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Tax change could result in higher residential rents in the UK
Landlords in the UK’s private rented sector could be forced to put up rents if their buy to let mortgage interest payments are made non tax deductible, it is claimed. The National Landlords Association (NLA) is warning that costs in the UK private rented sector (PRS) could rise by up to £2.6 billion if tax changes are made, as has been hinted. In a letter to the Chancellor ahead of Wednesday’s Budget, the NLA’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,’ said 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 added. Using figures from the Council of Mortgage Lenders reported at the end of 2014, the NLA estimates that costs in the PRS 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 concluded 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’. Continue reading
UK small home builders get finance boost
Small house builders in the UK are to benefit from a £100 million cash boost to recognise and support their important role in keeping the country building. Housing Minister Brandon Lewis said that The Housing Growth Partnership will act as a dedicated initiative that will invest alongside smaller builders in new developments, providing money to support their businesses, helping get workers onto sites and increasing housing supply. The Partnership will also establish a network of builders, including experienced developers, who will act as mentors and advisers to those looking to expand and grow their businesses. The latest figures show that in the last 25 years, the number of firms building between one and 100 units a year has fallen from over 12,000 to fewer than 3,000 but house building figures show starts have more than doubled since those seen during the same period in 2009 and Lewis said he wants smaller firms to be involved in this growth. The government has matched a £50 million investment from Lloyds Banking Group to create the £100 million Housing Growth Partnership, which will be used to help smaller builders to invest in new projects and develop their businesses, allowing them to recruit and train skilled workers and become more competitive in their local area. The partnership expects to make around 50 investments, with the aim to provide an additional 2,000 homes. ‘The 2008 economic crash devastated our army of small builders, with delivery falling from 44,000 homes to just 18,000 and now seven years on companies are getting back on their feet but we’re determined to give them all the help they need,’ said Lewis. ‘Access to finance is one of the biggest challenges they face so this £100 million commitment will help our smaller builders fund new projects, expand their businesses, create more jobs and build more homes,’ he pointed out. ‘With housing starts at a seven year high and climbing and homes granted planning permission at 261,000, the highest since 2007, this work will ensure we maintain this momentum and keep the country building,’ he added. According to Andrew Bester, group director and chief executive of commercial banking at Lloyds Banking Group, it will help address the challenge of housing supply and affordability in the UK’s housing market. ‘It will provide SME house builders with much needed equity to support residential development projects, to stimulate growth in their businesses and facilitate access to conventional property development finance. We believe building both a greater quantity and mix of homes will help Britain prosper,’ he added. Brian Berry, chief executive of the Federation of Master Builders, confirmed that one of the biggest obstacles these firms have faced is a severe difficulty in accessing finance. ‘Without adequate access to finance they cannot bring forward the number of new homes they would otherwise,’ he said. ‘The new Housing Growth Partnership will directly help to address this issue and the additional £50 million greatly increases the scale of what can be achieved. We… Continue reading
UK landlords seeing rise in tenant demand, especially from families
Almost half of landlords in the UK are reporting an increased demand for rental properties which is expected to continue over the next 12 months. Some 43% have experienced a rise in tenant demand and it is being driven by young people and families, according to the latest research by specialist buy to let lender Paragon Mortgages. It also shows that 51% expect this level of growth to continue over the next 12 months with 47% renting to young couples, 43% to young singles and 42% to families with children. ‘It is no surprise that rental demand is steadily increasing. With continued stress on the housing stock driving prices up, tough affordability hurdles for would be buyers and a social rented sector under pressure as a result of renewed interest in right to buy, a steady increase in rental demand was practically inevitable,’ said John Heron, Managing Director of Paragon Mortgages. ‘It is important that landlords continue to expand the supply of rented property in order to maintain balance and so avoid unsustainable increases in rents. A healthy, competitive and innovative buy to let market is critical to this,’ he added. Meanwhile, separate research shows that more than half of tenants say they experienced problems with their rented homes over the past 12 months, ranging from poor maintenance to breaches of their contract. The biggest problem, for 15% of tenants, was their landlord’s failure to fix structural problems including damp, a leaking roof or rotten window frames, according to the research by mortgage and loans provider Ocean Finance. A further 13% of tenants suffered delays in repairing broken furniture, showers and washing machines. 14% of tenants faced unexpected increases in their rent, disputes over money deducted from their deposits and even early eviction when their landlord sold their property. Tenants in London, where more than 10 million people live in private rental accommodation, fared the worst, with 60% saying they experienced problems in the past 12 months. This was followed by those in the East Midlands and the rest of the South East region. Some 35% of tenants said even though they complained to the landlord or letting agent, the problems were not fixed. While 13% said they didn’t know who to turn to for advice, while 5% took matters into their own hands and refused to pay their rent until the landlord resolved the problem. ‘Landlords have an obligation to ensure that the properties they let are well maintained and safe for their tenants to live in. The research indicates that many tenants are renting sub-standard properties. It’s also concerning that people are facing mid-tenancy rent increases or have money unexpectedly taken from their deposits,’ said Gareth Shilton, a spokesman for Ocean Finance. ‘One of the problems may be a lack of clarity over whose responsibility it is to maintain different aspects of a property. Often the landlord believes the tenant is responsible for doing repairs that in fact they are obligated to make,’ he… Continue reading
