Winter Property Marketing

This time of year I get no end of owners telling me that they are waiting until the New Year to put their property on the market.  This may sound familiar and could work very well for you, however potentially you could miss out on over 60,000* property searches every week and that is just from one website!  Looking on the same website from which the above figure was taken, at the time of writing, in the last 7 days there have been 87 properties listed in Exeter, 34 of these were price reductions and 53 new to the market.  I know when I have looked myself for new property to buy  I have usually already trawled through all the properties on the market so just want to see the newest ones as these are the prime targets for me  to secure a good quality property. 

When it comes to marketing property, there are usually considerably fewer properties coming to the market at this time of year, so the chances of your property being seen are higher.  I find winter photographs taken in good weather with blue skies can help to enhance some of the best features.  Although gardens may not be at their prime, internal photographs of open fires and warm surroundings could be the catch for some eager buyers.  No one particularly likes traipsing around doing viewings in the rain so it is important to make the property as warm and inviting as possible.  Call me Scrooge but Christmas will eventually come and go very quickly so looking at it as a business transaction, I would personally not postpone marketing until after it, but of course everyone has their own views, including my wife.

If you would prefer to wait to market your property until after the New Year, it’s a good idea to have the photographs and details prepared beforehand so it can be immediately put onto the market when the time is right.

Due to the large supply and demand issue we are facing in the area, prices are set to go one way.  While this may be good news if you are thinking of waiting to sell and then downsizing when you do move; if you are looking to upsize or buy your first property, time is of the essence.  If your property increases in value by 1%, excellent, however if the more expensive property you want to buy also increases by 1%, that gap is getting larger and it may just be the difference between being affordable or out of reach. 

To try to reduce this effect, if you are planning to stay in the property over the winter and then sell, use these few months to carry out all those little jobs that you have been meaning to do.  I have inset halogen spotlights in my bathroom for example and although they look nice, they do tend to blow fairly frequently so I currently have two that are out.  This doesn’t particularly bother me, however if I was trying to sell my property and someone saw this, they may think there is an issue with the lighting system or have concerns about what else may not be working in the property.  Perhaps it would be worth getting a friend to have a look around the house and for them to suggest touch-ups?

I hope you all have a lovely Christmas & New Year and if you would like more inspiration or ideas on how to make the most of your property prior to selling or letting, please do call me on 01392 254488 (yes I am in the office between Christmas & New Year), Jon.

*Number of searches carried out on Rightmove in Exeter for week ending 09/11/2015

Government confirms Wear & Tear change after 170 consultation responses

HM Revenue and Customs has published the responses it has received to its 12 week consultation on changing the Wear and Tear Allowance for buy to let landlords - only 170 responses were received, 137 of those from individuals.

The government has formally said that, in the light of the consultation results, it is going ahead with replacing the current administration of the allowance with a system whereby only actual expenditure will be reimbursed.

The official HMRC summary of the responses admits that “many respondents expressed support for maintaining a Wear and Tear Allowance, principally because they saw it as simple” but that “a significant number of stakeholders agreed with the Government that the Wear and Tear Allowance was not fair, both as it only applies to landlords offully furnished properties and because itprovides relief where no expenses have been incurred.”

In the light of the consultations, HMRC says the government is keen on “”minimising complexity” in the way the allowance is administered in future. 

To that end, the HMRC summary says the government has ruled out extending the scope of the allowance, and has decided against any transitional arrangements. However, in future the allowance will “include the cost of disposing of old assets”.

The government is now publishing draft legislation for technical consultation on how the allowance will in future be implemented. There are now eight weeks of consultation on this draft legislation. 

Details of the responses and the further consultation are here.

Article courtesy of Letting Agent Today 

The Chancellor has announced a shock 3% extra stamp duty on buy-to-let!

The full details are yet to be released but it has been announced today that George Osborne will be introducing a 3% surcharge on stamp duty for second homes and buy-to-let properties from April 2016!

Get buying your new properties now to save considerable amounts!

The Industry in a Nutshell

350,000 ‘Homeless’ by 2020

Rightmove has released figures stating that a lack of housing will result in 350,000 households being excluded from the housing market by 2020.

Those on low and middle-incomes will be affected the worst, as rents and house prices will keep going up. Households in London and the South East are particularly at risk: 26,000 households in London and 11,500 in the South East are already being priced out a year.

Worryingly, the data does not include right-to-buy property and the sale of council homes, which could actually impact house prices more severely than Rightmove have predicted.

And Only a Quarter Will Own a Home by 2025

By 2025 only 26pc of ‘generation rent’ (20-39yr olds) will own their own home.

PwC pointed out that 38pc had bought a house in 2013.

Meanwhile, 59pc of generation rent will be in private rental accommodation, up from 45pc in 2013.

