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Politicians Want PRS Control

Politicians Want PRS Control

Labour Announces Further PRS Controls

The Labour party leader, Ed Miliband, has announced his party’s plans to reform the private rented sector (PRS), with longer term tenancies and rent cap proposals, should they win the May general election.

Labour have been at the forefront of the PRS reform movement for some time, campaigning for longer term tenancies for tenants in the private sector and now the political party leaders want to introduce even more legislation that would effectively cap rental prices so they cannot be increased by more than the rate of inflation (CPI) during the proposed secure three-year tenancies.

The PRS control proposals were supposed to win the hearts and minds of the 9.1 Million households currently living in private rented sector properties, however even tenant campaign groups can see that these new proposals have more holes in them than an old Swiss cheese.

The introduction of new legislation that Labour are proposing would require landlords and letting agents to disclose the rental prices charged to any previous rented property occupants, allowing tenants to have the upper hand in negotiating the best possible rental price with landlords, before the start of a new tenancy.

Do TESCO provide customers with information concerning the actual purchase price that they pay for items before they sell them on at a huge profit, do they reveal operational profit margins – No they don’t!
Prices fluctuate as do operational costs, why should landlords be singled out for special measures when other business sectors are left alone?

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Failed Warrington Letting Agent Rips Off Landlords

Failed Warrington Letting Agent Rips Off Landlords

Warrington Letting Agent Closes Owing ~
Landlords Thousands Of Pounds

Aspire Lettings based on Padgate Business Park in Warrington, Cheshire have vanished leaving more than 200 landlords without thousands of pounds in rental payments.

Landlords are still waiting to receive rental payments from Aspire Lettings, and they have tried to contact the owner of the company, Becky Westby, on numerous occasions, via telephone and email, but have been unable to get anywhere.

Any landlords using Aspire lettings in Warrington (Company number 09042816) should contact their tenants immediately and stop any further rental payments being made to Becky Westby and Aspire Lettings in Warrington and make alternative arrangements.

Affected landlords are also being encouraged to contact The Property Ombudsman and their local trading standards offices.

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Is The Mortgage Market Review Slowing The UK Property Market?

Is The Mortgage Market Review Slowing The UK Property Market?

Is The Mortgage Market Review Slowing The UK Property Market?

The number of new mortgages being approved by lenders dropped to an 11 month low in May 2014 as the new affordability rules brought in by the Mortgage Market Review (MMR) caused borrowers to be put off and delayed hundreds of existing mortgage applications.

The Mortgage Market Review brought in on the 26th April 2014 requires all UK based mortgage lenders to carry out rigorous affordability checks on the financial status of borrowers.

These stringent affordability checks include stress tests designed to determine if a borrower could continue to repay their loan if interest rates rise significantly.

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Mortgage Market Review Regulations Will Slow Property Transactions

Mortgage Market Review Regulations Will Slow Property Transactions

New Mortgage Rules Will Slow Down
UK Property Transactions

65,500 property purchases were approved by mortgage lenders in March 2014, showing the second successive monthly drop in the number of property transactions as mainstream mortgage lenders implement stricter rules which will be rolled out fully at the end of April 2014.

The figures for March were 7% lower than the 70,309 mortgage approvals recorded in February 2014.

The recent falls in the number of mortgage approvals are a stark contrast to the 11 months of continuous improvements which saw average monthly lending levels increase from 52,537 to 76,753 between February 2013 and January 2014.

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Property Investors Using Bridging Finance To Renovate Properties

Property Investors Using Bridging Finance To Renovate Properties

£640 Million (GBP) Bridging Finance Used By

Property Investors In Just 12 Months

There is a fresh warning being issued to property investors that the current UK financial system is not set up to help them develop or renovate property because mortgage lenders are not prepared to take the risk.

Property investors are finding it virtually impossible to secure a mortgage from mainstream mortgage lenders for a property that requires renovation or refurbishment, especially if the property was previously used for commercial purposes, e.g it was previously an office or a flat and requires alterations to allow the change of use from commercial to residential, or it is a property that does not have an existing bathroom or kitchen.

As has already been reported by Spotlight over recent months, there are promising signs that the UK’s economic recovery is building in strength, thanks to the implementation of the Government’s financial initiatives such as the Funding for Lending scheme, designed to encourage business and the Help-To-Buy scheme, which was launched at the start of the year in an effort to help more first time buyers to get onto the property ladder.

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Chancellor Insists Help-To-Buy scheme Is Part Of A Healthy Property Market

Chancellor Insists Help-To-Buy scheme Is Part Of A Healthy Property Market

Chancellor insists that 95% mortgages underwritten by Government are Part Of A Healthy Property Market

The Chancellor of the Exchequer, George Osborne has hailed the wider recovery of the UK’s economy and taken a swipe at the critics of his housing policies, insisting that large home loans are part of a “healthy market” and “aspirational society”.

Several Government schemes have been announced since the start of the year aimed to get banks and mortgage lenders to increase both the availability and affordability of mortgages in the UK.

The Government’s Help-To-Buy scheme has been the most controversial, because the Government underwrites high loan-to-value (LTV) mortgages, removing some of the risk from mortgage lenders, enabling them to offer cheaper mortgage loans to borrowers who only have small value deposits.

