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Poor Living Conditions Cost Buy To Let Landlord £12.5k

Failing to improve the poor living conditions at his buy to let rental property has cost a landlord more than £12,500 in fines and costs after his prosecution.

The buy to let landlord based in Bedford, Mr Balwinder Singh Chandi, owns a property in Bedford Road, Marston Moretaine, a small village near Bedford.

Following a visit by council officers to the buy to let rental property, he was served with an Improvement Notice by Central Bedfordshire Council as a result of the poor living conditions found at the rental property.

However, the landlord did not make the necessary improvements within the timescale laid down by the council, and as a result of his failure to rectify the poor living conditions Central Bedfordshire Council decided to take the matter the matter further, resulting in a court date.

The council took the case to Luton Magistrates Court on 18 December 2018, where Mr Balwinder Singh Chandi pleaded guilty and received a fine of £10,000.

In addition to the large fine for failing to improve the poor living conditions at the HMO rental property, the landlord was forced to pay a victim surcharge of £170 and also ordered to pay costs of £2,356.33 – Therefore required to pay a total of £12,526.33.

Speaking after the court case, Cllr Carole Hegley, Executive Member for Adults, Social Care and Housing Operations at Central Bedfordshire Council, said: ‘Landlords of Houses in Multiple Occupation must apply for a licence, which is in place to ensure that tenants are safe.’

She continued: ‘Despite us requesting that improvements be made, the landlord carried on and has paid the price.”

Landlords who fail to apply for a licence for Houses in Multiple Occupation (HMOs) will be committing an offence which may result in a prosecution, criminal conviction and a large fine.

Source: Residential Landlord

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Leeds doubles its buy-to-let cashback incentives to £1,000

Leeds Building Society has increased the cashback incentives available on selected 2 and 5-year buy-to-let cashback incentives from £500 to £1,000.

Highlights of the updated cashback range, which include a free standard valuation, include two buy-to-let mortgages at 60% loan-to-value, both with no fee. There’s a 2-year product at 2.69% and a 5-year at 2.74%.

Matt Bartle, Leeds Building Society’s director of products, said: “We’ve increased the cashback incentives available on some of our buy-to-let products while maintaining our product rates.

“Of course, landlords can choose how to spend the £1,000 cashback available. Cash freed up at the start of the mortgage could go towards redecorating costs and fees associated with finding tenants.

“Increasing cashback available on our buy-to-let range is a further example of how we’ve used our expertise and experience in the market to understand and respond to the needs of customers.”

The launch of the products follows the introduction of the ‘Easy Start’buy-to-let mortgage, with an interest rate of 0% for the first three months.

The society has reduced the rate of its 5-year Easy Start mortgage, which is available up to 70% LTV, by 0.21% to 3.03%, with a 0% interest rate for the first three months.

Source: Mortgage Introducer

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Five ways to clean up your buy-to-let portfolio in 2019

While January is a great time to be making financial resolutions, with many over-spending at Christmas, it’s sometimes best to concentrate on making the most of what you already have. For 2.5m people owning £1.4 trillion of buy-to-let, investment property is the best place to start. It comprises an enormous part of personal wealth, it requires time commitments that are akin to a part-time job, and the outlook for individual landlords is increasingly uncertain.

With that in mind, we’ve put together five tips for landlords to consider as they think about how to optimise their buy-to-let holdings in 2019.

1. Manage your mortgage

Mortgage payments may represent a significant part of your costs, and this will increase in a rising interest rate environment.

But there are great deals in the market, including fixed-rate options. Alongside traditional brokers, tech-powered online mortgage offerings like Trussle and Habito are able to help you sort through the huge range of deals on offer.

2. Review your managers

Many landlords make do with “rack rates” from high street agents for the management of their properties.

While you may have got the best offer when you bought the property, it is worth reviewing contracts periodically, with regard to both costs and service. If you have multiple properties, you should be able to secure significant discounts.

Also consider whether they are providing you and your tenants with a good service. Unhappy tenants mean voids, and voids significantly reduce returns, particularly if your properties are mortgaged.