The expected shift rings true – houses are getting far too expensive and only those earning well over the national average salary can realistically afford to buy a house. A typical required income would be £50,000 to fund a purchase.

Source: PwC

Buy-to-Let Mortgage Rates Plunge Again

Rental properties are in high demand. Huge demand, in fact. Rents are going up because supply is going down.

As such, lenders are climbing over each other to offer the best rates to investors. Landlord loans have fallen significantly in the past five years, from a typical 5.23pc two-year fixed term in 2010, to 3.26pc.

Five-year fixed rates have also fallen from 6.12pc to 4.06pc in the same period.*

Landlord lending was up 7pc in September, and is up 36pc year on year, according to the Council of Mortgage Lenders data.**

However, interest rates are likely to increase next year, which should bring an end to the low-cost deals.

Source: http://www.express.co.uk/finance/personalfinance/619761/Buy-To-Let-mortgage-rates-plunge-lenders-enter-loan-war

*moneyfacts

** CML

Buy-to-Luton

Luton has seen its rent increase more than anywhere in the UK this year, besides London.

Rents in Luton have risen by 10.4% this year, to an average of £722pcm. The average across the UK (excluding London) has been 3%.

Landlords could benefit from buy-to-let investments in the area as renters who struggle to meet the demands of the capital move north to commute.

Other areas around the outskirts of London have also registered big increases in rent, including Swindon and Southend on Sea (both 9.7%).

We have recently published a set of reports categorising the best buy-to-let investment locations in the UK. Download them here for an insight into where you could invest next.

Source: This is Money

Nine Ways To Maximise Your Buy-To-Let Profits

Many landlords are concerned that announced tax changes in the buy-to-let sector will wipe out their profits.

So, how can you claim against the tax? Most of the basics still apply – buying and furnishing properties are capital expenditure and therefore not claimable – but there are elements of your portfolio that are claimable.

Mortgage interest

You are currently allowed to offset your mortgage interest against your tax bill at your personal tax rate.

Unfortunately, this is set to change – controversially. Landlords won’t be able to deduct their mortgage from their rental income once the changes are implemented. Instead, you will be taxed on the rent you have received, not the profit you make. Therefore, you can be taxed on profit that isn’t there – you can be taxed more than 100% of your profit.

Mortgage fees

Broker and arrangement fees are tax deductible and claimed for the year that the mortgage was arranged.

Letting agent fees

Based on a national average rent of £749 and an average agent’s fee of 10-15pc of the monthly income, you can claim back all of these. This could equate to £1,350 a year.

Securing a tenant

Landlords who find tenants without the help of an agent can claim back the cost of advertising for tenants, purchasing tenancy agreement, credit checking and other costs. You can expect these to cost roughly £300 each time a new tenant moves into your property.

Building and contents insurance

Cover for low-risk buy-to-let properties costs around £200 a year. This is claimable.

Maintenance and repairs

Although getting the property fit for purpose is capital expenditure, keeping it that way isn’t. Wear and tear is claimable. Maintenance costs include mending windows and doors, white goods, furniture and decorating.

Furniture

Another area subject to change. Your current 10pc wear and tear allowance is being replaced by an ‘actual costs’ tax allowance. Therefore, you will only be able to claim back on the furniture you replace in a tax year.

Ground rent and service

If you are a leaseholder you probably pay ground rent to the freeholder. You can also claim back the costs of gardening and electrical costs, cleaning, heating and lighting in common areas, and security and concierge staff. Depending on how many of these you incur a year, it would make sense to claim on them.

Council tax and utility tax

If you are paying the bills that a tenant would normally pay, you can claim back the whole cost. A major benefit is that you can claim these costs even during void periods.

Others

Other direct costs such as phone calls, stationery and traveling expenses to make home visits are claimable.

You can also claim back on the fee of an accountant who prepares your tax return.

Right to Rent start date announced

The Government has announced that from 1 February 2016 all private landlords in England will have to check new tenants have the right to be in the UK before renting out their property.

Under the new rules, landlords who fail to check a potential tenant’s ‘Right to Rent’ will face penalties of up to £3,000 per tenant.

The new law will mean that private landlords, including those who sublet or take in lodgers, must check the right of prospective tenants to be in the country to avoid being hit with a penalty.

Right to Rent was introduced in the Immigration Act 2014 as part of the Government’s reforms to build a fairer and more effective immigration system. The first phase was launched in parts of the West Midlands, and the most recent announcement is the next stage of the scheme’s national roll out. 

Immigration minister James Brokenshire said: “Right to Rent checks are quick and simple, and many responsible landlords already do them as a matter of routine. We are providing landlords in England with all the advice and support they need before the checks go live on 1 February 2016.

“The new rules are part of the Immigration Act 2014 which introduced measures to reform the immigration system. Right to Rent is about deterring those who are illegally resident from remaining in the UK. Those with a legitimate right to be here will be able to prove this easily and will not be adversely affected.”

