LANDLORD | PROPERTY | INVESTMENT
LANDLORD INVESTOR MAGAZINE 29TH EDITION | 2017
PROPERTY PANEL SPARKS LOBBYING FOR CHANGE / SOCIAL HOUSING REFORM / POLITICS & PROPERTY / THE HOMELESSNESS REDUCTION ACT / HOW TO GET YOUR NEXT PROPERTY DEAL THIS SUMMER / TO GEAR OR NOT TO GEAR? / PORTFOLIO LANDLORDS’ CHECKLIST / LESS TAX RELIEF, MORE RED TAPE / AN ECONOMIC EXPERT WE SHOULD LISTEN TO / INDUSTRY SPOTLIGHT: THAMES WATER & LOFT INTERIORS
THE RT HON IAIN DUNCAN SMITH MP JOINS US TO DISCUSS
Social housing reform
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Welcome It’s been a month of increased press coverage about UK landlords after the Expert Property Panel at our Olympia Show sparked lobbying by Iain Duncan Smith MP for a change in laws affecting property investors. This resulted in thousands of you commenting about these issues in national and industry press. Our new contributors to Landlord Investor Magazine, Rt Hon Iain Duncan Smith MP and David Smith, the Economics Editor of the Sunday Times, have led the commentary on this nationally and in political debate; we look forward to hearing their opinion and insight in the coming months. Following on from the Expert Property Panel, Iain Duncan Smith was quoted in the Sunday Times addressing the areas brought to light: ‘“Finally, it is time to look again at the way we treat private landlords who buy houses to rent. George Osborne’s decisions to impose a stamp duty levy on the purchase of homes to rent, to restrict mortgage interest relief to the basic rate of income tax and to tax a landlord’s turnover rather than profits have led to landlords scaling back or even leaving the sector altogether.’’ The last few months have been a time of reflection for the nation as a whole following the General Election, Brexit and the terrible tragedy of the Grenfell fire; in his first feature for Landlord Investor Magazine, Iain Duncan Smith MP has given insight into what we can learn from the Grenfell tragedy to improve social housing in the wake of this shocking event. Marc Riley the designer for Landlord Investment Show and LI Magazine ran a marathon in mid-July to raise money for the victims of the Grenfell fire, so please turn to page 31 if you would like to donate.
LANDLORD INVESTOR MAGAZINE Editor Tracey Hanbury editor@landlordinvestmentshow.co.uk
Editorial Contributors Iain Duncan Smith David Smith Martina Lees Tom Entwistle Peter Littlewood Simon Zutshi Paul Mahoney Steve Olejnik Follow us
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LANDLORD INVESTOR 29TH EDITION
Welcome to the 29th edition of Landlord Investor Magazine
Contents
5 8 15 20 23 26 28 32 34 38 43
Olympia Update Expert Property Panel at Olympia
Political Comment Social housing reform
Expert Advice Politics & property
Industry Update The Homelessness Reduction Act
Investment How to get your next property deal this Summer
Finance To gear or not to gear? That is the question.
Finance Portfolio landlords’ checklist
Insight Less tax relief, more red tape
Insight An economic expert we should listen to
Industry Spotlight Thames Water – putting customers in control
Industry Spotlight Q&A with LOFT Interiors
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Meet the team TRACEY HANBURY
RYAN DENNINGTON
T: 0208 656 5075 M: 07931 308 875 tracey@landlordinvestmentshow.co.uk
T: 0208 656 5075 M: 07931 308 856 ryan@landlordinvestmentshow.co.uk
STEVE HANBURY
BEVERLEY MELINIOTIS
T: 0208 656 5075 M: 07429 683 046 steve@landlordinvestmentshow.co.uk
T: 0208 656 5075 beverley@landlordinvestmentshow.co.uk
EDITOR & SALES DIRECTOR
SALES & EVENTS MANAGER
DIRECTOR
ADVERTISING SALES MANAGER
ANNA JACKSON
MARKETING MANAGER
LES HANBURY DIRECTOR
T: 0208 656 5075 anna@landlordinvestmentshow.co.uk
FRAN ROBINS
MARC RILEY
SALES & EVENTS MANAGER
DESIGN MANAGER
T: 0208 656 5075 M: 07950 284 615 fran@landlordinvestmentshow.co.uk
T: 0208 656 5075 marc@landlordinvestmentshow.co.uk
ALICIA CELA
CHARLOTTE DYE
ACCOUNTS
SALES SUPPORT
T: 0208 656 5075 accounts@landlordinvestmentshow.co.uk
T: 0208 656 5075 info@landlordinvestmentshow.co.uk
Subscribe to LI Magazine Landlord Investor Magazine gives property professionals, landlords and investors monthly advice and information on the topics, news and legislation that matter to the industry. Your subscription gives you the latest industry information in 11 issues per year. Subscribe today for just £65.00 per year to get news, advice and comment on all areas of buy-to-let: • legal services & tax • insurance • investments • deposit schemes & landlord associations • property hotspots Call the subscription hotline on 020 8656 5075 today or visit landlordinvestormagazine/subscribe Published by LI Media, organisers of National Landlord Investment Show
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OLYMPIA UPDATE
LONDON OLYMPIA 15 JUNE 2017
Property panel sparks lobbying for changes in landlord law The UK’s leading property investment show has brought the controversial subject of landlord licensing and laws into the national press by its Expert Property Panel, including Iain Duncan Smith MP and David Smith, the Economics Editor of the Sunday Times. The Expert Property Panel and the coverage around it sparked interest from the Sunday Times, The Telegraph and industry media such as Property188 and LandlordZONE, generating thousands of comments and views, resulting in many landlords to writing to Parliament with their concerns about the effects of Section 24 in particular. The Expert Property Panel was chaired by Peter Littlewood from Southern Landlords Association and also included Carolyn Uphill, Chairman, National Landlords Association; Richard Bowser, Editor, Property Investor News; Tony Gimple, Less Tax for Landlords and Marie Parris, Managing Director, George Ellis Property Services who also raised their concerns about the current landscape for property investors. The panel debated and discussed current issues affecting including landlord law,
LANDLORD INVESTOR 29TH EDITION
licensing and Section 24 in front of an audience of 350 nationwide landlords and property investors. Following on from the debate, Iain Duncan Smith was quoted in the Sunday Times addressing the areas brought to light: ‘“Finally, it is time to look again at the way we treat private landlords who buy houses to rent. George Osborne’s decisions to impose a stamp duty levy on the purchase of homes to rent, to restrict mortgage interest relief to the basic rate of income tax and to tax a landlord’s turnover rather than profits have led to landlords scaling back or even leaving the sector altogether. ‘They are a significant provider of the additional housing we need. We should be encouraging them with devices such as VAT relief on conversions or even capital
allowances, not punishing them. It’s no wonder buy-to-let purchases have fallen dramatically. If the purpose was to stop foreign owners buying up property and leaving it empty we would be better off levying a tax on empty homes. For example, in New York, apartments can incur a tax of up to $20,000 if they are left empty. We are in danger of throwing the baby out with the bath water’ He also comments, ‘the issue of home ownership and home rental been at the forefront of political dialogue for some time. In the UK we face today a growing crisis in the availability of housing. However, with recent immigration running at the level it has for some years this issue has become one of the key issues facing the government and one which although it featured in the election, I had hoped would feature more than it did.’
