The Lettings Market is constantly changing and as a Landlord you need to stay on top of it! This newsletter will help provide you with the knowledge you need to prepare yourself for the changing market and make informed decisions about your portfolio. In this Newsletter, we’re looking at the past 6 months, and comparing it to the same period in 2017, giving you the best views of how the market has changed!
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As a Landlord you must be aware of the increasing legislation changes that affect you and your properties. As working members of Property Mark, we keep our Landlords up to date with over 160 pieces of legislation that are relevant to the private rental sector and we want to keep you updated too.
Here are some key legislation changes you need to be aware of today. As well as updating you on new legislation changes in the past 3 months, we also wanted to remind you of some of the other, more important legislation that you MUST be aware of.
The ‘How to Rent Guide’ was updated on 26th June, making it mandatory to provide tenants with a copy of the ‘How to Rent Guide’ at the point of all new tenancies and all tenancy renewals. Failure to do this could result in you losing your right to evict when issuing a Section 21 Notice. Fortunately for our Fully Managed Landlords, they don’t have to worry about this.
Prospect ensures that all new tenants and existing tenants at renewal, are supplied with the current ‘How to Rent Guide’, on our Landlord’s behalf. This is another worry that we’re able to alleviate for our Landlords.
Further to this, every one of our registered Tenants goes through a thorough referencing process, which means that our Landlords are unlikely to need to resort to issuing a Section 21 Notice in the first place. Our comprehensive Tenant referencing process means we find high-quality Tenants for our Landlords’ properties.
All properties which are tenanted are now required to have a minimum Energy Performance Rating of E, as measured on the Energy Performance Certificate (EPC). With the introduction of this piece of legislation, Letting Agents will not be able to grant a new tenancy or renew an existing tenancy, if the energy efficiency of a property is graded F or G.
Prospect has very few properties affected by this legislation and we are working closely with Landlords who need help. With energy costs continuing to increase, tenants are taking more notice of a property’s running costs, with heating and lighting inevitably being the main focus.
Energy efficiency is just one of the many areas we review with our clients to ensure we help to maintain the property’s value and a good rental return.
If you need advice on this, please contact your local office. We secure special discount rates for our Landlords through our maintenance partners, The Property Maintenance People and we may be able to do the same for you (even if you don’t let through us), so please get in touch.
Interest relief was reduced from April 2017 for higher rate taxpayers; which was announced in the Summer Budget 2015. To give Landlords time to adjust, the changes are being phased in gradually over 4 years and we are now approaching phase two:
2017/18 – the deduction will be restricted to 75% of finance costs, with 25% being available as a basic rate tax reduction.
2018/19 – 50% finance costs deduction and 50% given as a basic rate tax reduction
2019/20 – 25% finance costs deduction and 75% given as a basic rate tax reduction
From 2020/21 – all financing costs incurred by a landlord will be given as a basic rate tax reduction
Tax can be complex and many Landlords are over paying on their tax. There are strategies to safely and legally reduce the amount of tax you need to pay; however, these are scenario dependant. Please contact one of our senior team members to arrange your free consultation with a Landlord Tax Specialist Advisor.
Mortgage finance rules are becoming more stringent on Portfolio Landlords. These rules are being applied to Landlords who own four or more mortgaged rental properties. The rule stipulates that lenders are to assess a Landlord’s full property portfolio before offering a mortgage.
Lenders will assess all assets individually, putting them through a ‘financial health check’.
If you have any questions about these changes, please do not hesitate to contact us.
We have seen measures introduced to improve the standard of Letting and Property Management in the private rented sector. At Prospect we run the Prospect Training Academy to train all our staff to the highest standard.
Plus, our senior staff members are all members of the Association of Residential Lettings Agents (ARLA, Property Mark) and Prospect is a member of The Property Ombudsman. We feel that this is imperative, as there are now over 160 pieces of legislation that are relevant to the rentals sector.
Being a market leader in Lettings, we ensure that our staff members are well informed about the latest legislation and best practice, so they can provide you with the best support and advice possible. Please contact one of our offices if you have any queries.
It’s been a busy first half of 2018 for Prospect Estate Agency; we have registered over 12,500 tenants and buyers across Berkshire and Surrey.
Our Lettings team has seen an increase in activity from tenants, with Tenant registrations increasing by 3.7% in 2018, which has resulted in an uplift of 3% in tenancies agreed - great news for our Landlords. Plus, we have also seen a small increase in the amount of properties being viewed by each tenant before making a decision, meaning that it’s becoming more important to ensure your property stands out!
Our average rent has stayed stable, along with the average investment purchase price agreed, equalling yields also staying stable. This in my opinion show that the uncertainty that was created has passed.
Nothing of course is without risk; however money is still cheap to borrow and changes to ‘buy to let’ mortgage requirements give buyers less risk in terms of being financially stretched when having any void periods, or replacements/repairs are required . This then always prompts me to ask “What else can you put your money into that will potentially give you the level of capital growth we have seen in the past, along with a passive income, other than the property market?”
I will leave you with my final thoughts. I have worked in the Property sector for 15 years and during this time property values have had their ups and downs but for anyone holding an investment property, the rental incomes have continued to be healthy. This has enabled Landlords to weather any storm. So in my opinion and if the last 15 years are anything to go by, property is still a viable investment vehicle.
If you would like to talk about the property market, or my views in this update, please contact me on 0118 955 9701. I look forward to talking to you.
- Written by Mike Gallagher, Area Lettings Manager
Across the UK, and specifically in the Thames Valley, there is continued growth regarding the ‘build to rent’ sector, which has billions of pounds worth of funding and is becoming more and more influential in the Private Rented Sector.
