New EU regulation risks UK BTL market

As reported in the property trade title Property Drum the proposed EU regulation on mortgages, designed to combat fraud, which is due to be voted on early in 2012, could change the way some buy-to-let lending is regulated to bring it into line with rules governing conventional residential mortgages.

Critics are expressing fears that the new rules could seriously reduce the number of buy to let mortgages that are granted. This is because lenders would be required to test affordability using standard residential mortgage criteria: relative size of deposit, existing income, other debts, but they would not be able to include potential rental income, meaning that a landlord investor would have to be able to afford to pay the mortgage on the property without receiving any income from it.

Everyone will appreciate the need to reduce fraud but is this yet another hammer to crack a nut? In a country populated by large numbers of frustrated first-time buyers forced into the private rented sector, high rents with longer tenancies, low property purchase prices and better returns than other investment opportunities, the buy to let sector is growing, and the number of mortgages servicing it is growing too.

In the third quarter, buy-to-let lending as a proportion of total lending hit its highest level in three years, jumping 16 per cent in value. According to one lender, 10 per cent of its applications last year were from prospective landlords. This year, the proportion reached 80 per cent. A spokesperson for Lloyds recently forecast 20 per cent growth in the buy-to-let mortgage market in 2012.

Of course, this situation is rather different in many EU countries, where most people have always rented and the change from aspiration to home ownership to reconciled to long term renting is not an issue, and there are many more properties available to rent.

But in the UK, where buy to let is one of the few areas of the property business that is doing well, heavy handed EU legislation could affect our rental housings stocks far more dramatically than in other countries.

If the new legislation is passed, potential new investors and landlords wanting to develop their portfolios, and / or remortgage current assets, should get a plan underway soon; the new rules would take effect from 2013. At least an increase in activity in the short term would be good for the market; if 50 per cent of the estimated 1.4 million landlords in the UK bought a new property before the new legislation hits, we’d have 700,000 more rental properties available for tenants.

Stamp duty holiday to end as planned in 2012

The government have announced today that it will not be extending the stamp duty holiday that it put in place in 2010 and extending until 24^th March 2012.

This means that property buyers will be faced with an additional cost of up to £250,000 if they complete their purchase after the 24^th March 2012. After this date entry level stamp duty will return, meaning 1% tax on a purchase between £125,000 and £250,000.

Those thinking of buying on investing in property in 2012 may consider bring their plans forward to beat the tax deadline date, but beware if you don’t find in early January you are unlikely to see the deal complete before the deadline as sales are reportedly taking an average now of 92 days.

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Paula Cunningham - Director

Living Property Lettings & Property Management win Beccles Corporate Duck Race!

Quackers, the Living Property Lettings & Management mascot won the annual corporate Beccles Duck Race held today, September 11^th at Beccles quay, in a close float to the winning post.

Paula Cunningham, Director of Living Property commented, “Living Property are delighted that our girl, Quackers, did us proud winning this prestigious event which has been so well attended our community”.

Kim Davies, fellow Director of Living Property added, “the Beccles Duck Race is a fantastic well run annual event run in aid of BecclesSea Cadets, we are delighted to support this worthy organisation and take the opportunity to applaud the events main sponsors, Tobar, Hawkins Bazaar and Crisp for enabling this annual event for families”.


The Beccles Duck race report can be seen on Archant's Beccles & Bungay site here

Your can follow us at twitter @ #livingproperty

Living Property joins Zoopla network

Living Property, specialists in property rental and management based at Beccles within Suffolk’s Waveney Valley have joined the Zoopla property portal network and in so doing will see all of its clients rental instructions published across Archant, the UK largest independent regional publishers homes24.co.uk property portal as well as the properties being searchable via Yahoo UK & Ireland, Sky.com, UpMyStreet, AOL and MSN.

Paula Cunningham, Director comments, “In joining the UK’s number two property website the Zoopla network membership compliments our existing portal membership of rightmove, the UK leading portal. Our deliberate on-line strategy is to invest in the marketing and promotion of our landlord’s properties to minimise void periods thus ensuring properties are tenanted as quickly as possible”.