3. Look at your profit and loss.

Do you really know how much you are earning, after mortgage costs, wear and tear, property management, and voids?

Most landlords focus on the rents they receive, not the bottom line. The answer might surprise you – 61 per cent admit that they underestimated costs last year.

4. Beware tax changes.

Once you’ve got to a clear-eyed view of the economics of your properties, you have to consider your personal tax situation. For example, mortgage relief is being phased out, and there have been changes to “wear and tear” allowances that may erode returns.

Some portfolio landlords are using limited companies to optimise their tax position, but this will only make sense for larger portfolios, given the overheads involved.

You need to consider if it justifies the amount of time (and risk) involved with running your portfolio.

5. Plan your strategy.

Property is a long-term asset class, and involves considerable costs, effort, and time, so you should be deliberate with regard to the future.

It might be prudent to reallocate your property exposure to different regions of the country (areas like Manchester and Birmingham have delivered strong returns on price and rental income). It may be that you want to gradually decrease your allocation to property compared to other asset classes.

You’ll also want to take a long-term view of your tax position, potentially with advice. With many young people struggling to get on the property ladder, advice can be particularly important when thinking about how to allocate investments between generations.

Whatever you decide, you need to be paying attention. The government and the market are making it increasingly hard to be an “armchair” landlord.

Without due consideration, you could be sleepwalking into investments that cost you money as well as time, while thoughtful landlords reap the benefits of their care and attention.

Source: City A.M.

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Gateshead Buy To Let Investment Landlord Fined £60k

A Gateshead buy to let investment landlord has been fined over £60,000 for failing to manage his rental property effectively and not complying with an improvement notice.

Regev Hazan, who is actually based in London but owns 26 properties in Gateshead, had failed to obtain the required licence to operate as a private landlord in the area.

One Gateshead property owned by Hazan was identified by Northumbria Police as a cannabis farm operated by a former tenant.

The discovery led to further investigations that suggested the property was operating as a house of multiple occupation (HMO) and Hazan was advised by the council how to better manage the property and offered training which he declined.

When the property was inspected again it was found to have multiple occupants, some of which had no tenancy agreement. The Gateshead property was also found to have defective heating, a lack of internal doors and lighting, lack of safety catches to windows and an inadequate fire detection system.

Hazan claimed that he was unaware of who the tenants were and how many were living at the property.

The landlord was charged with two offences under The Housing Act and prosecuted at South Tyneside Magistrate’s Court where he was fined £30,000 for failing to comply with the Improvement Notice, and a further £30,000 for being in breach of his landlord licence for ineffective management of the Gateshead property.

He was also required to pay a victim surcharge of £120 and ordered to pay costs of £1,200.

Gateshead’s cabinet member for housing, Cllr Malcolm Brain, said: ‘This was a huge fine, but the sentence was well-deserved. Whether Mr Hazan’s poor management of this property was intentional or it was simply as a result of his inadequacies as a property manager is irrelevant. What’s important is the fact he broke the law, repeatedly, and has been called to account.’

Source: Residential Landlord

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3 reasons why buy-to-let could crash in 2019

The prospects for buy-to-let investors appear to be relatively downbeat at present. In fact, this year could prove to be a challenging period to be a landlord.

Political risk in the UK appears to be causing a reduction in demand among property buyers, and this could hold back the rate of capital growth which is on offer for landlords. Similarly, affordability issues and the increasing appeal of other assets may mean that the outlook for buy-to-let investors deteriorates during 2019.

Political risk
While Brexit negotiations have been ongoing for a number of months, a clear path towards the UK exiting the EU doesn’t seem to be any closer. At the present time, almost any conclusion to the Brexit process is feasible, with a new Prime Minister, a change in government, or even a reversal of the initial referendum result still all possibilities.