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OLYMPIA UPDATE
What the experts say Peter Littlewood – Southern Landlords Association Peter chaired the Expert Property Panel and highlighted what he saw as the main concerns addressed: • some concerns about the Universal Credit system. Whilst it didn’t come out at the panel many landlords are refusing to take UC tenants; • issues around the use of blanket licensing, although there is a general feeling that reluctantly it is here to stay and is seen as a mechanism to help local authorities’ coffers, without any regard to the potential rise in rents to cover this cost; • minimal concern about Brexit, reduced after some points well made by Iain Duncan Smith; • issues associated with evicting a problem tenant and the probability of having to write costs off. This is a major reason why most landlords don’t issue longer term tenancies, thus giving the tenant more security of tenure. They are aware that the current system will result in a long delay; reduced income, and increased costs.
Vanessa Warwick, Co Founder of Property Tribes It was a major coup for the Landlord Investment Show to secure Iain Duncan Smith for its Expert Property Panel debate. All credit to the show for creating such a great forum for landlords to interact with a key Tory influencer. It is clear that the landlord lobbying IDS received at the event made an impression on him, as a few days later, in an article for the Sunday Telegraph, he spoke out against Section 24 and made some very supportive comments with regards to
private landlords and the role they play in housing the nation. He stated that landlords should be encouraged to invest rather than being disincentivized by tax attacks. This support from IDS is another significant landmark event in the Tenant Tax campaign and gives landlords a glimmer of hope that Section 24 may be diluted or reversed. If it is, I believe the Landlord Investment Show can take some credit for the part their panel debate played in giving landlords the chance to engage with a senior politician, and impressing their views upon him in such a way that he took them on board. A wonderful outcome for everyone involved. The show has now set a very high benchmark in panel debates, and I hope this will become a unique feature at future event. It now has the track record to attract some heavy hitters and create a forum for discussion and positive change in the PRS.
Richard Bowser, editor of Property Investor News The recent Landlord Investment Show at Olympia presented a rare opportunity for the 300+ landlords attending the panel debate to pose some direct questions to an influential and respected senior politician on matters affecting the private rental sector. Inevitably the two main topics which were of most concern centred on the imposition of the increased taxes on landlords including the 3% SDLT charge, S24 and the increasing use of landlord licensing by local authorities. I also had an opportunity to raise my own concerns directly to Iain Duncan Smith in a brief private conversation afterwards. I specifically asked Mr Duncan Smith
about the imposition of S24, which over the next few years could see many individual landlords paying significantly more in income tax and just how his party thought that this was justifiable, given it was not part of the Conservative Party manifesto prior to the 2015 General Election. His reply was highly insightful: what you have to understand is that there is Government and then there is the Treasury. They saw an opportunity to get one of their wish list items through and to raise more tax from private landlords. It’s likely that they did not expect this (S24) to be approved but it was. To be fair to Mr Duncan Smith he is one of the very few senior politicians who to-date has been prepared to publicly state that these taxes on landlords are wrong and should be reversed. Given the recent Election outcome is unlikely that S24 will be reversed in the near future but it’s probably not a bad idea to lobby your local MP to make them aware of the consequences.
Carolyn Uphill, Chairman of the National Landlords Association Issues around taxation and licensing were key concerns. It was clear that many landlords in the audience felt ‘got at’ by both government and local councils which do not understand, or appreciate, their value to the economy and in providing homes at a time of continued shortage of supply.
David Smith, award-winning Editor of the Sunday Times This is a fascinating and challenging time, not least for landlords. I very much enjoyed taking part in the panel and discussing some of the key issues at the Landlord Investment Show.
It was a major coup for the Landlord and Investment Show to secure Iain Duncan Smith for its Expert Property Panel debate. Vanessa Warwick – Co Founder of Property Tribes
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29TH EDITION LANDLORD INVESTOR
OLYMPIA UPDATE
National Landlord Investment Show will be reporting on any developments as soon as they happen and; the Expert Property Panel will once again come together on 7 November at Olympia, London to discuss industry developments and any changes brought on by the recent lobbying. We are delighted to announce that Iain Duncan Smith MP will once again be attending alongside key industry figures. If you would like a chance to attend this panel, register for the Olympia Show at landlordinvestmentshow.co.uk.
Dates for your diary National Landlord Investment Show is heading to: East London Wednesday 6 September Crowne Plaza London Docklands Sussex Wednesday 13 September Brighton Racecourse Kent Tuesday 26 September Kent Event Centre
LANDLORD INVESTOR 29TH EDITION
Manchester Thursday 12 October Manchester United Football Club
Those interested in the Morning Networking Event can indicate their attendance as part of their registration.
Cardiff Wednesday 25 October Cardiff City Football Club
Exhibiting
London Olympia Tuesday 7 November Registration for forthcoming Autumn shows in London, Sussex and Cardiff is complimentary at landlordinvestmentshow.co.uk
Spaces are filling fast for remaining shows in 2017. Contact the team today to secure your preferred stand space on 020 8656 5065 or visitlandlordinvestmentshow.co.uk/ contact
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POLITICAL COMMENT
THE RT HON IAIN DUNCAN SMITH MP
The Grenfell Tower disaster has shocked us all and it is of course right that there should be a full public enquiry looking into why the tragedy happened and what lessons can be learned from it. Whilst that is the right thing to do, it is also vital that we look into the way we provide social housing and how that could be improved.
Social housing reform Having a home to live in is a vital right for everyone and the huge post-war success in producing such homes was remarkable. However as the world has changed, social housing simply hasn’t kept up. Too often now people find themselves in homes which are no longer near to work, trapped in areas riven with high levels of crime and drugs. Over two-thirds of social tenants have incomes in the bottom 40 per cent. And in some areas now, only 5 per cent of tenants move each year. Almost half of the social housing stock falls in the category of the 20 per cent most deprived neighbourhoods in the country. Although welfare reforms have meant some 2 million more people are in work, there still remain large pockets of unemployment centred often on difficult estates.
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Two areas that have acted as a disincentive to work are now being rectified. Housing benefit is taken away pound for pound as people earn and local authorities often reinstate it at the incorrect level when they fall out of work. Universal Credit, (UC) addresses both issues with a lower level of deduction and the automatic re-setting of the benefit according to income. Local services failed to be brought together for householders, but alongside UC, universal services is set to change that dramatically, to the benefit of residents. However, before the last election, I argued that we needed to do more, to look carefully at the tenure of social
housing with a view to giving social housing tenants shared equity, I believe that it would help address the issue of asset poverty. At present, 61 per cent of households without assets are poor and more people are asset poor than are income poor. Assets are essential for, and a determinant of, a family’s long-term economic growth. This is why we should now look again at how we can give tenants an asset share of the home they live in and the tenure of social housing should be flexible enough to change as the household’s circumstances change. Owning a home ensures we look after it and take pride in it as well. It helps drive positive behaviour in families and that in turn saves and re-stabilises many, many lives.
29TH EDITION LANDLORD INVESTOR
POLITICAL COMMENT
Almost half of the social housing stock falls in the category of the 20 per cent most deprived neighbourhoods in the country.
LANDLORD INVESTOR 29TH EDITION
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POLITICAL COMMENT
There is no question but that social housing is the issue of our time.