Kim Davies, fellow Director of Living Property added, “with 87% of all property search now undertaken on-line, in recognition that around 1 in 3 UK adults between the ages of 24 and 45 now own a smart phone and the fact that 47% of Zoopla network audience is unique we felt that the time was right to expand our on-line marketing strategy which now also includes our livingproperty.net website being mobile search enabled”.

If you have any questions about property rental email info@livingproperty.co or phone 0845 459 4095

UK ends love affair with home ownership?

Latest figures from Communities and Local Government (CLG) have revealed owner occupation of residential property is now at its lowest for 11 years, with one in every six homes in England now a private rental property,

The metrics show that 17.4% of UK housing is now within the private rented sector, an increase from 16.4% in 2009 and up 229,000 by number.

Since 2000, the number of properties in the private rented sector, which currently stands at 3.9 million, has risen by 1.8 million, reflecting the shift in housing tenure England. The growth trend is likely to continue for the foreseeable future due to mortgage lenders continued risk adverse attitude to lending to would be buyers.

The number of properties in the owner-occupied sector fell from 14.9 million in 2009 to 14.8 million last year – the lowest since 2000.

The jury is out on whether this is a permanent shift, for certain private rental is no longer stigmatised as the less well offs way to habitation, coupled with other factors such as a significant improvement of the quality and variety of rental homes available for renters it highly likely that we are indeed seeing a long term shift.

If your struggling to sell you home and want advice, without obligation, about renting call Living Property Lettings & Management on 0845 459 4095

All in the course of a days work!

After seeing all the troubles in London and around the UK in the last few days there was not a hoody in sight today as I ventured out with my little Smart car onto the Reedham ferry in Norfolk. Viewing the Norfolk Broads scenery and witnessing the smiles on the faces of holiday’s makers it appears Britain is perhaps not as ‘broken’ as some would have us believe. Letting and property management is hard work and to make a success of it, like anything, you have to put in the hard yards but there are times like today when it brings along a little unplanned adventure which makes everything worth while! p.s. I now have a beautiful mansion for rent at £2,100 per month, fantastic location with views to die for, interested please email me paula@livingproperty.co

Living Property Lettings & Management acquire Homewell of Bungay

Living Property, specialists in the rental and management of residential property in Suffolk’s Waveney Valley have acquired the business of Homewell formally trading as Rentwell based in Bungay, Suffolk.

Paula Cunningham and Kim Davies, founders and directors are delighted to welcome Amanda Coates who joins their team from Homewell.

Paula comments, “Kim and I are well acquainted with Bungay and we won’t be strangers to many of Homewell’s landlords as we worked in Bungay for our former employee, Howards, who sadly closed their Bungay branch several years ago which motivated us to set up and strike out on our own. The purchase of Homewell allows us to become reacquainted with many past customers and we been truly flattered by the number of positive comments and vows of continued support of the landlords”.

Kim adds, “Paula and I are passionate in what we do and our aim is always to offer an exceptional and trusted rental and property management service delivered at highly competitive fees. We are in business for the long game, our customers know and understand this and reward us with the loyalty of their business”.

To contact Paula email paula@livingproperty.co, Kim at kim@livingproperty.co or Amanda at amanda@livingproperty.co  

A Guide to UK Residential Rental Yield Calculation

What is rental yield? Rental yield is the amount of money a landlord receives in rent over one year, shown as a percentage of the amount of money invested in the property. A property investor needs to consider costs above and below the ‘plimsoll’ line as well as void periods i.e. the period during any one year that the property stands vacant during tenant change over, latest ARLA data states void period are running at UK average of 17 days per annum.

Cost considerations are but not limited to:

1) costs of finance setup - booking fee, arrangement fee, valuation, brokers fees
2) legal fees, searches
3) costs of any refurbishment (including your own time)

From the monthly rental return, you should remove

1) costs of finance - repayments/interest
2) costs of compliance - safety checks, repairs, insurances
3) allowance for void periods between lettings
4) service costs (if applicable)
5) management fees/finders fees if using an agency
6) Advertising costs

A basic formula for rental yield is:

mrr = monthly rental return

i = investment

yield = mrr*12/i*100

If you want to factor in loan costs a calculator can be found at http://bit.ly/lvMuB9