In response, it appears as though prospective home buyers are becoming increasingly cautious. Various house-builders have reported a softening of demand in parts of the UK, and this trend could continue over the course of 2019. Even after Brexit has taken place, there may still be caution due to its one-off nature, linked to the fact that it’s never been undertaken before. As a result, demand for homes could slow and capital growth prospects for landlords could decline to some degree.

Affordability
The affordability of property in the UK continues to be a potential risk facing buy-to-let investors. In 2018, the house-price-to-earnings ratio reached its highest level since records began in 2002, which shows that many people are finding it difficult to get onto the property ladder. The natural response of the market to this issue is likely to be a fall in demand, which could help to ease affordability issues over the medium term.

This situation would be bad news for landlords, since it could mean that the capital growth which has been experienced in previous years is somewhat lacking in 2019. And with yields on property already relatively low in a number of areas, the total return capacity of the industry could be limited.

Relative appeal
While buy-to-let may be unappealing this year, other asset classes could become increasingly attractive. Equities, for example, have experienced a severe pullback in the last six to eight months. This may continue in the short run, but history shows that corrections are always followed by recoveries. There could therefore be an influx of capital away from property and into the stock market as investors seek to capitalise on the undervaluation of the latter and the potential overvaluation of the former.

As such, 2019 could be a tough year for property investors. While in the long term there could be continued growth ahead, there may be better opportunities within the stock market for investors who are seeking to obtain a mix of income and capital growth in the coming months.

Source: Yahoo Finance UK

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Less Buy To Let Investors Registering To Buy Property

There were less buy to let investors registering to buy property in 2018 according to new data released by estate agent Haart.

The number of landlords registering to buy property with the agent fell by 36 per cent year-on-year in November when compared to November 2017.

London recorded the biggest fall in property investors registering, down by 47 per cent on an annual basis.

On a broader scale, the number of landlords registering to buy property across the market in England and Wales dropped by 15.6 per cent on a monthly basis but was actually 22 per cent higher than the corresponding month last year.

From a rental point of view however the opposite is true. Average rents across England and Wales fell by 0.9 per cent on a monthly basis, and by 3.6 per cent year-on-year.

However, demand in London has increased by 7.6 per cent on a monthly basis and by 41.4 per cent annually, a major factor why rents edged up 1.2 per cent monthly month and by 6.9 per cent year-on-year.

CEO of Haart, Paul Smith, commented: ‘It’s very promising to see house prices climb up on the month amidst choppy political and economic waters. November and December are typically quieter months for the property market, but I expect we will see a surge in activity across the country once the Christmas lull is over.

He continued: ‘The monthly drop in the numbers registering to buy in London, which coincides with a huge increase in the number registering to rent, is indicative of buyers waiting for the political in-fighting to blow over. However, if the government were to provide clarity on Brexit, this would act as an ignition to unlocking the market’s huge potential.

‘Throughout 2018, the market has enjoyed a number of underlying strengths. With demand for property remaining significantly higher than supply, and a range of low fixed mortgages readily available, coupled with the fact that employment figures are at their highest in decades, there is plenty of reasons to be confident about the UK’s housing market going into 2019.’

Source: Residential Landlord

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2018 Buy To Let Review Of The Year Too

For many landlords, 2018 was a year during which the regulation in the buy to let investment sector became overwhelming. While Right to Rent and the Tenant Fees Bill dominated the headlines and the regulatory landscape, there has been a swathe of smaller changes that should not be forgotten and should be reviewed.

2018 saw a real focus on ridding the sector of rogue landlords. This was not a concerted focus but rather an amalgamation of different rulings that increased the powers possessed by tenants, local councils and regulatory bodies. This started off with an announcement in January from Secretary of State for Housing at the time, Sajid Javid, who confirmed that the government would be supporting new legislation to ensure that rental properties are safe for tenants. This allows tenants to take legal action when facing rogue landlords who rent out unsafe or substandard properties.

However, in a victory for landlords, a landmark case from the Court of Appeal ruled that councils should not be able to use selective licensing conditions to impose certain standards on privately rented properties. The case involved Paul Brown, an Accrington landlord, who challenged Hyndburn Council after it attempted to use its selective licensing scheme in certain areas of the borough to force the implementation of carbon monoxide detectors in privately rented properties.

