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Airbnb – Overnight success or a bad night’s sleep? Latest Articles, UK Property Forum for Buy to Let Landlords

Airbnb is fast becoming the preferred method of accommodation amongst leisure and business travellers.  For Airbnb hosts it can be an easy way of making some extra cash.

However, recently there have been a number of cases where properties have been damaged by guests, sublet by tenants, people being injured at Airbnb properties and hosts left with a lot of clearing up to do.

Nicole Rogers from DAS Law answers the most important questions for existing Airbnb hosts and those thinking of renting out their properties.

Could sharing your rented or leasehold property with Airbnb cost you your tenancy or home?

Millions of Airbnb users may have unknowingly breached the terms of their leases, leaving them vulnerable to legal action or losing their tenancy.

The vast majority of tenancy and leasehold agreements are likely to state that the property in question may only be used as a private residence.  This would prevent tenants from renting out or ‘sharing’ their flat or home for short periods. It should be considered by anyone letting their property out through Airbnb to check their tenancy or leasehold agreements first.

It is not just those renting that should be wary of breaking contracts, mortgage companies may also take a dim view of home owners offering short term lettings of their property. It would be wise for owners to contact their mortgage company before offering their home out, as they may very well be breaking their mortgage contract. Whilst buy-to-let mortgages allow for assured short term tenancy, ‘short-term’ is often defined as 6 months; clearly Airbnb stays are considerably shorter than this.

What precautions do you need to take to comply with health and safety legislation?

Hosts must ensure that the premises are reasonably safe for visitors. With regards to fire safety, landlords should inform visitors of a fire evacuation route. The Regulatory Reform (Fire Safety) Order 2005 makes landlords responsible for taking steps to protect the people using your premises from the risk of fire. This means that a host should carry out a fire risk assessment, if necessary, improve the fire safety measures and keep the risks, and fire safety measures, under review.

If a visitor has suffered an injury at a host’s premises, he/she may seek to pursue a personal injury claim, particularly if the host has breached its duty of care to the visitor, which subsequently has caused foreseeable injury.

If your property or belongings are damaged or stolen, will your home and contents policy cover you?

It is unlikely as the insurer will usually not have catered for paying guests when arranging the policy. The host would need to clarify with their insurer as to whether their cover would be sufficient to cover losses.   Airbnb do offer a ‘host guarantee’ whereby the firm promises to reimburse hosts for damages of up to £600,000, the company adds that hosts should not consider this as a replacement for owners or renters home insurance.

Whilst a host is not required to take out specific landlord insurance, it would be advisable to speak with a specialist broker or insurer to ensure sufficient protection.

What are the tax implications for the income you receive?

Money received from hosting is generally regarded as income; therefore, it is likely that income tax will be payable so the host may need to declare their earnings to HMRC. It is possible that a host may be entitled to certain tax reliefs or allowances, so it is advisable to take tax advice regarding this.

As an Airbnb host, do you need to have public liability insurance?

There is no legal obligation to take out public liability insurance to host via Airbnb. However, it would be worthwhile to do so in order to protect yourself, the host in the event of an injury claim from the visitor.


Trail of destruction by tenant from hell in Liverpool Echo Latest Articles, UK Property Forum for Buy to Let Landlords

The Liverpool Echo have shown the flip side of the landlord story with a shocking tail of wilful destruction by a tenant from hell.

Click here to see the full article and terrible photos.

The Landlord is Steve Parry, a 55 year old surveyor, who bought two rental properties to supplement his pension and retirement planning. However, the plan went ‘Bad’ for his property in Wavertree Liverpool.

Steve said he had “not made a bean” after the nightmare last tenant who cost £1,500 in court fees to evict leaving more than £2,000 in unpaid rent and at least £6,000 in damages.

The Photos in the Echo show a ceiling that collapsed after a (assumed deliberate) flood in the bathroom, piles of rubbish including bags of dog mess, trashed kitchen and smashed doors.

Steve served notice on the tenant in 2015 as she fell behind with rent and had a large frightening dog that was prohibited under the tenancy agreement.

Steve, in his Echo article, reported: “The house was wrecked, it’s shocking. She had failed to sort the rent out despite numerous promises, so I gave her two months’ notice to quit.