Already those on the far left are pressing their own view of what the problem is, calling in effect for the re-nationalising of social housing and the ending of private property rights. This kind of ‘government knows best’ view may seem alluring, but those of us who remember the sink estates, vast rent arrears and often substandard housing when councils ran social housing know that it is far from a panacea. Others don’t see it as the left does here. In France, employer-employee groups provide part of the funding for social housing to support local employees. In Holland, the rent for the cheaper rental homes is kept through non-profit private housing foundations or associations. These financially independent groups act as social entrepreneurs, working to prevent segregation. They also successfully highlight an important problem in the provision and service by public bodies. In the UK, since the war, we have used the built environment to lock in our place in society. A glance at any city will show that children tend to grow up now in houses near to children whose family’s status is very similar. We have lowincome estates, middle-class estates and even some areas where housing is only inhabited by the very wealthy. Now, we need to look at how we can create more
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balanced communities through a mix of tenure, and sensitive allocation policies whilst protecting against the danger of stigmatisation. It is also time for us to reconsider the way we treat private landlords who buy houses to rent. At the National Landlord Investment Show at Olympia recently, I was struck by how concerned private landlords were. A large number of them were talking about no longer buying to let and they blamed it on George Osborne’s decision to impose a stamp duty levy on the purchase of homes to rent, to restrict mortgage interest relief to the basic rate of income tax and to tax a landlord’s turnover rather than profits. This, they said, had led to private landlords scaling back their operations or even leaving the sector altogether. I was concerned about this because private landlords are a significant provider of the additional housing we need. I have long believed we should be encouraging them with devices such as VAT relief on conversions or even capital allowances, not punishing them. It’s no wonder buy-to-let purchases have fallen dramatically. If the purpose was to stop foreign owners buying up property and leaving it empty we would be better off levying
a tax on empty homes. For example, in New York, apartments can incur a tax of up to $20,000 if they are left empty. We are in danger of throwing the baby out with the bath water. What is certain is that even if we do achieve our housebuilding target, there will still be a continuing growth in demand and a significant chunk of this will have to be available through private landlords. I think it is time to review Mr Osbourne’s tax changes on buy-to-let landlords. There is no question but that social housing is the issue of our time and that is why I have asked the Centre for Social Justice, (an organisation I established to search for ways to improve the quality of life of the poorest in society), to put together a team of all parties to review this and recommend the necessary changes. Despite the angry rhetoric the British people need calm and measured judgement followed by swift and direct action, not political point-scoring. As we now urgently work to improve the built environment and the lives of those whose quality of life depends on their social housing, we must recognise that governments of all persuasions have for far too long failed to take the key decisions early enough.
29TH EDITION LANDLORD INVESTOR
ADVERTORIAL FEATURE
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29TH EDITION LANDLORD INVESTOR
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INVESTMENTS SOLD FROM OUR INVESTMENTS SOLD FROM OUR JUNE AUCTION INCLUDE JUNE AUCTION INCLUDE
ASHFORD, KENT ASHFORD, KENT Semi-detached, subject to statutory tenant Semi-detached, subject to statutory tenant SOLD £242,000
SOLD £242,000
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11 11 -- 15 15 September September SEAFORD, EAST SUSSEX SUSSEX ResidentialSEAFORD, investmentEAST producing £43,260 p.a. Residential SOLD investment£542,000 producing £43,260 p.a.
Entries Entries Close: Close: 14 14 August August Catalogue on-line: 22 Catalogue on-line: 22 August August
SOLD £542,000
CLACTON-ON-SEA, ESSEX Commercial investment let atESSEX £21,000 p.a. CLACTON-ON-SEA, Commercial investment let at £21,000 p.a. SOLD £288,000
SOLD £288,000
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FRESHWATER, ISLE OF WIGHT Bungalow for investment orWIGHT occupation FRESHWATER, ISLE OF Bungalow for investment or occupation SOLD £135,000
SOLD £135,000
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29TH EDITION LANDLORD INVESTOR
EXPERT ADVICE
TOM ENTWISTLE LANDLORDZONE
Theresa May’s call for a snap general election in June took most of us by surprise and the end result was even more of a surprise, particularly for the Tories. With such a commanding opinion poll lead before the election, the Conservatives were confident enough to risk some quite unpopular policies in their manifesto, but they failed to read the deeply held grievances of many people under the age of 50. This back-fired on them spectacularly as a result.
Politics & property LANDLORD INVESTOR 29TH EDITION
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EXPERT ADVICE
Apart from Brexit, and May’s plea for wholehearted backing for her negotiations, housing seems to have been very high on the list of many voter’s priorities, and probably a significant factor in the overall result – young people, especially, saw housing as a major election issue for them. If nothing else, the election gave the main political parties the opportunity to address voters’ concerns about housing; all political parties made housing a primary issue and set out their own strategies and promises for tackling the shortage of residential houses across the UK. All parties agreed the need for a greater supply of housing in their manifestos and the general consensus was just that - but if only just for once, the government of the day would keep their promises and actually act on them.
Richard Sexton, a director at Chartered Surveyors, e.surv has said of the problems facing the UK’s housing: “As a country, we are facing a housing crisis as many buyers struggle to save up for large deposits, and this is putting more pressure on the widening affordability gap. “To ensure market fluidity we need to see significant investment in our country’s housing stock to get more people onto the housing ladder.” Successive UK governments have failed get enough housing built, and failed to meet their housebuilding promises, both in the private sector and in social housing; the UK is now in the most serious grip of a steadily worsening housing crisis, according to many experts. The previous Conservative government’s failure (just as did several Labour governments before it) to meet its target of delivering 200,000 new homes a year - or anywhere near the 300,000 new properties that the House
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of Lords Economic Affairs Committee recommended should be delivered each year - says something about the difficulties successive governments have faced in solving the UK housing crisis. To a large extend these problems benefited landlords, particularly the smallscale buy-to-let property investors who came along over the last 20 or 30 years to fill a void left by house builders and local authorities. Through a lack of viable alternative investments, these buy-to-let investors transformed the UK housing market from one where renting was a minority participation market, to one where renting is now a serious contender to home ownership – renting is now around 20% of households heading for 25% on its current trajectory, over the next 5 years. Small-scale buy-to-let landlords, many of them investing in rental housing for their pensions, now number over 1.75million.
But buy-to-let, it seems, has become a victim of its own success: although low interest rates and consequently higher asset values, especially since the 2007 “credit crunch”, have helped many landlords borrow big and grow substantial portfolios, the same has not been the case for “Generation Rent.” Yes, buy-to-let landlords have provided a large quantity of much needed accommodation, refurbishing older properties and building new ones, but, the argument goes, prices have been inflated as a result, locking a large swathe of the population out of home ownership. The result of this has been political manoeuvring to dissuade buy-to-let investment in favour of helping people to buy, and increasing institutional (professional management) rented housing. Although as yet a small segment of the private rented sector (PRS) this initiative on the part of the Conservative government is likely to have a significant impact on the rental market in the future, particularly in the largest cities.
In addition to a hung parliament, and a minority government, and with Brexit uncertainties all around, the Conservatives have some major decisions to make on housing: building more housing is one thing, but can they make housing more affordable for their young disgruntled voters? Can the declining home ownership trend be reversed? Property taxation is an issue that key property industry figures would like to see reformed without delay. Housing transactions and prices, especially those at the top end of the market, are faltering because of stamp duty hikes. Those wanting to buy second homes, and including buy-to-let investment properties, are being penalised by having to pay a 3% stamp duty premium. Buy-to-let landlords are being further penalised by the removal of mortgage interest relief and tax on turnover rather than profit,
plus a whole host of new rental laws regulations which create endless new administrative work around lettings. History shows that high transactional taxes do not necessarily lead to increased tax receipts for the government, as the Laffer Curve* clearly demonstrates, and is illustrated by the existing stagnant market in prime central London caused by the 15% stamp duty on high-end properties.
*Economist Arthur Laffer argues that total tax revenues decline when taxes are raised beyond a certain sustainable level, illustrated by his inverted U curve. Limiting demand through taxation, when it is more house supply that is needed, makes residential property less “liquid” as an asset class, which in turn pushes values down, as has happened in prime central London, and this will drive some into negative equity.
