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Sunday, January 26, 2020

Landlords offer free taxi rides and gifts

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Saturday, January 25, 2020

More than 1 in 3 homes under-occupied

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RLA political update on PRS

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Friday, January 24, 2020

London councils call for Airbnb clampdown

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Tenants staying longer

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Proportion of PRS households unchanged

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DWP updates Universal Credit guidance

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Latest English Housing Survey

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BTL is eating into our weekends

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Rise in home ownership among the young

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Sellers face reduced CGT tax deadline

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London property market bounces back

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Wednesday, January 22, 2020

An alternative rental deposit schemes

Custodial and alternative rental deposit schemes on the rise pushing transparency in the sector

The latest research by rental deposit replacement scheme Ome, has looked at how the growing preference for custodial deposit protection schemes is creating a more professional, safer and transparent rental sector, with the emergence of deposit alternatives also helping to drive this change. 
Data from Ome shows that the number of deposits protected via insurance-based deposit protection schemes has fallen -8.3% on the previous year, while the number of deposits protected via custodial schemes is up 24.4% on the previous year. A trend that has been seen consistently since Ome’s sister company, mydeposits, launched a custodial protection scheme alongside their insurance-based option in 2015.  
Ome believes this trend is an overall positive one for the lettings sector as not only are custodial schemes preferable for many tenants, who may otherwise feel uneasy about a landlord holding onto their money personally, but it also limits the amount of client money held by agents to further reduce risk in the industry.  
With the upcoming launch of Ome and continued success of mydeposits, parent company Hamilton Fraser will be the first provider to offer the choice of three deposit options when tenants secure a rental property. This will drive further progress for choice and transparency as the sector continues to progress.  

What’s the difference?  

Insurance-backed Deposit Protection

With an insurance-backed deposit protection scheme, the landlord or agent takes the security deposit from the tenant and registers it with a government-approved scheme but the money remains in their bank account. This allows them to control the money for the duration of the tenancy but requires a small fee to be paid to the scheme provider.  
At the end of the tenancy, the landlord or agent is free to negotiate any return with the tenant, agreeing on deductions before returning the money without needing to involve the deposit protection scheme. This is often the quicker of the two traditional deposit protection schemes when ending a tenancy.
The scheme reimburses the tenant at the end of the tenancy should the landlord or agent be unable or unwilling to return the right proportion of the deposit to the tenant when it is legally due following a dispute resolution process. The landlord is expected to send the scheme the disputed amount whilst the scheme decides who gets what. It is the scheme that is insured rather than the tenant to cover the scheme’s liability to pay the tenant when the landlord or agent won’t.  
Custodial Deposit Protection
With a custodial scheme, the money is collected by a landlord or agent and then lodged within a government-approved protection scheme. 
This scheme provider then takes custody of your money and holds it for the duration of the tenancy, only releasing it once both parties agree on a returned sum or a tenancy dispute has been resolved.  
Both landlord and tenant can initiate the request to return funds but both must agree on the sum being returned. Today, all of this can be done easily online via portal that all parties will have access to.  
The benefit to a tenant is that an independent third party has control of the money and again, the money remains safe if the landlord or tenant goes out of business. The money will only be returned once a tenancy has finished or if the landlord or agents wish to move it to another protection scheme.  
Ome’s Deposit Replacement Membership
Ome’s Deposit Replacement Membership removes the requirement of a cash deposit altogether, with a landlord or agent registering the tenancy online and inviting the tenant to create their membership.
Tenants pay a small monthly membership until the end of the tenancy, at which point the tenant and landlord are free to negotiate any end of tenancy settlements. Where an agreement cannot be met the negotiation can be escalated to the same adjudication team as mydeposits use.
The core benefit to tenants is cash flow. Unlike cash deposits, or even some of the more traditional deposit alternatives, the tenant can manage their finances over a longer period of time. 
A landlord can feel comfortable that they receive the same financial security as a cash deposit, however as no money exchanges hands are not threatened with a fine of up to three times the deposit should they forget or fail to protect a deposit properly. Even where a tenant leaves the property early (or fails to maintain their membership fee) Ome will ensure landlords are reimbursed for their losses as a result of a tenant’s breach of contract.