In the future, builders will look to rent out a proportion of the units within new developments, rather than just selling all they build. This method of investing in property is massively backed by the government, as it will result in a higher standard of properties available to rent in the UK. This type of investment has only emerged in the UK in recent years and is already estimated to be worth £25 billion.
Again, this is more evidence that the government is driving out rogue or inexperienced landlords and wants to provide a better quality of housing and management to the rental sector. This is why it’s so important for you, as a Landlord, to work with a Letting Agency that keeps you updated with market and legislative changes and helps you identify new ways to improve the quality of your product and maximise your returns!
To truly get the most out of your property, you need to understand what Tenants are looking for. We register over 1,120 local Tenants every month and we listen to what properties they’re looking for. This is how we’re able to best advise our Fully Managed landlords on attracting Tenants. Because of this, we have been able to continually increase the rate at which we’re able to let out new properties as they come onto the market.
To help you understand what properties tenants are looking for, you need to understand which properties existing Tenants are renting, which is highlighted in the table below. This table shows the sizes of properties that are actually being let in our five core areas.
Demand varies slightly based on which area you’re looking at so we encourage you to speak to one of our Lettings Experts if you’re looking for advice, but you can see a common pattern across all areas. People are looking to rent 1 and 2 bedroom properties (making up to 84% of all new rent agreements in Reading), which is primarily made up of apartments.
This is why we’re helping many of our Landlords and investors identify new commercial to residential opportunities in and around these towns, as well as opportunities for Title Splitting larger properties into apartments.
We’ve also been encouraging landlords in Reading with 4/5 bedroom detached homes to convert them into luxury HMOs, this is because they’re able to achieve a higher rental income from 4/5 individually let rooms compared to renting it out as a single dwelling. This is the case because demand is very high for 1 bedroom properties, due to the high population of young professionals in the area.
If you’d like to discuss this data in greater detail, please feel free to contact one of our Lettings Experts.
There are many ways Prospect endeavours to help all of our Landlords, from ensuring you have a fully qualified lettings team at your fingertips to making managing your property as easy and seamless as possible. Find out what Prospect is doing to help you…
We have undertaken some major initiatives to aid our landlords and tenants. We have been expanding and training our Property Management team, to ensure that we are providing a better level of customer service overall. In fact, most of our team are now ARLA qualified, to give you that extra piece of mind, knowing you’re in safe hands.
With the commitment of our Accounts team, we have reduced the level of rent arrears across our portfolio to only 0.87%; against the national average of approximately 4%. Also, we have overall, increased our average tenancy length, giving more security to our Landlords.
Once you’ve instructed Prospect to market your rental property, you will benefit from the convenience of our Landlord Tracker*.
Regardless of how many properties you have with us, our Landlord Tracker gives you all the key information you need in just one click, from your phone, tablet or PC
This innovative tool for Landlords will allow you to keep up to date with your property portfolio, at any time, in any place. Perfect for busy Landlords!
*Fully Managed and Rent-Collection Landlords only
We are also continuing to expand and strengthen our network, with 9 offices in Berkshire and Surrey and a 10th coming soon in Hampshire, plus our Mayfair marketing suite connecting you to London and international Buyers and Tenants.
If you’d like to discover how Prospect can help you achieve the best rental yields and attract the best tenants for your portfolio, please arrange a free lettings valuation today.
Your property is an investment and we want to help you make the most out of it. This is why we would like to introduce you to Sarah Corradine, the Portfolio Investment Manager for Prospect Estate Agency.
Sarah will work closely with you to ensure you are getting the most out of your portfolio and Prospect, whilst also providing you access to the great investment opportunities, if you’d like.
Using her own personal investment experience to understand exactly what you need from an agent and being fully ARLA (Association of Residential Letting Agents) qualified, you can rest assured that she is both proficient and committed to helping you safeguard and make the most of your investment!
Discover how to maximise your portfolio with a complimentary investment consultation with Sarah. Arrange yours today by calling Sarah on 0118 907 3104.
We’re not just here to offer advice. We’re also here to help you take action. If you’re interested in expanding your portfolio, we’ve got some fantastic deals available for you, including these two incredible New Homes developments.
Being brand new builds, you’ll purchase the property ready for tenancy – ensuring you can start benefiting from income immediately.
Potential yields of up to 4.5% with plots available from £260,000
Highly anticipated one and two bedroom apartments located in Wokingham’s redeveloped town centre
Available now with 50% already sold
Potential yields of up to 5.0% with plots available from £230,000
A development of eight high specification one and two bedroom flats and maisonettes with parking
Scheduled completion for September
If you’re ready to expand your portfolio or would like to know more about these exclusive Prospect New Homes developments and how they can add to your portfolio, please call Sarah on 0118 907 3104.
Being a landlord can be overwhelming if you don’t have the right support. If you’d like to sit down with one of our Lettings Experts, members of our team who have been in the industry for as much as 28 years, to discuss your portfolio or strategy as a landlord, arrange your free advisory consultation today.
We’ve helped thousands of landlords and property investors over the years and want to give you the support you need. Whether you want advice on how you can make your property work better for you or what your options are of releasing equity from your portfolio, we’re here to help.
You can visit our Landlords Property Marketing page to discover how Prospect will celebrate your home and attract the right tenants for you.
Alternatively, if you'd also like to discover your property's rental value in today's market, we'd be happy to provide a free, no obligation lettings valuation.
We also offer to give £250 of our selling fee to your chosen local school upon selling your property. This is just one of the many ways we give back and help support the local community. If you'd like to learn more about our Back to Schools initiative and would like to discover more about what happens on a property valuation, please click here.