September Newsletter - Rental market defying the usual market slowdown

In this month's edition, we start off with the news that the rental market has defied the typical summer slowdown this year, and appears to be in rude health. 

Elsewhere, there are sustained calls for stamp duty in an effort to bring landlords back into the property market, we provide an update on the proposed abolition of Section 21 and finally, landlords have revealed who the ideal tenants for their properties would be. 

Rental market defying the usual market slowdown

 

Rental properties have defied the usual summer slowdown which is often seen in the housing market due to several factors, including summer holidays and children not being at school. According to the latest data from the Agency Express Property Activity index, properties let nationally were up 6% month-on-month.

The Agency Express index is based on the number of lettings boards which are erected each month, and is therefore a particularly up-to-date measure of activity in the marketplace. According to the board company, as well as properties ‘Let’ being up 6%, the number of properties entering the lettings market also increased by 8.5% month-on-month, with a 5.8% increase of properties let in London

Central North West London has seen letting enquiries increase over August with overseas tenants looking to secure an apartment for their school term starting in September, says Lewis Green of Greenstone. The September market looks promising as enquiry levels increase, although the supply of good property is low. This means that tenants have less choice, are unable to negotiate on asking rents and landlords are achieving full market value and avoiding vacant periods.

We are also seeing properties coming on the market at least 2 months ahead of the availability date and securing tenants quickly, so if you have a property to rent, don’t wait to put it on the market, tenants will commit in advance and understand the importance of forward planning.

For a free market appraisal of your property to rent or to understand how our bespoke service can assist you, please don't hesitate to contact us.

Call for stamp duty reform for buy-to-let landlords

 

Proposed reforms to stamp duty could offer dividends for the property market, with buy-to-let landlords set to reap the benefits should the Government make changes to the current system.

During his leadership campaign, Prime Minister Boris Johnson pledged to cut stamp duty in the cases of sales under £500,000 and over £1.5m, alongside a suggestion that further cuts could be made to help those at the lower end of the property market in an effort to assist first-time buyers.

At present, landlords or other homebuyers are required to pay a 3% stamp duty surcharge when purchasing a second property, a significant deterrent for the Buy-to-Let sector at a time when homes worth between £250,001 and £925,000 are already subject to a 5% surcharge.

But research suggests that just 10% of properties purchased in 2019 so far would have been liable for stamp duty should the second property tax be removed, leaving landlords in a healthier position financially and encouraging them to invest in Buy-to-Let homes. The impact on the market as a whole is easy to see; more properties purchased makes for a healthier market as a whole, alongside offering more options for renters.

Managing Director of mortgages.online Paul Flavin offered the following on the current state of play: “The increased stamp duty payable on buy-to-let purchases, and the removal of the ability to offset mortgage costs has put many investors off the property market, with a knock-on effect of reducing the stock of rental properties.

“We have two basic messages for the Chancellor (Sajid Javid). Relief for buy-to-let investors and measures to stabilise the economy with clarity once and for all on Brexit, are both needed urgently. We would encourage the Chancellor to look again at the negative impact these measures have.”

Plans to switch stamp duty from buyers to sellers in an effort to encourage more first-time buyers to enter the market have already been quashed by Javid, but it’s clear that reforms on stamp duty are required in order to encourage buyers, whether landlords or otherwise to purchase property.

Landlords reveal the ideal tenants for their homes

 

Every landlord has their image of the perfect tenant. With recent statistics from the English Housing Survey now showing that 4.5m households now rent from private landlords - a harmonious relationship between both parties is the only way to ensure a long-term, mutually beneficial tenancy. But what qualities make the perfect tenant?

In a recent study performed by Intus Lettings, 500 landlords were asked to reveal what type of person makes their perfect tenant. According to the poll, the majority of landlords would prefer a couple with no children, with 29% of landlords stating they would prefer to rent to that demographic.

The second favourite type of tenants is single, young professionals, with 1 in four landlords preferring them as a tenant, followed by parents and children, who were favoured by 20% of the surveyed landlords.

Despite representing a lucrative market for landlords willing to invest time and money, the least popular type of tenant was students, with only 1% favouring their demographic.

The study also prompted landlords to specify what aspect of the vetting process will usually persuade them towards signing up a tenant. The majority of respondents (40%) agreed that a good reference was likely to persuade them to agree to a tenancy, followed by the attitude and manner of the prospective tenant during the viewing. The age and marital status of the tenants proved to be the least important factor.

When it comes to the biggest landlord fears and frustrations, costly damage to their property and furniture were the primary concerns, with failure to pay the rent on time coming in second.

Section 21 - an update on the proposed abolition

 

With the news of government plans to abolish Section 21 shaking those in the lettings industry, many within property have been quick to condemn the proposals. We’ve pulled together the latest opinions and updates since the announcement in April this year…

In brief, Section 21 is the right for landlords to evict tenants from their property after their fixed-term contract has come to an end, and with no need for a reason as long as eight weeks’ notice has been given. The Government had announced earlier in the year that they intended to abolish this in order to give tenants more security and longer-term guarantees in their rental fees.

Both negative and positive reactions have been recorded with tenants deeming the move as positive due to the additional guarantees which will be extended to them and landlords worried about potential difficulties when removing problem tenants.

A prominent agent recently came out in favour of the abolition, seeing it as a gateway to a newer type of tenant who is a lifestyle renter, rather than renting out of financial necessity.

However, Richard Lambert, CEO of the National Landlord Association, has stated; “Claims by the Government and tenant support groups that Section 21 is the leading cause of homelessness are not supported by the available evidence. They are factually incorrect, misleading and just plain wrong. No reasonable landlord would seek to evict a tenant without good cause.

“Most evictions are a symptom of wider issues, such as the freeze on local housing allowance, insecure jobs, and the lack of support for vulnerable tenants to sustain private tenancies successfully. The increase in the use of no-fault evictions through Section 21 is because landlords simply don’t have faith in the courts being able to deal with eviction cases, however justified their reason.

That’s why we’re appealing directly to the Prime Minister to save section 21. Landlords are running businesses and have very few options when it comes to managing the risks they face. The focus should instead be on fixing the issues that contribute to this risk.”

With government proposals moving forwards, and the consultation period on the proposal currently running to 12th October this year, we could see the proposals come into place either towards the end of 2020 or start of 2021.

Iain McKenzie, CEO The Guild of Property Professionals, said of the Government’s proposal and coming into law: “What this means is that should the law come into place, it will not impact tenancies that are already in place at the time it is passed. So, landlords in these agreements will still be able to use Section 21 until the tenancy comes to an end. Any new agreement thereafter will then become an assured tenancy,” he adds.