Archive for Lettings
Buy-to-Let Landlords Suffering From Economic Downturn
Response to figures released by the Council of Mortgage Lenders which show that buy-to-let landlords are losing their properties at over three times the rate of other homeowners.
Colette Murphy, Director at Braemore Property Management, said: “There’s no question that buy-to-let landlords are currently suffering from the economic conditions – particularly if they invested in property over the last few years with the minimum of down payment.
“Buy-to-let investing has usually relied on capital growth to make the investment profitable, as the rental yields were relatively low. However, as house prices have been falling over the past year or so, investors who purchased properties during the peak time in 2007 now have an asset that is actually worth less than they paid for it.
“The rental market has also recently been swelled by extra properties over the past six months or so and this has led to rents decreasing as landlords started to compete more fiercely for tenants. Anyone who bought prior to the property slump is now feeling the squeeze and, in some exceptional cases, this can lead to repossession – although, over the past 24 months, we have only seen four instances of this happening across the 850 properties on our books.
“However, it’s important to note that buy-to-let investing is not dead. There are more affordable property prices available on the market, record low interest rates and banks that are willing to lend to people who have sufficient funds in place for a deposit – so it is still a smart move to invest in bricks and mortar if you can afford to do so.
“As experts are predicting an eventual rise in property prices at some point in the future, it’s likely that anyone investing now will be able to make a gain in the long run.”
Landlords, Have You Got Your EPC?
Nearly 40 per cent of the UK’s energy consumption arises from the way in which our 25 million buildings are lit, heated and used. Even comparatively minor changes in energy performance and the way we use each building will have a significant effect in reducing energy consumption and therefore carbon emissions.
Almost half of the UK’s carbon dioxide emissions, the main greenhouse gas which causes climate change, actually come from the things we do every day. Leaving the lights on unnecessarily, or boiling the kettle with more water than is actually required, all waste energy. We are already seeing the effects of climate change here in the UK. Winters are becoming milder, rainfall patterns are shifting, making drought and floods more common.
After two and a half years of intense negotiations, the Kyoto Protocol was adopted at the third conference of the Parties to the UNFCCC (COP3) in Kyoto, Japan on 11th December 1997. Following ratification by Russia, the Protocol entered into force on 16th February 2005. The protocol requires developed countries to reduce their green house gases (GHG) emissions below levels specified for each of them in the Treaty. Under the Kyoto Protocol, by 2008-2012 the UK must reduce its baseline emissions of the six major greenhouse gases by 12.5 per cent, from a baseline target set in 1990. The UK Government has also set a target to reduce carbon dioxide emissions to 20 per cent beneath that baseline. The long term goal is to reduce emissions by 60 per cent by 2050.
Following an EU directive, all domestic properties being sold or rented out, will shortly need to have an Energy Performance Certificate (EPC). In response to this, Communities and Local Government has introduced a number of energy and cost-saving measures to make all buildings more efficient. These measures are being applied across all European Union countries and are in accordance with the European Directive for the Energy Performance of Buildings.
The energy efficiency and fuel costs will now become an element in the design and decision process of all new projects, and an important component to future property purchases. By 1st October 2008, all buildings in the UK that are constructed, sold or rented will require an EPC.
The EPC is part of these new measures to improve the efficiency of buildings, resulting in lower energy bills for the occupier. An EPC provides the owner with a rating for the building, showing its energy efficiency and environmental impact on a scale from A-G (where A is the most efficient and G the least efficient). Two ratings are given:-
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The environmental impact rating is a measure of a building’s impact on the environment in terms of carbon dioxide emission-the higher the rating, the less impact it has on the environment.
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The energy efficiency rating is a measure of a building’s overall efficiency. The higher the rating, the more energy efficient the building is, and the lower the fuel bills are likely to be.
The ratings will vary according to the age, location, size and condition of the building. The potential rating on the certificate will take these factors into account.
Housing Minister, Yvette Cooper on its launch in 2006, said,
“Given the growing challenge from climate change and rising energy costs, I think people should be entitled to this kind of information about the home they buy. You can get this kind of consumer information on fridges and washing machines, so why not on a home where emissions-and the savings-are so much greater?”