29TH EDITION LANDLORD INVESTOR
EXPERT ADVICE ELECTION SPECIAL
Post the election result, the Conservatives will have to think long and hard about how they make life easier for a lost generation if they are to regain their votes. The housing crisis coupled with student debt has led to a protest vote that put Jeremy Corbyn on the brink of power. For the Conservatives, it comes down to either providing more homes that the youth of today can afford, not by subsidising mortgages or taxing landlords, but by a radical building surge. The alternative is for the country to face the prospect of major socialist “reengineering” programme. Of all the problems this minority government now faces, housing, which ironically has been brought into sharp focus with the Grenfell Tower tragedy, is one of its biggest. Whereas housing wealth has been a key factor in enriching an older generation,
including many landlords, it now excludes and even impoverishes many others. The bitterness is palpable and hence the influence this has had on the election result. Locking a generation out of homeownership means they have little to gain and nothing to lose in life, whichever way they vote, when they are simply working to pay their landlord’s rent. There is every chance that you would vote for Labour’s promises of easy solutions, no matter how much of a fantasy the economics is based on, if you are in this position. A foot on the property ladder conversely is for most people a huge milestone on life’s journey, a goal which most of today’s “Boomer Generation” parents achieved with relative ease, providing lifelong security, a steady build-up of wealth, and a major shift in attitude as they had an ownership stake. Whereas the “Baby Boomer” generation born in the 50s, 60s and maybe 70s expected to become wealthier than their parents, today’s youth (Generation Rent) are finding it almost impossible
LANDLORD INVESTOR 29TH EDITION
to aspire to this - often weighed down with student debt and paying high rents, struggling in a highly competitive and often insecure jobs’ market, and earning wages that don’t keep pace with inflation - is it any wonder? Consequently, wealth inequality in the UK is widening and the trend is accelerating. According to the thinktank The Resolution Foundation: “A typical adult born during 1981-85 had half as much total net wealth at age 30 as a typical adult at the same age five years before them.” On the other hand, we have seen a generation with their wealth increasing almost exponentially due mainly to property price inflation – in fact in many cases their properties have been earning more than they do.
incentives to expand their portfolios, which will have the effect of reducing rents. 3. To encourage the provision of more social housing, by local authorities, housing associations and private forprofit landlords. The danger is that the effect of all this will be to lower house prices in general and will probably lead to issues of building on green-belt land, which will inevitable be met by energetic resistance from “Nimbys” (not in my backyard). And declining property prices will undoubtedly put pressure on some who are over leveraged, especially if interest rates start to rise, and this could easily lead to a further banking crisis.
So will the post-election programme of mass house building promised by Sajid Javid, the new Communities Secretary, have the desired effect on house prices?
So here we will meet two countervailing forces: the Tories imperative of remaining in power through addressing the social issues
Will it actually happen this time? Given the lead-time needed to get new-builds to the point of habitation means that we won’t know the answer for some time.
outlined above, or the danger of destabilising lenders through falling house prices, a real and present danger to the major banks.
Thinking up more schemes to help first time buyers to borrow cheaply, making mortgage credit easily available, and pressurising banks into lending more to first-time buyers, can to some extent be counterproductive. With a static supply of housing, any boosting of demand simply pushes up prices even more, taking them further out of reach for “Generation Rent”.
The answer is likely to be a slow controlled decline in these asset prices as the economy returns to normal post-recession, and is weaned off quantitative easing. Interest rates will eventually start to rise and price inflation will take up the slack. With, hopefully, rising wages, consumers will be in a position to cope with higher prices and mortgages payments and more people will be in a position to buy.
There is an urgent need, in my view, for this government to take a radical approach to the problems in the housing market: 1. To instigate a major large-scale building programme of affordable homes - which inevitably will mean some relaxation on planning restrictions.
This of course is all predicated on a relatively successful outcome to the Brexit process and an economy that continues to grow apace. One thing is certain though, if the present government does not “bite the bullet” on this one, they will be out of power for a long time to come.
2. To pull back on the policy of making it difficult for small-scale landlords to make a profit, but instead to provide
Tom Entwistle is Editor of LandlordZONE® and an experienced residential and commercial landlord.
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29TH EDITION LANDLORD INVESTOR
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INDUSTRY UPDATE
PETER LITTLEWOOD SOUTHERN LANDLORDS ASSOCIATION
The
Homelessness Reduction Act A new act came into being recently aimed at reducing the number of homeless people, but what does it mean for buy-to-let landlords? This is partially in response to the number of people now rough sleeping – last year the number of people sleeping on the streets increased by 16%, up from 3,569 in 2015 to 4,134 in 2016.
with a ‘priority need’. It builds on the preventative approach in the 2002 Act, by requiring public authorities (such as the NHS) to notify the housing authority if someone they’re working with is facing homelessness.
2) Duty to take steps to relieve homelessness: Councils will have to help all those who are homeless to secure suitable accommodation, regardless of whether they are ‘intentionally homeless’ or priority need.
Background
It started life as a private member’s bill, introduced by Bob Blackman MP, and the Government supported it as they saw it as a mechanism to stop local authorities from encouraging tenants to stay in the property until a bailiff’s order.
This should mean that all eligible households are offered help to find a home, rather than some people being turned away.
The act introduces two new duties
How this affects landlords and tenants
1) Duty to take steps to prevent homelessness: Councils will have to help people at risk of losing suitable accommodation as soon as they are threatened with homelessness within 56 days (previously 28 days).
Councils will step in sooner to find alternative accommodation, making it less likely that the landlord will need to take the matter as far as court or eviction in order to recover their property, because the tenant has been found suitable alternative accommodation in the meantime. Taking the pressure of going to court out of the equation means less stress and upheaval for both tenant and landlord.
The ground-breaking Housing (Homeless Persons) Act 1977 defined homelessness for the first time and placed duties on local housing departments to house people with dependent children and other vulnerable people. The Homelessness Act 2002, extended entitlements to rehousing to a wider group of ‘single’ homeless people, including care leavers and people fleeing violence. It introduced an essential strategic approach to homelessness prevention. The new Homelessness Reduction Act (2017) goes further and requires local housing authorities to help all eligible applicants – rather than just those
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This means people should get help on receiving a notice from their landlord if they are struggling to find a letting, rather than being told to come back when they have a bailiff’s date.
It should also ensure that the true scale of homelessness is recorded.
29TH EDITION LANDLORD INVESTOR
INDUSTRY UPDATE
The number of people sleeping on the streets increased by 16%, up from 3,569 in 2015 to 4,134 in 2016.
Important point to note The local authorities obligation to act is removed if the Section 21 is invalid. It is critical therefore that landlords ensure all Section 21’s are completed correctly. Note that a new Section 21 was introduced October 1st 2015 (confusingly called Form 6a) and this must be used on any AST raised since that date. You can use one of the old Section 21’s on an AST raised before that date until October 1st 2018, after which form 6a has to be used. It’s confusing everyone, especially Judges who are (incorrectly) insisting only Form 6a can be used. The Government have also made the following statement: We will amend form 6A, which is used to evict tenants through Section 21, and amend the “How to Rent” guide to include information encouraging tenants to seek help earlier when they receive a Section 21 notice and believe they are at risk of homelessness as a result Note that a Section 8 is not included in this legislation as it is deemed that any tenant being served with a Section 8 has intentionally made themselves homeless.
LANDLORD INVESTOR 29TH EDITION
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INVESTMENT
SIMON ZUTSHI
How to get your next property deal this Summer Many people take a few months off from their property investing over the Summer but it can be a great time to pick up a great deal. We have asked Simon Zutshi to share with you some of the practical things you can do to bag your next deal in the next two months.