Co-founder of Ome, Matthew Hooker, commented: 

“There isn’t a huge difference between an insurance or custodial deposit protection scheme from a tenant perspective and both will deliver a certain degree of protection. However, it’s clear that the industry is slowly moving away from the insurance-backed protection scheme and this is largely due to a focus on raising standards and increasing transparency across the sector, with landlords opting for custodial schemes in order to provide and maintain this level playing field throughout. 
Poor communication during the repayment of deposits is currently the biggest cause of tenancy disputes so it’s clear that the industry is heading in the right direction by opting for custodial schemes that enforce the need to itemise deductions before the money can be released. The next logical step is to provide a trusted, cashless option that not only requires an itemised list of end of tenancy settlements but also requires the evidence upfront.  
That said, while custodial schemes continue to become ‘the norm’ and the increase in the number of deposit replacements such as Ome are also providing tenants and landlords with an additional route that further removes many of the friction points of deposit disputes entirely, we believe that the ultimate goal is tenant choice.  
Looking into the future, and in the context of a Lifetime Deposit, it wouldn’t be unimaginable that tenants have the choice as to where they put their money for protection during a tenancy. Whether this is with a custodial scheme or a deposit replacement, all options should provide the same fundamental protection and operate to the same minimum standards in order to better the sector as a whole.” 

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Demand for HMOs on the rise

Demand for HMOs on the rise as portfolio landlords look to purchase

  • 31% of landlords looking to purchase will target HMOs in 2020
  • 9% of portfolio landlords – those with four or more properties – plan to add to their portfolio over the next quarter
  • Landlord confidence ticks up, although remains historically weak

Landlords are planning to acquire Houses in Multiple Occupation (HMO) more than any other property type over the next 12 months, research from Paragon has found.

Paragon’s Q4 2019 PRS Trends report1 found that of the landlords planning to purchase property in the next 12 months, nearly a third (31%) plan to purchase HMOs, up from 12% just three months earlier. 

This is the highest level since Q2 2017 and reflects a greater propensity for portfolio landlords to purchase. A quarter of landlords said they plan to acquire flats, with 18% targeting terraced housing. 

The research revealed that 9% of portfolio landlords – those with four or more properties – plan to add to their portfolio over the next quarter, compared to just 1% of non-portfolio landlords. 

HMOs are typically purchased by portfolio landlords as they offer a higher yield but are more complex to manage. Paragon research shows HMOs achieve a yield of 6.5%, compared to an average yield across all property types of 5.6%2.

Richard Rowntree, Director of Mortgages at Paragon, said: “The private rented sector needs to grow to meet increasing levels of tenant demand and it’s clear that portfolio landlords will drive that growth. Not only are they looking to build their portfolios, they are also looking at more complex types of property that will deliver higher yields, such as HMOs.”

Overall, landlord confidence generally remained weak during the quarter, although there was a slight uptick in landlords’ confidence compared to Q3 2019. Paragon’s Confidence Index – which is produced by landlords ranking confidence out of 10 – recorded a score of 6.2 during the period, the highest level for a year and up from 5.8 on the previous quarter.

Richard Rowntree added: “Although still fragile, hopefully we are starting to see some green shoots with regards to landlord confidence. Landlords have encountered significant regulatory and fiscal changes in recent years and we hope to now enter a more settled period.”

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The latest DPS Rent Index


Higher wages and lower deposits help take sting out of renting, says The DPS in its latest Rent Index

The proportion of income that tenants spent on rent decreased between 2016 and 2019 despite increases in rental levels, according to The Deposit Protection Service (The DPS).

In the latest edition of its Rent Index, the largest protector of deposits in the UK compares rent levels across the country with averages salaries and reveals that the average proportion of wages spent on rent fell from 32.64% in 2016 to 30.64% in 2019.

The DPS said that various factors had helped improve the affordability of renting during the period, including a 2.69% increase in average salary (from £29,559 to £30,353) and a £77 decrease in average tenancy deposits (from £905 to £828) since the introduction of the deposit cap in June last year.

Matt Trevett, Managing Director of The DPS, said: “Although rents have risen over the past decade, other changes since 2016 have helped ensure renting has become on average more affordable. 