But despite Brokenshire’s assurances, Right to Rent has received widespread criticism with landlord groups claiming landlords are being forced to actas border control, and suggestions that anyone with a foreign-sounding name could be turned down for a rental property.

Under Right to Rent, landlords should check identity documents for all new tenants and take copies. The Government claims scheme has been designed to make it straightforward for people to evidence their right to rent and a range of commonly available documents can be used, including:

• a UK passport
• a European Economic Area passport or identity card
• a permanent residence card or travel document showing indefinite leave to remain
• a Home Office immigration status document
• a certificate of registration or naturalisation as a British citizen

The checks should be carried out on all new tenants and are backed up by codes of practice – including guidance on avoiding unlawful discrimination – which was drawn up with the assistance of the Human Rights Commission.

There are four steps involved in making a Right to Rent check:

• Check which adult tenants will live in the property as their only or main home.
• Ask tenants for the original documents that show they have the right to be in the UK.
• Check the documents are valid with the tenant present.
• Make and keep copies of the documents and record the date you made the check.

If a potential tenant has an outstanding immigration application or appeal with the Home Office, landlords can conduct a check on that person’s ‘right to rent’ via the Landlords’ Checking Service.

Guidance to help both landlords and tenants understand the new rules is available on GOV.UK.

Article courtesy of Landlord Today

Exeter Students

Love them or hate them, students are an integral and important part of the property market in Exeter.  From purpose built apartment blocks to privately owned multi bedroom houses, there is a wide choice of accommodation for students to choose from.

Exeter University is now ranked 93^rd in the Times Higher Education World University Rankings, placing it among the very best institutions across the globe and it is this together with a number of other factors which is providing yet another boost to the Exeter property market with more students wanting to study in the city and more private landlords looking to invest.

I have many potential landlords contacting me to discuss investing in a student property. They hear  of the high annual income that can be achieved but sometimes underestimate the work involved in managing a student property and keeping up to date with the changing legal requirements.

Potential and existing landlords should consider what may happen if the property is not let or if additional licencing comes into place preventing the ability to renew HMO licences in certain parts of the city.  Although there is no sign of the market cooling soon, it is worth having a contingency plan, just in case. It is true that in the majority of cases there are excellent annual returns to be made, last year we found all our properties let extremely quickly and demand outstripped supply, meaning landlords were also able to select the best tenants for their properties. I can see no reason why the same won’t be true this year.

I have sold many student properties over the last few years all generally achieving high gross annual yields; however it is worth factoring in to financial calculations potential expenditures, such as replacing furniture, redecorating and dealing with tenancy matters.  With changes to tax allowances coming into place and the potential abolition of the 10% furnished property allowance, it is worth talking to a financial adviser to look at your personal circumstances before you make the purchase.

Students nowadays look for properties that are well equipped, well maintained, clean and tidy.  They ask questions about the landlord and if the property is managed by an agent or the landlord, they are also knowledgeable about the requirements for Energy Performance Certificates, fire detection and licences. In other words, if a property has been neglected, the likelihood is that it will not be let.

If you are looking for information on the requirements for an HMO licence contact us or follow this link to Exeter City Councils’ website: http://www.exeter.gov.uk/index.aspx?articleid=11223.

Generally in the current market student properties do make good investments, however it is worth looking at the pricing and location very carefully. There are few properties on the market and they are currently so popular that the prices are starting to increase quickly.  If you are looking at buying or selling a student property with or without tenants in situ, please call me on 01392 254488 to discuss the current market. I am always happy to talk to potential and existing landlords.

Rental price growth slows

Rent price rises have slowed to match the pace of house price growth in the UK after nine months of sustained faster growth, according to HomeLet.

The HomeLet Rental Index shows that rent prices have slowed below double figures to an average annual increase of 8.5% across the UK.

For the three months to September 2015, every region of the UK with the exception of the East Midlands has seen annual rent price rises slow down or move into negative growth.

Nine out of 12 UK regions are still seeing rent prices rise on an annual basis, with the largest increases seen in Scotland at 8.4%, the East Midlands at 7.7% and Greater London at 6.6%. The figures also show three regions in negative annual price movement, with prices in the North West 4.6% lower than a year ago, 2.2% lower in East Anglia and 1.4% lower in Northern Ireland.

Comparing September figures to the previous month, the index reveals that only three regions have seen rent prices rise since August. In the three months to September 2015 only Scotland, the East Midlands and West Midlands have seen prices rise – by 1.2%, 1.4% and 1.4% respectively.

Every other region of the UK has seen rent prices fall modestly in the three months to September 2015, with the largest price reductions seen in the South West, the North East and North West at -2.4%, -2.3% and -2.2% respectively. 