LANDLORD INVESTOR 29TH EDITION
I do hope you are looking forward to the Summer and have a holiday planned with your family or friends. I believe it is really important to make sure you have some quality relaxation time booked in to rest and recharge your batteries. I tend to take most of August off and we don’t run any property investors network meetings in August because many people are away. However, I think many investors take their foot completely off the gas for a few months over the Summer and don’t do anything to build their property portfolio over that time. I think this is a mistake for two main reasons. 1) There are still people who need to sell their property in the Summer and with generally less investors looking at this time there is the opportunity to pick up a great deal. 2) If you don’t do anything for a few months it can be really hard to get the momentum going again in September and October and then before you know it, December comes and people slow down again. The result being that often I see people doing no deals in the last six months of the year, and then look back and wonder what happened to the year.
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INVESTMENT
I would recommend that you plan to take some time off to relax but you should still keep up with the activity needed to secure your next property investment. Some investors would disagree with me on this because they say that there are less sellers around because many of them go on holiday over the summer and so they stop doing their marketing and advertising during this time. You may notice this if you look in the classified advertisement section of your free local weekly newspaper, where you sometimes see people advertising to “buy your house fast for cash”. Usually there are less of these type of adverts placed in the Summer months. I would suggest that the Summer months are actually a good time to advertise to attract motivated sellers because there is less competition from other investors and if someone really needs to sell their house that does not change just because the sun comes out. If you stop adverting at this time, then you could miss out on some great deals For the same reason estate agents are often quieter in the Summer as well, but they still need to sell houses and meet their sales targets. During the Summer months can be a great time to go and meet with estate agents because they may have more time to spend with you because they are not so busy. This is a great opportunity to build rapport with the estate agents, to really get to know then and explain what you are looking for. I recommend you take the time to reconnect with agents in your area who you have previously purchased from and make sure they know that you are still in the market for another good deal. If you are new to investing, then you really do need to build your relationship with your local estate agents and the Summer could be the time to do it. Don’t go in at the weekend as there may only be part time staff working there. We have found that the best time to go and meet with estate agents is during the week on a Tuesday or Wednesday.
How to motivate yourself this Summer When the sun is shining outside and your friends are off down the pub for a few drinks, it can be really hard to motivate yourself to do the things you know you need to do. Here are some simple steps to keep you motivated:
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1) Remember why you are investing in the first place. Hopefully, you have a strong reason why you want to invest in property. Maybe you hate your job and desperately need to replace your income so that you can leave. Maybe you love what you do but just want a safety net in place. Whatever your reason why, try to get as clear as you can on it and imagine what life will be like when you achieve your property investing target. Some short term sacrifice now can give you huge benefits in the future. 2) Schedule time into your diary to work on your property investing. If it is in your dairy, then you are more likely to get things done rather than just working off an action list, when it is all too easy for tasks to slip to the next day and so on. 3) Try to do something each day to move towards your property goal. Some days you will only have 10 minutes and other days you may have a few hours. Doing something every day will help keep the momentum going. After a few weeks you will really notice the progress you have made. 4) Plan to reward yourself as you reach small milestones and complete the tasks which you have set yourself. 5) If you are going on holiday this summer, why not read the latest editions of Landlord Investor Magazine on your ipad or tablet. www.landlordinvestormagazine.co.uk 6) This is a great chance to catch up on articles you may not have read yet, and may make you keen to take action when you get back. One of the things we have organised for our PIN Academy Members each year in August, is to take the 21day challenge. It is completely free for PIN Academy Members and has proven to be very popular over the last few years. It is an educational and accountability programme, which helps them focus on a small task each day, for 21 days. It is amazing what people have achieved in such a short space of time including finding deals and JV partners, getting their system set up and many of the tasks they keep putting off. If you are interested in benefiting from the 21-day challenge this August, you can find out more here: pinAcademy. co.uk/21DC
Getting back on the wagon If you are going to take a prolonged period off during the Summer, then it is really important to get back into the swing of things as soon as you can after the Summer. Here are a few tips for you: 1) Book into your local property investors network meeting in September. Put the date in your diary and make a commitment to yourself to turn up. This will help kick start your investing by reconnecting with some positive property people. 2) Try to do some sort of education or training in September as this will help refocus you and make sure you commit to your own success. This could be a live one-day seminar or attend one of the regional or national shows organised by Landlord Investor. 3) Work out what you need to do to acquire your next property. Write a plan and break it down into small bite size tasks. Prioritise these tasks and then schedule time into your diary for when you are going to do them. In summary, the Summer can be a great time to secure your next deal as long as you continue to take action. Keep your advertising for motivated sellers going, visit estate agents in your area, and do something every day to keep the momentum going. Enjoy your Summer. Best wishes, Simon Zutshi
Commit to your own success There are no pin meetings in August so why not book into your local pin meeting in July to get your monthly dose of property positivity before the Summer break. If by the time you read this article, you have missed your July local pin meeting then you will already be able to book into the September meeting via the main website. pinmeeting.co.uk
29TH EDITION LANDLORD INVESTOR
INVESTMENT
I would recommend that you plan to take some time off to relax, but If you are going on holiday this summer, why not read the latest editions of Landlord Investor online magazine on your ipad or tablet. www.landlordinvestormagazine.co.uk
LANDLORD INVESTOR 29TH EDITION
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FINANCE
PAUL MAHONEY NOVA FINANCIAL
When investing in property, the investor must decide whether to take finance or purchase using solely cash. This is usually determined by what they are hoping to achieve from the investment.
To gear or not to gear? That is the question Borrowings are used to accelerate returns by applying a deposit and leveraging it with further funds. Generally, this is for the main purchase of capital growth however if the interest rate is lower than the rental yield then it can also accelerate income returns. For example; • A £100,000 property • 75% mortgage • 7% gross yield • 3% interest rate Would usually give a 10%+ NET yield on funds applied and a relatively average 5% growth would provide a 20% return on funds applied which is a total of 30%+ per year. This is without achieving fantastic return on the actual property but is a fantastic return on the funds applied. This is the differentiating factor that property offers; the ability for a mortgage at a high loan to value, low interest rates and over the long term.
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How much gearing – if the investor decides to borrow then they must determine how much they need to borrow. In the UK, the standard buyto-let mortgage is at a 75% loan to value (LTV) however better rates are available at lower LTVs. Higher LTVs allow the investor to better utilise their money however does incur more risk given the higher cost of borrowing. Lenders & criteria – there are a broad range of lenders in the buy-to-let market which offer over 1,000 different products with a range of differing criteria. In a broad sense, high street lenders tend to be more restrictive and offer lower rate and then at the other end of the scale are more expensive lenders with relaxed criteria. Between those two points are a range of niche lenders to meet different requirements. Advice – given the circa 1,000 buy-tolet products available, it can be useful to seek advice from an independent mortgage advisor who can assess your specific situation and match you to the most suitable product. This will generally save you time in assessing
the products yourself and approaching a range of different lenders, it could also result in you getting a better deal that perhaps you weren’t aware of or have access to as there are a range of intermediary only products. Costs – when taking a mortgage, you must be aware that there are costs associated with arranging and maintaining a mortgage. Usual costs include an arrangement fee which is either a percentage of the mortgage or a fixed cost, often lenders and brokers will charge an administration fee, in some cases there are early redemption costs if you repay or re-mortgage before a given timeframe. There is in all cases interest repayments for the amount borrowed and depending on the product in some cases principle payments as well. An authorised and qualified advisor in our advisory firm can assist you with better understanding all the above. Contact Nova Financial on 0203 8000 600, nova.financial, info@nova.financial
29TH EDITION LANDLORD INVESTOR
FINANCE
How much gearing – if the investor decides to borrow then they must determine how much borrowings.