The Residential Landlords Association (RLA) supported the case from Mr Brown. Mr Brown argued that the imposition of such standards via a licensing scheme went beyond the powers that should be available to local authorities, something agreed upon by the Court of Appeal who said that the councils should use the ‘extensive powers’ that they already possess under the Housing, Health and Safety Rating System (HHSRS) to address electrical and gas safety issues.

As the year drew to a close, housing minister Heather Wheeler announced a £2 million rogue landlord fund that councils can use to combat poor landlords who repeatedly break the law. Councils are now able to bid for funding from the budget to increase enforcement action and test new ways to clamp down on unsuitable accommodation. It was suggested that the funding could be used to build relationships with emergency services.

While the funding is meant to focus on the substandard properties let out by rogue landlords, a landlord company found themselves in a spot of bother earlier in the year for a far less conventional reason. Landlord company Adilsons Property Limited were forced to shell out £7,638 due to a family of noisy pigeons whose cooing kept the tenants awake until 4am every day. The landlords’ refusal to sort out the problem was what led to the hefty fine.

On a more localised scale, by May all 32 London boroughs signed up to a rogue landlord database with the aim of naming and shaming criminal landlords. Mayor of London Sadiq Khan initiated the checker which encourages local authorities to submit records of prosecutions and fines against landlords.

In terms of investments, the focus has moved from the luxury market to university towns, which Totally Money found offer the best buy to let investments. Nottingham and Liverpool stood out, with Nottingham’s NG1 postcode offering a rental yield of 11.99 per cent.

Despite student properties being popular investments, students were not popular tenants. Instead, family tenants were marked out as the favourites according to research from the National Landlords Association (NLA). It was deemed that this group take up the least amount of management time. Overall, a surge in lifelong renters was also recorded during 2018, bringing stability to the sector and a growth in demand.

However, despite growing numbers of tenants wishing to remain in place for a long period of time, government plans to introduce mandatory three-year tenancies were poorly received by the NLA. It was suggested that tenancies should have a mandatory length of a minimum of three years with a six-month break clause. Many landlords were unhappy about this, arguing that contrary to research findings, many tenants valued the flexibility of shorter tenancies.

Finally, the elephant in the room throughout 2018: Brexit.

Brexit has been looming over the buy to let sector throughout the year, yet as 2019 approaches without any kind of practical deal on the horizon, the impact is still yet to be felt. London house prices are expected to fall this year as Brexit limits demand, according to Reuters, marking their first annual dip in 10 years.

A survey conducted by John Pye Property found that 38 per cent of the respondents considered Brexit related uncertainty a key issue in the sector. This is an echo of last year’s review, and while it is depressing that Brexit negotiations in 2018 have failed to offer us anything other than more ‘uncertainty’ we can hold out hope that 2019 will bring a more positive outlook for the sector.

As for the rest of 2019, Propertymark found that two thirds of letting agents expect rents to rise, marking a growth in optimism in comparison to last year’s survey. 53 per cent expect demand to rise, although 78 per cent expressed concern that given growing regulations, the number of landlords operating in the sector will decline. With Brexit on the horizon, 2019’s market is hard to predict. However, whatever comes, it can be sure that those landlords who soldiered through the regulatory landscape of 2018 will be able to handle it.

Source: Residential Landlord

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Buy-to-let specialists are thriving

Figures recently included in the Mortgage Market Tracker from the Intermediary Mortgage Lenders Association suggest brokers saw the largest drop in business volumes in the third quarter of 2018 that they’ve experienced in more than two years.

This hasn’t been our experience in 2018 at all, which is most likely down to us deliberately taking a strategic approach to our positioning. Even in a market where buyers, movers and developers are choosing to sit on their hands, we’ve concentrated on areas of the market where we know we can add significant value.