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UK Property Prices Rise Most in Six Years

UK Property Prices Rise Most in Six Years

Residential Property Prices Continue To Increase

UK residential property prices have increased by 0.4% in May 2013, the biggest monthly increase since May 2007, as, according to Hometrack Ltd, a shortage of available residential properties boosted average property values in London.

Average residential property prices in England and Wales have seen a gradual increase in value during the last six months with property prices increasing gradually, while London property prices have jumped 0.9% over the same timeframe.

Demand for residential property in the capital has surged 15% in the past six months alone, while supply of available properties has fallen 0.6%.

Richard Donnell, Director of Research at Hometrack said, “The impetus for rising house prices is originating almost exclusively from London and the South East. Elsewhere housing market conditions are improving gradually, with prices trending slowly upwards.”

The Government initiative to ease the strict lending conditions set by lenders has improved the overall health of the UK property market but the Funding for Lending scheme needs to be backed by more solid initiatives.

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Even MP's Think Landlord Immigration Checks Are Unworkable

Even MP’s Think Landlord Immigration Checks Are Unworkable

MP’s Question Immigration Checks By Landlords

The Governments plan to make private rented sector (PRS) and social housing landlords legally responsible for checking the immigration status of all tenant applicants has raised questions on the policy from MP’s.

The proposal to make landlords perform immigration checks on tenants and prosecute those who fail to comply has caused outrage among UK PRS landlords, who would be expected to be doing the UK Border Agency’s work without payment.

Following the outline of the new proposals, Shadow Home Secretary, Yvette Cooper, a former housing minister, told the House of Commons during a lively debate on the Queens speech that landlords performing immigration checks on tenants would be unworkable, stating that: “The Government cannot tell us how their policy will be enforced, because they do not know who the landlords are and they will not have a statutory register.”

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A Life Less Taxing For Landlords

A Life Less Taxing For Landlords

HMRC Issue Landlord Warning

With the new tax year already here the HMRC have repeated the warning that they are cracking down on tax evasion by UK private rented sector landlords,

All PRS landlords who own residential rental properties are being advised to register for self assessment, if they haven’t done so already.

The self assessment annual tax return covers the period up to the 5th April each year, and needs to be filed online by no later than the following 31st January.

In order to calculate the tax owed by a landlord, the rental income must be added to any other taxable income that the landlord may earn, including wages from employment. The rate of income tax that HMRC will charge will depend on the landlord’s total income for the tax year.

There are a number of expenses that landlords can offset against their tax liability for rental income, including;

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The ‘Bedroom Tax’ – Under Occupancy Ruling

Changes will be made to Housing Benefit under the UK Government’s Welfare reforms which will come into effect from 1 April 2013 which will mean tenants claiming benefits will receive less benefit towards the cost of the rent.

If there is one spare bedroom in the rental property then the Housing Benefit will be cut by 14% of the cost of the rent. If there are 2 spare bedrooms then the Housing Benefit will be cut by 25% of the cost of the rent.

The new bedroom tax rules mean that tenants in social housing will see their benefit cut if they have spare rooms. These rules even apply to those not on benefit, they will now face charges of around £13 for one spare room and £22 for 2 rooms.

Under the new government rules, one bedroom is allocated for:

  • A couple.
  • A person who is not a child (aged 16 and over).
  • 2 children of the same sex up to the age of 16.
  • 2 children who are under 10.
  • Any other child, (other than a foster child or child whose main home is elsewhere).
  • A carer (or group of carers) providing overnight care.

What it could mean for your tenants

If your tenants are affected by these changes and their Housing Benefit doesn’t cover the cost of the rent, the tenant is expected and legally obliged to pay their landlord the balance.

These welfare reforms will instantly affect social housing tenants, however, private rental sector (PRS) tenants won’t be affected by this change at the present time, but it will happen.

Use the link to the welfare reform calculator to see how your tenants could be affected – Welfare reform calculator

Preparing your tenants for the changes

As a landlord you may wish for your tenants to consider:

  • Talking to you – Re-negotiate a rent reduction to a level which is more affordable
  • Opening a Credit Union account so that rental payments can be made automatically without the tenant having full access to the whole proportion of their benefit payments.
  • Get a job to replace their benefit income.

Housing Benefit will be paid direct to people of working age through Universal Credit. This means that they will have to make arrangements to pay the full rent on time every month directly to their landlord.

This will start in October 2013 for all new claims, with existing claimants being moved onto ‘Universal Credit’ from April 2014.

Universal Credit is a new means-test benefit for working age people. It will be a monthly payment paid into a household bank account that will be generally phased in from October 2013, however this will be trialed by certain local authorities including the City of Salford from April 1st 2013. It will first be introduced for new claimants and for people whose circumstances have changed resulting in a change to their benefits.

It will replace lots of benefits that your tenants may currently receive, including: Housing Benefit, Local Housing Allowance, Working Tax Credit, Child Tax Credit, Income Support, Income based Jobseeker’s Allowance and Income-related Employment and Support Allowance.

How It Will Affect Your Tenants

When the changes affect your tenants:

  • Tenants may receive less benefits resulting in a shortfall in income leading to financial struggles.
  • Tenants will be paid benefits on a monthly basis, direct to their bank account.
  • Universal Credit payments will include the Housing Benefit payment which will be paid directly to them even if they are still in rent arrears or are considered vulnerable
  • There may be a risk of tenant rent default and this needs to be watched out for and action should be taken  to recover the rent immediately.

There Will Never Be A Better Time To Invest In Property

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