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Pensioner buy to let landlords ponder selling-up

Despite offering a valuable retirement income, more than 40% of retiree landlords are considering off-loading their buy to let property, according to a survey. Responsible Equity Release also found that seven in 10 pensioner landlords said that without their rental income they would struggle to get by. More than 1,000 retired people who owned a rental property were surveyed and 92% of them said mortgage interest relief changes would have an impact on their profits. The situation is so worrying, says the firm, that pensioner landlords are now wondering whether it is worth hanging on to their buy to let property at all. Pensioners with a buy to let property   The firm’s managing director, Steve Wilkie, said: “For a lot of pensioners their buy to let property has helped because of low interest rates while savings have struggled and attract little interest, their property income is strong. “Many say they would really struggle to make ends meet without their buy to let income boost.” He said that it appeared the Chancellor George Osborne has forgotten that his new tax on buy to let properties will not affect wealthy landlords. Mr Wilkie added: “The changes will hit hard-working honest people […]

Landlords urged to be wary of creating a limited company

With the various changes to the tax regime for UK residential landlords, one lettings agency is urging landlords to be wary and calculate carefully before opting for incorporation. The appeal for creating a limited company to hold a landlord’s property portfolio has been growing in recent months as a means to avoid some of the changes and save the landlord money. Among the changes are to the wear and tear allowance and from next year, landlords will be restricted on the amount of mortgage relief they can claim. However, unlike many property professionals and accountants who have been urging landlords to incorporate to save on their tax bill, Benham & Reeves says landlords should be more cautious. Indeed, a lot depends on a landlord’s personal circumstances as to whether setting up a limited company makes financial sense. Landlords would need to ‘sell’ their property portfolio   The letting agency says that landlords would need to ‘sell’ their property portfolio to the new company which would incur stamp duty land taxes (SDLT). They say that the savings that can be made on mortgage tax relief will not be enough to mitigate the SDLT’s charge of between 5% and 12% on the […]

More landlords are winning deposit disputes

Landlords and letting agents are increasingly winning deposit disputes for the first time since their introduction in 2007, according to research. The Tenant Deposit Scheme (TDS) says that last year nearly 20% of deposit disputes raised by landlords saw a 100% pay-out to them whereas 20% of deposit disputes raised by tenants saw them receiving a full pay-out. The remaining 60% of disputes saw the deposit being shared between landlord and tenant. That’s a slightly better result than was seen in previous years when tenants generally were awarded the full deposit more often than landlords were. One big reason for the increase in landlords being successful in claiming the deposit to cover repair costs is the growing popularity of having documented information for adjudication. Landlords are increasingly using digital inventories   Indeed, letting agents and landlords are increasingly using digital inventories and increasing the number of mid-term inspections which is helping the balance shift in favour of landlords. It’s crucial that landlords record properly the condition of their property when a tenant moves in and provides a comprehensive inventory which also states the condition of furnishings and fittings. There should also be a thorough checkout report conducted too. The chief […]

Rents Will Be Pushed Up By Stamp Duty Charge

Tenants face paying more in rent because of stamp duty reforms on buy to let properties, says the Association of Residential Letting Agents (ARLA). In their latest report, the Association says that 57% of its members say rents for tenants will rise after the stamp duty hike comes into effect with landlords having to push their increased costs onto tenants. In addition, 52% of letting agents have seen an increase in buyers wanting to invest in buy to let property and beat the stamp duty deadline. When questioned further, 63% of letting agents say that the supply of buy to let property will fall after the stamp duty deadline passes in April, after that landlords will be slowly forced from the market. Stamp duty changes will hit small landlords   ARLA’s managing director, David Cox, said: “The stamp duty changes will hit small landlords and also institutional investors and our members report landlords are rushing to snap-up buy to let properties but it’s likely that we will see the market fall like a stone after April and, probably, it will not pick up again until 2017. “This will almost certainly mean rents will increase as supply drops and competition intensifies […]

Serious rent arrears in decline

Landlords around the UK are seeing the number of tenants who are in serious rent arrears beginning to fall, according to a tenant arrears tracker. The data from estate agents Your Move and Reeds Rains reveals that in the fourth quarter of last year, around 1,500 tenants moved out of serious rent arrears compared to the third quarter. The tracker reveals that this is a 1.5% improvement over the quarter and is a reverse of the worst arrears trend seen in early 2015. When all private rented households are taken into account, just 1.6% are considered to be in serious rent arrears. In comparison, in the first quarter of 2008 there were 2.9% of tenants in serious rental arrears which was a record high. ‘Unlikely an individual tenant will fall into serious rent arrears’   Adrian Gill, a director of Your Move, said: “It’s extremely unlikely an individual tenant will fall into serious rental arrears and the proportion of those renting who get behind on rent payments has dropped considerably. “The numbers are going the right way too and there are fewer people at risk from the consequences of not paying their rent which is great news.” Alongside this, the […]