“Predictions that rents would rise in response to the introduction of the tenant fees ban and deposit cap do not seem to have materialised, with many landlords seemingly declining to increase rents since last summer.” 

The DPS Rent Index, which is published quarterly and is based on The DPS database of millions of properties across the UK, also showed that average rents reached a peak of £777 during the third quarter of 2019 (Q3 2019), before decreasing marginally by £4 to £773 during the following quarter.

Paul Fryers, Managing Director at specialist buy-to-let mortgage provider Zephyr Homeloans, which like The DPS forms part of the Computershare Group, said:  “Although the longer-term recovery in rental levels is likely owing to broader economic factors, changes to rental figures are also more likely at moments where property changes hands.

“Over the last couple of years, professional landlords have become a larger proportion of the buy-to-let market as more and more smaller or ‘accidental’ landlords sell up, partly as a result of increasing costs.”

Northern Ireland saw biggest increase in average monthly rents (3.01%) from £532 to £548 during Q4 2019, while average monthly rent in Yorkshire and The Humber decreased the most, from £551 to £524 (4.90%). 
                                                                         
London continues to be the most expensive rental region in the UK, with average monthly rents standing at £1,345 in Q4 2019 – over two and a half times the amount (£518) paid in the UK’s cheapest region, the North East, during the same period.

Excluding London, average monthly rent during the last quarter of 2019 stood at £672, said the report.

Detached properties saw the largest increase (0.81%) in average monthly rents, from £990 to £998, in Q4.

Monthly rents for terraced houses declined the most during the quarter, falling 0.55%, from £732 to £728.

Average rents increased by 20% between 2010 and 2019, but only by 1% between 2016 and 2019, according to figures from The DPS.


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Tuesday, January 21, 2020

Can we sell the home our son currently rents from us?

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Landlords to face £30k fines for unsafe electrics

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Landlord left with £46k of damage

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Agent disqualified for pocketing £68k of deposits

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Compulsory electrical checks for landlords

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How landlords are tackling tax changes

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Thursday, January 16, 2020

75% of income required to rent

75% of income required to rent in parts of England – here’s how it’s changed in the last 20 years

The latest research by lettings and sales agent, Benham and Reeves, has revealed the amount of net income required to cover the cost of renting has increased +16.8% in the last two decades to 45.5% nationally, now accounting for 74.8% of the average salary in London having jumped +33.7% since the turn of the millennium. 

The research shows that 20 years ago, the average rent accounted for 28.7% of the average income in England. This was, of course, higher in London where 41.1% of income was required to cover rent, with the South East (31.2%) and South West (29.4%) also amongst some of the highest of all regions. 

Today, the proportion of income required to cover the cost of renting has increased by +16.8% across England to 45.5%.  

Again, London has seen the most drastic increase with an eye-watering 74.8% of the average income now required to cover the average cost of renting – a +33.7% increase in the last 20 years.  

The East of England has seen the second largest increase in that time, up +18.7% , while the South East has seen the third largest increase (+18.6%) and is currently home to the second largest income to rent ratio at 49.8%.  
20 years ago, the East Midlands was home to the lowest income to rent ratio with 24% of earnings required for the average rent, today the North East is home to the most favourable ratio at 32% and has also seen the smallest increase in the last 20 years (7.4%). 

Director of Benham and Reeves, Marc von Grundherr, commented: 

There’s been plenty of positive changes to the rental market in the last 20 years with better codes of practice and improvements through technology allowing for a fairer, more transparent process for both landlords and tenants.  
Unfortunately, the one thing this can’t address is the huge demand for rental properties and the resulting increase in the cost of renting as a result and with wage growth failing to keep pace, the proportion of our earnings required to cover rent has spiked notably since the turn of the millennium.”

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Tuesday, January 14, 2020

Data Protection Fee: do landlords need to pay?