“I was then forced to serve two notice on her, which cost £200 each and she ignored. I had to get an order for possession in court, which I only got in the November. She was supposed to vacate by the 13th December, but despite everything I let her remain on agreement she would leave after the New Year.

“But she refused to move, saying she was looking for a new house. I had no choice but to pay for court bailiffs. She was finally removed this April.”

It was then that Steve found the trail of destruction wrought on his house.

Steve said that although he knew it was unfair to tar all benefits tenants with the same brush, he also could not take the risk again, and knew many landlords were now choosing not to rent to tenants in receipt of benefits especially with Universal Credit reforms forcing tenants to manage their own benefit payments.

He went on to say “people assume you’re loaded as a landlord, but I haven’t made a bean I’ve had that many problems. All I’m hoping is the house value will be more than I bought them for.”

Steve’s final plea to the government was to continue to crack down on bad landlords, but to also redress the balance protecting good landlords from bad tenants.


2.75% increase in the average rent price shown by Belvoir Q2 index Latest Articles, UK Property Forum for Buy to Let Landlords

Property franchise Belvoir, which has over 300 offices, has published its Q2 rental index, indicating a year on year increase in average rents of just over 2.75%, from £730 in Q2 2016 to £751 in Q2 2017.

Comparing the Q2 2017 average to the 2016 annual average of £783, this indicates rental increases of just under 2% – a figure that is in line with ONS statistics and other reputable rental indexes.

The latest data shows rents range from £597 in the North West, £665 in Yorkshire, through to £1048 in the South East and £1,446 per month in London.

In London, the average rent recorded in Q2 2017 was £1454 (excluding Central London), which is an increase of 4.5% compared to Q2 2016. Q2 2017 versus the 2016 annual average of £1511 shows a fall in rents of around -4%. For London, during Q2 2017, half of the offices recorded a slight fall in rents and half recorded slight increases.

Around 40% of offices In the South East experienced a slight rise in rents during Q2 2017, whilst 40% recorded slight falls and 20% experienced static rents. Three quarters of offices in the South West experienced a decline in rents during Q2 2017, with the remaining quarter recording slight increases. This pattern continued in East Anglia, Yorkshire and the East Midlands where half of offices recorded small rental increases and the remaining offices experienced slight falls.

In the North West, just over two thirds of offices experienced slight increases during Q2 2017, and just under a third experienced slight falls with stable rents in remaining offices.

Commenting on the Belvoir Q2 rental index, CEO Dorian Gonsalves said: “Belvoir’s statistics, which show an average rise of 2.75% are very much in line with other reputable rental indexes, and that of the Office of National Statistics (ONS).

“Sensationalist media reports that rents are spiralling out of control across the country are at odds with what our offices are reporting, and that other letting agents across the country are currently experiencing. However, feedback from our franchisees confirmed that less properties were seeing static rents than in the previous quarter, and more offices experienced rent rises of £25 and £50 per month.

“Belvoir’s rental index began in 2009 and is an extremely valuable resource, which analyses the ups and downs of the rental market not just at national level, but regionally and at county level. We are also tracking tenant demand, length of tenancies, arrears and evictions with predictions for rental demand in the next quarter.

‘Our rental trend predictions for different rental sectors in Q3 are that families and professionals are most likely to experience rent rises. Demand from tenants on benefits saw the biggest increase versus Q1 and therefore rents are expected to rise for this sector. Two to three bed properties remain in demand and are in short supply.

“Although we are not currently seeing a huge exit of landlords from the market it is apparent that landlords are beginning to sell their properties. Most agents expect investor enquiries to remain the same, or to fall, especially for room rents. Average void periods for one week remain the same, although there has been an increase in two-week voids

“The majority of tenants are staying in their properties for longer, with almost half choosing to stay for 13-18 months, and over 36% staying for up to two years. Importantly, over 80% of Belvoir offices carried out no or just one evictions during Q2 2017, This is a good indication of how well our referencing and property management systems are performing and highlights the importance of tenants choosing a reputable agent when renting their home.

“Almost 70% of Belvoir agents believe the government has under-estimated how many landlords will be affected by the changes to mortgage interest relief, and we look forward to the results of our Q3 rental index with interest.”