LANDLORD INVESTOR 29TH EDITION
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FINANCE
STEVE OLEJNIK MORTGAGES FOR BUSINESS
From October 2017, lenders are required to apply a specialist underwriting approach to buy-to-let mortgage applications from portfolio landlords. In practice this means that you will have to provide lenders with much more detailed information when applying for a mortgage, even if you want a simple remortgage.
Portfolio landlords’
checklist But how do you know if you are a portfolio landlord? The Prudential Regulation Authority (PRA) definition of a portfolio landlord is a borrower with four or more distinct mortgaged buy-to-let properties, either together or separately, in aggregate. If this definition applies to you, and you know you will require buy-tolet finance in future, we recommend that you prepare now. In addition to the standard supplementary documentation, (proof of income and identity) here is a checklist of what else you may have to provide:
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Latest 2-3 years’ tax returns You might be asked for the last 2-3 years’ worth of tax returns, so make sure you have copies available. At the very least you will have to provide SA302s which are statements of your income. These are issued by HMRC and can be downloaded from your HMRC account. If you do not have an online account, you can request them by post but do note that they can take a few weeks to arrive. Up to 6 months’ bank statements These are required so that the lenders can see how you spend and manage
your money on a monthly basis. If you use a number of different bank accounts, e.g. to keep separate rental income from any other income you may earn, remember, you will need to provide the statements for all the accounts. Details of your entire property portfolio Make sure your spreadsheet of properties is up to date including addresses, rental income, and details of any outstanding mortgages. Lenders need to know the size of your overall borrowing and commitments. They will also use this information to assess your experience as a landlord.
29TH EDITION LANDLORD INVESTOR
FINANCE
Evidence of other income
Cash flow forecasts
As well as being a landlord, do you have a ‘day job’ or income from pensions or other investments? Lenders will take other sources of income into consideration, so make sure you have the relevant paperwork to support this income.
Lenders will need to know how you manage your money and property portfolio. For example, do you have sufficient cash reserves to cover void periods, general property maintenance and emergency repairs? How much income do receive on a monthly basis. And how much goes out. Do you have a contingency fund?
Business plan This doesn’t have to be a lengthy document, rather, lenders will want to understand your investment strategy, now and in the future. For example, what type of properties do you buy? Where do you buy them? How do you buy them and on what terms, i.e. interest only or capital repayment? What is your exit strategy?
LANDLORD INVESTOR 29TH EDITION
Whilst we are waiting for most lenders to publish their specific requirements, this checklist is somewhat of a moveable feast rather than a hard and fast rule. However, 1st October is not far away, so you need to be prepared. We’ve also noticed that some lenders are already beginning to ask for additional information…
At Mortgages for Business we are working on some tools to make collecting and maintaining this information easier for landlords. Details to be announced over the coming months. In the meantime, we recommend that you start collating your paperwork now, it could save you time and effort later. You could also consider bringing forward any financing plans you may have as we anticipate there could be a log jam of mortgage applications with the specialist buy-to-let lenders come October. Steve Olejnik Chief Operating Officer, Mortgages for Business
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LANDLORD INVESTOR TEAM
LI Magazine’s designer, Marc Riley just ran 26 miles to raise money for victims of the Grenfell Tower tragedy, an achievement in anyone’s book, but read the full story and prepare to be astonished.
Keep on running It’s a glorious Tuesday morning and the sun’s beaming through the gaps in the office blinds, narrow shafts of light catching particles of dust midair. One by one the LI team shuffle into our boardroom and locate a seat, precariously balancing coffee cups with note pads and laptops. We’re about to start planning the next edition of LI Mag and the quorum is almost complete as our Designer Manager, Marc, hobbles in with hands full and closes the door with a foot. Dropping heavily into a chair he groans loudly. The team just stare at him open mouthed. “What?”, he responds, shoveling a Hobnob into his mouth and dropping crumbs down his shirt. On Friday afternoon Marc told us he was running a marathon to raise money for the victims of the Grenfell Tower tragedy. No big announcement preceded by weeks of preparation. No, he just drops it into conversation when asked what he’s doing at the weekend. We know he ‘runs a bit’, but 26 miles? We also know he has ‘a bit of a prob’ (his own word) with his left leg and walks with a varying limp. When asked he just mumbles something about motorbikes. This is the first time we’ve seen him since. Despite best efforts to disguise it, Marc has some pretty major challenges, having suffered a catastrophic road
LANDLORD INVESTOR 29TH EDITION
accident in his 20s. In his left leg the tibia, fibia and femur were smashed into 14 separate splinters, requiring extensive surgery and a bone graft from his left hip to repair, coming close to lower-leg amputation at the time and several times in the following months due to infection. The young orthopedic surgeon saved his leg, although he cut through the sciatic nerve when repairing the femur and Marc subsequently lost all use and feeling below the knee – he still can’t lift his foot or wiggle his toes. This makes running pretty treacherous and requires incredible concentration to prevent him face-planting at every bump or rut. His right leg ‘got off lightly’ (again his own words) with just 2 breaks, but it’s taken a pounding over the years and it’s clearly feeling the strain. After 4 months of traction he was finally discharged being told he’d never walk unaided and that ‘later life’ would be ‘problematic’. Approaching the ripe old age of 50, later life would appear to be right now and the reality is that he’s in constant pain, suffering from arthritis in the many fractures repaired with a complicated internal scaffold of pins and plates. On Saturday he ran 43k. That’s 26 miles in old money, a full marathon.
To add personal weight to the story, his son and mother live a couple of roads away from Grenfell Tower. His son, Jacob, has just finished year 7 at a local school which was attended by one of the children who lost her life, and hundreds who have been directly affected. “I taught Jacob to swim at North Kensington Leisure Center, which Grenfell overlooks. We swim there together every week and were on our way the day the tragedy happened. It’s had a profound impact upon both of us and every time I see the charred shell of Grenfell Tower my heart breaks. I just wanted to help in some small way”. The final figure recorded on a Fitbit was 43k and his time of 5 hours, 15 minutes, was authenticated by the local Scout Troop. Not a bad time, in anyone’s book. Brushing biscuit crumbs from his shirt Marc mentions he has a Justgiving page, so we pooled resources in the LI office and donated £250. You’d struggle to find a more deserving cause and inspiring personal story, if you’d like to contribute please visit www.justgiving.com/fundraising/ marc-riley-50-4-50. Thank you. The LI Team.
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INSIGHT
WRITTEN BY MARTINA LEES AND FEATURED IN THE SUNDAY TIMES
Less tax relief, more red tape: is it last orders for put-upon landlords? 32
29TH EDITION LANDLORD INVESTOR
INSIGHT
Landlords — whether accidental, amateur or semi-pro — feel under siege. Hunkered down at this month’s National Landlord Investment Show, in west London, the audience applauded when one among them remarked: “There seems to be an attack on landlords. The tone is being set that landlords are greedy, horrible people, rather than people who are trying to provide a home, something that maybe local authorities can’t do.”