Martin Totty, Barbon Insurance Group’s chief executive officer, said: "The UK economy has dipped into 'negative inflation' which is a boost to consumers' spending power and, ultimately, their real income. Affordability is an important factor in determining rents. Depending on what happens with inflation and real incomes over the coming months, could have a bearing on future rental price trends especially where, in certain areas of the country, the supply of rental properties is not keeping pace with demand from those wishing to be private sector renters.”

Article courtesy of Landlord Today

Winter Is Coming… Prepare Your Garden In Ten Steps.

For your garden to survive winter, it is essential that you take a few steps in autumn to prepare. Not only does this make things easier for you in spring, but it also prolongs the life of plants, outdoor furniture and toys.

If you rent your property, there’s a high chance that it is written in your tenancy agreement that you are to look after your gardens. Therefore these ten simple tips could ensure you keep your deposit safe.

1. Remove Greenhouse Shading

Days are shorter in winter so your plants need all of the sunlight they can get. By giving your greenhouse a little scrub with some warm soapy water and some elbow grease, you can provide optimum amount of daylight to your plants inside. Now is the ideal opportunity to check your greenhouse for any wear and tear and replace any broken glass.

2. Spruce Up Your Lawn

Remove moss with a rake, and then continue to remove old grass clippings. Make deep holes with garden fork prongs in areas of high wear (such as walkways). These holes allow better drainage and aeration in the often over-compacted areas. Laying new turf now provides enough time for it to establish before the spring.

3. Clear Out Your Compost

Last season’s compost should be at the perfect level to use on your plant beds right now. If not, why not turn the compost to encourage a faster degradation? Plus, with the newly trimmed bushes and hedges, you will accumulate a lot of new compost material so get trimming.

4. Tidy Away Toys

Toys that are left out will wear faster when exposed to the elements. If you don’t have – or have no room in – a garage or shed, or if your property is rented, why not try an outdoor storage trunk.

5. Plant Evergreens

This is the perfect time to plant evergreens. Evergreen plants provide a visually appealing and fragrant winter backdrop. They usually require minimal attention and are extremelydurable once established.

6. Think Of The Wildlife

While you’re cosying up to a Netflix marathon in your fluffiest onesie with a toasty hot chocolate, spare a thought to the birds and squirrels. Why not hang a seed dispenser – or even make your own– to brighten up your garden and provide some much-needed food for your local wildlife. Allow the variety of wildlife to create a focal point of your back garden whilst your summer flowers lie dormant.

7. Pack Away Any Summer Accessories

Clean and cover BBQs, undress and fold away swing covers and pack away your seat cushions. Summer is over, so the chances of you needing these items are slim. Storing such items effectively over winter means they won’t weather in winter, saving you money in the spring.

8. Maintain Your Garden Equipment

Even the trustiest of rakes could – and probably will – dishevel in a particularly harsh winter. Pack away in a shed or garage. Sharpen shears, service lawn mowers if required and generally make sure everything is in good working order, and stored in a neat and organised manner – Next year ‘you’ will thank you.

9. ‘Leaf Litter’ Is Good… Unless You Have A Pond!

Leaving leaves on top of soil provides a kind of ‘blanket’ to protect the delicate plant roots from frost and other winter nasties.  The leaves degrade into organic matter over the course of the season, turning into nutritious sustenance for the surrounding plants. This is one of the few times being messy is encouraged!

10. Channel Your Inner Jamie Oliver

This is a great time of year to grow bulbs such as garlic and shallots for next summer’s salads. They’re also some of the more hardy plants, so provide a great ‘first attempt’ for the less-than-green-fingered among us.

For more topical news and tips for homeowners, please visit our news section on the Martin & Co Today blog.

View all articles by Gina Narramore

Government rules out any re-think on restricting buy to let tax breaks

The government is ruling out any re-think on its proposals to reduce buy to let tax breaks from next year.

The Financial Secretary to the Treasury, David Gauke, has written to the Residential Landlords' Association to emphasise the determination of the government to plough ahead with the changes, first announced in July by Chancellor George Osborne.

Gauke's letter is uncompromising, saying the Osborne proposals are essential to establish "a fair tax system".

Gauke's letter says: "By restricting cost relief to the basic rate of income tax, all finance costs incurred by individual landlords will be treated the same by the tax system."

The RLA, in an earlier letter to Gauke, had made the point that the private rental sector should be treated like any other business for tax purposes. 

Gauke's response to this point includes this key statement: "Landlords will continue to get full income tax relief on the costs incurred in letting out a property, such as letting agency fees and replacing furniture, as others do on the costs they incur in carrying out a trade. Finance costs are different as having a mortgage on a property also allows the landlord to purchase a more expensive property and incur larger gains on the investment than they would without the mortgage. The government wants to rebalance relief for these finance costs and ensure that all individual landlords get finance cost relief at the same rate."

