join the lower end of the property ladder, purchasing the terraces and apartments that they can afford, therefore allowing the rest of the chain to kick into action.

As such, you will find more first-time buyers making their deals near the start of the year. They’re not relying on selling a property (and therefore waiting for another party to get involved) plus their lack of time constraints allows them to find a deal to suit them – therefore making this the longest lasting part of the chain.

Families (Who are Usually Up-Sizers)

Families aren’t as flexible as first-time buyers. They will look around during autumn, spring and early summer… while the kids are at school! This gives the parents time to look around without having to tow bored children around. Furthermore, outside of term time families will want to spend time together, to go on holidays for example, so don’t expect too many viewings in the Easter holidays and in the middle of summer.

Families with younger children will tend to favour moves closer to the middle of the year, allowing the children to play in a new garden and settle into new bedrooms. Be empathetic to the needs of families and their children and you will see a real need for a ‘familial’ deal – if your home is suitable for a family to live in, expect more movement before the halfway point of the year.

Mature Adults (Who are Usually Down-Sizers)

If the household is now an empty-nest, adults will often pay off their mortgage and then look to purchase something smaller moving towards retirement.

They will also be looking towards the summer, but obviously will not be inhibited by children in school, or perhaps even by full-time jobs. However, this may just be a logical decision – nobody wants to search for houses in the rain, cold and dark.

The advantage to mature buyers is that they tend to look at fewer properties and make their minds up much faster than younger families and single people.

The question you should ask yourself, at this time of the year, is whether to market your property over Christmas and into January or, if it is already on the market, to keep it there.

Based on the three types of buyers we just pointed out, logic would tell you not to – after all, the only market you can have faith in to search your property is the first-time buyers, and anyone who follows the property industry knows that they are struggling to afford properties in the first place.

But, and here’s the important factor, traffic and clicks on property portals like Rightmove is always incredibly high at this stage of the year, even though it seems that the market has cooled.

What is in fact happening is that your property becomes part of the embers that roar back into life come January – where not having your property on the market is to miss all the heat generated from new interest.

Of course, depending on your property, its size, its likely target market, and your desire to move, you will have to take your own decision. But don’t underestimate the power of having your property online over the Christmas break – you never know who is going to see, but you can rest assured that it is being seen, a lot, to your advantage.

If you have any questions or would like some support with selling your property, contact your local Martin & Co office here.

The Pick Of The Stats

Tenant Demand on the Up

A report from Paragon Mortgages said that tenant demand rose in Q3 of 2015.

A survey of 2,000 landlords said that 41% noted a demand increase.

The Paragon Mortgages report also measured average rental yields across the country in Q3 at 5.6pc.

Landlords in Yorkshire and the Humber reported highest yields of 6.1pc, while London landlords noted 4.8pc. This may explain why the commuter belt in outer London has registered the second largest increase in tenant demand.

Source: https://landlordnews.co.uk/tenant-demand-grows-as-yields-remain-steady/

 

Home ownership just keeps on sliding

In 2003, 71pc of households were owned by their residents.

Today, that number has fallen just below 63pc. In London, it is below 50pc.

Renting is a necessity for the younger generations – 36pc of households are privately owned, leaving everyone else to rent.

 

And only a quarter will own a home by 2025

Only 26pc of generation rent (20-39yr olds) will own their own home.

PwC pointed out that 38pc had brought a house in 2013.

Meanwhile, 59pc of generation rent will be in private rental accommodation, up from 45pc in 2013.

Starter homes in London are being capped at £450,000, and £250,000 elsewhere.

A typical required income to be able to afford a purchase is £50,000, almost double the national average salary.

Source: PwC

 

Interest rates to hold steady?

One of the key factors that affects the market is the interest rate. Homeowners with mortgages rely on them and they also change spending and saving habits across all walks of life.

Last month, the Bank of England voted 8-to-1 to hold the current interest rate of 0.5pc, which has stayed constant since March 2009.

The Bank released a batch of economic forecasts that suggests the rate may hold until early 2017, in spite of rumours that an increase was going to take place in summer of this year.

The economy has slowed its growth throughout the year and wage increases and inflation are below target – until inflation steadies, interest rates won’t change.

http://www.cityam.com/230566/with-the-bank-of-england-set-to-keep-interest-rates-at-record-low-city-ams-shadow-mpc-votes-six-three-to-hold