Extent of Subletting Without Permission Revealed

The level of subletting by tenants in private rented property without the landlord’s permission has been revealed and it will come as a surprise for many. Research has revealed that one in six tenants have rented out all, or part, of their rented property to someone who was not named on the lease. Of those who did, one in four tenants said they had not checked the terms of the tenancy to see if subletting was permitted. Another 34% of tenants said they had not told their landlord of their decision to sublet. The research was carried out by Direct Line for Business and the firm’s Nick Breton said: “With the average rent standing at £739, a third of a tenant’s income is paying for their accommodation. “Rents grew by 5% on average last year and it seems that a growing number of tenants are looking to offset this by subletting.” Big increase in the number of tenants looking to sublet their homes   Now Direct Line for Business is warning that 2016 could see a big increase in the number of tenants looking to sublet their homes. Their research has revealed that 15% of those questioned said they were […]

Surge in landlords forming limited company to beat tax hike

A growing number of landlords in the UK are considering forming a limited company to run their business and offset tax costs, according to a survey. The National Landlords’ Association (NLA) says that more than 40% of landlords questioned are considering forming a limited company and just 1% of landlords had already done so. The NLA says that this low take-up is down to the complicated process of transferring property into a company. From their survey, 31% of landlords said they had no plans of moving their properties into a limited company while 29% said they were unsure about whether to form a limited company or not. The question of incorporation has come into focus since buy to let landlords are not able to claim mortgage interest relief when it is phased out from April next year. Landlords will not be able to reclaim their mortgage interest costs   Under the new tax regime, landlords will not be able to reclaim their mortgage interest costs before declaring their taxable profits. The NLA says the switch is ‘The Turnover Tax’ with landlords being taxed on their rental income rather than on their profits. This move will move many landlords who pay […]

Buy to let mortgage approvals soar

The latest figures for buy to let mortgage approvals have revealed that numbers rocketed in January as buyers rushed to beat the upcoming stamp duty changes. In research from esurv, January saw 85,400 house purchase approvals – a rise of 20.6% on December’s figure. However, this is the highest number recorded since October 2007 when 87,594 approvals were registered. Over the past year, house purchase lending has risen in the UK by nearly 40%. Rush to obtain buy to let loans   A director of the chartered surveyors esurv, Richard Sexton, said: “Buy to let mortgage approvals have contributed to January’s home lending growth with a rush to obtain buy to let loans before duty changes begin in April. “Many predicted that the buy to let sector would narrow but we’ve seen lending appearing to do the opposite. “The rise in buy to let has not been at the expense of first-time buyers since the number of small deposit loans granted in January has risen and it’s a sign that lenders are giving first-timers a chance.” He added that the surge in buy to let buying has helped to conceal the strength of small deposit lending and the picture for […]

Landlord confidence tumbles in the UK

Up to 500,000 buy to let properties could be sold as investors’ confidence tumbles and they leave the market this year. That’s the prediction from the National Landlords’ Association (NLA) who say that confidence among the UK’s landlords is at its lowest since the banking crisis. The NLA points out that the number of landlords wanting to sell-up has doubled since July last year. That’s when the Chancellor George Osborne announced his double whammy of tax hikes – removing mortgage interest tax relief for landlords and adding a 3% stamp duty surcharge on buy to let purchases. The Chancellor said his policies were aimed at ‘creating a level playing field’ but landlords with 15 properties and more are set to avoid the penalties. Landlords say they are not creating the problem   Now smaller landlords say they are not creating the problem that the government’s policies have been designed to tackle. The NLA is predicting that after 500,000 properties leave the buy to let sector, there will be another 100,000 properties sold every year afterwards. This prediction has been underlined by research from a national newspaper which found that 20% of buy to let investors are looking to sell their […]

Landlords say buy to let sector will be damaged

Landlords around the UK say that the government’s continued assault on buy to let will end up causing serious damage to the market, according to one survey. Property management firm Orchard and Shipman says that 90% of the 500 landlords they questioned, said that the coming tax hikes will lead to higher rents for tenants. In addition, one in four landlords are planning to sell their buy to let properties because of the tax changes. Worryingly, one in five landlords also say they are planning to leave the buy to let sector altogether. Landlords are passionately committed   The firm’s chief executive, Shane Speirs, said: “Many property investors and landlords are passionately committed and will do what it takes to protect tenants but our research shows landlords are looking at ways of recovering a potential drop in revenue.” He added: “The buy to let market will, I believe, pull together to continue to provide accommodation for growing tenant demand.” The survey also reveals that 90% of landlords believe they should be able to deduct their legitimate expenses from tax bills. This is in response to the government’s plan to limit mortgage interest tax relief on a landlord’s income. Landlords are […]