Gauke insists that the phased reduction on tax relief for landlords will not lead to a rise in rents "due to the small overall proportion of the housing market affected." 

The minister insists only one in five landlords will pay more tax as a result of the change, which will be phased in over four years.

Article courtesy of Letting Agent Today 

Is it cheaper to rent or buy?

An excellent article by Money Advice Service posted on the On The Market blog -

If you can’t afford to buy, renting is cheaper. Right? Well the latest figures show that might not be the case with average mortgage payments LESS than average rent payments. But does that mean buying a home costs less than renting.....

https://www.onthemarket.com/content/is-it-cheaper-to-rent-or-buy-3/

Top 5 Blog Posts To Sell Your Home

Whether you are selling your home, buying a home, a landlord, a tenant, or just generally interested in all things property (and who can blame you – so are we!), here at Martin & Co we are always try to provide the best help, advice and guidance possible to you.

Over the past few months we have shared with you a number of tips and advice and today’s post, we’re sharing five articles, specifically aimed at sellers, from our Martin & Co Today blog.

So if you are looking to sell your home or if your home is currently on the market and you could do with some advice for getting it sold, check out all or just a few of the posts below – they received the most clicks since publication to date – you won’t be disappointed!

Whilst it’s very tempting to leave responsibility for your property sale to your estate agent, there are in fact some steps you can take yourself,to improve the interest in your property – in other words, to get more viewings! Here are my 5 changes you can make for a quicker sale and a great post to read for each one:

1.   What To Look For When Choosing An Estate Agent To Sell Your Property

2.   How To Get Your Property Ready To Sell

3.   Is DIY Home Selling A Good Idea?

4.   Six Warning Signs You Need A New Estate Agent

5.   Beat The Clock With Our 10 Top Tips For Tidying Before A Viewing 

So that’s it. We hope you find these useful when selling your home.

For more information on selling a property, pop into your local Martin & Co branch where one of our local experts will be more than happy to discuss your options with you.

Alternatively, you can visit our dedicated sellers section of our website, packed full of information, resources and tools to help you sell.

What has happened since the pension reforms?

The new pension freedoms that came into effect in April 2015 were expected to change pensioner and “soon to be pensioner” behaviours. What has happened?

37% of homeowners over 55 said they planned to buy a new property, and 14% said their future plans were as a direct response to pension changes.

However, buy-to-let mortgage approvals are growing more than four times the rate of first-time buyer mortgages at the moment, so this sector remains strongly supported.

Pensioners have directly responded to the changes by opting not to buy a pension annuity; annuities have fallen in value considerably: £3.1bn in Jan-Apr 2013, £1.8bn in 2014 and down to £1bn this year. Not only has the value of annuities fallen, but the number of annuities bought has also fallen steadily from90,000 in the second quarter of 2013 to just 17,800 in 2015.

As an alternative to pension annuities, pensioners can use Income Drawdowns – this is essentially taking money out of your pension pot and treating it as an income. Drawdown sales have soared, namely because everyone can now access them with no restrictions. The total value of drawdown products sold to June 2015 reached £1.3bn compared with just £670m last year.

We commissioned a set of market intelligence reports showing that buy-to-let returns can outperform pension annuities by up to 25%. If you are nearing retirement age and have  considered Buy-to-Let as a vehicle for income contact your local Martin & Co office today or download a market intelligence report by visiting www.martinco.com/askmartin.

Source: Telegraph. http://www.telegraph.co.uk/finance/personalfinance/special-reports/11865691/How-weve-used-the-new-pension-freedoms.html

Small Business Rates Relief & VAT issues – Exeter – 21 October

Joint RICS Exeter for an interesting and hopefully cost saving seminar covering VAT issues and Small Business Rates Tax Relief. The seminar starts with a speaker from Centurion VAT specialists looking at VAT issues arising in construction, land and property transactions & we will be discussing minimising costs & delays and also which buildings and projects can qualify for VAT relief. 

This will be followed by a presentation by fellow Chartered Surveyor Ian Sloan FRICS, looking at how to save money for your clients (and possibly your own businesses) with Small Business Rates Tax relief and who can claim and what savings can be available in industrial, office and retail premises.

Please click below for more details:

http://www.rics.org/uk/training-events/networking/business-rate-relief-vat-issues/exeter/

Carbon Monoxide

From October 2015 it will be mandatory that a carbon monoxide alarm is fitted in every room in a rental property that contains a 'solid fuel burning combustion appliance' and for smoke alarms to be fitted on every floor of any rented property where a room is used as living accommodation, for all new tenancies.

According to a survey of tenants carried out by Axa Business Insurance, some 71% of landlords have not yet organised a carbon monoxide alarm in their rental property. 