There are a number of trends that have affected the shape of lending in 2018, the most significant being the impact of changes in taxation and affordability testing in the buy-to-let market. The reduction in tax relief on buy-to-let mortgage interest and the tougher stress-testing rules from the Prudential Regulation Authority are beginning to have a visible effect on lending trends.

Limited company buy-to-let has been a big win for us this year, as has our commitment to offering flexible affordability criteria to landlords with other sources of income.

Adding value to investment properties at the outset has also been a focus for landlords increasingly this year. We’ve helped landlords by adapting our application processes for short-term bridge to let and launching our new Refurbishment buy-to-let proposition which features a double proc fee and single application.

We believe this demonstrates both our commitment as a lender to supporting our borrowers and introducers, and also illustrates the value that a specialist lender can offer in today’s market.

Buy-to-let remortgaging has been a significant part of the market this year, and that’s not accounting for product transfers in buy-to-let. The big high street lenders have necessarily had to focus on retention in 2018 as margin pressures have got tougher and transaction volumes have remained subdued.

That has opened up an opportunity for specialist lenders to plug the gaps created by these shifts. We’re big enough to make a meaningful difference to the supply of specialist buy-to-let finance and nimble enough to be able to flex our criteria and underwriting to adapt to the needs of borrowers in a changing market.

What’s in store for 2019? Well, that remains to be seen. But I suspect that it will be a year in which smaller specialists continue to thrive.

And, rest assured, that we will remain committed to supporting brokers and borrowers whose needs are not being met on a high street increasingly under pressure.

Source: Mortgage Introducer

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Nationwide Buy To Let Review Of The Year

The private rental sector nationwide has remained robust through 2018, despite dour predictions as last year drew to a close. The theme of 2018 has been regulatory impact, ranging from the imminent implementation of the Tenant Fees Bill to the persistent teething problems with the notorious Right to Rent.

Criminal landlords have found it increasingly hard to operate; a London landlord checker and a £2 million rogue landlord fund have vowed to clean up the sector. While Brexit has been a looming spectre over the year, ‘uncertainty’ remains the key descriptor and its likely that ascertaining its true impact will be a job for next year’s review.

A quieter housing market was seen throughout the year. House price rises have slowed, according to Nationwide, dropping to their slowest pace since May 2013 in October. Economic uncertainty, stemming largely from Brexit but also a nationwide tightening of the purse strings, encouraged a slump in house prices.

The Tenant Fees Bill has been a cause of controversy nationwide throughout the year.

June 5th saw the first sitting of the bill. It was at this point that the issue of the deposit requirement was first raised. MP Sarah Jones argued that currently, the majority of landlords require a 4-week deposit. However, should a 6-week cap be imposed, it is likely that the majority of landlords would raise their deposits to match this figure.

In contrast, the National Landlords Association (NLA) argued that a limit of just one month limits flexibility in tenancy requirements. They took the unlikely angle of defending the nation’s pets – suggesting that properties who permit furry friends should be entitled to demand a larger deposit to cover potential damage.

The bill was generally met with discern by landlord bodies, with ARLA Propertymark citing its own research as saying tenants nationwide will end up worse off with a fee ban due to raised rents, rather than seeing a more affordable private rented sector. The RLA complained that by taking months to become law, the bill is inefficient and suggested that far quicker changes could have been made.

In spite of criticism, the bill pressed on and towards the end of November, the second reading for the tenant fees bill saw it pass through the House of Lords without amendment. The third and final reading will come after the report stage, although the deposit cap remains a contentious issue.

While the Tenant Fees Bill has been a steady presence throughout the year, it has been all but overshadowed by the constant controversy surrounding Right to Rent, an issue amplified by the Windrush Scandal which saw a number of British subjects who originated from Caribbean countries as part of the ‘Windrush Generation’ wrongly deported and denied citizenship rights such as medical care. The issue arose as a direct result of Theresa May’s ‘Hostile Environment’ policy, the same policy which saw the implementation of Right to Rent.