As a landlord myself, the Queen’s Speech on Wednesday added to the gloom. A new bill will not only ban fees for tenants in England, but cap deposits at one month’s rent. Although this will help most tenants, it will make it harder for those who struggle to pass reference checks. Many landlords then ask for a higher deposit — and if that’s not allowed, they won’t rent to them. This is the latest in a line of measures to “make renting fairer”, as the government puts it. Red tape is on the rise. For one thing, 174,000 homes let to sharers may need a mandatory licence as a house in multiple occupation (HMO), on top of the 60,000 that already have one. Cue laughter in west London when Iain Duncan Smith, the former work and pensions secretary, quipped: “If we applied licensing to councils, which are often quite bad landlords, there would be a big move to stop licensing immediately.” Then there’s tax. You pay 3% extra stamp duty on a buy-to-let purchase and, in what will hit much harder, by 2020 you will no longer be able to deduct mortgage interest payments as a cost from your taxable profit. Though you can claim a 20% relief on your interest, anyone who earns close to £40,000 will pay more tax. If you have a big mortgage, you may pay more tax than the amount your buy-to-let makes. Despite hitting properties bought long before this was on the cards, the tax change — Section 24 in landlord speak — was not in any Tory manifesto. How, then, did it ever go through? “There’s government, then there’s the Treasury,” Duncan Smith told the audience. “I’m sure this is what happened — the chancellor is met by the Treasury, who say, ‘There’s this group with a peculiar tax setup being able to lay it off their
LANDLORD INVESTOR 29TH EDITION
mortgages. This is worth X amount of money to help with deficit reduction.’ Then he says, ‘That’s a reasonable sum. OK, so why would we be doing this, then?’ ‘Well, we’re going to help Generation Rent.’ The rationale that is presented is not the rationale for why you did it.” Worse than Section 24 is the problem of how hard it is to oust a tenant in rent arrears. When asked who had struggled with this, half the room raised their hands. “Can you imagine,” one landlord said, “someone going day after day into their local supermarket, trashing the place, walking away with stuff, and then, when they’re taken to court, that person says, ‘Ah, but you haven’t filled out the form correctly’?” Landlords now lose the automatic right to take back their property if they fail to give tenants copies of the gas-safety and energy-performance certificates, the government’s latest How to Rent leaflet or paperwork on where the deposit is protected. Add to that gridlocked courts: Ministry of Justice figures show that it takes an average of 10 months legally to regain your property. The harder being a landlord gets, the greater the opportunity for those who do it right and run it tight And what of Brexit? Currency falls since the EU referendum have pushed up living costs. “When budgets get tighter, people live with their parents longer, hutch up or stay in their existing rental property,” says Fionnuala Earley, chief economist at Countrywide estate agency. Together with an increase in homes to let in the wake of last year’s rush to beat the 3% stamp-duty deadline, this has caused rents to fall across much of Britain, despite the longterm increase in private renters.
In Wales and central London, rents on new lets have dropped by 4.5% in the year to May, Countrywide reports. Brexit uncertainty is adding to a general economic slowdown that has seen property prices rise much more slowly than we’ve grown used to. So, is this scaring off investors? Are more landlords selling than buying? Countrywide crunched the numbers exclusively for Home — and they show the market is cooling. Throughout 2015, net landlord sales hovered at about 1,500 a month. In the stamp-duty rush of March 2016, they spiked eightfold to almost 12,000, before plummeting to -6,000 in the ensuing months. After a short recovery to 400 early this year, net landlord sales have fallen back to -1,400 since April — when Section 24 started to bite. According to Earley, the tax change “may be beginning to affect landlords’ decisions to purchase more”. Portfolio landlords are selling off some properties to reduce their overall debt. They are also shifting their attention north: in May, only 13% of London sales were to landlords, compared with 25% in the northeast. The harder it gets, the greater the opportunity for those who do it right and run it tight. So let’s stop the moral posturing that our poor tenants and the public service we provide will be the true casualties of the latest landlord clampdown. Though we’re not the villains some make us out to be, neither are we heroes. We are simply making the best of what we have on the right side of the property divide; we shouldn’t expect a medal for it. Martina Lees is author of The Accidental Landlord; accidentallandlord.info
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INSIGHT
DAVID SMITH ECONOMICS EDITOR OF THE SUNDAY TIMES
An economic expert we should listen to 34
29TH EDITION LANDLORD INVESTOR
INSIGHT
This has not been a great time for economic experts. Ever since Michael Gove said during the referendum campaign more than a year ago that people had had quite enough of experts, they have been struggling to be taken seriously. The absence of an economic collapse in the immediate aftermath of the EU vote stood as a living rebuff to the economists who had warned of the dire consequences of a vote to leave.
More recently, the Bank of England has been keeping everybody guessing with contradictory messages from the economists on its monetary policy committee (MPC) about whether interest rates should be going up or not. My guess is that, while a reversal of last summer’s “emergency” rate cut to 0.25% is quite likely in the coming months, it would be followed by a lengthy pause for breath. However, it is another economist with Bank of England connections I wanted to focus on. David Miles, a member of the MPC from 2009 to 2015, during which time he never voted for a change in rates, is a former City economist who is now a professor of economics at Imperial College, London. I have known him for many years and we have exchanged views on the housing market regularly over that period. However, it was his recent comments at an event organised by New City Agenda which caught my eye. He said that tax rises on landlords, done in the belief that this would help first-time buyers, were “profoundly wrongheaded”. “I think these measures were introduced in order to try to help make housing more affordable for people
who want to buy them, I think they are almost certainly wrongheaded,” he said. “I suspect that they will have a negative impact on the ability of young people to become homeowners, because those people are in the rented sector already. “Making rental property more expensive, as is very likely if you reduce the attractiveness to suppliers of rented property, if a side effect of that is to make rents even higher, it is very hard to see that as helping the people who you are trying to help become homeowners.” Miles was building on some earlier work he had done on this theme. In a recent paper, “The impact of recent tax changes on the private rented sector”, he examined the impact of the 3 percentage point stamp duty premium and, more significantly, the gradual scaling back of mortgage interest relief for landlords to the basic rate of income tax. His language in that paper was more technical, but the conclusion was the same. It said: “If these changes were a move towards a more neutral (nondistortionary) system of taxation of rented property, relative to owneroccupied property, they would have a rationale. But rather than being a move
towards neutrality – as was claimed – they in fact represent a further penalty against private provision of rented properties by potential suppliers who cannot (or chose not to) invest via a corporate entity. The reason for increasing the tax distortion against the rental sector is far from clear. Why would one want to deter provision of private rented accommodation from smaller landlords?” Quite. His is an important voice in this debate. Is there any chance of these tax changes being reversed? His former colleagues at the Bank of England, who were worried for prudential reasons about the pace of buy-to-let lending (before it slowed sharply) seem unlikely to speak out. Philip Hammond, the Chancellor, has other fish to fry. Hammond’s problem, apart from his battles in the Cabinet over the type of Brexit Britain is heading for, is that he needs all the revenue he can get. He is under pressure to relax elsewhere, most notably on public sector pay. But these tax changes were not, in any case, big revenue raisers. And the more they have the effect on the supply of rented accommodation, as highlighted by Miles, the stronger the case for a U-turn.
Hammond’s problem, apart from his battles in the Cabinet over the type of Brexit Britain is heading for, is that he needs all the revenue he can get.
LANDLORD INVESTOR 29TH EDITION
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INDUSTRY SPOTLIGHT
Q&A
Tracey Hanbury, Editor of Landlord Investor Magazine catches up with Benjamin Hall, CEO from LOFT Interiors.