The poll of almost 500 tenants also found that 54% are yet to install a fire alarm and 43% have failed to arrange an annual gas safety check. 

If you would like to ensure that you are kept up-to-date with the latest legislation, please contact me to discuss how we can assist further.

Should I buy a student property in Exeter?

I have many, many…many potential landlords contacting me at the moment to enquire about buying student property.  I imagine people hear of the high annual income that can be achieved and want to dive straight in, however in the majority of cases I find they have not carried out enough research into the Exeter student market.

It is worth considering what may happen if there is another quiet year and the property is not let or if additional licencing comes into place preventing the ability to renew HMO licences in certain parts of the city.  Although there is no sign of this any time soon, it is worth having a contingency plan, just in case.  It is true that in the majority of cases there are excellent annual returns to be made, this year we found all our properties let extremely quickly and demand considerably outstripped supply, meaning landlords were also able to select the best tenants for their properties.

I have sold a many student properties over the last few years and on average they have been achieving a gross annual yield of around 6.9%, which is generally considerably higher than most other residential lets.  This sounds good, however it is worth factoring in the potential expenditures, such as replacing furniture, redecorating and dealing with tenancy matters.  With changes to tax allowances coming into place and the abolition of the 10% furnished property allowance, it is worth talking to a financial adviser to look at your personal circumstances.

Students nowadays look for properties that are well maintained, clean and tidy.  They ask questions about the landlord and if the property is managed by an agent or the landlord, they are also knowledgeable about the requirements for Energy Performance Certificates, fire detection systems and licences.  In other words, if a property has been neglected, the likelihood is that it will not be let.

If you are looking for information on the requirements for an HMO licence, please follow this link to Exeter City Councils’ website: http://www.exeter.gov.uk/index.aspx?articleid=11223.

Generally, student properties do make good investments, in the current market.  If you are looking at buying a student property, please call me to discuss the ones we currently have for sale and I am always happy to provide advice to existing landlords.

Regards, Jon.

Cranbrook Update

The latest railway station for East Devon at Cranbrook is taking shape with the platform and shelters now in place along with the access road and car parks.

Cranbrook will eventually have 15,000 residents say planners so the station will certainly assist in developing the community by providing quick access to Exeter city centre and London.  The promised railway station is more than a year behind schedule but at last it is expected to open this year.  Network Rail have been unable to confirm a date but said it would open by the autumn.

Once complete the station will have a bus link to Exeter airport and there is already an existing bus service from Younghayes Road into Exeter city centre.

An opening date for the supermarket at Cranbrook has now also been set.  The development is opposite the primary school and Younghayes Community Centre.

The Express & Echo quoted the Co-operative saying: “The Southern Co-operative’s new neighbourhood food store is planned to open in Gallopis Court, 147 Younghayes Road, Cranbrook, on Wednesday, 9th September. In addition to a bespoke range of produce, ready meals and an instore bakery, the store will include a Post Office and free to use ATM. The store opening is the latest for the independent regional retailer, The Southern Co-operative, whose nearest stores to Cranbrook include three in Exeter; Beacon Lane, Alphington Road and Buddle Lane.”

The firm said they would involve the community in the opening with special events to mark the occasion.

The Rev Mark Gilborson of the Cornerstone Church in the town said the Post Office was a surprise, but in a nice way. He said: “Cranbrook is set to be one of the biggest towns in East Devon with 25,000 to 35,000 people and we need the infrastructure. It’s not only good for Cranbrook but it’s also good for the Surrounding area as people in Cylst Honiton and Rockbeare will also be able to use the facilities. Cranbrook is such a brilliant community that we deserve it.”

As the leading letting agent at Cranbrook Martin & Co are pleased to see these developments take place as it will not only assist in letting properties in the town but will also create a community where residents will be happy to stay for a long period.

Osborne poised for ‘imminent’ new crackdown on buy-to-let

Chancellor George Osborne could crack down on the buy-to-let sector “imminently”.

The new curbs would be on top of measures already announced this month, to scrap the wear and tear allowance and to limit tax relief on the interest of buy-to-let mortgages.

Osborne has now told the Treasury Select Committee that the Bank of England could be handed radical new powers.

These could include the Bank being given powers to restrict the number and size of buy-to-let mortgages.

The Bank of England has warned that a buy-to-let bubble could threaten the financial stability of the whole country.

Osborne said he had already asked Bank of England governor Mark Carney for a consultation.
Asked by MPS about a timeframe, Osborne said: “I think the next couple of months. I have just written a letter [to Carney]. It’s all imminent. It’s happening this year.”

The move follows a downbeat assessment by the Residential Landlords Association of the curbs so far announced.

It says that as a direct result of the Budget, 65% of landlords are now considering raising their rents.
The RLA also attacked Osborne for arguing that landlords are currently taxed more favourably than home owners.

