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Only a few weeks until Right to Rent checks apply across England
Residential property landlords in England are being reminded that there is less than a month to go before right to rent rules come into force regarding checking the background of new tenants. The new law means that from 01 February landlords with property in England will have to carry out checks to ensure potential tenants have the right to rent property in the UK. Already they can start to carry out right to rent checks as these can be done from 28 days before the start of a tenancy agreement. ‘Many responsible landlords have already been undertaking similar checks and these are straightforward and do not require any specialist knowledge,’ said Immigration Minister James Brokenshire. He explained that the Right to Rent rule is part of the government’s wider reforms to the immigration system to make it stronger, fairer and more effective. ‘Those with a legitimate right to be here will be able to prove this easily and will not be adversely affected. The scheme is about deterring those without the right to live, work or study in the UK from staying here indefinitely,’ he pointed out. Right to Rent was first introduced in parts of the West Midlands in December 2014 and the extension to England is the next phase of a UK wide roll out. Landlords, and anyone who sublets or takes in lodgers, could face a financial penalty of up to £3,000 per tenant if they are found to be letting property to someone who has no right to stay in the UK. Stephen Gabriel, strategic manager for homes and communities from Sandwell Council, explained that research done as part of the pilot found that many landlords felt carrying out checks was good practice, and that the new system was simple and easy to follow. There is an online checking tool available on GOV.UK which landlords can use to guide them through the process, and also to request a check on anyone who has an outstanding case with the Home Office. Right to rent checks should be carried out on all adult tenants for new tenancy agreements in England from 01 February 2016. The scheme is backed up by codes of practice which include guidance on avoiding unlawful discrimination drawn up with the assistance of the Equality and Human Rights Commission. Continue reading
Demand from buy to let landlords for remortgages likely to rise in 2016
Buy to let remortgage transactions outstripped purchases by more than two to one in 2015 but this could be reversed in 2016, according to the latest industry sector index report. Remortgages for vanilla buy to let property accounted for 64% of transactions with Houses in Multiple Occupation (HMOs) and Multi-Unit Freehold Blocks (MUFBs) seeing even greater remortgage activity at 78% and 88% of transactions respectively, the data from specialist brokers Mortgages for Business shows. The results aren’t surprising, according to David Whittaker, managing director of Mortgages for Business. ‘For some time now landlords have been making considerable savings through remortgaging. Many have also been releasing equity to make improvements and plan further purchases,’ he said. ‘However, I anticipate that we will see a reversal of this trend in the first quarter of this year as landlords hurry to expand their portfolios before the stamp duty surcharge kicks in on 01 April,’ he explained. ‘The number of enquiries for purchase finance is already well ahead of where we were this time last year, particularly from those looking to sell their personally owned property into a corporate vehicle,’ he added. Although yields across all property types rallied in the fourth quarter of 2015, in real terms they continue to plateau as rental income fails to keep pace with rising property prices. However, returns for the more complex properties remain healthy and well above the psychologically important 6% mark. The number of lenders operating in the market remained static at 33. However, the number of buy to let mortgage products available to borrowers grew slightly to an average of 975. ‘It is unlikely that this average figure will be topped going forward unless new lenders enter the market, or some of the existing providers start to offer products to limited companies. Of course, that figure is only an average, at one point at the beginning of December our tracking system showed 1,168 products,’ Whittaker pointed out. Continue reading
Annual rent growth in UK outside of London up almost 5% in final quarter of 2015
Average annual rent growth across the UK, excluding London, was 4.9% for new tenancies signed during the final three months of 2015 than in same period of 2014, the latest index data shows. It means that the average monthly rent outside of London now stands at £739 while in the capital rents increased by a much larger 8% year on year in the final quarter of 2015, taking the average to £1,523. The HomeLet rental index shows that after London the biggest annual rise was in the South East at 7%, followed by 6.4% in the East Midlands, 5.7% in East Anglia and 5.5% in the South West. In Scotland annual rental growth was 3.2%, in Yorkshire and the Humber it was 3.1%, in Wales it was 2.3%, in the North East it was 1.9%, and in the West Midlands 1.7%. The biggest annual fall in monthly rental prices was in the North West with a decrease of 5.1% while Northern Ireland recorded a fall of 0.6%. The data also reveals that Brighton, Bristol, Edinburgh and Newcastle recorded the largest increase in rents last year amongst the country’s largest towns and cities. Rents in Brighton and Bristol were, on average, 18% higher than on new tenancies agreed in 2014, taking them to £1,078 and £904 respectively, while rents were up by 16% in Edinburgh and Newcastle to £891 and £518 respectively. Martin Totty, chief executive officer of HomeLet parent company Barbon Insurance, pointed out that 2015 was a year in which rents on new tenancies were up compared with 2014 in almost every area of the country. ‘While we saw a moderation in the rate at which rents increased during the final months of the year, and even some falls in a number of regions, the sector overall has continued to see strong demand,’ he said. He also explained that rents in London have continued to rise more quickly than in most areas of the country, but not at quite the pace of 2014, while average rents outside of the capital rose more quickly last year than in 2014. ‘As a result, we saw a narrowing of the rent inflation gap between London and the regions last year,’ he added. Continue reading