Over 35 years experience LOFT Interiors began life in May 2003 as BuyToLet-Furnishings. The company was established to provide an immediate, cost effective, furnishing solution for landlords and property managers. Their USP was to fully assemble and install, remove all packaging and deliver our furniture the NEXT DAY - removing old, unwanted items in the process – a service we’re still proud of today. The company rebranded in 2004 and became LOFT Interiors, developing a much needed product and service to an industry that was changing rapidly. Buy-to-let was booming and the private rental sector’s requirement for a “one stop” furnishing solution was in great demand. LOFT created furniture packages based on a landlord’s budget and target audience, immediately identifying the need to balance style, durability and price point. Their high level of service has remained intact and as the company has grown, they have identified the needs of customers and departmentalised accordingly; the furniture packages are perfect for landlords in the private rental sector, student furniture and of course for individuals too.
Q Benjamin, how would you describe LOFT Interiors A Furnishing solutions for the residential property industry. An endto-end service that fits the needs of today’s property professional with the experience of a team who understand the demands of the marketplace. LOFT Interiors provides a complete furnishing solution for landlords and letting agents across the UK.
Understanding the marketplace keeps you ahead of the competition: we scour the globe to source products that are on-trend and in-demand by today’s end-user. Our highlyexperienced team have decades of experience working in the property industry.
Q Can you give us a few pointers on how landlords can ensure that their properties can stand out from the rest?
Make your property a home and turn short-term lets into long-term tenants: with increasing competition from build-to-rent, properties should be recognised as tenants’ homes with a focus on improving standards and encouraging long-term living.
A Tenants now demand more than ever in response to rising rental costs:
Q Does LOFT Interiors deliver and install at the property?
Ensure your property stands out from the rest with high-impact and carefully considered furniture and accessories that catch the eye of any perspective tenant.
A All our customers benefit directly from the knowledge, experience and infrastructure we have developed over the past 14 years. Our dedicated fleet of vans work tirelessly to ensure that every product is delivered and installed in your property with efficiency and care and our highly-experienced team know how to get the best out of each property.
Clever investment on interior design can go a long way to increasing your return. High-impact furnishings don’t need to be expensive. Our cost-effective solutions are designed for property professionals to get the most out of any space.
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All our furniture is sourced from reputable suppliers with whom we build strong relationships with and we have a strong commitment to ethical
sustainability. Cardboards, metals, plastics and mattresses are all recycled to help reach out 0% landfill goal. The latest technology is used for smart route mapping so that our deliveries reduce as much emissions as possible. Q Benjamin, its great to see LOFT Interiors going from strength to strength. Can you give us a few benefits of using your services. A The benefits of working with LOFT Interiors include: – A highly experienced team – Full assembly & installation – Old items removed & recycled – Key collection & tenant liaison – 70,000 sqft warehouse – £1m+ of on-hand stock – Fleet of 15 vehicles – Uniformed, CSCS trained staff – Dedicated aftercare & maintenance – Zero % landfill + recycling policy – Real-time delivery updates & tracking For more information and to download the Landlord Brochure please visit: loft-interiors.co.uk
29TH EDITION LANDLORD INVESTOR
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www.bishopandsewell.co.uk LANDLORD INVESTOR 29TH EDITION
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ADVERTORIAL FEATURE
KEVIN WRIGHT NINJA INVESTOR PROGRAMME
Financing your property strategies When people talk about ‘property’ as a means of earning a living they are either thinking of estate agents or becoming a landlord, but there is, as they say, more than one way to skin a cat! The Ninja property investors who attend my courses use a wide range of strategies to generate an income from property. These are a few of them – and the best way to finance them:
Buy-to-let
Finance
This usually depends on you having a deposit to purchase your first property (unless you inherit a property or have a lot of equity in your main residence to draw on).
Assuming you don’t have enough cash in your bank for either the deposit or the refurb costs, you’ll need to be more creative. That’s where bridging finance comes in. It’s the difference between not being able to buy that perfect property and missing out on an opportunity – and investing a little to make a lot.
There are sub-divisions of this strategy: Single let: where you let the property in its entirety to an individual or family on an agreed rental per month. HMOs: where you turn both lounge and dining room into bedrooms and let all the rooms, with the kitchen as the only communal area. This will give you a higher income, but more effort to keep communal areas in good condition and dealing with the higher turnover of tenants. Serviced accommodation: property that is let on short-term rentals from a day or two upwards. This means the property will need to be fully-furnished, have a cleaning service after every let and you’ll need to provide and probably the basics of tea, coffee, sugar, etc. in the kitchen – but the daily/weekly income will be much higher. Typically ten days rent per month generates the same income as a single let.
It is especially good where you can buy a house below market value and then carry out refurbs to add significant value and then mortgage at full market value. Even refurb costs can be covered if you know where to find the right bridging partner. Buy-to-sell Buy-refurb-sell: This is probably the most common strategy in the buy-tosell category. Investors find property in poor condition, buy at a low price, invest in bringing the property up to scratch and sell at full market value. It’s an excellent way to make a good profit.
Kevin Wright is always happy to discuss how best to finance your property deal. Call him on 07889 526979. Kevin runs the Ninja Investor programme teaching these strategies ninjainvestorprogramme.co.uk.
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29TH EDITION LANDLORD INVESTOR
The dates for the upcoming Ninja Networking Blitz meetings are: Manchester 12th September London 14th September Newcastle 20th September Leeds 21st September Bristol 26th September Southampton 28th September Cambridge 5th October Birmingham 18th October
NEWS.CO.UK
INDUSTRY SPOTLIGHT
THAMES WATER
Putting customers in control of their water use Free smart meters are putting Thames Water’s customers in control of their water use, helping them to make simple money-saving choices at home.
LANDLORD INVESTOR 29TH EDITION
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INDUSTRY SPOTLIGHT
Every single day Thames Water provides over 2.5 billion litres of clean water to more than fifteen million people, spanning London and Thames Valley – an area that the government has designated as ‘seriously water stressed.’
2,400
Demand in a dry year
(MIllion litres per day)
2,300
Shortfall of 414 million litres per day
2,200
Shortfall of 133 million litres per day
2,100 2,000
Water available if we do nothing and continue as we are
1,900 1,800 2010
2015
2020
2025
2030
2035
2040
(Year)
The UK’s largest water and wastewater services provider is compulsorily metering customers’ homes between now and 2030 - last year, installing over 100,000 meters across 11 London boroughs, with more to follow.
off while brushing your teeth – can reduce their bill.”
Danny Leamon, head of metering, said: “If we continue on as we are, there will be a shortfall of over 100 million litres of water every day by 2020 – that’s the amount needed by 850,000 people. This is due to population growth and behavioural changes. Our latest forecasts suggest an increase of up to three million people across the region we serve by 2040.”
Thames Water will write to the property address and the bill payers address (if this is different) in advance, to let them know about plans to fit a water meter. If a tenant pays the water bill, only they will receive a letter – but they are encouraged to let landlords know about a meter installation.
He continued: “Meters will help manage future demand by offering our customers access to their water use information, online or over the phone, allowing them to see how efficient their home is and track how simple water-saving efforts – like four minute showers and turning the tap
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What does this mean for landlords?
Faye England, metering manager says: “Where possible, we’ll always look to fit a meter outside of a property. However, if that’s not possible we’ll arrange a meeting to discuss an alternative location. This could be in your garden, or inside your home next to the inside stop tap under your kitchen sink, for example.”
After customers meters are installed, they will have two years to adjust before being switched on to a metered bill. Throughout this transitional period, regular comparison information between their current charges and what they would pay once metered is provided. If the account holder changes during this period, they will be switched straight onto a metered charge. Households who find that they are better off on a metered tariff can opt to switch over at any point within the two year period. For those whose metered bill would be higher, support and practical advice is on hand as to how costs could be reduced right across the home. More information is available on the Thames Water website at thameswater.co.uk/mymeter or over the phone on 0800 316 0989.
29TH EDITION LANDLORD INVESTOR
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