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Mandatory five-year electrical safety checks

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Delay to NLA & RLA merger

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Goodmayes is tipped as one to watch

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Hanley enters ex-pat BTL market

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Letting agency for tenants with disabilities

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LHA rates to rise in line with the CPI

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New Edinburgh Airbnb licensing scheme

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Monday, January 13, 2020

'Absurd' leasehold pricing should stop

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Birmingham city-wide Article 4 Direction

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UK house sales rising after election

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Govt rejects renewal of Liverpool licensing scheme

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Scottish landlords face eviction delays

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Govt appeal this week: Right to Rent

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Government ends LHA rate freeze

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PRS now 30% of all households in London

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Ipswich lettings agency fined £25k

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Rate cut on the cards

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Thursday, January 09, 2020

High house prices due to low interest rates

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Scottish councils to get stronger short-term let powers

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House prices up 1.5% in December

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New rates on Paragon mortgages

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Wednesday, January 08, 2020

UK property market in 2020 : Savills

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Castle Trust launches 10-year BTL loan

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Cost of living outstripped house prices

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House prices up 4% in 2019: Halifax

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£42,000 to extend my lease

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26% of landlords plan to cash in

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Gatehouse Bank cuts BTL rate

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A quarter of landlords plan to exit

A quarter of landlords plan to exit the market this year, putting over half a million homes up for sale 

  • A quarter (26%) of UK landlords plan to sell at least one property in 2020, largely due to uncertain market conditions, government reforms and tax increases, meaning over half a million homes could be put up for sale
  • 82% of landlords are not planning on buying properties in 2020
  • A third (35%) also reported a decrease in their rental yield in 2019 and over a quarter (26%) expect to see a further decrease in 2020


8th January, London: A quarter (26%) of landlords plan to cash in on at least one property this year, potentially putting over half a million homes up for sale[1], according to new research by landlord insurance provider Simply Business. 

The survey of 800 landlords revealed that with uncertain market conditions, fourth fifths (82%) of landlords are not planning on buying any more properties in 2020. Just one tenth (13%) said they would buy another property this year, while a third (35%) also reported a decrease in their rental yield in 2019. 

The top reasons landlords gave for wanting to sell are tax increases and government reform, such as shifting House in Multiple Occupation (HMO) licensing, which added new stipulations on the minimum size of rooms, as well as banning of admin fees. Well over a tenth cited these as their reasons. 

Other reasons that landlords gave for planning to sell include rising rental costs (10%), cashing in on their investment (9%), economic instability (5%) and slowing house price growth (4%). This comes after a third (35%) also reported a decrease in their rental yield in 2019, which adds to the desire to sell. 

A fifth (20%) reported a decrease of 0-5%, just under one in 10 (9%) reported a decrease of 5-10% and 3% of landlords reported a decrease of 10-15%. 

Looking ahead to this year, over a quarter (27%) of landlords expect to see a further decrease in their rental yield in 2020. One in five (18%) expect to see a decrease of 0-5%, and a further 6% of landlords expect to see a decrease of 5-10%. Only 2% of landlords expect to see a decrease of 10-15%. However, half (52%) are still optimistic and expect their rental yield to increase in 2020.

Bea Montoya, Chief Operating Officer at Simply Business commented: 

“Landlords around the country are telling us that government reforms, tax increases, and rising rental costs are forcing them to put their investments up for sale. The tax increases imposed by the government are proving counter-productive for landlords, while ongoing political and economic uncertainty hasn’t been providing landlords with the confidence they need to stay in the market. But selling a buy-to-let is a big decision, especially if you’re selling more than one. 


“Any landlord looking to sell up should make sure they understand the complexities surrounding buy-to-let sales, particularly if the property is occupied. Any tenants should be made aware of plans to sell as early as possible, and given reassurance their tenancy still stands. When it comes to selling, landlords need to understand any tax implications involved, such as capital gains tax. If the property is sold for more than it was paid for, there will be a capital gains tax liability.”

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Tuesday, January 07, 2020

Did you fail to sell a property in 2019?

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Will mortgage rates go up after Brexit?

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DWP update for landlords with UC tenants

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Calls to make it easier for tenants to have pets

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Friday, January 03, 2020

Should I build a house in my garden?

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House price growth to be flat in 2020

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5 bits of legislation for landlords in 2020

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What does 2020 have in store for landlords?

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Rental yield interactive map

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Limited supply drove rental growth: Hamptons

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Annual UK house price growth of 1.4%: Nationwide

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House price growth tops 1%

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Govt £4m crackdown on criminal landlords

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