Alan Ward, RLA chairman, said that this was wrong, since unlike home owners, landlords are taxed on capital gains.

He said: “The belief that landlords should be compared to home owners is like comparing apples with pears. The two are vastly different.

“It’s time the Treasury recognised residential landlords as a business.”



Written by Rosalind Renshaw at Property Industry Eye

HMRC gives full details of wear-and-tear tax changes

HMRC has revealed the scope of its proposed changes to the wear and tear allowance, as announced in George Osborne’s budget earlier this month – and it wants the views of letting agents and landlords on the initiative.

Osborne stated that from April 2016 the formal “wear and tear allowance” –which allows 10% of rental profits to be written off for notional wear and tear, even if there has been no such actual expenditure in that particular year – will be replaced with a relief that enables all landlords to deduct the costs they actually incur on replacing furnishings in the property.

Now HMRC has announced the scope of the changes in an 11-page consultation document. One important piece of news is that whereas the old wear and tear tax break applied only to fully-furnished properties, agents and landlords will in future no longer need to decide whether their property is sufficiently furnished to claim the new replacement furniture relief.

This is because the new relief will apply to all landlords of residential dwelling houses, no matter what the level of furnishing.

The consultation document is available online but the critical details are as follows:

“The relief will apply to landlords of unfurnished, part furnished and furnished properties.

“The relief will not apply to ‘furnished holiday letting’ businesses (FHLs) and letting of commercial properties, because these businesses receive relief through the capital allowances regime.

“The new replacement furniture relief will only apply to the replacement of furnishings. The initial cost of furnishing a property would not be included.

“Under the new replacement furniture relief landlords of all non-FHL residential dwelling houses will be able to claim a deduction for the capital cost of replacing furniture, furnishings, appliances and kitchenware provided for the tenant’s use in the dwelling house, such as:

- movable furniture or furnishings, such as beds or suites,
- televisions,
- fridges and freezers,
- carpets and floor-coverings,
- curtains,
- linen,
- crockery or cutlery,
- beds and other furniture.

“We believe that limiting the scope of the allowance to items that are provided for the tenant’s use in the dwelling house that is being let removes any opportunity to claim the cost of larger items used for the purpose of the property rental business, for example, cars.

“Fixtures integral to the building that are not normally removed by the owner if the property was sold would not be included because the replacement cost of these would, as now, be a deductible expense as a repair to the property itself. Fixtures include items such as:

- baths,
- washbasins,
- toilets,
- boilers,
- fitted kitchen units.

“Landlords will no longer need to be concerned with whether the item being replaced is a fixture (and therefore a repair to the property) or not. In either case, the cost can be deducted from their rental income to arrive at the profits of their property rental business.

“Landlords will no longer need to decide whether their property is sufficiently furnished to claim the new replacement furniture relief, as they had to when claiming the wear and tear allowance. This is because the new relief will apply to all landlords of residential dwelling houses, no matter what the level of furnishing.”

The Consultation will run for 12 weeks from 17 July 2015 to 9 October 2015.

Landlords considering post-budget rent increases

New research from the Residential Landlords Association (RLA) has undermined the Government’s case that changes to the way landlords are taxed will not increase rents.

Interim findings from a survey of landlords by the RLA has found that 65% are now considering increasing rents as a direct result of the budget.

The chancellor announced earlier this month that mortgage interest relief for residential landlords would be restricted to the basic rate of income tax.

Also landlords will no longer be entitled to an automatic entitlement to a wear and tear allowance for their properties, leaving them with no recompense for general wear and tear of a property.

The RLA’s findings undermine HM Revenue and Customs’ assessment that these measures will have no significant impact on rent levels and it argued that the basis of the budget assumptions is wrong.

George Osborne had argued that landlordsare taxed more favourably than home owners but both the Institute for Fiscal Studies and think tank Policy Exchange have warned that this is not correct. Unlike home owners, landlords are taxed on rental income and capital gains.

RLA chairman Alan Ward said: “The reality is that the chancellor’s belief that rental property is taxed more favourably than home owners is simply not correct.

“Rather than supporting the sector to provide the vital homes needed to support a flexible labour market, today’s Finance Bill will choke off supply and drive up rents.

“The belief that landlords should be compared to home owners is like comparing apples with pears. The two are vastly different. It’s time the Treasury recognised residential landlords as a business.”

Investing in New Builds

Since the creation of the new town of Cranbrook, on the outskirts of Exeter, we have received no end of calls from potential landlords looking to invest at the development.  The benefits of purchasing a new property are extensive, including low maintenance, higher than average rents and high demand – all of which help to produce a high net yield.

By working closely with the residents, developers and landlords, Martin & Co have become the lead letting agent in the town. By adding extra value such as accompanying purchasers on the site handover meetings, taking potential purchasers around the town to meet the developers and providing rental assessments and advice, we have been able to ensure our clients are in the best position possible to make an informed decision.