Belvoir’s Q2 rental index is produced by property expert Kate Faulkner and can be viewed in full on the Belvoir website – https://www.belvoir.co.uk/belvoir-rental-index


Send in tax returns even if you don’t make a profit – Newham and HMRC crack down Latest Articles, UK Property Forum for Buy to Let Landlords

Unfortunately, we still speak with amateur landlords who may have owned a rental property for years, often by accident, who have not submitted any tax returns. This is most commonly, because they think they don’t need to if they haven’t made a profit.

To be fair to HMRC if no profit hasn’t been made and you own up first they are pretty understanding about it.

However, Newham council are now working with HMRC investigating all landlords that are on their selective licencing list, but not declaring on self assessment tax returns that they own rental property. They think this could involve up to 13,000 landlords, which is about half the total number in the borough.

Sir Robin Wales, Newham Mayor, said: “In addition to uncovering large scale exploitation of vulnerable tenants, our licensing scheme has also unearthed that many unscrupulous landlords may be benefiting from undeclared tax.

“At a time when local authorities are experiencing savage cuts, and Newham alone has had half its grant funding cut, possible tax evasion on this scale takes money from vital public services. This is money out of the pockets of our poorest residents who rely on our services the most.

“While the Chancellor is scrambling around ahead of his Autumn Budget and the Prime Minister is claiming there is ‘no Magic Money Tree’, Newham has the solution in private rented licensing.“

University of London professor, Richard Murphy, claims that tax revenue losses from the PRS could amount to £1 billion per annum.

Murphy’s assessment is based upon the above Newham statistics and he said in his blog, “Their estimate is that maybe £200 million of tax is not being paid in London alone as a result of the failure of landlords to register to declare tax that they owe. This compares with HMRC’s suggestion that they may lose £550 million of tax a year in this way across the country as a whole.”

 


Sale and Rent Back Court Case Wreaks Havoc Latest Articles, UK Property Forum for Buy to Let Landlords

A couple who purchased their neighbour’s house to help him out of financial difficulty have been ordered by a judge to give him a 90 year lease at a fixed rent for the whole term.

David and Sheila Harding, who purchased the property in 2001 from their neighbour Mr Colin Gregory, now want to sell to fund a new life in Spain, but in the hearing were branded by the judge as “foolhardy in the extreme” and refused permission to appeal.

16 years ago Mr Gregory confided in his neighbours and close friends, the Hardings, of his difficulties in paying his mortgage. To assist, the Hardings purchased his property for £143,000 with a ‘Buy to Let’ mortgage, allowing Mr Gregory to stay in his home at an agreed rent of £800pcm.

The property was recently offered back Mr Gregory to purchase for £60,000 less than the now £310,000 value. He was given a year to find the funds, which he was unable to do.

The Hardings eventually found a buyer who agreed to continue renting to Mr Gregory but subject to an increased rent to reflect the current market value, now £1,200 a month. This was refused by Mr Gregory and the case went to Brighton County Court.

Mr Gregory said he sold the house to the Hardings for a reduced price, only because he could rent it for as long as he wanted.

We have not seen the actual tenancy agreement, but there was apparently no mention of the lifetime occupation and fixed rental in the documents.

The decision by the Judge will also adversely affect the value of the security of the mortgage lender, which would now be well within their right to call in their mortgage or even force a sale through LPA receivers for breach of contract resulting from the granting of a 90 year lease. The property  could be valued as little as 20 times rent (£800 x12x20 =£192,000), which is roughly what freehold ground rents trade at. It will be virtually impossible for the Hardings’ to sell the property at the normal market value or to remortgage now.

The case was won by Mr Gregory’s solicitor using two extremely old pieces of law which included:

  • The 1925 Property Act under which he apparently has the right to pay £800 a month for the next 90 years.
  • The 1948 Bannister v Bannister case where a woman was given the right to live rent free for life in a cottage she sold to her brother for under market value.

The Hardings were ordered to pay Mr Gregory’s costs of £11,000 and they can now only sell the property to a buyer prepared to rent to Mr Gregory for 90 years at £800pcm.

Although the Judge refused the right to appeal, Property118 was also refused this by Mr Justice Teare in our case against West Brom. Mark Smith (Barrister-at-Law) made an application to a higher Court for leave to appeal, which was granted and we went on to win our case at the Court of Appeal. There is hope that this case could still be overturned. However, there are set timescales to seek leave to appeal from a higher Court and we do not know when the judgment was handed down. It could be too late!