Right to Rent requires that landlords determine whether their tenants have the right to remain in the UK, facing criminal charges if they fail to do so. As a result, research from the Joint Council for the Welfare of Immigrants (JCWI) found that 51 per cent of landlords are now less likely to let to foreign nationals. 2018 saw over 400 fines issued to landlords, amounting to £265,000 by the end of March, although this figure included fines from the previous year.

The policy has seen two separate legal challenges launched against it in 2018, following claims that the legislation forces landlords to ‘act as border guards’.

The first case was launched by the JCWI. Legal policy director at JCWI, Chai Patel, said: ‘The right to rent policy is designed to encourage irregular migrants to leave the country by making them homeless. The problem with it, apart from the inhumanity of that proposition, is that there’s no evidence it works. The Home Office hasn’t shown that the scheme will do anything to increase voluntary departures, which have actually reduced since the scheme came into force. Worse, the scheme causes discrimination against foreign nationals even if they have immigration status.’

He continued: ‘It also causes discrimination against British citizens who don’t have passports. Faced with our evidence, the Home Office has buried its head in the sand and refuses to review the scheme before forcing it onto Scotland, Wales and Northern Ireland. We have no choice now but to challenge this pernicious and ineffective policy through the courts.’

This was met with support from landlords, who have condemned the policy. The RLA supported a judicial review of Right to Rent, arguing that landlords nationwide should not shoulder these responsibilities.

A second challenge comes from a woman who faced eviction after her landlord was told she did not have permission to reside in the UK after the Home Office lost her passport when she applied to extend her visa. The woman’s lawyers are in the process of arguing that the ‘right to rent’ policy is not compatible with the Human Rights Act.

Finally, independent chief inspector of Borders and Immigration David Bolt has condemned the scheme, writing in a foreword to his report that the policy has ‘yet to demonstrate its worth as a tool to encourage immigration compliance’.

However, while it appears universally accepted that the policy has brought little good to the sector, it served its creator James Brokenshire well when he was promoted to Secretary of State for Housing following Amber Rudd’s resignation during the Windrush Scandal and Sajid Javid’s promotion to Home Secretary.

While the Tenant Fees Bill and Right to Rent might have dominated the headlines during 2018, there has been plenty of lower profile legislation adding to the regulatory landscape for landlords.

Councils have been granted new powers to crackdown on rogue landlords while a new fund has been launched to combat bad practice in the sector. The second part of this review in the New Year will focus on those regulations that were introduced to protect tenant rights, as well as investigating predictions for the coming year.

Source: Residential Landlord

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Best Investment Property For Rental Yields

Buy to let investors are always looking for the best rental yields, so what type of properties can provide the best rental yields at the moment?

According to data from online buy to let agency yieldit, three out of the top five highest-yielding properties were houses with three bedrooms or more, producing net rental yields of up to 11 per cent.

Houses with three bedrooms or more are able to attract multiple tenants or larger families, and also tend to be freehold and therefore have no service charges attached that need to be deducted from the net rental yield.

In fact, houses as a whole came top for rental yields at an average of 6.4 per cent, followed by studios at 5.3 per cent and apartments at 4.9 per cent.

When it came to apartments, one-bedroom apartments were found to be a better investment than two-bedroom, with average net rental yields of 5.4 per cent compared to just 4 per cent.

One-bedroom apartments without parking were found to have higher rental yields (5.5 per cent) than those with parking (5.2 per cent), likely down to a lower purchase price.

Head of Sales at yieldit, Ryan Hughes, commented: ‘Deciding on what type of property to invest in is one of the biggest choices a landlord has to make. Houses suitable for families remain a popular choice, and yields can be significantly higher when you remove costs like ground rent, service charge and self-manage – however it’s important to note that this type of property might require more work and unexpected maintenance costs could affect annual returns.’

He continued: ‘For those looking to invest in apartments, the data suggests that there is a growing demand for one-bedroom apartments without parking. As environmental issues become more prevalent, we can expect to see tenants opt for more environmentally friendly ways to travel and an unwanted parking space might push up the price for renters.’

Source: Residential Landlord