While there are many different styles of houses, flats and coach houses available at the development, I have listed below some rough examples of the rents and yields that we would be likely to achieve. If you are looking to purchase a property at Cranbrook please call me on 01392 254488 for a more detailed breakdown.

1 bedroom flat - £650 - £695pcm. Estimated gross yield – 5.56%

2 bedroom coach house - £795pcm. Estimated gross yield – 5.16%

2 bedroom house - £795pcm. Estimated gross yield – 5.16%

3 bedroom house - £895 - £950pcm. Estimated gross yield – 4.65%

4 bedroom house - £995 - £1100pcm. Estimated gross yield – 4.80%

Buy To Let tax blow delivered by George Osborne

Chancellor George Osborne has announced that mortgage interest tax relief for buy-to-let homebuyers are to be restricted to basic rate of income tax, currently 20 per cent.

He says the measure, which will address "unfairnesses in property taxation", will be phased out "gradually" from 2017. 

"Buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot. And the better-off the landlord, the more tax relief they get. For the wealthiest, every pound of mortgage interest costs they incur, they get 45p back from the taxpayer” Osborne told MPs. 

"All this has contributed to the rapid growth in buy-to-let properties, which now account for over 15 per cent of new mortgages, something the Bank of England warned us last week could pose a risk to our financial stability. So we will act – but we will act in a proportionate and gradual way, because I know that many hardworking people who’ve saved and invested in property depend on the rental income they get" he said.

This will certainly be interesting to watch over the next few months and we will keep you up-to-date as things develop.

Rents will rise if tax breaks scrapped, Osborne warned

Chancellor George Osborne has been warned that rents in the private rented sector could rise if he scraps the tax-deductible status of mortgage interest payments in today’s emergency Budget. 

In a letter to the Chancellor, the National Landlord Association’s chief executive officer Richard Lambert says that making mortgage interest payments non tax-deductible would be the last thing the UK economy needs and would only put greater pressure on the cost of housing.

The letter also outlines the contributions that landlords make to the UK economy by means of their support for the housing industry and through direct contributions in the form of tax.   

“It has been suggested that private landlords receive too many ‘perks’ or reliefs which give them an unfair advantage compared to owner-occupiers, but this ignores the fact that letting residential property for profit is a business” says Lambert.

“No business pays tax on their gross turnover alone so why should landlords be treated any differently? Removing their ability to deduct legitimate costs before declaring their taxable profit would essentially force them to suck up one of the most significant expenses they face in being able to provide homes for others” he claims.

Using figures from the Council of Mortgage Lenders reported at the end of 2014, the NLA estimates that costs in the private rented sector could rise by as much as £2.6 billion if mortgage interest payments were to be reclassified as non-deductible - a move it warns would leave landlords with no other option than to raise rents. 

Lambert concludes the letter by seeking…“an unequivocal reassurance that the Government will continue to regard buy-to-let mortgage interest payments as a legitimate business cost, and give landlords the confidence and certainty to invest for the future”.

Buy To Let mortgage restrictions on the way?

The Bank of England says excessive lending to fund buy to let purchases could pose a risk to the financial well-being of the country and it hints this may have to be addressed by financial tools to limit BTL mortgages.

In its latest report the BoE says in the year to March 2015, buy to let lending expanded by 8.0 per cent and now accounts for 15 per cent (or more th one in seven) of the stock of outstanding mortgages. It also accounts for 18 per cent of new mortgage lending.

So far, so good - but then the report grows increasingly concerned at recent trends.

“The expansion of the buy-to-let mortgage market has been supported by strong competition between banks, primarily in lending rates. But there are signs of growing risk appetite spreading to underwriting standards [and] .... the number of advertised buy to let mortgage products at LTV ratios of 75% and above has increased since mid-2013” it says.

It goes on to hint that pressure for buy to let mortgages is likely to be growing at the moment thanks to ‘pension freedom’ changes, but then the Bank issuesa stark warning:

“The actions of buy to let investors affect the broader housing and mortgage markets as individuals compete to buy the same pool of properties. Looser lending standards in the buy to let sector could contribute to general house price increases and a broader increase in household indebtedness. 

“And in a downswing, investors selling buy to let properties into an illiquid market could amplify falls in house prices, potentially raising losses given default for all mortgages. This could be a particular concern in a rising interest rate environment, if properties become unprofitable given higher debt-servicing costs. 

“Buy to let borrowers are potentially more vulnerable to rising interest rates because loans are more likely to be interest only and extended on floating-rate terms, and affordability tends to be tested at lower stressed interest rates than owner-occupied lending.”

The BoE report then adds that the Treasury will later this year consult on possible tools to be used by the Bank’s financial policy committee which could ultimately restrict buy to let lending.