If there is a process whereby the Harding’s could attempt take this further we hope they do, and we are keen to do all we can to help because this judgement could impact on many more landlords.

Even if an application for appeal can be made within the timescales, the success of it would be highly dependent upon what the tenancy agreement. If it is an AST or an Assured tenancy, and even if the Harding’s hadn’t properly served a section 13 notice to increase rent, they would have had the right to do so. Surely, that alone would be grounds for an application to appeal?

Back in 1948, when the original case Law relied upon in this case was created, AST’s and Assurred Tenancies did not exist. All Tenancies were protected at that time. This might be another angle on which an appeal case could be built on.

If a s13 notice was served correctly then the maths suggest that Mr Gregory would be two months in arrears within 6 months and of the s13 notice expiring as a result of refusing to pay the £400 a month rent increase. On that basis, the Harding’s could have served a section 8 notice to seek possession on the grounds of their back-stabbing former friend being two months in arrears.

If anyone out there knows the Hardings please ask them to contact Property118 so we can investigate if there is the possibility to win a right to appeal. Time is of the essence!

It will also be interesting to ascertain how many Sale and Rent Back (SARB) agreements and mortgages this case could affect.

Mr Harding Ian quotes to have said after the case, “‘We tried to help out, not only as a good neighbour and landlord, but we considered Colin a good friend.

“We own it, we pay the mortgage on it, we bought it, but due to a nearly 100 year old law he gets to live in it on the cheap. We have nowhere to turn to and can’t believe it has turned out like this.

“We went into court told by our solicitors that there would be no problem and walked out with him winning the case and us owing him costs. It’s ludicrous. There is nothing more we can do.

“We want to warn other people who are thinking of entering into any kind of agreement like this. We did everything by the book and look where it ended up.

“Nobody had ever heard of the law the solicitor used but it has cost us dearly. We’re stuffed!”

Please SHARE this article to warn others.


Generation Rent are more reliant than ever on the PRS Latest Articles, UK Property Forum for Buy to Let Landlords

A survey carried out by LetBritain of 2000 UK adults shows that 39% are financial unable to purchase the home they would like and are reliant on the Private Rental Sector (PRS) to meet their needs.

In London this jumps to a whopping 49% who are unable to purchase, because of the disparity in house prices.

In a bizarre twist opposed to government policy, 27% of adults renting said they were looking to purchase a Buy to Let property to get on the housing ladder. In London 42% of renters said they would consider purchasing a Buy to Let in more affordable areas of the country.

61% of those surveyed said they blamed the government for not doing enough to help Generation Rent and 64% said they could only see the situation getting worse in the next five years.

LetBritain CEO, Fareed Nabir, added “With more and more people across the UK coming to rely on the private rental sector, the results of the research are concerning. Whilst many renters are working hard to enter the property market, they clearly do not feel the government understands the issues faced by tenants.”

“Interestingly, the findings show that Generation Rent is now increasingly looking to buy properties outside of their chosen place of residence so they can still get onto the property ladder without having to sacrifice the location or quality of the property they wish to live in.”


Derelict pub converted into a flat, modern HMO and commercial unit Commercial Finance, Latest Articles

In this case study, learn how long term Shawbrook Bank customer HMO Property Investments Ltd used finance to transform a derelict pub into a thriving new mixed use property in Lincoln, with Shawbrook Broker and Property118 Partner Brooklands Commercial Finance acting as intermediary.

If you are considering a refurb, development or commercial project it is definitely worth watching  the video below to see how one of our favourite banks helped the clients with Bridging facilities and then switching straight to a term mortgage.

If you require assistance with any type of property finance from Buy to Let mortgages, commercial mortgages, Development finance and Refurbs to Bridging finance for investors and developers please complete the contact form below and we will be pleased to get our team at Brooklands Commercial finance to help.

Contact Property118 for assistance

  • Please give us a few details so we can investigate and call you back

LSE call on Chancellor to reform Stamp duty Latest Articles, UK Property Forum for Buy to Let Landlords

The London School of Economics and the VATT Institute for Economic have produced a research paper predicting the level of home moving would increase by 27% if the Stamp duty levy was completely abolished.

