Rents may fall for council tenants - scuppering the Governments council house building targets

Housing associations may see a fall of £260 million next year if the Government carries through its policy to link social housing rent to inflation.
With the retail prices index expected to fall below minus 2 per cent in September, the month when rent is set for the next year, could cause a cut in rental payments.

Ruth Davison, the National Housing Federation campaign director, said that the impact of a 2 per cent reduction would cut the number of homes that could be built next year by 4,000 at a time when nearly 5 million people were waiting for council homes. “This is bad economics and bad politics,” she said. “We desperately need new homes. And as the public finances deteriorate we will need more private borrowing to ensure we can continue to build these new homes,” she added.
A shortage of council homes could help to retain levels of demand for property in the private rental sector which could be seen as positive news for private landlords.

Read full article in the Times

Low Interest Rates Could be Here to Stay

Low interest rates could be with us for a fair while yet.

The City is starting to believe that interest rates could remain low for years, following the news that the Bank of England gave a strong hint that it might again expand its policy of flooding the economy with money.

Maybe hold off jumping on that fixed rate btl mortgage.

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The changing face of London's rental property advertising.

Nothing stays the same. One year you're 'in' and the next year, you're 'out'. (Twitter be warned)

I found an interesting blog post from Pimlico flats tracing the decline in some of Londons primary advertising resources for rental properties.

Tracing the decline of the London Evening Standard, the rise and fall of Loot magazine, and the rise and predicted fall of Gumtree as a location for advertising rental properties to let.

As Gumtree moves away from its free model and places higher charges on posting adverts the number and quality of posts is declining. The increasing incident of 'scam posts' has also lead to a erosion in the quality of users experience.

Read the full article here

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Property Mentors - but nice, not like the last lot.

The new breed of 'property mentors' , 'gurus' and 'experts' aren't like the previous lot who mis-sold overly priced investments for exhorbitant fees to unsuspecting novice property investors.

Oh, no, this lot are different, they want to care for you and guide you through the shark infested, perilous investment waters.

These good samaritans will nurture you, support you and carefully guide you to the perfect investment opportunity all because they like to help people get on in life.

(meanwhile they will secretly take a big fat commission on this supposed fantastic property investment opportunity they have helped you to find, from the selling agent, in the style of the old fashioned IFA's.)

But remember, they're not like the last lot, they really do care. Honest!

Novice property investors tread carefully.

Sale and leaseback introducers fees

According to Resident Broker it now possible to earn fees by introducing sale and rent back clients. They have reported in a recent newsletter that:

"Following last week’s note on the new sale and rent regulation I’ve received many emails (and calls) about which regulated companies accept paid introducer fees. In fact - I was so surprised at your response, it galvanised me into action and I revisited the companies I knew and (and some I didn’t) to double-check the details.
So, introducer fees ranged from 0.4% of the purchase price, to a fixed £1000 per deal. Based on my own research, and insider knowledge, of who is delivering exactly what they say they are delivering, one company I can definitely recommend is Buy House Limited. You can register by following this link.

If there’s anyone else out there who has any further recommendations, then let me know and I will update you all next week."


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Resident Broker - Tips of the week

Tip of the week 1. Computer says no, and you end up paying.

Index valuations are being used by a number of lenders to determine the market value of your property without actually having to send out a valuer. The most common use for them being for remortgages and further advances.

However, I have noticed many times where the index valuation has been seemingly a lot lower than your expectations of the actual value. So you either accept it, or pay for a valuer to go out and double check the individual valuation (for an additional cost ,of course).

Landlord Insurance - professional rates - discounted

Now here’s the significance:

1. Many (and one lender confirmed to me - the majority) of index valuation amounts (when contested) are overturned by the valuer, who frequently gives a higher figure.

2. The index valuation can determine the level of the further advance, and if it’s a remortgage, what type of mortgage product you are eligible for – so if you don’t contest it, you could end up being put on a worse rate.

For example:

Current loan is £129,500, Index valuation is £175,000 therefore loan to value is 74% - eligible product is 6% for 2 years

However, if you contested the index valuation, as you believed it was actually worth £195,000, and the valuer confirmed this was the case – you’re now eligible for their 70% LTV product which is 5.4% for 2 years.
So the saving is 2 years interest savings of £777 – minus the valuation £120
£657.00

Well you know the old saying – better in your pocket than a lender!

Tip of the week 2 -
Are you paying too much tax on your rental profits?

With the welcome advent of some low SVR rates, many investors are starting to make significant profits from their portfolios. Significant for the taxman, that is.

I can’t claim any credit for this tip, as it is brought to you by an accountant friend of mine, Stephen Fay ACA. He’s an active investor and specialist property accountant,
(so he knows what he’s talking about).

Are you ready for this? Then here goes:

All property investors are required by the taxman to file tax returns, and to pay income tax on property rental profits. Whilst most tax returns will include the ‘obvious’ costs, such as mortgage interest and insurance, many investors fail to include all the costs they are entitled to claim.- meaning they pay too much tax.　

Consider the following allowable expenses - often missed by investors:

Legal fees associated with arranging finance – even for new properties. Ask your solicitor to provide a separate invoice for the cost of dealing with the mortgage – this element is then allowable for income tax purposes. Don’t forget the valuation fee if it was a lender’s requirement.

Mortgage arrangement fees are allowable for income tax purposes (even if added to the mortgage).

‘Pre-commencement. Expenses’ – expenses incurred up to seven years before a property rental business starts may be claimed as allowable expenses if they would normally qualify.　
Tax returns that haven’t included these, and lots of other legitimate expenses, can easily be re-stated to reduce the taxable profit. 　

Call one of our advisors today for more information 01424 205 373


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