Therefore the introduction of EPC represents a positive step forward. Encouraging home owners and users, to be given-user friendly information they need to reduce the environmental impact of their homes and energy bills. By providing knowledge and increasing awareness through long-term incentives, the EPC will contribute greatly to a reduction in UK carbon emissions.
Landlords-Do Not Leave EPC Until Last Minute
The EU Performance of Buildings Directive has been translated into national law with its main aim being to improve the energy performance of buildings, by requiring the energy performance to be advertised on the sale or rental of any domestic property.
This has been achieved through the introduction of Energy Performance Certificate (EPCs). Any private property rented out on or after 1st October 2008 will require an EPC. This certificate will be valid for 10 years.
The certificate will give each building a SAP (Standard Assessment Procedure) rating, which will equate to an energy rating A-G, similar to those seen on fridge/freezers (where A is very efficient and G is very inefficient). All property owners will need to get their building inspected by an accredited energy assessor, if they want to let it to new tenants or sells it. The current market price for producing the certificate is estimated between £100-£150.
An EPC will be supplied with a recommendation report that lists cost effective and other measures to improve the energy rating of the building. The certificate will also be accompanied by information about the rating that could be achieved if all the recommendations were implemented. Property owners will be able to get a new certificate after installing energy efficiency measures.
EPCs may help with renting or selling properties as they will indicate to prospective buyers or tenants, how energy efficient the property is and will also provide information that may help to reduce the running cost of the property.
To find out more, contact the Energy Performance of Buildings Advice Line Tel-0845 3652468.
Landlords Urged To Claim Back Tax
The National Landlords Association (NLA), UK representative body for landlords, has urged private-residential landlords to use the Landlord’s Energy Saving Allowance (LESA). This is a tax break allowing landlords to claim on their tax return against the cost of buying and installing energy saving items.
Landlords are able to claim a maximum of £1,500 per property against the cost of installing draught proofing, loft insulation or insulation for hot water systems. For example, if a landlord installed insulation at a cost of £1,500 the saving could be as much as £600 for higher rate income tax payers and £300 for those who pay basic rate income tax.
David Salusbury, chairman at NLA, said,
“The NLA encourages its members to invest in maintaining and improving the quality of their properties. LESA is a welcome incentive for landlords, to persuade them to make the necessary energy efficiency improvements.
“As well as contributing to the overall efforts by society to combat climate change, landlords may see an increase in the value of their investment as a result. We are pleased that the Government has chosen to offer incentives, instead of regulation, and would urge landlords to use the tax break or, perhaps risk losing it in the future.”
Government Wants HIPs To Benefit Consumers
The Government is seeking to extend measures, to help ensure consumers are seeing the vital information in Home Information Packs and to make sure they are receiving a higher standard of service from HIP and other service providers.
The new measures include: developing a new set of standards with industry on what consumers should expect from property professionals in the home buying and selling process; further building on the quality of information in the packs; working with industry to ensure that consumers are fully seeing and benefiting from the HIP, including the EPC, early in the process; extending until the end of the year the provisions enabling consumers to market their home as long as they have ordered and committed to pay for a HIP, and the provision requiring the lease to be included in the HIP for leasehold properties.
The latest figures on HIPs show that consumers are already benefiting from the introduction of Home Information Packs. More than 700,000 homes now have energy ratings as a result of HIPs, helping home owners to save money on their fuel bills and cut carbon emissions. Greater competition in the property searches market is also leading to reductions in costs with some local authorities reducing their search fees by up to £120.
Housing Minister, Caroline Flint said,
“Home Information Packs are already bringing benefits to consumers. Property search costs are falling and new information on energy efficiency can help cut carbon emissions and enable prospective purchasers to get a better idea of the likely costs of energy bills.
“But we want to do more to improve the HIP and the home buying and selling process for consumers. Developing a new set of standards for industry is an important next step in further ensuring all consumers get the highest quality of service when buying or selling a home. We also want to ensure all consumers are seeing the vital information in a HIP early in the process so they can fully benefit.
“Alongside the development of a new industry code, we will continue to work with the industry to promote higher and consistent standards of practice on the delivery of HIPs.”