The research indicates current levels of stamp duty are making the housing crisis worse by cause a bottleneck in the market with pensioners being deterred form downsizing by the costs and stalling families from purchasing larger homes.

The Chancellor Philip Hammond is reportedly under pressure from his own Cabinet to reform Stamp Duty to kick start the market, which is also a major contributor to the wider economy. It is thought from a previous reform that if you halved the tax then income to the treasury would actually increase.

Co-author of the report, Professor Christian Hilber, said: “The key message of our paper is that stamp duty hampers mobility significantly.

“If you are a young family and you have an additional child, you’ll need an additional room, but the stamp duty is discouraging this kind of move because of the additional cost and lack of available homes to move into.

“In a nutshell, the stamp duty discourages the elderly from downsizing and young expanding families from moving to more adequate larger housing.”

Former chancellor, Lord Lawson of Blaby, told the Telegraph: “The present levels of stamp duty are clearly counterproductive, in terms of housing policy and revenue alike, and need to be reduced. For what it’s worth, when I was Chancellor, I halved the rate of stamp duty on house sales, and the revenue increased.”

HM Treasury replied saying: “Almost 90% of people want to own a home, but only 63% do. We reformed property taxes including stamp duty to help more people get onto the property ladder.

“In addition, we are helping people, including young families, to buy their first homes through policies such as Help to Buy and the Lifetime ISA, and the recent £2.3bn Housing Infrastructure Fund which will free up over 100,000 properties in high demand areas.”

Purchase price of property Rate of Stamp Duty Buy to Let/ Additional Home Rate
£0 – £125,000 0% 3%
£125,001 – £250,000 2% 5%
£250,001 – £925,000 5% 8%
£925,001 – £1.5 million 10% 13%

PRA and Section 24 changes and what they mean for property investors Commercial Finance, Latest Articles

How will lenders, brokers and investors alike be affected now and in the future by ongoing tax changes with Section 24 mortgage interest relief restrictions now being phased in and the PRA’s final wave of BTL underwriting standards, coming into effect on 30th September 2017?

You can watch Shawbrook Bank’s Head of Sales Sarah Woolf, property investor Kim Stones and Laura Rodriquez from Property118 partner broker Brooklands Commercial Finance discuss these controversial issues in the video below.

If you require assistance with any type of property finance from Buy to Let mortgages, commercial mortgages, Development finance and Refurbs to Bridging finance for investors and developers please complete the contact form below and we will be pleased to get our team at Brooklands Commercial finance to help.

Contact Property118 for assistance

  • Please give us a few details so we can investigate and call you back


Landlords losing confidence in rental profits Latest Articles, UK Property Forum for Buy to Let Landlords

Landlords are losing confidence in their ability to rely on steady rental yields, according to recent figures from the National Landlords Association (NLA).

The figures show that the proportion of landlords who are optimistic about their ability to rely on a steady rental yield has fallen 15% in the past two years, down from 64% in Q2 2015 to just 49% in Q2 2017.

The drop-off in confidence coincides with the period since the announcement from the then Chancellor George Osborne in July 2015 that mortgage interest relief would be removed for landlords.

However, the sentiment contrasts with actual rental yields achieved across the UK, which have remained fairly stable. Over the past few years, the average yield has fluctuated around the 6% mark.

Regionally, landlords in the East Midlands currently generate the highest rental yields at 6.9%. By contrast, landlords in outer London generate the lowest yields at 5%. A full regional breakdown can be found below.

The news comes during a time when property prices in many areas of the United Kingdom are stalling. The average price of a home rose in July by 0.3% following recent declines in May, April, and March.

Richard Lambert, Chief Executive Officer at the NLA, said:

“Average rental yields have remained fairly stable over the past few years, yet there is a steady increase in landlords losing confidence in their ability to make a profit from letting property.

“This perception probably exists because many will now be feeling the impact on their businesses of greater taxation and the costs of complying with regulation, which are eating away at their profits and making it harder to provide homes.

“Like any business, the increasing value of the capital assets on your balance sheet will be of little help if you are treading the fine line between profit and loss, especially if you can’t keep up your mortgage payments in the short term”.


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